What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-22 compared with 2023-02-16 · 376 added, 210 removed, 1019 unchanged (37% of the section changed)

12 unchanged sentences

We have audited the accompanying consolidated balance sheets of Insight Enterprises, Inc.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S.

and subsidiaries (the Company) as of December 31, 2023 and December 31, 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

17 unchanged sentences

(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.

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.

Evaluation of revenue recognition

28 unchanged sentences

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 22, 2024 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired SADA Systems, LLC during 2023, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, SADA Systems, LLC’s internal control over financial reporting associated with approximately 15% of total assets as of December 31, 2023 and less than 1% of net sales for the year ended December 31, 2023 included in the consolidated financial statements of the Company as of and for the year ended December 31, 2023.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of SADA Systems, LLC.

Basis for Opinion

10 unchanged sentences

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

11 unchanged sentences

Inventories 184,605 265,154

Contract assets, net 120,518 7,909

Other current assets 189,158 191,597

Total current assets 4,331,301 $ 3,900,668

Long-term contract assets, net

Property and equipment, net 210,061 204,260

1 unchanged sentence

Intangible assets, net 369,687 204,998

Long-term accounts receivable

412,666 160,818

Other assets 145,510 148,804

9 unchanged sentences

Deferred income taxes 27,588 32,844

Long-term accounts payable

353,794 127,004

Other liabilities 203,335 156,586

35 unchanged sentences

Interest expense, net 41,124 39,497 40,516

Other (income) expense, net ( 230 ) ( 1,012 ) 1,529

Other expense (income), net

817 ( 230 ) ( 1,012 )

Earnings before income taxes 377,854 374,433 292,557

14 unchanged sentences

Net earnings $ 281,309 $ 280,608 $ 219,345

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 17,190 ( 31,708 ) ( 11,639 )

10 unchanged sentences

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

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 215 2 — — ( 10,797 ) — — ( 10,795 )

2 unchanged sentences

Retirement of treasury stock ( 1,634 ) ( 16 ) 1,634 217,108 ( 15,537 ) — ( 201,555 ) —

Excise tax on stock repurchases — — — — ( 1,882 ) — — ( 1,882 )

Foreign currency translation adjustments, net of tax — — — — — 17,190 — 17,190

2 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 )

26 unchanged sentences

Deferred income taxes ( 13,080 ) ( 9,251 ) 11,858

Amortization of debt discount and issuance costs 6,105 16,875 16,217

Amortization of debt issuance costs 4,870 6,105 16,875

Other adjustments ( 1,583 ) 2,035 ( 3,259 )

2 unchanged sentences

Decrease (increase) in inventories 75,729 53,711 ( 148,941 )

Increase in contract assets ( 13,840 ) ( 3,152 ) ( 4,757 )

(Increase) decrease in long-term accounts receivable

( 126,850 ) ( 17,015 ) 11,750

Decrease (increase) in other assets

34,061 48,025 ( 25,093 )

Increase in accounts payable 216,229 53,607 303,395

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

Increase (decrease) in long-term accounts payable

111,790 7,931 ( 18,454 )

(Decrease) increase in accrued expenses and other liabilities

( 35,518 ) ( 3,518 ) 8,517

Net cash provided by operating activities:

4 unchanged sentences

Acquisitions, net of cash and cash equivalents acquired ( 481,464 ) ( 68,248 ) —

Net cash (used in) provided by investing activities:

Net cash used in investing activities:

( 505,201 ) ( 137,841 ) ( 21,074 )

2 unchanged sentences

Repayments on ABL revolving credit facility ( 4,288,036 ) ( 4,433,510 ) ( 4,040,496 )

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

Net repayments under inventory financing facilities ( 70,408 ) ( 8,307 ) ( 14,355 )

Repurchases of common stock ( 217,108 ) ( 107,922 ) ( 50,000 )

Earnout and acquisition related payments ( 15,615 ) — —

Other payments ( 13,141 ) ( 14,466 ) ( 10,030 )

Net cash provided by (used in) financing activities:

Net cash (used in) provided by financing activities:

( 16,712 ) 114,007 ( 161,385 )

8 unchanged sentences

Description of Business

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

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

We serve these clients in North America;

2 unchanged sentences

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 35 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.

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

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

5 unchanged sentences

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

Effective December 1, 2023, we acquired SADA Systems, LLC ("SADA"), a provider of cloud consultancy and technical services, for a preliminary cash purchase price of approximately $ 398,589,000 , net of cash and cash equivalents acquired of $ 24,701,000 and excluding the estimated fair value of earn outs, reported in other liabilities, with a range of payouts through 2027 of $ 0 to $ 390,000,000 .

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

Effective August 17, 2023, we acquired Amdaris Group Limited (“Amdaris”), a software development and digital services specialist, for a preliminary cash purchase price, net of cash and cash equivalents acquired, of approximately $ 82,875,000 , and excluding the estimated fair value of earn outs, reported in other liabilities, with a range of payouts through 2026 of $ 0 to $ 54,391,000 .

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.

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).

(collectively, “Hanu”), a global leading cloud technology services and solutions provider, for a cash purchase price, net of cash and cash equivalents acquired, of approximately $ 68,248,000 , excluding the earn out and hold backs for representations and warranties.

Our results of operations include the results of Hanu, Amdaris and SADA from their respective acquisition dates.

(See Note 20 for a discussion of our acquisitions).

Principles of Consolidation and Presentation

3 unchanged sentences

Included in our accounts receivable, net balance at December 31, 2023 and 2022 is $ 26,025,000 and $ 11,069,000 , respectively, of accounts receivable from an unconsolidated affiliate.

References to “the Company,” “Insight,” “we,” “us,” “our” and other similar words refer to Insight Enterprises, Inc.

References to “the Company,” “Insight,” “we,” “us,” “our” and other

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

similar words refer to Insight Enterprises, Inc.

and its consolidated subsidiaries, unless the context suggests otherwise.

