EX-99.1 2 c00199exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(INSIGHT LOGO)
     
FOR IMMEDIATE RELEASE   Nasdaq: NSIT
INSIGHT ENTERPRISES, INC. REPORTS FIRST QUARTER
2010 RESULTS
TEMPE, Ariz. — May 5, 2010 — Insight Enterprises, Inc. (Nasdaq: NSIT) (the “Company”) today reported results of operations for the quarter ended March 31, 2010.
First Quarter Highlights
    Net sales for the first quarter of 2010 increased 10% to $1.05 billion.
 
    Gross profit for the first quarter of 2010 increased 10% to $145.0 million.
 
    Net earnings for the first quarter of 2010 of $9.2 million.
 
    Diluted earnings per share for the first quarter of 2010 of $0.20.
 
    Paid down the Company’s revolving credit facilities by $67.0 million during the first quarter of 2010.
“We are pleased with our financial performance in the first quarter, which resulted from better than expected sales and gross margin performance in North America across a leaner cost structure and in-line performance in our EMEA and Asia Pacific segments,” stated Ken Lamneck, President and Chief Executive Officer.
SEGMENT OVERVIEW
In North America, net sales were $688.3 million for the first quarter of 2010, up 4% from the first quarter of 2009. Net sales of hardware increased 23% year over year, while software sales declined 22% and net sales in the services category declined 5% year to year. Gross profit was up 6% year over year at $98.9 million with gross margin increasing 30 basis points to 14.4% from 14.1% in the prior year quarter. Selling and administrative expenses in North America in the first quarter of 2010 were down $10.2 million, or 11% compared to the first quarter of 2009. Selling and administrative expenses in the first quarter of 2010 include approximately $497,000 of professional fees and costs associated with the restatement remediation and ongoing litigation. Comparatively, selling and administrative expenses in the first quarter of 2009 included an aggregate of $8.2 million of charges related to the North America portion of the termination of an equity-based incentive compensation plan and professional fees and costs associated with the trade credits investigation and restatement quantification. The North America segment did not have any severance and restructuring charges during the first quarter of 2010, compared to $5.9 million in severance and restructuring charges recorded during the first quarter of 2009. As a result, earnings from operations in North America were $14.1 million in the first quarter of 2010, compared to a loss from operations of $7.9 million in the first quarter of 2009.
                 
Insight Enterprises, Inc.   6820 South Harl Avenue   Tempe, Arizona 85283   480-902-1001   FAX 480-760-8958
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Insight Q1 2010 Results, Page 2   May 5, 2010
The Company’s EMEA operating segment reported net sales of $317.3 million for the first quarter of 2010, up 17% in U.S. dollars compared to the first quarter of 2009. Excluding the effects of foreign currency movements, net sales were up 10%. Net sales of hardware grew 30% year over year, software sales increased 10% and services sales grew by 24% compared to the first quarter of last year, all in U.S. dollars. Excluding the effects of foreign currency movements, hardware sales increased 20%, software sales increased 4% and services sales increased 17% year over year. Gross profit was up 15% in U.S. dollars, 8% excluding the effects of foreign currency movements, while gross margin decreased to 13.0% for the first quarter of 2010 from 13.3% in the prior year quarter. Selling and administrative expenses in EMEA in the first quarter of 2010 were up 10%, or $3.5 million, compared to the first quarter of 2009 in U.S. dollars and, excluding the effects of foreign currency movements, were up $1.3 million or 3% year over year. The prior year quarter selling and administrative expenses included $1.4 million of charges related to the EMEA portion of the termination of an equity-based incentive compensation plan. EMEA also recorded $71,000 in severance and restructuring expenses, net of adjustments, in the quarter ended March 31, 2010, compared to $417,000 in severance and restructuring charges recorded during the first quarter of 2009. As a result, earnings from operations in EMEA were $2.8 million in the first quarter of 2010 compared to $581,000 in the first quarter of 2009.
The Company’s APAC operating segment reported net sales of $43.8 million for the first quarter of 2010, up 115% from the first quarter of 2009 in U.S. dollars, 71% excluding the effects of foreign currency movements. Gross profit was $4.8 million, an increase of 71% year over year in U.S. dollars, 36% excluding the effects of foreign currency movements, while gross margin decreased to 11.0% for the first quarter of 2010 from 13.9% in the prior year quarter. Selling and administrative expenses in APAC increased 34% year over year in U.S. dollars, 5% excluding the effects of foreign currency movements. As a result, earnings from operations in APAC were $388,000 in the first quarter of 2010, compared to a loss from operations of $576,000 in the first quarter of 2009.
UPDATED GUIDANCE
Given the Company’s stronger than expected financial performance in the first quarter, the Company now anticipates that diluted earnings per share for the full year of 2010 will be between $1.05 and $1.15. This outlook reflects the following assumptions:
    continued strong demand for hardware technology in North America partially offset by:
    the full-year effect of partner program changes that were effective beginning in May of 2009;
 
