What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-16 compared with 2022-02-18 · 193 added, 236 removed, 1036 unchanged (29% of the section changed)

16 unchanged sentences

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 16, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for its convertible debt instrument in 2022 due to the adoption of the FASB’s Accounting Standards Update No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

Basis for Opinion

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The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment.

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A(a) Management’s Annual Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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(in thousands, except per share data)

ASSETS December 31,

Current assets:

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Accumulated other comprehensive loss – foreign currency translation adjustments ( 58,802 ) ( 27,094 )

( 27,094 ) ( 15,455 )

Total stockholders’ equity 1,638,068 1,509,227

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Gross profit:

Products 836,535 739,219 675,154

Services 800,032 708,338 624,788

Gross profit 1,636,567 1,447,557 1,299,942

Operating expenses:

1 unchanged sentence

Severance and restructuring expenses, net 4,235 ( 1,634 ) 12,394

Acquisition-related expenses — 2,208 11,342

Acquisition and integration related expenses 1,972 — 2,208

Earnings from operations 413,700 332,061 271,575

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Net earnings $ 280,608 $ 219,345 $ 172,640

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments ( 31,708 ) ( 11,639 ) 22,710

10 unchanged sentences

Balances at December 31, 2021 34,897 $ 349 — $ — $ 368,282 $ ( 27,094 ) $ 1,167,690 $ 1,509,227

Cumulative effect of accounting change — — — — ( 44,731 ) — 17,789 ( 26,942 )

Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes 220 2 — — ( 7,907 ) — — ( 7,905 )

322 3 — — ( 6,575 ) — — ( 6,572 )

Stock-based compensation expense — — — — 22,710 — — 22,710

Equity component of convertible senior notes, net of deferred tax of $ 14,819 and issuance costs of $ 1,700

— — — — 44,731 — — 44,731

Issuance of warrants related to convertible senior notes

— — — — 34,440 — — 34,440

Purchase of note hedge related to convertible senior notes, net of deferred tax of $ 16,047

— — — — ( 50,278 ) — — ( 50,278 )

Repurchase of treasury stock — — ( 1,109 ) ( 107,922 ) — — — ( 107,922 )

1 unchanged sentence

Foreign currency translation adjustments, net of tax — — — — — ( 31,708 ) — ( 31,708 )

— — — — — 3,489 — 3,489

Net earnings — — — — — 280,608 280,608

Balances at December 31, 2022 34,009 $ 340 — $ — $ 327,872 $ ( 58,802 ) $ 1,368,658 $ 1,638,068

Balances at December 31, 2020 35,103 $ 351 — $ — $ 364,288 $ ( 15,455 ) $ 993,245 $ 1,342,429

Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes 291 3 — — ( 9,112 ) — — ( 9,109 )

285 3 — — ( 5,967 ) — — ( 5,964 )

Stock-based compensation expense — — — — 18,201 — — 18,201

2 unchanged sentences

Foreign currency translation adjustments, net of tax — — — — — ( 11,639 ) — ( 11,639 )

— — — — — 22,710 — 22,710

Net earnings — — — — — — 219,345 219,345

Balances at December 31, 2021 34,897 $ 349 — $ — $ 368,282 $ ( 27,094 ) $ 1,167,690 $ 1,509,227

Balances at December 31, 2019 35,263 $ 353 — $ — $ 357,032 $ ( 38,164 ) $ 841,097 $ 1,160,318

Issuance of common stock under employee stock plans, net of shares withheld for payroll taxes 285 3 — — ( 5,967 ) — — ( 5,964 )

291 3 — — ( 9,112 ) — — ( 9,109 )

Stock-based compensation expense — — — — 17,727 — — 17,727

2 unchanged sentences

Foreign currency translation adjustments, net of tax — — — — — 22,710 — 22,710

— — — — — ( 11,639 ) — ( 11,639 )

Net earnings — — — — — — 172,640 172,640

17 unchanged sentences

Increase in accounts receivable ( 406,370 ) ( 289,009 ) ( 132,599 )

(Increase) decrease in inventories ( 148,941 ) 1,029 11,944

(Increase) decrease in other assets ( 18,100 ) 7,367 ( 129,745 )

Increase (decrease) in accounts payable 303,395 152,235 ( 612 )

(Decrease) increase in accrued expenses and other liabilities

( 9,937 ) 52,217 119,590

Decrease (increase) in inventories 53,711 ( 148,941 ) 1,029

Decrease (increase) in other assets 27,858 ( 18,100 ) 7,367

Increase in accounts payable 53,607 303,395 152,235

Increase (decrease) in accrued expenses and other liabilities 4,413 ( 9,937 ) 52,217

Net cash provided by operating activities:

98,106 163,711 355,582

Cash flows from investing activities:

Proceeds from sale of assets 1,346 31,005 40,295

Acquisitions, net of cash and cash equivalents acquired — ( 6,405 ) ( 664,287 )

Purchases of property and equipment ( 70,939 ) ( 52,079 ) ( 24,184 )

Acquisitions, net of cash and cash equivalents acquired ( 68,248 ) — ( 6,405 )

Net cash (used in) provided by investing activities:

( 137,841 ) ( 21,074 ) 9,706

Cash flows from financing activities:

Borrowings on senior revolving credit facility — — 242,936

Repayments on senior revolving credit facility — — ( 242,936 )

Borrowings on ABL revolving credit facility, net of initial lender fees 3,953,496 3,030,679 1,680,515

Borrowings on ABL revolving credit facility 4,678,212 3,953,496 3,030,679

Repayments on ABL revolving credit facility ( 4,433,510 ) ( 4,040,496 ) ( 3,462,063 )

Borrowings on accounts receivable securitization financing facility

— — 2,364,500

Repayments on accounts receivable securitization financing facility

— — ( 2,558,500 )

Net (repayments) borrowings under inventory financing facilities ( 8,307 ) ( 14,355 ) 103,254

Proceeds from issuance of convertible senior notes — — 341,250

Proceeds from issuance of warrants — — 34,440

Purchase of note hedge related to convertible senior notes — — ( 66,325 )

Repurchases of treasury stock ( 50,000 ) ( 25,000 ) ( 27,899 )

Repurchases of common stock ( 107,922 ) ( 50,000 ) ( 25,000 )

Other payments ( 14,466 ) ( 10,030 ) ( 8,661 )

Net cash (used in) provided by financing activities ( 161,385 ) ( 361,791 ) 577,587

Foreign currency exchange effect on cash, cash equivalents and restricted cash balances

Net cash provided by (used in) financing activities:

114,007 ( 161,385 ) ( 361,791 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 24,605 ) 14,285 ( 27,996 )

Cash, cash equivalents and restricted cash at beginning of year 130,582 116,297 144,293

Cash, cash equivalents and restricted cash at end of year $ 105,977 $ 130,582 $ 116,297

Foreign currency exchange effect on cash, cash equivalents and restricted cash balances ( 14,531 ) ( 5,857 ) 10,788

Increase (decrease) in cash, cash equivalents and restricted cash 59,741 ( 24,605 ) 14,285

Cash, cash equivalents and restricted cash at beginning of period 105,977 130,582 116,297

Cash, cash equivalents and restricted cash at end of period $ 165,718 $ 105,977 $ 130,582

See accompanying notes to consolidated financial statements.