Certain amounts in the prior year’s consolidated financial statements and related footnotes thereto have been reclassified to conform with the current year presentation.

Acquisition Accounting

3 unchanged sentences

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.

4 unchanged sentences

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.

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 and contract assets, 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.

Cash, Cash Equivalents and Restricted Cash

7 unchanged sentences

All cash receipts/payments with third parties directly to/from restricted cash accounts are reported as an operating, investing or financing cash flow, based on the nature of the transaction.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts Receivable

We establish an allowance for doubtful accounts to reflect our best estimate of probable losses inherent in our accounts receivable balance.

The allowance is based on our evaluation of the aging of the receivables, historical write-offs and the current economic environment.

We write off individual accounts against the reserve when we no longer believe that it is probable that we will collect the receivable because we become aware of a client’s or partner’s inability to meet its financial obligations.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

financial obligations.

Such awareness may be as a result of bankruptcy filings, or deterioration in the client’s or partner’s operating results or financial position.

Allowance for Contract Assets

We estimate our allowances for credit losses on contract assets using relevant available information from internal and external sources, related to past events, current conditions and reasonable and supportable forecasts.

Historical credit loss experience provides the basis for the estimation of expected credit losses.

Probability of default rates are published quarterly by third-party credit agencies.

Adjustments to our initial credit risk ratings may take into account various customer specific factors, including estimated loss given default, the locations in which the customer is operating and macroeconomic conditions.

These adjustments result in our internal risk rating categorization as low, moderate or high, as disclosed in Note 2.

We state inventories, principally purchased IT hardware, at the lower of weighted average cost (which approximates cost under the first-in, first-out method) or net realizable value.

3 unchanged sentences

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

11 unchanged sentences

When an indication exists that the carrying amount of long-lived 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.

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.

Such impairment test is based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

12 unchanged sentences

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

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.

Long-term Accounts Receivable and Contract Assets

We recognize long-term accounts receivable, including unbilled receivables, related to multi-year contracts when we have completed our performance obligations under the contract and where our right to receive consideration from the client is unconditional and based on the passage of time only.

We recognize long-term contract assets related to multi-year contracts when we have completed our performance obligations under the contract but do not have an unconditional right to receive consideration.

When our right to consideration is contingent upon other factors, such as a client consuming future services under the contract we recognize a contract asset until our right to receive consideration becomes unconditional.

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

2 unchanged sentences

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.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

20 unchanged sentences

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.

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 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.

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

2 unchanged sentences

We recognize hardware product revenue on a gross basis at the point in time when a client takes control of the hardware, which typically occurs when title and risk of loss have passed to the client at its destination.

Our selling terms and conditions specify Free On Board (“F.O.B.”) destination contractual terms such that control is transferred from the Company at the point in time when the product is received by the client.

Our selling terms and conditions typically specify Free On Board (“F.O.B.”) destination contractual terms such that control is transferred from the Company at the point in

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

time when the product is received by the client.

The transaction price for hardware sales is adjusted for estimated product returns that we expect to occur under our return policy based upon historical return rates.

14 unchanged sentences

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

4 unchanged sentences

Under net sales recognition, the cost of the software maintenance agreement is recorded as a reduction to sales, resulting in net sales equal to the gross profit on the transaction, and there are no costs of goods sold.

Because we are acting as the software publisher’s agent, revenue is recognized when the parties agree to the initial purchase, renewal or extension as our agency services are then complete.

Because we are acting as the software publisher’s agent, revenue is recognized

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

when the parties agree to the initial purchase, renewal or extension as our agency services are then complete.

We report all fees earned from activities reported net within our services net sales category in our consolidated statements of operations.

22 unchanged sentences

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

2 unchanged sentences

We recognize revenue on fixed fee professional services contracts using a proportional performance method of revenue recognition based on the ratio of direct labor and other allocated costs incurred to total estimated direct labor and other allocated costs.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

OneCall Support Services Contracts

16 unchanged sentences

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

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

1 unchanged sentence

Partner funding received pursuant to volume sales incentive programs is recognized as it is earned as a reduction to costs of goods sold.

Partner funding received pursuant to volume purchase incentive programs is allocated as a reduction to inventories based on the applicable incentives earned from each partner and is recorded in cost of goods sold as the related inventory is sold.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

inventory is sold.

Partner funding received pursuant to shared marketing expense programs is recorded as it is earned as a reduction of the related selling and administrative expenses in the period the program takes place if the consideration represents a reimbursement of specific, incremental, identifiable costs.

5 unchanged sentences

No single client accounted for more than 10% of our consolidated net sales in 2023.

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.

Purchases from Microsoft and TD Synnex accounted for approximately 27 % and 12 %, respectively, of our aggregate purchases in 2023.

No other partner accounted for more than 10% of purchases in 2023.

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.

Our top five partners as a group for 2023 were Microsoft, TD Synnex (a distributor), Cisco Systems, Ingram Micro (a distributor) and Dell, and approximately 60 % of our total purchases during 2023 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.

9 unchanged sentences

Forfeitures are recognized as they occur.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Foreign Currencies

6 unchanged sentences

The resulting translation adjustments are recorded directly in accumulated other comprehensive income, net of tax – foreign currency translation adjustments as a separate component of stockholders’ equity.

Net foreign currency transaction gains/losses, including transaction gains/losses on intercompany balances that are not of a long-term investment nature and non-functional currency cash balances, are reported in other expense (income), net within non-operating (income) expense in our consolidated statements of operations.

Net foreign currency transaction gains/losses, including transaction gains/losses on intercompany balances that are not of a long-term investment nature and non-functional

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

currency cash balances, are reported in other expense (income), net within non-operating (income) expense in our consolidated statements of operations.

Income taxes are accounted for under the asset and liability method.

19 unchanged sentences

Diluted EPS is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding RSUs and certain shares underlying our outstanding convertible senior notes (the "Notes").

Dilutive potential common shares include outstanding RSUs and certain shares underlying our outstanding convertible senior notes (the "Notes") and the warrants relating to the Call Spread Transactions (as defined in Note 8), as applicable.