    a decline in sales of services in 2010 due to the completion of a significant services engagement in 2009 that is not currently expected to be replaced fully in 2010; and
 
    an effective tax rate of approximately 36% - 39% for 2010, up from 26% in 2009.
This outlook does not include the impact of any severance and restructuring expenses or expenses associated with the restatement of the Company’s financial statements or related litigation.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and live web cast today at 5:00 p.m. ET to discuss first quarter 2010 results of operations. A live web cast of the conference call (in listen-only mode) will be available on the Company’s web site at www.insight.com, and a replay of the web cast will be available on the Company’s web site for a limited time following the call. To listen to the live web cast by telephone, call 1-800-706-7748 if located in the U.S., 617-614-3473 for international callers, and enter the access code 10105640.
                 
Insight Enterprises, Inc.   6820 South Harl Avenue   Tempe, Arizona 85283   480-902-1001   FAX 480-760-8958
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Insight Q1 2010 Results, Page 3   May 5, 2010
Financial Summary Table
(in thousands, except per share data and percentages)
                         
    Three Months Ended March 31,  
                    %  
    2010     2009     change  
Insight Enterprises, Inc.
                       
Net sales
  $ 1,049,380     $ 951,160       10 %
Gross profit
  $ 145,045     $ 131,771       10 %
Earnings (loss) from operations
  $ 17,263     $ (7,919 )     318 %
Net earnings (loss)
  $ 9,165     $ (6,797 )     235 %
Diluted EPS
  $ 0.20     $ (0.15 )     233 %
 
                       
North America
                       
Net sales
  $ 688,294     $ 660,101       4 %
Gross profit
  $ 98,947     $ 93,042       6 %
Earnings (loss) from operations
  $ 14,084     $ (7,924 )     278 %
 
                       
EMEA
                       
Net sales
  $ 317,293     $ 270,725       17 %
Gross profit
  $ 41,261     $ 35,904       15 %
Earnings from operations
  $ 2,791     $ 581       380 %
 
                       
APAC
                       
Net sales
  $ 43,793     $ 20,334       115 %
Gross profit
  $ 4,837     $ 2,825       71 %
Earnings (loss) from operations
  $ 388     $ (576 )     167 %
                                                                         
    North America     EMEA     APAC  
    Three Months Ended     Three Months Ended     Three Months Ended  
    March 31,     March 31,     March 31,  
                    %                     %                     %  
Sales Mix   2010     2009     change*     2010     2009     change*     2010     2009     change*  
Hardware
    66 %     56 %     23 %     39 %     35 %     30 %                  
Software
    27 %     36 %     (22 %)     60 %     64 %     10 %     99 %     98 %     118 %
Services
    7 %     8 %     (5 %)     1 %     1 %     24 %     1 %     2 %     7 %
 
                                                           
 
    100 %     100 %     4 %     100 %     100 %     17 %     100 %     100 %     115 %
 
                                                           
     
*   Represents growth/decline in category net sales on a dollar basis.
                 