Table of content

INSIGHT ENTERPRISES, INC.

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Description of Business

We empower organizations with technology, solutions and services to help our clients maximize the value of Information Technology (“IT”) today and drive (digital) transformation for tomorrow in North America;

We help our clients accelerate their digital journey to modernize their business and maximize the value of technology.

We serve these clients in North America;

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

and Asia-Pacific (“APAC”).

As a Fortune 500-ranked global technology provider of end-to-end secure digital transformation solutions and services, we help clients innovate and optimize their operations to run smarter.

As a Fortune 500-ranked solutions integrator, we enable secure, end-to-end digital transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 34 years of broad IT expertise.

We amplify our solutions and services with global scale, local expertise and our e-commerce experience, enabling our clients to realize their digital ambitions at every opportunity.

Our company is organized in the following three operating segments, which are primarily defined by their related geographies:

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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.

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

Effective June 1, 2022, we acquired Hanu Software Solutions, Inc.

and Hanu Software Solutions (India) Private Ltd.

(collectively, “Hanu”) for a preliminary cash purchase price, net of cash and cash equivalents acquired, of approximately $ 68,248,000 , excluding the estimated fair value of an earn out with a maximum value of $ 20,000,000 and hold backs for representations and warranties of approximately $ 8,501,000 to be paid in future periods.

Effective February 28, 2020, we acquired vNext SAS (“vNext”), a French digital consulting services and managed services provider.

The acquisition was funded using cash on hand.

Effective August 30, 2019, we acquired PCM, Inc.

(“PCM”), a provider of multi-vendor technology offerings, including hardware, software and services, for a purchase price of approximately $ 745,562,000 , including cash and cash equivalents of $ 84,637,000 and the payment of PCM’s outstanding debt.

The acquisition was funded through a combination of using cash on hand and borrowings under our senior secured revolving credit facility (the “ABL facility”).

Our results of operations include the results of vNext and PCM from their respective acquisition dates.

(See Note 20 for a discussion of our PCM acquisition).

Our results of operations include the results of Hanu and vNext from their respective acquisition dates.

(See Note 20 for a discussion of our Hanu acquisition).

Principles of Consolidation and Presentation

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Initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred.

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Additionally, these estimates and assumptions affect the reported amounts of net sales and expenses during the reporting period.

Actual results could differ from those

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Actual results could differ from those estimates.

On an ongoing basis, we evaluate our estimates, including those related to sales recognition, anticipated achievement levels under partner funding programs, assumptions related to stock-based compensation valuation, allowances for doubtful accounts, valuation of inventories, litigation-related obligations, valuation allowances for deferred tax assets and impairment of long-lived assets, including purchased intangibles and goodwill, if indicators of potential impairment exist.

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Additionally, assumptions about future demand, market conditions and decisions by manufacturers/publishers to discontinue certain products or product lines can affect our decision to write down inventories.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Property and Equipment

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Buildings 29 years

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

External direct costs of materials and services consumed in developing or obtaining internal-use computer software and payroll and payroll-related costs for teammates who are directly associated with and who devote time to internal-use computer software development projects, to the extent of the time spent directly on the project and specific to application development, are capitalized.

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We regularly perform reviews to determine if facts and circumstances exist which indicate that the economic lives of our intangible assets are shorter than originally estimated or the carrying amount of these assets may not be recoverable.

When an indication exists that the carrying amount of intangible assets may not be recoverable, we assess the recoverability of our assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

or group of assets over their remaining lives against their respective carrying amounts.

Such impairment test is based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Impairment, if any, is based on the excess of the carrying amount over the estimated fair value of those assets.

We adopted ASU No.

2016-02, “Leases” (Topic 842) with a date of initial application of January 1, 2019.

As a result, we updated our accounting policy for leases.

We determine if a contract or arrangement is, or contains, a lease at inception.

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Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities of $ 65,922,000 and $ 70,512,000 , respectively, were recognized at commencement date based on the present value of lease payments over the lease term.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

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Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Self-Insurance

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When we provide a combination of hardware and software products with the provision of services, we separately identify our performance obligations under our contract with the client as the distinct goods (hardware and/or software products) or services that will be provided.

The total transaction price for an arrangement with multiple performance obligations is allocated at contract inception to each distinct performance obligation in proportion to its stand-alone selling price.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

transaction price for an arrangement with multiple performance obligations is allocated at contract inception to each distinct performance obligation in proportion to its stand-alone selling price.

The stand-alone selling price is the price at which we would sell a promised good or service separately to a client.

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In addition to other factors considered, we assume primary responsibility for fulfillment in the arrangement, we assume inventory risk if the product is returned by the client, we set the price of the product charged to the client and we work closely with our clients to determine their hardware specifications.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Bill and Hold Transactions

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These warehousing services are designed to help our clients with inventory management challenges associated with technology roll-outs, product that is moving to end of life, or clients needing integrated stock available for immediate deployment.

The client is invoiced and title transfers to the client upon receipt of the product at our warehouse.

The client is invoiced, title transfers to the client, and revenue is recognized upon receipt of the product at our warehouse.

These product contracts are non-cancelable with customary credit terms beginning the date the product is received in our warehouse and the warranty periods begin on the date of invoice.

Revenue is recognized for the sale of the product to the client upon receipt of the product at our warehouse.

We recognize revenue from software sales on a gross basis at the point in time when the client acquires the right to use or copy software under license and control transfers to the client.

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For sales transactions for certain security software products that are sold with integral third-party delivered software maintenance, we record the software license on a net basis, as the agent in the arrangement.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Services Offerings

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We act as the agent in selling these software-as-a service subscription products.