A reconciliation of the denominators of the basic and diluted EPS calculations follows (in thousands, except per share data):

12 unchanged sentences

Diluted $ 7.55 $ 7.66 $ 5.95

In 2022, 2021 and 2020, approximately 39,000 , 2,000 and 122,000 , respectively, of our RSUs were not included in the diluted EPS calculations because their inclusion would have been anti-dilutive.

For the years ended December 31, 2023, 2022 and 2021, approximately 54,000 , 39,000 and 2,000 , respectively, of our RSUs were excluded from the diluted EPS calculations because their inclusion would have been anti-dilutive.

These share-based awards could be dilutive in the future.

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 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.

For the years ended December 31, 2022, and 2021, certain potential outstanding shares from the warrants relating to the Call Spread Transactions were excluded from the diluted EPS calculations because their inclusion would have been anti-dilutive.

Recently Issued Accounting Standards

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

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures", which requires public entities to disclose information about their reportable segments' significant expenses on an interim and annual basis.

The amendments aim to improve interim disclosure requirements, clarify situations where an entity can reveal multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and include other disclosure requirements.

The main objective of the amendments is to assist investors in understanding the entity's overall performance and evaluate potential future cash flows.

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 with early adoption being permitted.

We adopted this standard effective January 1, 2024 and it did not have a material effect on the Company's consolidated financial statements or disclosures.

In September 2022, the FASB issued ASU No.

2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50)”.

This standard is intended to address requests from stakeholders

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

for information about an entity’s use of supplier finance programs and their effect on the entity’s working capital, liquidity, and cash flows.

The guidance was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll-forward information requirement, which is effective for fiscal years beginning after December 15, 2023.

The Company adopted this standard effective January 1, 2023, with the exception of the roll-forward information requirement.

The adoption did not have a material effect on the Company's disclosures.

In October 2021, the FASB issued ASU No.

2021-08, "Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers", which clarifies how to properly account for deferred revenue in a business combination.

The amendments require an acquirer to use the guidance in ASC 606, Revenue from Contracts with Customers, rather than using fair value, when recognizing and measuring contract assets and contract liabilities related to customer contracts assumed in a business combination.

The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

The Company adopted this standard effective January 1, 2023 and the adoption did not have a material effect on the Company's consolidated financial statements or disclosures.

In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU No.

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

5 unchanged sentences

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

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

The adoption of ASU 2020-06 significantly impacted our consolidated statements of operations and consolidated balance sheet as we no longer report accreted interest on the Notes.

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 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.

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.

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.

2019-12, “Simplifying the Accounting for Income Taxes.” The new standard is intended to simplify various aspects of accounting for income taxes by removing specific exceptions and amending certain requirements.

The new standard is effective for interim and annual periods beginning after December 15, 2020, and early adoption is permitted.

We adopted the new standard as of January 1, 2021.

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

(2) Receivables, Contract Liabilities and Performance Obligations

(2) Receivables, Contract Assets, Contract Liabilities and Performance Obligations

Contract Balances

2 unchanged sentences

$ 3,568,290 $ 3,272,371

Non-current receivables, which are included in “Other assets” 161,837 147,139

Contract assets, net

120,518 7,909

Long-term accounts receivable

412,666 160,818

Long-term contract assets

$ 132,780 $ —

Contract liabilities, which are included in “Accrued expenses and other current liabilities” and “Other liabilities”

$ 107,217 $ 102,057

Significant changes in the contract liabilities balances during the year ended December 31, 2022 are as follows (in thousands):

Increase (Decrease)

Significant changes in the contract assets balances during the years ended December 31, 2023 and 2022 are as follows (in thousands):

Balances at December 31, 2021 $ 4,757

Reclassification of beginning contract assets to receivables, as a result of rights to consideration becoming unconditional

Contract assets recognized, net of reclassification to receivables 7,909

Balances at December 31, 2022 $ 7,909

Contract assets acquired through business combination

Reclassification of beginning contract assets to receivables, as a result of rights to consideration becoming unconditional

Contract assets recognized, net of reclassification to receivables 51,350

Balances at December 31, 2023 $ 272,287

Contract assets consist of amounts the Company is entitled to for the resale of third-party consumption-based services, prior to payment becoming unconditional.

In these transactions, the Company invoices clients for the gross amount of consideration it is responsible to collect,

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

including amounts ultimately passed on to the third-party service providers.

As of December 31, 2023 contract assets, net of allowances, were $ 253,298,000 .

Gross contract assets by our internal risk ratings as of December 31, 2023 are summarized as follows (in thousands):

Contract assets

Moderate risk

Total contract assets

Significant changes in the liabilities balances during the years ended December 31, 2023 and 2022 are as follows (in thousands):

Balances at December 31, 2021 $ 116,067

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

4 unchanged sentences

Balances at December 31, 2023 $ 107,217

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Transaction price allocated to the remaining performance obligations

5 unchanged sentences

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

Additionally, for our time and material services contracts, whereby we have the right to consideration from a client in an amount that corresponds directly with the value to the client of our performance completed to date, we recognized revenue in the amount to which we have a right to invoice as of December 31, 2022 and do not disclose information about related remaining performance obligations in the table above.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

information about related remaining performance obligations in the table above.

Our open time and material contracts at December 31, 2023, have an average expected duration of 24 months.

8 unchanged sentences

(3) Assets Held for Sale

During 2021, we completed the sale of our three properties in Tempe, Arizona and the sale of our property in Woodbridge, Illinois for total net proceeds of approximately $ 27,211,000 .

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

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During 2023, we completed the sale of our properties in Montreal, Canada and Sheffield, United Kingdom for the total net proceeds of approximately $ 15,476,000 .

During 2022, we had no assets held for sale.

(4) Property and Equipment

11 unchanged sentences

Depreciation and amortization expense related to property and equipment was $ 26,245,000 , $ 23,722,000 and $ 23,376,000 in 2023, 2022 and 2021, respectively.