Insight Enterprises, Inc.
  6820 South Harl Avenue   Tempe, Arizona 85283   480-902-1001   FAX 480-760-8958
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Insight Q1 2010 Results, Page 4   May 5, 2010
FORWARD-LOOKING INFORMATION
Certain statements in this release and the related conference call and Web cast are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including the Company’s estimated diluted earnings per share for 2010, the Company’s effective tax rate for 2010 and assumptions related to demand for hardware technology in North America and expectations of a decline in sales of services in 2010 due to the non-recurrence of a significant services engagement, are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statement. Some of the important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements, include, but are not limited to, the following, which are discussed in “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009:
    the Company’s reliance on partners for product availability, marketing funds, purchasing incentives and competitive products to sell;
 
    changes in the information technology industry and/or rapid changes in product standards;
 
    general economic conditions, including concerns regarding the Company’s ability to collect its accounts receivable and credit constraints;
 
    disruptions in the Company’s information technology systems and voice and data networks, including its system upgrade and the migration of acquired businesses to its information technology systems and voice and data networks;
 
    actions of the Company’s competitors, including manufacturers and publishers of products it sells;
 
    stockholder litigation and regulatory proceedings related to the restatement of the Company’s consolidated financial statements;
 
    increased debt and interest expense and lower availability on the Company’s financing facilities and changes in the overall capital markets that could increase its borrowing costs or reduce future availability of financing;
 
    the integration and operation of acquired businesses, including the Company’s ability to achieve expected benefits of the acquisitions;
 
    the variability and seasonality of the Company’s net sales and gross profit;
 
    the risks associated with international operations;
 
    exposure to changes in, or interpretations of, tax rules and regulations;
 
    exposure to foreign currency exchange risks;
 
    failure to comply with the terms and conditions of the Company’s public sector contracts;
 
    the Company’s dependence on key personnel; and
 
    intellectual property infringement claims and challenges to the Company’s registered trademarks and trade names.
Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the SEC. Any forward-looking statements in this release should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. The Company assumes no obligation to update, and does not intend to update, any forward-looking statements. The Company does not endorse any projections regarding future performance made by third parties.
         
Contacts:
  Glynis Bryan   Helen Johnson
 
  Chief Financial Officer   Senior VP, Treasurer
 
  Tel. 480-333-3390   Tel. 480-333-3234
 
  Email glynis.bryan@insight.com   Email helen.johnson@insight.com
                 
Insight Enterprises, Inc.   6820 South Harl Avenue   Tempe, Arizona 85283   480-902-1001   FAX 480-760-8958
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Insight Q1 2010 Results, Page 5   May 5, 2010
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                 
    Three Months Ended  
    March 31,  
    2010     2009  
Net sales
  $ 1,049,380     $ 951,160  
Costs of goods sold
    904,335       819,389  
 
           
Gross profit
    145,045       131,771  
Operating expenses:
               
Selling and administrative expenses
    127,711       133,343  
Severance and restructuring expenses
    71       6,347  
 
           
Earnings (loss) from operations
    17,263       (7,919 )
Non-operating (income) expense:
               
Interest income
    (127 )     (100 )
Interest expense
    2,367       2,099  
Net foreign currency exchange loss (gain)
    209       (51 )
Other expense, net
    346       279  
 
           
Earnings (loss) before income taxes
    14,468       (10,146 )
Income tax expense (benefit)
    5,303       (3,349 )
 
           
Net earnings (loss)
  $ 9,165     $ (6,797 )
 
           
 
               
Net earnings (loss) per share:
               
Basic
  $ 0.20     $ (0.15 )
 
           
Diluted
  $ 0.20     $ (0.15 )
 
           
 
               
Shares used in per share calculations:
               
Basic
    46,073       45,710  
 
           
Diluted
    46,643       45,710  
 
           
                 
Insight Enterprises, Inc.
  6820 South Harl Avenue   Tempe, Arizona 85283   480-902-1001   FAX 480-760-8958
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Insight Q1 2010 Results, Page 6   May 5, 2010
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                 
    March 31,     December 31,  
    2010     2009  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 85,324     $ 68,066  
Accounts receivable, net
    828,311       998,770  
Inventories
    81,212       82,380  
Inventories not available for sale
    40,619       43,036  
Deferred income taxes
    33,630       35,750  
Other current assets
    89,077       32,318  
 