We do not take control of the software products or assume any performance obligations to the clients related to the provisioning of the

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

offerings in the cloud.

We do not take control of the software products or assume any performance obligations to the clients related to the provisioning of the offerings in the cloud.

As a result, these sales are recorded on a net sales recognition basis.

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Specific revenue recognition practices for certain of our services offerings are described in further detail below.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Time and Materials Services Contracts

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We have concluded that we control all services under the contract and can direct the third-party sub-contractor to provide the requested services.

As such, we act as the principal in the transaction and record the services under a gross sales recognition basis, with the selling price being recorded in sales and our cost to the third-party service

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

provider being recorded in costs of goods sold.

For certain third-party service contracts in which we do not control the services prior to transferring to our clients because we are not responsible for fulfillment of the services, we have concluded that we are an agent in the transaction and record revenue on a net sales recognition basis.

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Selling and Administrative Expenses

Selling and administrative expenses include salaries and wages for teammates who are not directly associated with delivering services, bonuses and incentives, stock-based compensation expense, employee-related expenses, facility-related expenses, marketing and advertising expense, reduced by certain payments and credits received from partners related to shared marketing expense programs, as described under “Partner Funding” below, depreciation of property and equipment, professional fees, amortization of intangible assets, provisions for losses on accounts receivable and other operating expenses.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

property and equipment, professional fees, amortization of intangible assets, provisions for losses on accounts receivable and other operating expenses.

Partner Funding

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No single client accounted for more than 10 % of our consolidated net sales in 2022.

Purchases from Microsoft, TD Synnex (a distributor) and Ingram Micro (a distributor) accounted for approximately 22 %, 15 %, and 10 % respectively, of our aggregate purchases in 2021.

Purchases from Microsoft, Techdata (a distributor) and Ingram Micro (a distributor) accounted for approximately 22 %, 10 %, and 9 % respectively, of our aggregate purchases in 2022.

No other partner accounted for more than 10 % of purchases in 2022.

Our top five partners as a group for 2021 were Microsoft, TD Synnex (a distributor), Ingram Micro (a distributor), Dell and Cisco Systems, and approximately 60 % of our total purchases during 2021 came from this group of partners.

Our top five partners as a group for 2022 were Microsoft, Techdata (a distributor), Ingram Micro (a distributor), Dell and Cisco Systems, and approximately 55 % of our total purchases during 2022 came from this group of partners.

Although brand names and individual products are important to our business, we believe that competitive sources of supply are available in substantially all of our product categories such that, with the exception of Microsoft, we are not dependent on any single partner for sourcing products.

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These amounts were predominantly offset by partner funding earned pursuant to shared marketing expense programs recorded as a reduction of selling and administrative expenses, as discussed in “Partner Funding” above.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Stock-Based Compensation

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Forfeitures are recognized as they occur.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Foreign Currencies

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Dilutive RSUs, net of tax effect 251 399 327

The convertible senior notes 1,453 — —

Convertible senior notes 1,466 1,453 —

Weighted-average shares used to compute diluted EPS

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In the years ended December 31, 2022, 2021, and 2020 certain potential outstanding shares from the warrants relating to the Call Spread Transactions (as defined in Note 8) were not included in the diluted EPS calculations because their inclusion would have been anti-dilutive.

In the years ended December 31, 2020 and 2019 certain potential outstanding shares from the Notes were not included in the diluted EPS calculations because their inclusion would have been anti-dilutive.

In the year ended December 31, 2020 certain potential outstanding shares from the Notes were not included in the diluted EPS calculations because their inclusion would have been anti-dilutive.

Recently Issued Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

I n August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") ASU No.

2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”.

The new guidance is intended to simplify the accounting for certain convertible instruments with characteristics of both liability and equity.

The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments.

The guidance removed certain accounting models which separate the embedded conversion features from the host contract for convertible instruments.

As a result, after the adoption of this guidance, an entity’s convertible debt instrument will be wholly accounted for as debt.

The guidance also expands disclosure requirements for convertible instruments and simplifies areas of the guidance for diluted earnings-per-share calculations by requiring the use of the if-converted method.

The guidance is effective for fiscal years beginning after December 15, 2021 and can be adopted on either a fully retrospective or modified retrospective basis.

We adopted the new standard as of January 1, 2022 on a modified retrospective basis.

The cumulative effect adjustment from prior periods that we recognized in our consolidated balance sheet as of the adoption date as an adjustment to increase retained earnings was approximately $ 18,000,000 .

The guidance also expanded disclosure requirements for convertible instruments and simplified areas of the guidance for diluted earnings-per-share calculations by requiring the use of the if-converted method.

The guidance was effective for fiscal years beginning after December 15, 2021, and could have been adopted on either a fully retrospective or modified retrospective basis.

The Company adopted this standard effective January 1, 2022, using the modified retrospective approach.

Therefore, financial statements for the year ended December 31, 2022 are presented under the new standard, while the comparative periods are not adjusted and are reported in accordance with the Company's old method of accounting.

The adoption of ASU

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2020-06 significantly impacts our consolidated statements of operations and consolidated balance sheets as we no longer report accreted interest on the Notes and the full par value of the Notes is reflected as debt.

The cumulative effect adjustment from prior periods that we recognized in our consolidated balance sheet as adjustments to reduce additional paid in capital and increase retained earnings were $ 44,731,000 and $ 17,789,000 , respectively.

Had we followed the prior method of accounting for the three months ended December 31, 2022, both reported basic and diluted net EPS would decrease by $ 0.06 , from $ 2.24 and $ 2.13 , respectively, to $ 2.18 and $ 2.07 , respectively.

For the year ended December 31, 2022, reported basic and diluted EPS would decrease by $ 0.24 and $ 0.22 , respectively, from $ 8.04 and $ 7.66 , respectively, to $ 7.80 and $ 7.44 , respectively.

In December 2019, the FASB issued ASU No.