Included within the buildings and equipment values presented above for 2023 are assets in the process of being readied for use in the amounts of approximately $ 11,200,000 and $ 1,500,000 , 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.

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.

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, 2023 are as follows (in thousands):

9 unchanged sentences

Balance at December 31, 2023 $ 588,883 $ 88,848 $ 6,614 $ 684,345

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

On December 1, 2023, we acquired SADA, which is reported in 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 $ 117,022,000 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

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.

The primary driver for this acquisition was to strengthen our ability to benefit from the growing trend of multicloud adoption, and to accelerate our progress toward our strategic objective of growing cloud services and solutions.

On August, 17, 2023 we acquired Amdaris, which is reported in our EMEA business.

The excess purchase price over fair value of net assets acquired of approximately $ 71,698,000 was recorded as goodwill in the EMEA reporting unit.

The primary driver for this acquisition was to expand our capacity to deliver services to support clients’ digital transformation initiatives in EMEA.

On June, 1, 2022 we acquired Hanu, which is reported in our North America 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.

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.

During 2023, we periodically assessed whether any indicators of impairment existed which would require us to perform an interim impairment review.

2 unchanged sentences

The results of the qualitative goodwill impairment test indicated that the fair values of our North America, EMEA and APAC reporting units were in excess of their respective carrying values.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(6) Intangible Assets

16 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

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.

During 2022, we increased our maximum availability 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").

1 unchanged sentence

As of December 31, 2023, our combined inventory financing facilities had a total maximum capacity of $ 705,000,000 , of which $ 231,850,000 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.

Interest does not accrue on accounts payable under these facilities provided the accounts payable are paid within stated vendor terms (typically 60 days);

however, we impute interest on the average daily balance outstanding during these stated vendor terms based on our incremental borrowing rate during the period.

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

In the second quarter of 2023, the Company transitioned the reference rate for invoices issued in U.S.

Dollars under the PNC facility from LIBOR to the Term Secured Overnight

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Financing Rate ("Term SOFR") benchmark provisions.

If balances are not paid within stated vendor terms (typically 60 days), 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 Term SOFR, EURIBOR, or SONIA, as applicable, plus 4.50 % and 0.25 % on the PNC (other than the Canada facility) and EMEA facilities, respectively.

Amounts outstanding under these facilities are classified separately as accounts payable – inventory financing facilities in the accompanying consolidated balance sheets and within cash flows from financing activities in the accompanying consolidated statements of cash flows.

We impute interest on the average daily balance outstanding during these stated vendor terms based on our incremental borrowing rate during the period.

Imputed interest of $ 13,276,000 , $ 15,523,000 and $ 15,292,000 was recorded in 2023, 2022 and 2021, respectively .

11 unchanged sentences

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

The ABL facility matures on July 22, 2027.

As of December 31, 2023, eligible accounts receivable and inventory were sufficient to permit availability to $ 1,709,888,000 of the full $ 1,800,000,000 facility amount, of which $ 591,500,000 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 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 %.

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 spread of 1.25 % to 1.50 %.

The floating interest rate applicable at December 31, 2023 was 6.69 % per annum for the ABL facility.

2 unchanged sentences

Interest expense associated with the ABL facility was $ 30,116,000 , $ 21,362,000 and $ 11,065,000 in 2023, 2022 and 2021, respectively, including the commitment fee and amortization of deferred financing fees.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

If a default occurs (subject to customary grace periods and materiality thresholds) under the credit agreement, certain actions may be taken, including, but not limited to, possible termination of commitments and required payment of all outstanding principal amounts plus accrued interest and fees payable under the credit agreement.

Convertible Senior Notes

Convertible Senior Notes due 2025

In August 2019, we issued $ 350,000,000 aggregate principal amount of Notes that mature on February 15, 2025.

2 unchanged sentences

Holders of the Notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding June 15, 2024, under the following circumstances:

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

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

2 unchanged sentences

The Notes exceeded the market price trigger of $ 88.82 in the fourth quarter of 2023 and as such, the Notes are convertible at the option of the holders through March 31, 2024.

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

The Notes are convertible at the option of the holders at December 31, 2023 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.

As such, the Notes balance net of unamortized debt issuance costs is 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.

The conversion rate will initially be 14.6376 shares of common stock per $ 1,000 principal amount of notes (equivalent to an initial conversion price of approximately $ 68.32 per share of common stock).

Upon conversion, we will pay cash equal to the principal amount of the Notes, plus shares of our common stock for any additional amounts due.

The conversion rate will initially be 14.6376 shares of common stock per $ 1,000 principal amount of the Notes (equivalent to an initial conversion price of approximately $ 68.32 per share of common stock).

The conversion rate is subject to change in certain circumstances and will not be adjusted for any accrued and unpaid interest.

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

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.

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.

As of December 31, 2023, none of the criteria for a fundamental change or a conversion rate adjustment had been met.

The maximum number of shares issuable upon conversion, including the effect of a fundamental change and subject to other conversion rate adjustments, would be 6,788,208 .

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We may redeem for cash all or any portion of the Notes, at our option, on or after August 20, 2022 if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

No sinking fund is provided for the Notes.

In September 2023, an individual Note holder exercised their option to convert their Notes in the aggregate principal amount of $ 16,895,000 , which was settled in January 2024.

As a result, the principal amount of the Notes was settled in cash with additional amounts due being settled in shares of our common stock.

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

2 unchanged sentences

Principal $ 350,000 $ 350,000

debt discount and issuance costs, net of accumulated accretion ( 3,801 ) ( 41,457 )

debt issuance costs, net of accumulated amortization

( 2,012 ) ( 3,801 )

Net carrying amount $ 347,988 $ 346,199

Equity, net of deferred tax $ — $ 44,731

The remaining life of the debt discount and issuance cost accretion is approximately 2.12 years.