           
Total current assets
    1,158,173       1,260,320  
 
Property and equipment, net
    144,869       150,103  
Goodwill
    16,474       15,829  
Intangible assets, net
    78,114       82,483  
Deferred income taxes
    77,468       78,489  
Other assets
    19,640       16,097  
 
           
 
  $ 1,494,738     $ 1,603,321  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 687,447     $ 695,549  
Accrued expenses and other current liabilities
    176,947       212,276  
Current portion of long-term debt
    880       875  
Deferred revenue
    50,138       54,135  
 
           
Total current liabilities
    915,412       962,835  
 
               
Long-term debt
    82,127       149,349  
Deferred income taxes
    2,968       3,054  
Other liabilities
    23,813       20,509  
 
           
 
    1,024,320       1,135,747  
 
           
 
               
Stockholders’ equity:
               
Preferred stock
           
Common stock
    462       460  
Additional paid-in capital
    372,817       372,021  
Retained earnings
    83,029       73,864  
Accumulated other comprehensive income — foreign currency translation adjustments
    14,110       21,229  
 
           
Total stockholders’ equity
    470,418       467,574  
 
           
 
  $ 1,494,738     $ 1,603,321  
 
           
                 
Insight Enterprises, Inc.
  6820 South Harl Avenue   Tempe, Arizona 85283   480-902-1001   FAX 480-760-8958
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Insight Q1 2010 Results, Page 7   May 5, 2010
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                 
    Three Months Ended March 31,  
    2010     2009*  
Cash flows from operating activities:
               
Net earnings (loss)
  $ 9,165     $ (6,797 )
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
               
Depreciation and amortization
    9,743       9,773  
Provision for losses on accounts receivable
    1,365       655  
Write-downs of inventories
    1,276       2,221  
Non-cash stock-based compensation
    1,214       6,091  
Excess tax benefit from employee gains on stock-based compensation
    (844 )      
Deferred income taxes
    2,435       (1,846 )
Changes in assets and liabilities:
               
Decrease in accounts receivable
    150,052       117,169  
Decrease in inventories
    1,500       7,631  
Increase in other current assets
    (57,251 )     (6,269 )
Increase in other assets
    (3,473 )     (424 )
Increase (decrease) in accounts payable
    26,004       (8,705 )
Decrease in deferred revenue
    (1,353 )     (1,500 )
Decrease in accrued expenses and other liabilities
    (29,796 )     (16,690 )
 
           
Net cash provided by operating activities
    110,037       101,309  
 
           
Cash flows from investing activities:
               
Purchases of property and equipment
    (2,794 )     (5,062 )
 
           
Net cash used in investing activities
    (2,794 )     (5,062 )
 
           
Cash flows from financing activities:
               
Borrowings on senior revolving credit facility
    206,500       307,873  
Repayments on senior revolving credit facility
    (273,500 )     (364,873 )
Borrowings on accounts receivable securitization financing facility
    25,000       120,000  
Repayments on accounts receivable securitization financing facility
    (25,000 )     (120,000 )
Payments on capital lease obligation
    (217 )      
Net repayments under inventory financing facility
    (19,836 )     (17,830 )
Payment of deferred financing fees
          (531 )
Excess tax benefit from employee gains on stock-based compensation
    844        
Payment of payroll taxes on stock-based compensation through shares withheld
    (1,151 )     (307 )
 
           
Net cash used in financing activities
    (87,360 )     (75,668 )
 
           
Foreign currency exchange effect on cash flows
    (2,625 )     (2,561 )
 
           
Increase in cash and cash equivalents
    17,258       18,018  
Cash and cash equivalents at beginning of period
    68,066       49,175  
 
           
Cash and cash equivalents at end of period
  $ 85,324     $ 67,193  
 
           
     
*   Certain amounts in the consolidated statement of cash flows for the three months ended March 31, 2009 have been reclassified to conform to the presentation for the three months ended March 31, 2010.
                 
Insight Enterprises, Inc.
  6820 South Harl Avenue   Tempe, Arizona 85283   480-902-1001   FAX 480-760-8958
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