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The adoption of this new standard did not have a material effect on our consolidated financial statements.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(2) Receivables, Contract Liabilities and Performance Obligations

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The following table provides information about receivables and contract liabilities as of December 31, 2022 and 2021 (in thousands):

2021 December 31,

Current receivables, which are included in “Accounts receivable, net”

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Balances at December 31, 2020 $ 107,158

Recognition of the beginning contract liabilities to revenue, as the result of performance obligations satisfied

Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied $ ( 77,622 )

Cash received in advance and not recognized as revenue $ 86,531

Balances at December 31, 2021 $ 116,067

Recognition of the beginning contract liabilities to revenue, as the result of performance obligations satisfied

Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied ( 77,334 )

Cash received in advance and not recognized as revenue 63,324

Balances at December 31, 2022 $ 102,057

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Transaction price allocated to the remaining performance obligations

The following table includes estimated net sales related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2022 that are expected to be recognized in the future (in thousands):

2023 $ 109,824

2026 and thereafter 6,509

Total remaining performance obligations $ 162,203

With the exception of remaining performance obligations associated with our OneCall Support Services contracts which are included in the table above regardless of original duration, remaining performance obligations that have original expected duration of one year or less are not included in the table above.

With the exception of remaining performance obligations associated with our OneCall Support Services contracts which are included in the table above regardless of original duration, remaining performance obligations that have original expected durations of one year or less are not included in the table above.

Amounts not included in the table above have an average original expected duration of nine months.

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We do not believe that backlog as of any particular date is predictive of future results, therefore we do not include performance obligations under open cancellable purchase orders, which do not qualify for revenue recognition as of December 31, 2022, in the table above.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Assets recognized for costs of obtaining a contract with a customer

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During 2020, we completed the sale of our Irvine, California and El Segundo, California properties for approximately $ 14,218,000 and $ 26,404,000 , respectively.

We are using the proceeds from these sales to ready our property in Chandler, Arizona to be used as our global corporate headquarters.

We used the proceeds from these sales to ready our global corporate headquarters in Chandler, Arizona.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(4) Property and Equipment

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Depreciation and amortization expense related to property and equipment was $ 23,722,000 , $ 23,376,000 and $ 28,025,000 in 2022, 2021 and 2020, respectively.

On November 1, 2019, we completed the purchase of real estate in Chandler, Arizona for approximately $ 48,000,000 that we intend to use as our global corporate headquarters.

The property contains a building and some infrastructure in place that we expect will be ready for our use in 2022.

Included within the software, buildings and land values presented above for 2021 are assets in the process of being readied for use in the amounts of approximately $ 7,016,000 , $ 62,286,000 and $ 11,700,000 , respectively.

Included within the software and buildings values presented above for 2022 are assets in the process of being readied for use in the amounts of approximately $ 3,532,000 and $ 3,346,000 , respectively.

Depreciation on these assets will commence, as appropriate, when they are ready for use and placed in service.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The changes in the carrying amount of goodwill for the year ended December 31, 2022 are as follows (in thousands):

3 unchanged sentences

Goodwill acquired during 2021 — 4,865 — 4,865

— 4,865 — 4,865

Measurement period adjustments during 2021 5,711 ( 677 ) — 5,034

1 unchanged sentence

Balance at December 31, 2021 $ 403,591 $ 17,735 $ 7,020 $ 428,346

$ 403,476 $ 18,527 $ 7,365 $ 429,368

Goodwill acquired during 2022 69,923 — — 69,923

Foreign currency translation adjustment ( 2,991 ) ( 1,748 ) ( 497 ) ( 5,236 )

Balance at December 31, 2022 $ 470,523 $ 15,987 $ 6,523 $ 493,033

$ 403,591 $ 17,735 $ 7,020 $ 428,346

On June, 1, 2022 we acquired Hanu, which has been integrated into our North America business.

Under the acquisition method of accounting, the preliminary purchase price for the acquisition was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values.

The excess purchase price over fair value of net assets acquired of approximately $ 69,923,000 was recorded as goodwill in the North America reporting unit.

On February 28, 2020, we acquired vNext, which has been integrated into our EMEA business.

Under the acquisition method of accounting, the purchase price for the acquisition was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values.

Under the acquisition method of accounting, the purchase price for the acquisition was

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values.

The excess purchase price over fair value of net assets acquired was recorded as goodwill in the EMEA reporting unit.

The primary driver for this acquisition was to strengthen our capacity to deliver consulting and implementation services to support clients’ digital transformation initiatives.

On August 30, 2019, we acquired PCM, which has been integrated into our North America and EMEA businesses.

The excess purchase price over fair value of net assets acquired of approximately $ 253,894,000 , net of measurement period adjustment of $ 5,034,000 recognized in 2020, was recorded as goodwill in the North America and EMEA reporting units (see Note 20).

The primary driver for this acquisition was to help existing PCM clients in positioning their businesses for future growth, transforming and securing their data platforms, creating modern and mobile experiences for their workforce and optimizing the procurement of technology.

The addition of PCM complements our supply chain optimization solution offering, adding scale and clients in the mid-market and corporate space in North America.

During 2022, we periodically assessed whether any indicators of impairment existed which would require us to perform an interim impairment review.

9 unchanged sentences

Intangible assets, net $ 204,998 $ 214,788

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During 2022, we periodically assessed whether any indicators of impairment existed related to our intangible assets.

2 unchanged sentences

Future amortization expense for the remaining unamortized balance as of December 31, 2022 is estimated as follows (in thousands):

Years Ending December 31,

Years Ending December 31, Amortization

2023 $ 32,413

4 unchanged sentences

The amounts outstanding under these facilities are classified separately as accounts payable - inventory financing facilities in the accompanying consolidated balance sheets.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Inventory Financing Facilities

During 2021, we increased our maximum availability for vendor purchases under our unsecured inventory financing facility with MUFG Bank Ltd (“MUFG”) from $ 250,000,000 to $ 280,000,000 .

I n August 2021, we increased our maximum availability under our unsecured inventory financing facility with PNC Bank, N.A.

The aggregate availability for vendor purchases under the PNC facilities is $ 300,000,000 , including a new $ 25,000,000 facility in Canada (the "Canada facility").

In addition, we have a $ 40,000,000 unsecured inventory financing facility with Wells Fargo in EMEA (the "EMEA facility").

As of December 31, 2021, our combined inventory financing facilities had a total maximum capacity of $ 620,000,000 , of which $ 311,878,000 was outstanding at December 31, 2021.

We have an unsecured inventory financing facility with MUFG Bank Ltd (“MUFG”) for $ 280,000,000 .

During 2022, we increased our maximum availability for vendor purchases under our unsecured inventory financing facility with PNC Bank, N.A.

("PNC") from $ 300,000,000 to $ 375,000,000 , including the $ 25,000,000 facility in Canada (the "Canada facility").

We also increased our unsecured inventory financing facility with Wells Fargo in EMEA (the "EMEA facility") to $ 50,000,000 .