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

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):

The following table summarizes the interest expense components resulting from the Notes reported within the consolidated statement of operations for the years ended December 31, 2023 and 2022 (in thousands):

2023 2022 2021

8 unchanged sentences

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

The remaining life of the debt issuance cost accretion is approximately 1.12 years.

The effective interest rate on the principal of the Notes is 0.75 %.

Interest expense resulting from the Notes reported within the consolidated statement of operations for the years ended December 31, 2023, 2022 and 2021 is made up of contractual coupon interest and amortization of debt issuance costs.

Convertible Note Hedge and Warrant Transaction

In connection with the issuance of the Notes, we entered into certain convertible note hedge and warrant transactions (the “Call Spread Transactions”) with respect to the Company’s common stock.

In connection and concurrent with the issuance of the Notes, we entered into certain convertible note hedge and warrant transactions (the "Call Spread Transactions") with respect to the Company’s common stock.

The convertible note hedge consists of an option to purchase up to 5,123,160 common stock shares at a price of $ 68.32 per share.

7 unchanged sentences

From time to time, we enter into finance leases and other financing agreements with financial intermediaries to facilitate the purchase of products from certain vendors.

The current and long-term portions of our finance lease and other financing obligations are included in the current and long-term portions of long-term debt in the table above and in our consolidated balance sheets as of December 31, 2022 and 2021.

The current and long-term portions of our other financing obligations are included in the current and long-term portions of long-term debt in the table above and in our consolidated balance sheets as of December 31, 2023 and 2022.

We lease office space, distribution centers, land, vehicles and equipment.

17 unchanged sentences

Operating lease liabilities Other liabilities 71,033 63,324

Finance lease liabilities Long-term debt — 27

Total lease liabilities $ 91,615 $ 82,565

(a) Recorded net of accumulated amortization of $ 48,000 and $ 27,000 as of December 31, 2022 and 2021, respectively.

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):

(a) Recorded net of accumulated amortization of $ 48,000 as of December 31, 2022.

Lease cost Classification 2023 2022

Operating lease cost (a) (b)

Operating lease cost (a)

Selling and administrative expenses $ 24,054 $ 23,986

4 unchanged sentences

Total lease cost $ 24,070 $ 24,017

(a) Includes immaterial amounts recorded to cost of goods sold.

(b) Excludes short-term and variable lease costs, which are immaterial.

Excludes short-term and variable lease costs, which are immaterial.

INSIGHT ENTERPRISES, INC.

1 unchanged sentence

Future minimum lease payments under non-cancelable leases as of December 31, 2023 are as follows (in thousands):

Operating leases Finance leases Total

2023 $ 21,719 $ 28 $ 21,747

2024 16,614 — 16,614

2025 13,568 — 13,568

2026 12,038 — 12,038

Operating leases

2024 $ 23,811

10 unchanged sentences

Finance leases — 1.49

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

The following table provides other information related to leases for the years ended December 31, 2023 and 2022 (in thousands):

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

Operating cash flows from operating leases $ 24,088 $ 23,674

Leased assets obtained in exchange for new operating lease liabilities

Leased assets obtained in exchange for new operating lease liabilities (a)

28,675 22,725

(a) Includes operating lease assets acquired as part of the Amdaris and SADA acquisitions of $ 2,881,000 and $ 2,032,000 , respectively.

INSIGHT ENTERPRISES, INC.

13 unchanged sentences

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.

We grant service-based RSUs and performance-based RSUs to officers and certain employees under the Plan.

RSUs generally 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.

Beginning in February 2022, we also granted performance-based RSUs based on a 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.

In 2023, we granted performance-based RSUs to our officers and certain employees (the "Ambition" grant).

The number of RSUs granted was based on an INA Adjusted EFO margin financial metric, some of which also have an Absolute TSR ("aTSR") multiplier applied to the number of shares granted.

These performance-based RSUs will be received at vesting, and their amount will range from 0 % to 100 % of the target, with a multiplier of up to 300 % applied to certain grants.

The performance period for these grants is from January 1, 2023, to December 31, 2024.

Additionally, the performance-based RSUs based on the aTSR multiplier will vest 50 % on the two-year anniversary of the grant, and the remaining 50 % will vest on the three-year anniversary of the grant date.

The Company previously adopted the Amended Insight Enterprises, Inc.

4 unchanged sentences

No further awards will be made under the Prior Plan.

The Plan is administered by the Compensation Committee of Insight’s Board of Directors, and, except as provided below, the Compensation Committee has the exclusive authority to administer the Plan, including the power to determine eligibility, the types of awards to be granted, the price and the timing of awards.

Under the Plan, the Compensation Committee may delegate some of its authority to our Chief Executive Officer to grant awards to individuals other than individuals who are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended.

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)

As of December 31, 2023, there are 1,975,445 shares of common stock available for grant under the Plan out of the 2,200,747 shares of common stock that were reserved and made available for grant under the Plan.

Accounting for Restricted Stock Units

13 unchanged sentences

Performance-based RSUs (rTSR) granted 33,506 $ 206.08

Performance-based RSUs - Ambition granted 110,561 $ 169.75

Vested, including shares withheld to cover taxes ( 294,686 ) $ 78.05 $ 39,239,334 (a)

4 unchanged sentences

(b) The aggregate fair value of the nonvested RSUs and the RSUs expected to vest represents the total pre-tax fair value, based on our closing stock price of $ 177.19 as of December 29, 2023, which would have been received by holders of RSUs had all such holders sold their underlying shares on that date.

During each of the years in the three-year period ended December 31, 2022, the RSUs that vested for teammates in the United States were net-share settled such that we withheld shares with value equivalent up to the teammates’ maximum statutory United States tax obligation for the applicable income and other employment taxes and remitted the equivalent cash amount to the appropriate taxing authorities.

During each of the years in the three-year period ended December 31, 2023, the RSUs that vested for teammates in the United States were net-share settled such that we withheld shares with value equivalent up to the teammates’ maximum statutory United States tax

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

obligation for the applicable income and other employment taxes and remitted the equivalent cash amount to the appropriate taxing authorities.

