Segment Information

9 Months Ended

Sep. 30, 2019

11.Segment Information

We operate in three reportable geographic operating segments: North America; EMEA; and APAC with PCM being included in our North America and EMEA segments. Our offerings in North America and certain countries in EMEA and APAC include IT hardware, software and services. Our offerings in the remainder of our EMEA and APAC segments are largely software and certain software-related services.

The following table summarizes net sales by offering for North America, EMEA and APAC for the three and nine months ended September 30, 2019 and 2018 (in thousands):

	North America				EMEA				APAC
	Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,
Sales Mix	2019		2018		2019		2018		2019		2018

Hardware	$	1,020,083	$	953,431	$	137,416	$	147,497	$	9,243	$	6,041
Software		295,730		259,602		186,839		168,603		19,569		13,099
Services		199,349		158,426		31,453		29,080		12,865		11,947
	$	1,515,162	$	1,371,459	$	355,708	$	345,180	$	41,677	$	31,087

	North America				EMEA				APAC
	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
Sales Mix	2019		2018		2019		2018		2019		2018

Hardware	$	2,704,212	$	2,724,916	$	451,892	$	505,844	$	25,740	$	22,518
Software		907,683		828,231		560,073		551,920		80,287		91,459
Services		551,215		465,458		113,092		104,086		39,840		36,658
	$	4,163,110	$	4,018,605	$	1,125,057	$	1,161,850	$	145,867	$	150,635

All significant intercompany transactions are eliminated upon consolidation, and there are no differences between the accounting policies used to measure profit and loss for our segments or on a consolidated basis. Net sales are defined as net sales to external clients. None of our clients exceeded ten percent of consolidated net sales for the three or nine months ended September 30, 2019 or 2018.

A portion of our operating segments’ selling and administrative expenses arise from shared services and infrastructure that we have historically provided to them in order to realize economies of scale and to use resources efficiently. These expenses, collectively identified as corporate charges, include senior management expenses, internal audit, legal, tax, insurance services, treasury and other corporate infrastructure expenses. Charges are allocated to our operating segments, and the allocations have been determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by the operating segments.

The following tables present our results of operations by reportable operating segment for the periods indicated (in thousands):

	Three Months Ended September 30, 2019
	North America		EMEA		APAC		Consolidated
Net sales:
Products	$	1,315,813	$	324,255	$	28,812	$	1,668,880
Services		199,349		31,453		12,865		243,667
Total net sales		1,515,162		355,708		41,677		1,912,547
Costs of goods sold:
Products		1,195,020		297,789		26,431		1,519,240
Services		101,498		10,028		5,586		117,112
Total costs of goods sold		1,296,518		307,817		32,017		1,636,352
Gross profit		218,644		47,891		9,660		276,195
Operating expenses:
Selling and administrative expenses		170,993		44,568		7,654		223,215
Severance and restructuring expenses		2,449		213		—		2,662
Acquisition-related expenses		5,896		—		—		5,896
Earnings from operations	$	39,306	$	3,110	$	2,006	$	44,422

	Three Months Ended September 30, 2018
	North America		EMEA		APAC		Consolidated
Net sales:
Products	$	1,213,033	$	316,100	$	19,140	$	1,548,273
Services		158,426		29,080		11,947		199,453
Total net sales		1,371,459		345,180		31,087		1,747,726
Costs of goods sold:
Products		1,108,658		290,071		17,079		1,415,808
Services		83,474		7,875		5,655		97,004
Total costs of goods sold		1,192,132		297,946		22,734		1,512,812
Gross profit		179,327		47,234		8,353		234,914
Operating expenses:
Selling and administrative expenses		134,792		42,206		7,097		184,095
Severance and restructuring expenses		253		430		—		683
Acquisition-related expenses		188		—		—		188
Earnings from operations	$	44,094	$	4,598	$	1,256	$	49,948

	Nine Months Ended September 30, 2019
	North America		EMEA		APAC		Consolidated
Net sales:
Products	$	3,611,895	$	1,011,965	$	106,027	$	4,729,887
Services		551,215		113,092		39,840		704,147
Total net sales		4,163,110		1,125,057		145,867		5,434,034
Costs of goods sold:
Products		3,290,555		926,712		98,197		4,315,464
Services		272,245		29,021		17,188		318,454
Total costs of goods sold		3,562,800		955,733		115,385		4,633,918
Gross profit		600,310		169,324		30,482		800,116
Operating expenses:
Selling and administrative expenses		452,441		139,365		21,961		613,767
Severance and restructuring expenses		3,260		328		124		3,712
Acquisition-related expenses		9,059		—		—		9,059
Earnings from operations	$	135,550	$	29,631	$	8,397	$	173,578

	Nine Months Ended September 30, 2018
	North America		EMEA		APAC		Consolidated
Net sales:
Products	$	3,553,147	$	1,057,764	$	113,977	$	4,724,888
Services		465,458		104,086		36,658		606,202
Total net sales		4,018,605		1,161,850		150,635		5,331,090
Costs of goods sold:
Products		3,242,903		971,232		105,046		4,319,181
Services		230,487		25,370		16,498		272,355
Total costs of goods sold		3,473,390		996,602		121,544		4,591,536
Gross profit		545,215		165,248		29,091		739,554
Operating expenses:
Selling and administrative expenses		402,638		137,383		21,718		561,739
Severance and restructuring expenses		1,034		1,545		130		2,709
Acquisition-related expenses		282		—		—		282
Earnings from operations	$	141,261	$	26,320	$	7,243	$	174,824

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

	September 30, 2019			December 31, 2018
North America	$	3,729,338		$	2,660,886
EMEA		596,657			611,338
APAC		101,829			98,959
Corporate assets and intercompany eliminations, net		(445,464	)		(595,236	)
Total assets	$	3,982,360		$	2,775,947

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Depreciation and amortization of property and equipment:
North America	$	4,371	$	4,131	$	12,114	$	12,587
EMEA		1,013		1,052		2,980		3,053
APAC		140		123		412		378
		5,524		5,306		15,506		16,018
Amortization of intangible assets:
North America		5,765		3,949		13,037		10,670
EMEA		67		71		205		216
APAC		114		165		348		513
		5,946		4,185		13,590		11,399
Total	$	11,470	$	9,491	$	29,096	$	27,417