As of December 31, 2022, our combined inventory financing facilities had a total maximum capacity of $ 705,000,000 , of which $ 301,314,000 was outstanding.

The facilities remain in effect until they are terminated by any of the parties.

If balances are not paid within stated vendor terms, they will accrue interest at prime plus 2.00 % on the MUFG facility, Canadian Dollar Offered Rate plus 4.50 % on the Canada facility and LIBOR, EURIBOR, or SONIA, as applicable, plus 4.50 % and 0.25 % on the PNC (other than the Canada facility) and EMEA facilities, respectively.

The PNC facility allows for an alternative rate to be identified if LIBOR is no longer available.

Net amounts drawn down or repaid during the year on these facilities are classified within cash flows from financing activities in the accompanying consolidated statements of cash flows.

2 unchanged sentences

Imputed interest of $ 15,523,000 , $ 15,292,000 and $ 13,076,000 was recorded in 2022, 2021 and 2020, respectively .

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(8) Debt, Finance Leases and Other Financing Obligations

3 unchanged sentences

Finance leases and other financing obligations 102 63

Total 361,606 438,686

637,900 361,606

current portion of long-term debt ( 346,228 ) ( 36 )

Long-term debt $ 291,672 $ 361,570

On August 30, 2019, we entered into a credit agreement (the “credit agreement”) providing for a senior secured revolving credit facility (the “ABL facility”), which has an aggregate U.S.

dollar equivalent maximum borrowing amount of $ 1,200,000,000 , including a maximum borrowing capacity that could be used for borrowing in certain foreign currencies of $ 150,000,000 .

While the ABL facility has a stated maximum amount, the actual availability under the ABL facility is limited by specified percentages of eligible accounts receivable and certain eligible inventory, in each case as set forth in the credit agreement.

On July 22, 2022, we entered into the Third Amendment to the Credit Agreement (as amended, the "credit agreement") to modify our senior secured revolving credit facility (the “ABL facility”), increasing the maximum borrowing amount from $ 1,200,000,000 to $ 1,800,000,000 , including a maximum borrowing capacity that could be used for borrowing in certain foreign currencies of $ 350,000,000 and extending the maturity date.

From time to time and at our option, we may request to increase the aggregate amount available for borrowing under the ABL facility by up to an aggregate of the U.S.

1 unchanged sentence

The ABL facility is guaranteed by certain of our material subsidiaries and is secured by a lien on certain of our assets and certain of each other borrower’s and each guarantor’s assets.

The ABL facility matures on August 30, 2024.

The ABL facility now provides for an uncommitted first-in, last-out revolving facility in an aggregate amount of up to $ 100,000,000 .

The ABL facility now matures on July 22, 2027.

As of December 31, 2022, eligible accounts receivable and inventory were sufficient to permit access to the full $ 1,800,000,000 facility amount, of which $ 291,599,000 was outstanding.

The interest rates applicable to borrowings under the ABL facility are based on the average aggregate excess availability under the ABL facility as set forth on a pricing grid in the credit agreement.

Amounts outstanding under the ABL facility bear interest, payable quarterly, at a floating rate equal to LIBOR, EURIBOR, or SONIA, as applicable, plus a pre-determined spread of 1.25 % to 1.50 %.

Amounts outstanding under the ABL facility bear interest, payable quarterly, at a floating rate equal to SOFR, EURIBOR, AUD Rate, or SONIA, as applicable, plus a pre-determined

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

spread of 1.25 % to 1.50 %.

The floating interest rate applicable at December 31, 2022 was 5.47 % per annum for the ABL facility.

1 unchanged sentence

During 2022, weighted average borrowings under our ABL facility were $ 523,023,000 .

Interest expense associated with the ABL facility was $ 11,065,000 in 2021, including the commitment fee and amortization of deferred financing fees.

Interest expense associated with the ABL facility was $ 21,362,000 , $ 11,065,000 and $ 14,541,000 in 2022, 2021 and 2020, respectively, including the commitment fee and amortization of deferred financing fees.

The ABL facility contains customary affirmative and negative covenants and events of default.

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(1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price of our common stock per $ 1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

(3) if we call any or all of the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date;

1 unchanged sentence

On or after June 15, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, the holders may convert their notes at any time, regardless of the foregoing circumstances.

Our convertible notes exceeded the market price trigger of $ 88.82 in the fourth quarter of 2021 making the Notes convertible at the option of the holders through March 31, 2022.

None of the note holders have exercised their rights at this time.

The Notes exceeded the market price trigger of $ 88.82 in the fourth quarter of 2022 and as such, the Notes are convertible at the option of the holders through March 31, 2023.

All of the Notes remain outstanding at December 31, 2022.

The Notes are convertible at the option of the holders at December 31, 2022 and, if converted, we are required to settle the principal amount of the Notes in cash.

As such, the Notes balance net of unamortized debt issuance costs are classified as a current liability.

If the Notes continue to exceed the market price trigger in future periods, they will remain convertible at the option of the holders, and the principal amount will continue to be classified as current.

Upon conversion, we will pay or deliver cash equal to the principal amount of the notes, plus cash or shares of our common stock or a combination of the two for any additional amounts due.

2 unchanged sentences

In addition, following certain events that occur prior to the maturity date or following our issuance of a notice of redemption, the conversion rate is subject to an increase for a holder who elects to convert their notes in connection with those events or during the related redemption period in certain circumstances.

If we undergo a fundamental change, the holders may require us to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

If we undergo a fundamental change, the holders may require us to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100 % of the

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

As of December 31, 2022, none of the criteria for a fundamental change or a conversion rate adjustment had been met.

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The effective interest rate on the liability component of the Notes is 4.325 %.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the interest expense components resulting from the Notes reported within the consolidated statement of operations for the year ended December 31, 2022 and 2021 (in thousands):

2022 2021 2020

Contractual coupon interest $ 2,625 $ 2,625 $ 2,625

3 unchanged sentences

Also in January 2022, we filed an irrevocable settlement election notice with the Note holders to inform them of our election to settle the principal amount of the Notes in cash.

As a result of this election, at period ends where the market price, or other conversion triggers are met, the Notes will be classified in our consolidated balance sheet as current.

As a result of this election, at

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

period ends where the market price, or other conversion triggers are met, the Notes will be classified in our consolidated balance sheet as current.