The total shares withheld during 2023, 2022 and 2021 of 79,636 , 79,611 and 105,434 , respectively, were based on the value of the RSUs on their vesting dates as determined by our closing stock price on such dates.

1 unchanged sentence

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

$ 96,545 $ 93,825 $ 73,212

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

11 unchanged sentences

Effective tax rate $ 96,545 25.6 % $ 93,825 25.1 % $ 73,212 25.0 %

On March 27, 2020, the U.S.

enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide certain relief as a result of the COVID-19 pandemic, which included, among other things, provisions relating to net operating loss carrybacks and other beneficial income tax changes.

In 2020, we recorded a tax benefit of approximately $ 1,712,000 related to the CARES Act, which was reflected in our effective tax rate reconciliation in ‘Other, net’.

As of December 31, 2023, we have accumulated undistributed earnings generated by our foreign subsidiaries, most of which have been taxed in the U.S.

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

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.

1 unchanged sentence

Deferred tax assets:

Net operating losses $ 24,571 $ 25,791

Capitalized research expenses

$ 33,569 $ 17,682

Loss carryforwards

$ 25,690 $ 24,571

Foreign tax credits 9,976 10,681

9 unchanged sentences

Net deferred tax liabilities $ ( 24,526 ) $ ( 27,221 )

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

4 unchanged sentences

As of December 31, 2023, we have U.S.

state net operating loss carryforward (“NOLs”) that will expire between 2021 and 2040.

We also have foreign NOLs of $ 84,328,000 , certain of which will expire between 2023 and 2028, while the majority have no expiration date.

Certain state NOLs relate to pre-acquisition losses from acquired subsidiaries and are subject to annual limitations as to their use under the provisions of Internal Revenue Code Section 382.

state and foreign net operating loss carryforwards (“NOLs”) that will expire between 2024 and 2042, while the majority have no expiration date.

Due to the uncertainty around future utilization, we have recorded a valuation allowance against the majority of these NOLs.

W e have provided valuation allowances for certain of our deferred tax assets where we believe it is more likely than not that the related tax benefits will not be realized.

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, 2022 were driven by the expiration of foreign tax credits and changes in certain NOLs against which a valuation allowance had been recorded.

At December 31, 2023 and 2022, our valuation allowances totaled $ 33,385,000 and $ 32,546,000 , respectively, relating primarily to foreign tax credits and NOLs.

This increase was primarily the result of foreign NOLs generated during the year for which there is an uncertainty as to future utilization.

As of December 31, 2023 and 2022, we had approximately $ 13,947,000 and $ 14,814,000 , 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.

We do not believe there will be any changes over the next 12 months that would have a material effect on our effective tax rate.

We are currently under audit in various jurisdictions for tax years 2017 through 2021.

13 unchanged sentences

The interest rate attributable to the borrowings under our ABL facility and the Notes was 6.69 % and 0.75 %, respectively, per annum at December 31, 2023.

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.

The change in annual pre-tax earnings from

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

operations resulting from a hypothetical 10% increase or decrease in the applicable interest rate would have been immaterial.

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

3 unchanged sentences

Unobservable inputs that are not corroborated by market data.

As of December 31, 2022, we have no non-financial assets or liabilities that are measured and recorded at fair value on a recurring basis, and our other financial assets or liabilities generally consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities and long-term debt.

As of December 31, 2023, we have no non-financial assets or liabilities that are measured and recorded at fair value on a recurring basis, and our other financial assets or liabilities generally consist of cash and cash equivalents, accounts receivable, contract assets, accounts payable, accrued expenses and other current liabilities and long-term debt.

The estimated fair values of our cash and cash equivalents approximate their carrying values and are determined based on quoted prices in active markets for identical assets.

The estimated fair values of our long-term debt balances, excluding the Notes, approximate their carrying values based on their variable interest rate terms that are based on current market interest rates for similar debt instruments.

The Notes were initially recorded at their estimated fair value based on market interest rates for similar debt instruments.

The fair market value of the Notes as of December 31, 2022 is disclosed in footnote 12.

The fair market value of the Notes as of December 31, 2023 is disclosed in Note 12.

The fair values of the other financial assets and liabilities are based on the values that would be received or paid in an orderly transaction between market participants and approximate their carrying values due to their nature and short duration.

3 unchanged sentences

The Company provides a discretionary match to all participants who make 401(k) contributions pursuant to the Defined Contribution Plan.

On May 15, 2020, our matching contributions were temporarily suspended due to the COVID-19 pandemic.

Company matching contributions returned in 2021.

The discretionary match provided to participants is equivalent to 50 % of a participant’s pre-tax contributions up to a maximum of 6 % of eligible compensation per pay period.

2 unchanged sentences

Total consolidated contribution expense under these plans was $ 28,341,000 , $ 27,827,000 and $ 25,270,000 for 2023, 2022 and 2021, respectively.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(15) Share Repurchase Programs

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.

On May 18, 2023, we announced that our Board of Directors authorized the repurchase of up to $ 300,000,000 of our common stock, including $ 100,000,000 that remained available from the prior authorization.

As of December 31, 2023, approximately $ 200,020,373 remained available for repurchases under our 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.

2 unchanged sentences

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, 2023, 2023 and 2022, respectively, in thousands, except per share amounts:

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2023 1,634 $ 132.90 $ 217,000

10 unchanged sentences

Accordingly, we have not accrued any liabilities related to such performance bonds in our consolidated financial statements.

The Company has a minimum required purchase commitment of approximately $ 100,467,000 pursuant to an agreement primarily related to cloud services.

The total purchase commitment is required to be met or exceeded during a 5 -year period, starting October 1, 2023 through September 30, 2028.

At December 31, 2023 we had a remaining purchase commitment of $ 95,814,000 .

If total purchases do not meet the required commitment by September 30, 2028, the shortfall must be prepaid by the Company and can be used for further purchases through September 30, 2029.