Convertible Note Hedge and Warrant Transaction

22 unchanged sentences

The following table provides information about the financial statement classification of our lease balances reported within the consolidated balance sheets as of December 31, 2022 and December 31, 2021 (in thousands):

Leases Classification December 31,

2021 December 31,

Leases Classification 2022 2021

Operating lease assets Other assets $ 76,160 $ 72,605

8 unchanged sentences

The following table provides information about the financial statement classification of our lease expenses reported within the consolidated statement of operations for the year ended December 31, 2022 and 2021 (in thousands):

Lease cost Classification Year ended

December 31, 2021

December 31, 2020

Lease cost Classification 2022 2021

Operating lease cost (a) (b)

16 unchanged sentences

2027 10,140 — 10,140

18,261 — 18,261

After 2027 17,366 — 17,366

Total lease payments 91,445 28 91,473

1 unchanged sentence

Present value of lease liabilities $ 82,537 $ 28 $ 82,565

Operating lease payments include $ 13.4 million related to options to extend lease terms that are reasonably certain of being exercised.

The following table provides information about the remaining lease terms and discount rates applied as of December 31, 2022 and 2021:

December 31, 2021 December 31, 2020

Weighted average remaining lease term (years):

5 unchanged sentences

The following table provides other information related to leases for the year ended December 31, 2022 and 2021 (in thousands):

December 31, 2021 December 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:

15 unchanged sentences

The Plan was approved by our stockholders at our 2020 annual meeting on May 20, 2020 and, unless sooner terminated, will remain in place until May 20, 2030.

The Plan allows the Company to grant options, stock appreciation rights, stock awards, restricted stock, stock units (which may also be referred to as “restricted stock units”), performance shares, performance units, cash-based awards and other awards payable in cash or shares of common stock to eligible non-employee directors, employees and consultants.

The Plan allows the Company to grant options, stock appreciation rights, stock awards, restricted stock, stock units (which may also be referred to as “restricted stock units” or "RSUs"), performance shares, performance units, cash-based awards and other awards payable in cash or shares of common stock to eligible non-employee directors, employees and consultants.

Consultants and independent contractors are eligible if they provide bona fide services that are not related to capital raising or promoting or maintaining a market for the Company’s stock.

The Company grants service-based RSUs and performance-based RSUs to officers and certain employees under the Plan.

RSUs vest over a two to four year vesting period, while performance-based RSUs are also subject to the achievement of pre-established annual financial and/or strategic performance goals.

In February 2022, Insight also granted performance-based RSUs based on relative total shareholder return (“rTSR”) metric to officers and certain employees under the Plan.

The number of rTSR performance-based RSUs expected to be received at vesting will range from 0 % to 200 % of target, based on the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period.

The Monte Carlo Simulation model is used to determine the fair value at grant date.

The Company previously adopted the Amended Insight Enterprises, Inc.

7 unchanged sentences

As of December 31, 2022, of the 2,395,000 shares of common stock reserved and available for grant under the Plan, 2,200,747 shares of common stock remain available for grant under the Plan.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accounting for Restricted Stock Units

7 unchanged sentences

As of December 31, 2022, total compensation cost related to nonvested RSUs not yet recognized is $ 34,373,000 , which is expected to be recognized over the next 1.06 years on a weighted-average basis.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our RSU activity during 2022:

1 unchanged sentence

Nonvested at the beginning of year 690,688 $ 67.60

Granted 292,838 $ 85.07

Service-based RSUs granted 215,765 $ 98.79

Performance-based RSUs granted 40,724 $ 99.06

Performance-based RSUs (rTSR) granted 34,684 $ 99.05

Vested, including shares withheld to cover taxes ( 300,365 ) $ 61.57 $ 29,805,641 (a)

8 unchanged sentences

These net-share settlements had the effect of repurchases of our common stock as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to us.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(11) Income Taxes

17 unchanged sentences

$ 93,825 $ 73,212 $ 55,812

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following schedule reconciles the differences between the U.S.

3 unchanged sentences

Statutory federal income tax rate $ 78,631 21.0 % $ 61,437 21.0 % $ 47,975 21.0 %

$ 47,975 21.0 %

$ 44,460 21.0 %

State income tax expense, net of federal income tax benefit

13,962 3.7 10,666 3.6 6,280 2.7

Audits and adjustments, net 2,273 0.6 2,131 0.7 662 0.3

Change in valuation allowances ( 2,551 ) ( 0.7 ) 1,317 0.5 476 0.2

( 2,739 ) ( 1.3 )

Foreign income taxed at different rates 5,660 1.5 4,308 1.5 3,825 1.7

Research and development credits ( 4,352 ) ( 1.5 )

( 1,858 ) ( 0.8 )

( 5,438 ) ( 2.6 )

Research and other credits ( 3,870 ) ( 1.0 ) ( 4,352 ) ( 1.5 ) ( 1,858 ) ( 0.8 )

Other, net ( 280 ) — ( 2,295 ) ( 0.8 ) ( 1,548 ) ( 0.7 )

( 1,548 ) ( 0.7 ) 2,207 1.1

Effective tax rate $ 93,825 25.1 % $ 73,212 25.0 % $ 55,812 24.4 %

$ 55,812 24.4 %

$ 52,309 24.7 %

On March 27, 2020, the U.S.

3 unchanged sentences

as a result of the Tax Cuts and Jobs Act of 2017.

For foreign subsidiary earnings not yet taxed under these provisions, we continue to assert permanent reinvestment of earnings earned in foreign jurisdictions which impose a withholding tax on dividends and, accordingly, have not accrued any additional income or withholding taxes on the potential repatriation of these earnings.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

or withholding taxes on the potential repatriation of these earnings.

At the present time, given the various complexities involved in repatriating earnings, it is not practicable to estimate the amount of tax that may be payable if these earnings were not reinvested indefinitely.

13 unchanged sentences

Net deferred tax liabilities $ ( 27,221 ) $ ( 41,384 )

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The net non-current deferred tax assets and liabilities are as follows (in thousands):

9 unchanged sentences

At December 31, 2022 and 2021, our valuation allowances totaled $ 32,546,000 and $ 36,948,000 , respectively, relating primarily to state and foreign NOLs and foreign tax credits.

Changes to our valuation allowance for the year ended December 31, 2021 were driven by the expiration of foreign tax credits and changes in our foreign and state NOLs.

Changes to our valuation allowance for the year ended December 31, 2022 were driven by the expiration of foreign tax credits and changes in certain NOLs against which a valuation allowance had been recorded.