The Company has a minimum required purchase commitment of approximately $ 40,000,000 pursuant to an agreement primarily related to software as a service.

The total purchase commitment is required to be met during a 4 -year period, starting November 30, 2022 through November 29, 2026.

At December 31, 2023 we had a remaining purchase commitment of $ 33,863,000 .

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company has recorded a contingent liability of approximately $ 21,289,000 , payable to a partner to settle various contractual commitments to resell a minimum amount of cloud services to clients.

Employment Contracts and Severance Plans

We have employment contracts with, and plans covering, certain officers and management teammates under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances after a change in control.

We have employment contracts with, and severance plans covering, certain officers and management teammates under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances after a change in control.

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

5 unchanged sentences

Management believes that payments, if any, related to these indemnifications are not probable at December 31, 2023.

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

Accordingly, we have not accrued any liabilities related to such indemnifications in our 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)

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.

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.

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

6 unchanged sentences

Legal Proceedings

From time to time, we are party to various legal proceedings incidental to the business, including preference payment claims asserted in client bankruptcy proceedings, indemnification claims, claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights, employment claims, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations.

We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate.

If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made.

From time to time, we are party to various legal proceedings incidental to the business, including preference payment claims asserted in client bankruptcy proceedings, indemnification claims, claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights, employment claims, claims related to services provided, interruptions, or outages, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations.

If accruals are not

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

required, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made.

Although litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses.

1 unchanged sentence

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 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.

PCM rejected and vigorously responded to those claims, and the Company continues to pursue various counterclaims.

The disputes are being heard by multiple courts and arbitrators in several different jurisdictions including California, Delaware and Pakistan.

The Company cannot determine with certainty the costs or outcome of these matters.

However, the Company is not involved in any pending or threatened legal proceedings, including the PCM litigation matters, that it believes would reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.

In connection with the acquisition of PCM, the Company assumed responsibility for various litigation matters related to PCM’s acquisition of certain assets of En Pointe Technologies in 2015 (the “PCM Earnout Litigation”).

The seller of En Pointe Technologies and related entities providing various post-closing support functions to PCM 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.

PCM rejected and vigorously responded to those claims and pursued various counterclaims.

The PCM Earnout Litigation was being heard by multiple courts and arbitrators in several different jurisdictions including California, Delaware and Pakistan.

In May 2023, the Company settled all claims related to the PCM Earnout Litigation and the parties began the process of dismissing each of the related claims and counterclaims in the various courts and jurisdictions.

On July 14, 2023, the Company funded an escrow pursuant to which $ 10,550,000 would be paid to the plaintiffs over a period of 36 months beginning after all of the cases have been dismissed.

The full amount of the settlement payment had been previously reserved.

The Company is not involved in any pending or threatened legal proceedings, including the PCM Earnout Litigation, that it believes would reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.

(17) Supplemental Financial Information

5 unchanged sentences

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

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(18) Cash Flows

6 unchanged sentences

$ 104,495 $ 91,485 $ 75,986

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(19) Segment and Geographic Information

We operate in three reportable geographic operating segments:

North America, EMEA, and APAC.

North America;

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

52 unchanged sentences

$ 7,520,323 $ 1,704,051 $ 211,739 $ 9,436,113

The method for determining what information regarding operating segments, products and services, geographic areas of operation and major clients to report is based upon the “management approach,” or the way that management organizes the operating segments within a company, for which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Decision Maker (“CODM”) in deciding how to allocate resources.

Our CODM is our Chief Executive Officer.

2 unchanged sentences

None of our clients exceeded ten percent of consolidated net sales in 2023, 2022 or 2021.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

17 unchanged sentences

Earnings from operations $ 362,082 $ 38,128 $ 19,585 $ 419,795

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended December 31, 2022

EMEA APAC Consolidated

North America EMEA APAC Consolidated

Products $ 7,291,301 $ 1,511,897 $ 144,589 $ 8,947,787

11 unchanged sentences

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

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended December 31, 2021

EMEA APAC Consolidated

North America EMEA APAC Consolidated

Products $ 6,478,637 $ 1,502,176 $ 139,314 $ 8,120,127

9 unchanged sentences

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

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

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

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

12 unchanged sentences

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

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We recorded the following pre-tax amounts, by operating segment, for depreciation and amortization in the accompanying consolidated financial statements (in thousands):

12 unchanged sentences

Total $ 62,476 $ 56,614 $ 55,421

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(20) Acquisitions

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

Effective December 1, 2023, we acquired 100 percent of the issued and outstanding shares of SADA Systems, LLC (successor to SADA Systems, Inc.

via conversion) ("SADA") for a preliminary cash purchase price of $ 398,589,000 , excluding cash and cash equivalents acquired of $ 24,701,000 .

SADA is a leading cloud consultancy and technical services provider and six-time Google Cloud Partner of the Year, including cloud licensing and professional services to small, mid-sized and corporate/enterprise commercial clients, state and federal governments and educational institutions across North America, Europe and Asia.

Based in Los Angeles, California, SADA has three office locations in North America, India and Armenia with more than 800 teammates.

We believe that this acquisition advances our strategy and further strengthens our unique position as a leading Solutions Integrator offering market-leading multicloud solutions at scale.

SADA's partnership with Google Cloud will enhance our ability to serve clients who operate across multiple clouds and accelerate adoption of widely sought-after technologies like Generative Artificial Intelligence.

SADA is being reported as a part of our North America operating segment.

The total purchase price of $ 425,327,000 , which is net of cash and cash equivalents acquired of $ 24,701,000 , is comprised of the initial purchase price of $ 423,290,000 paid in cash upon the SADA acquisition, contractual adjustments to the purchase price of $ 450,000 and a seller retention fund of $ 5,000,000 payable post-closing.

The purchase price also includes the estimated fair value of earn out payments of approximately $ 21,288,000 , which provides an incentive opportunity for the sellers of up to $ 390,000,000 , based on the SADA business achieving EBITDA and revenue growth performance through 2026.

A portion of the purchase price was used to settle SADA’s stock-based compensation liabilities of $ 67,600,000 and pay SADA’s transaction costs of approximately $ 16,841,000 at acquisition in accordance with purchase agreement.

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

Total purchase price, net of cash and cash equivalents acquired

Fair value of net assets acquired:

Current assets $ 348,727

Identifiable intangible assets - see description below 158,100

Property and equipment 2,266

Other assets 260,185

Current liabilities ( 335,548 )

Long-term liabilities, including long-term accounts payable

Total fair value of net assets acquired 308,305

Excess purchase price over fair value of net assets acquired ("goodwill") $ 117,022

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.

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

The estimated fair value of the property and equipment are also based upon historical costs as they approximate fair value.

The contract assets are an exception to the fair value model and are evaluated under relevant revenue recognition guidance including an allowance for credit losses using the current expected credit loss (“CECL”) model.

The preliminary estimated fair value of net assets acquired was approximately $ 308,305,000 , including $ 158,100,000 of identifiable intangible assets, consisting primarily of

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

customer relationships of $ 124,700,000 and non-compete agreements of $ 26,200,000 .

The fair values were determined using the multiple-period excess earnings method and the lost income method, respectively.

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 Years

Trade name 3 Years

Non-compete agreements 3 - 5 Years

Acquisition-related expenses recognized through December 31, 2023 was $ 3,572,000 .

Goodwill of $ 117,022,000 , which was recorded in our North America operating segment, represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed from SADA.

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

The addition of the SADA 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.

The intangible assets and goodwill are tax deductible as the transaction is a deemed asset acquisition for U.S.

federal income tax purposes after the Seller Parties undertook an internal restructuring pursuant to Section 368(a)(1)(F).

The purchase price allocation is preliminary and was allocated using information currently available.

Further information related to accounts receivable, contract assets, accounts payable, intangible assets, goodwill and various accrued expense balance assessments may lead to an adjustment of the purchase price allocation.

We have consolidated the results of operations for SADA since its acquisition on December 1, 2023.

Consolidated net sales and net earnings for the year ended December 31, 2023 include $ 33,451,000 and $ 14,502,000 , respectively, from SADA.

Due to seasonality in SADA's business, with the majority of net sales and net earnings historically being generated in the second half of the year, these results should not be considered indicative of future results.

The following table reports unaudited pro forma information as if the acquisition of SADA had been completed at the beginning of 2022 (in thousands, except per share amounts):

Year Ended December 31,

Net sales As reported $ 9,175,840 $ 10,431,191

Pro forma $ 9,367,386 $ 10,682,565

Net earnings As reported $ 281,309 $ 280,608

Pro forma $ 330,757 $ 308,243

Diluted earnings per share As reported $ 7.55 $ 7.66

Pro forma $ 8.88 $ 8.42

The pro forma results primarily include the adjustments to reflect the additional amortization of acquired intangible assets and interest expense on the additional borrowing under the ABL revolving credit facility, removal of acquisition-related costs, and the consequential tax effects of the pro forma adjustments and SADA tax status change.

SADA’s stock-based compensation plans were fully vested and settled upon acquisition based on a preexisting change-in-control provision within the plan terms.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

changes in the estimated fair value of awards, SADA recognized a stock-based compensation gain of $ 100,206,000 and $ 32,051,000 in its historical statements of operation for the years ended December 31, 2023 and 2022, respectively.

These gains are reflected in the unaudited pro forma earnings above.

As these plans were not replaced post-acquisition, there will be no future impact of SADA’s stock-based compensation plans on the Company.

This unaudited pro forma financial information is for informational purposes only.

It is neither indicative of the results of operations that would have been achieved had the acquisition been consummated at the beginning of 2022, nor is it necessarily indicative of future results.

Effective August 17, 2023, we acquired 100 percent of the issued and outstanding shares of Amdaris Group Limited (“Amdaris”) for a preliminary cash purchase price, net of cash and cash equivalents acquired, of approximately $ 82,875,000 , excluding the estimated fair value of an earn out, reported in other liabilities, with a range of payouts through 2026 of $ 0 to $ 54,391,000 .

Amdaris, an award-winning software development and digital services specialist, provides innovative software development, application support, managed services and consultancy services to the customers in the United Kingdom with service delivery centers located in several eastern European countries.

Amdaris has been recognized as a Microsoft Gold Certified Partner.

We believe this acquisition expands our global Modern Apps and Data & AI areas of solutions expertise as a leading solutions integrator and enhances our technological capabilities and scale to deliver an even broader range of customized services and solutions to clients in EMEA.

The preliminary fair value of net assets acquired was approximately $ 34,060,000 , including $ 41,291,000 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.

Further information obtained upon the finalization of the fair value assumptions for identifiable intangible assets acquired and the finalization of the fair value of the non-cash working capital could lead to an adjustment of the purchase price allocation.

Goodwill acquired approximated $ 71,698,000 , which was recorded in our EMEA operating segment.

We consolidated the results of operations for Amdaris within our EMEA operating segment beginning on August 17, 2023, the effective date of the acquisition.

Our historical results would not have been materially affected by the acquisition of Amdaris 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.

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

and Hanu Software Solutions (India) Private Ltd.

(collectively, “Hanu”) for a cash purchase price, net of cash and cash equivalents acquired, of approximately $ 90,106,000 , including $ 15,307,000 attributed to an earn out agreement and including hold backs for representations and warranties of approximately $ 6,358,000 , the majority of which will be paid in future periods.

We finalized the earn out and paid $ 10,748,000 in April 2023 and $ 3,973,000 in November 2023.

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.

1 unchanged sentence

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.

The fair value of net assets acquired was approximately $ 20,183,000 , 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 purchase price was allocated using the information 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 finalized the purchase price allocation in relation to this acquisition in May 2023.

The completion of this work did not materially alter our preliminary purchase price allocation.

INSIGHT ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

4 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data