As of December 31, 2022 and 2021, we had approximately $ 14,814,000 and $ 12,664,000 , respectively, of unrecognized tax benefits.

1 unchanged sentence

The changes in the unrecognized tax benefits balance during the year reflect additions for tax positions taken in prior and current periods, net of reductions related to audit settlements and statute expirations.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In the future, if recognized, the liability associated with uncertain tax positions would affect our effective tax rate.

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The change in annual pre-tax earnings from operations resulting from a hypothetical 10% increase or decrease in the applicable interest rate would have been immaterial.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Although the Notes are based on a fixed rate, changes in interest rates could impact the fair market value of such notes.

9 unchanged sentences

The Company does not have a significant concentration of credit risk with any single counterparty.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(13) Fair Value Measurements

19 unchanged sentences

Total consolidated contribution expense under these plans was $ 27,827,000 , $ 25,270,000 and $ 11,974,000 for 2022, 2021 and 2020, respectively.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(15) Share Repurchase Programs

In each of February 2020 and February 2018, our Board of Directors authorized the repurchase of up to $ 50,000,000 of our common stock.

In May 2021, our Board of Directors authorized the repurchase of up to $ 125,000,000 of common stock, including the $ 25,000,000 that remained available from the February 2020 authorization.

As of December 31, 2021 , approximately $ 75,000,000 remained available under the May 2021 share repurchase plan and none remained available under the February 2018 share repurchase plan.

On May 6, 2021, we announced that our Board of Directors had authorized the repurchase of up to $ 125,000,000 of our common stock.

On September 19, 2022, we announced that our Board of Directors had authorized the repurchase of up to $ 300,000,000 of our common stock, including $ 50,000,000 that remained available from our prior authorization.

We initiated $ 200,000,000 of share repurchases under this authorization beginning in November 2022 which we expect to complete by March 31, 2023.

As of December 31, 2022, approximately $ 217,086,000 remained available for repurchases under this share repurchase plan.

Our share repurchases may be made on the open market, subject to Rule 10b-18 or in privately negotiated transactions, through block trades, through 10b5-1 plans or otherwise, at management’s discretion.

The number of shares purchased and the timing of the purchases will be based on market conditions, working capital requirements, general business conditions and other factors.

We intend to retire the repurchased shares.

The following table summarizes the shares of our common stock that we repurchased on the open market under these repurchase programs during the years ended December 31, 2022, 2022 and 2021, respectively, in thousands, except per share amounts:

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2022 1,109 $ 97.35 $ 108,000

1 unchanged sentence

2020 445 56.20 25,000

Total 1,483 $ 102,899

2,051 $ 183,000

All shares repurchased were retired.

9 unchanged sentences

In addition, vesting of outstanding nonvested RSUs would accelerate following a change in control.

If severance payments under the current employment agreements or plan payments were to become payable, the severance payments would generally range from one to twenty-four months of salary.

If severance payments under the current employment agreements or plan payments were to become payable, the severance payments would generally range from three to twenty-four months of salary.

Indemnifications

4 unchanged sentences

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

We have entered into separate indemnification agreements with certain of our executive officers and with each of our directors.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We have entered into separate indemnification agreements with certain of our executive officers and with each of our directors.

These agreements require us, among other requirements, to indemnify such officers and directors against expenses (including attorneys’ fees), judgments and settlements incurred by such individual in connection with any action arising out of such individual’s status or service as our executive officer or director (subject to exceptions such as where the individual failed to act in good faith or in a manner the individual reasonably believed to be in, or not opposed to, the best interests of the Company) and to advance expenses incurred by such individual with respect to which such individual may be entitled to indemnification by us.

be in, or not opposed to, the best interests of the Company) and to advance expenses incurred by such individual with respect to which such individual may be entitled to indemnification by us.

There are no pending legal proceedings that involve the indemnification of any of the Company’s directors or officers.

12 unchanged sentences

Legal expenses related to defense of any legal proceeding or the negotiations, settlements, rulings and advice of outside legal counsel in connection with any legal proceedings are expensed as incurred.

In connection with the acquisition of PCM, the Company has effectively assumed responsibility for PCM litigation matters, including various disputes related to PCM’s acquisition of certain assets of En Pointe Technologies in 2015.

In connection with the acquisition of PCM in 2019, the Company has effectively assumed responsibility for PCM litigation matters, including various disputes related to PCM’s acquisition of certain assets of En Pointe Technologies in 2015.

The seller of En Pointe Technologies and related entities providing various post-closing support functions to PCM have asserted claims regarding the sufficiency of earnout payments paid by PCM under the asset purchase agreement and the unwinding of the support functions post-closing.

8 unchanged sentences

Year ended December 31, 2022 $ 16,941 $ 6,066 $ ( 7,846 ) $ 15,161

$ 15,106 $ 7,862 $ ( 6,027 ) $ 16,941

Year ended December 31, 2021 $ 15,106 $ 7,862 $ ( 6,027 ) $ 16,941

$ 10,762 $ 10,163 $ ( 5,819 ) $ 15,106

Year ended December 31, 2020 $ 10,762 $ 10,163 $ ( 5,819 ) $ 15,106

$ 10,462 $ 5,079 $ ( 4,779 ) $ 10,762

INSIGHT ENTERPRISES, INC.

12 unchanged sentences

Our offerings in North America and certain countries in EMEA and APAC include IT 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.

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

Disaggregation of Revenue

55 unchanged sentences

None of our clients exceeded ten percent of consolidated net sales in 2022, 2021 or 2020.

A portion of our operating segments’ selling and administrative expenses arise from shared services and infrastructure that we have historically provided to them in order to realize economies of scale and to use resources efficiently.

These expenses, collectively identified as corporate charges, include senior management expenses, internal audit, legal, tax, insurance services, treasury and other corporate infrastructure expenses.

Charges are allocated to our operating segments, and the allocations have been

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

determined on a basis that we considered to be a reasonable reflection of the utilization of services provided to or benefits received by the operating segments.

These expenses, collectively identified as corporate charges, include senior management expenses, internal audit, legal, tax, insurance services, treasury and other corporate infrastructure expenses.

Charges are allocated to our operating segments, and the allocations have been determined on a basis that we considered to be a reasonable reflection of the utilization of services provided to or benefits received by the operating segments.

The tables below present information about our reportable operating segments (in thousands):

12 unchanged sentences

Severance and restructuring expenses 2,384 1,760 91 4,235

Acquisition and integration related expenses 1,715 257 — 1,972

Earnings from operations $ 350,436 $ 44,264 $ 19,000 $ 413,700

12 unchanged sentences

Severance and restructuring expenses ( 3,129 ) 1,328 167 ( 1,634 )

Acquisition-related expenses 2,004 204 — 2,208

Acquisition and integration related expenses — — — —

Earnings from operations $ 268,813 $ 46,918 $ 16,330 $ 332,061

14 unchanged sentences

Severance and restructuring expenses 9,273 2,989 132 12,394

Acquisition-related expenses 11,342 — — 11,342

Acquisition and integration related expenses 2,004 204 — 2,208

Earnings from operations $ 219,198 $ 40,368 $ 12,009 $ 271,575

The following table is a summary of our total assets by reportable operating segment (in thousands):

2021 December 31,

North America $ 5,219,480 $ 4,920,220

9 unchanged sentences

Net sales $ 6,237,901 $ 805,401 $ 1,297,277 $ 8,340,579

Total long-lived assets $ 110,161 $ 11,042 $ 24,813 $ 146,016

Net sales by geographic area are presented by attributing net sales to external customers based on the domicile of the selling location.

16 unchanged sentences

(20) Acquisitions

On August 30, 2019, we completed our acquisition of PCM, acquiring 100 percent of the issued and outstanding shares of PCM for a cash purchase price of $ 745,562,000 , which included cash and cash equivalents acquired of $ 84,637,000 and the payment of PCM’s outstanding debt.

PCM was a provider of multi-vendor technology offerings, including hardware, software and services to small, mid-sized and corporate/enterprise commercial clients, state, local and federal governments and educational institutions across the United States, Canada and the United Kingdom.

Based in El Segundo, California, PCM had 40 office locations in North America and the United Kingdom and more than 4,000 teammates.

We believe that this acquisition allowed us to help PCM clients in positioning their businesses for future growth, transforming and securing their data platforms, creating modern and mobile experiences for their workforce and optimizing the procurement of technology.

The addition of PCM complemented our supply chain expertise, adding scale and clients in the commercial space primarily in North America.

The following table summarizes the purchase price and the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Purchase price net of cash and cash equivalents acquired $ 660,925

Fair value of net assets acquired:

Current assets $ 531,941

Identifiable intangible assets - see description below 191,370

Property and equipment 91,213

Other assets 32,699

Current liabilities ( 369,183 )

Long-term liabilities, including deferred taxes ( 71,009 )

Total fair value of net assets acquired 407,031

Excess purchase price over fair value of net assets acquired ("goodwill") $ 253,894

Under the acquisition method of accounting, the total purchase price as shown in the table above was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values.

The excess of the purchase price over fair value of net assets acquired was recorded as goodwill.

In the fourth quarter of 2020, an adjustment of $ 56,700,000 was recorded to goodwill primarily due to a change in the customer relationships valuation based on updated information received for key inputs as well as an associated change in deferred taxes.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The estimated fair values of current assets and liabilities are based upon their historical costs on the date of acquisition due to their short-term nature.

The estimated fair values of the majority of property and equipment excluding acquired real estate are also based upon historical costs as they approximate fair value.

Certain long-term assets, including PCM’s IT systems, have been written down to the estimated fair value.

The estimated fair value of net assets acquired was approximately $ 407,031,000 , including $ 191,370,000 of identifiable intangible assets, consisting primarily of customer relationships of $ 178,900,000 .

The fair value of the customer relationships were determined using the multiple-period excess earnings method.

The identifiable intangibles resulting from the acquisition are amortized using the straight-line method over the following estimated useful lives:

Intangible Assets Estimated Economic Life

Customer relationships 10 - 12 years

Trade name 1 Year

Non-compete agreements 2 - 3 Years

Goodwill of $ 253,894,000 , which was recorded in our North America and EMEA operating segments, represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed from PCM.

The goodwill is not amortized and will be tested for impairment annually in the fourth quarter of our fiscal year.

The addition of the PCM technical employees to our team and the opportunity to grow our business are the primary factors making up the goodwill recognized as part of the transaction.

None of the goodwill is tax deductible.

The purchase price allocation was finalized during the third quarter of 2020.

We have consolidated the results of operations for PCM since its acquisition on August 30, 2019.

The following table reports pro forma information as if the acquisition of PCM had been completed at the beginning of the earliest period presented (in thousands, except per share amounts):

Year Ended December 31,

Net sales As reported $ 7,731,190

Pro forma $ 9,207,512

Net earnings As reported $ 159,407

Pro forma $ 171,102

Diluted earnings per share As reported $ 4.43

Pro forma $ 4.76

(21) Subsequent Events

In February 2022, we increased our maximum availability under our unsecured inventory financing facility with PNC.

The aggregate availability for vendor purchases under the PNC facilities is $ 375,000,000 , including the $ 25,000,000 Canada facility.

Effective June 1, 2022, we acquired 100 percent of the issued and outstanding shares of Hanu Software Solutions, Inc.

and Hanu Software Solutions (India) Private Ltd.

Hanu, a global leading cloud technology services and solutions provider, provides cloud solutions in the areas of applications and infrastructure, data and artificial intelligence, and cloud security to clients.

Hanu is recognized as one of Microsoft’s top public cloud service partners globally.

We believe this acquisition strengthens our service capabilities as a cloud solutions provider and is also a strategic investment in expanding our presence in India.

The preliminary fair value of net assets acquired was approximately $ 22,326,000 , including $ 24,750,000 of identifiable intangible assets, consisting primarily of customer relationships that will be amortized using the straight line method over the estimated economic life of ten years .

The preliminary purchase price was allocated using the information currently available.

Goodwill acquired approximated $ 69,923,000 which was recorded in our North America operating segment.

We have not finalized the purchase price allocation in relation to this acquisition as work on certain liabilities, including tax related balances, is not yet complete.

We do not believe that the completion of this work will materially modify the preliminary purchase price allocation.

We expect to complete our purchase price allocation prior to June 1, 2023.

We consolidated the results of operations for Hanu within our North America operating segment beginning on June 1, 2022, the effective date of the acquisition.

Our historical results would not have been materially affected by the acquisition of Hanu and, accordingly, we have not presented pro forma information as if the acquisition had been completed at the beginning of each period presented in our consolidated statement of operations.

INSIGHT ENTERPRISES, INC.

2 unchanged sentences

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What changed 10-K

Item 8. Financial Statements and Supplementary Data