Insight Enterprises, Inc. Reports Fourth Quarter and Full Year 2012 Results

Insight Enterprises, Inc. Reports Fourth Quarter and Full Year 2012 Results

TEMPE, Ariz., Feb. 14, 2013 (GLOBE NEWSWIRE) -- Insight Enterprises, Inc.
(Nasdaq:NSIT) (the "Company") today reported results of operations for the
quarter and year ended December 31, 2012.

Fourth Quarter Highlights

For the fourth quarter of 2012 compared to the fourth quarter of 2011:

  *Net sales decreased 1% to $1.3 billion.
    
  *Gross profit increased 1% to $180.4 million.
    
  *Gross margin increased approximately 20 basis points to 13.4%.
    
  *Earnings from operations decreased 13% to $36.6 million, or 2.7% of net
    sales.
    
  *The Company's effective tax rate was 40.3% compared to 15.8%.
    
  *Net earnings decreased 40% to $20.8 million.
    
  *Diluted earnings per share decreased 41% to $0.46.
    
  *Excluding severance and restructuring expenses, net earnings and diluted
    earnings per share on a non-GAAP basis were $22.1 million and $0.49,
    respectively, in the fourth quarter of 2012.*

2012 Full Year Highlights

For the full year 2012 compared to the full year 2011:

  *Net sales remained flat at $5.3 billion.
    
  *Gross profit increased 1% to $719.7 million.
    
  *Gross margin increased approximately 20 basis points to 13.6%.
    
  *Earnings from operations increased 1% to $148.2 million, or 2.8% of net
    sales.
    
  *The Company's effective tax rate was 35.9% compared to 29.3%.
    
  *Net earnings decreased 7% to $92.8 million.
    
  *Diluted earnings per share decreased 5% to $2.07.
    
  *Excluding severance and restructuring expenses and the gain on bargain
    purchase of Inmac, net earnings and diluted earnings per share on a
    non-GAAP basis were $95.3 million and $2.13, respectively, in 2012.*

During the fourth quarter of 2012, the Company's effective tax rate was higher
than normal due to a lower mix of income earned in foreign jurisdictions,
which have a lower statutory tax rate, and valuation allowances recorded in
certain countries in EMEA. During the fourth quarter of the prior year, the
Company recorded a tax benefit from a reorganization of certain of its foreign
operations, primarily related to the recognition of foreign tax credits, which
decreased the Company's effective tax rate.

* A tabular reconciliation of financial measures prepared in accordance with
United States generally accepted accounting principles ("GAAP") to non-GAAP
financial measures is included at the end of this press release.

"Overall, 2012 was a productive year for our business. Market conditions were
softer as macro-economic concerns globally led to lower capital spending for
IT products, but we executed well in the environment; improving the overall
profitability of our sales, investing strategically in sales and services
resources, successfully integrating two acquisitions, and essentially
completing our IT systems integration projects in Europe and North America,"
stated Ken Lamneck, President and Chief Executive Officer. "We believe these
actions will position us well as we head through 2013," added Lamneck.

                               SEGMENT OVERVIEW

In North America, net sales were $908.3 million for the fourth quarter of
2012, down 2% compared to sales of $922.5 million for the fourth quarter of
2011. Net sales of software increased 8% year over year, while net sales of
hardware and services decreased 5% and 21%, respectively. Gross profit of
$117.6 million was also down 2% year to year, with gross margin decreasing to
12.9% from 13.1% in the fourth quarter of 2011. Selling and administrative
expenses in North America in the fourth quarter of 2012 remained flat,
decreasing $166,000, compared to the fourth quarter of 2011. During the fourth
quarter of 2012, North America had $535,000, $336,000 net of tax, of severance
and restructuring expenses compared to $464,000, $285,000 net of tax, during
the fourth quarter of 2011. As a result, earnings from operations in North
America decreased 10% year to year to $27.5 million, or 3.0% of net sales, in
the fourth quarter of 2012, compared to $30.4 million, or 3.3% of net sales,
in the fourth quarter of 2011.

The Company's EMEA operating segment reported net sales of $378.4 million for
the fourth quarter of 2012, an increase of 2% in U.S. dollars compared to the
fourth quarter of 2011. Excluding the effects of foreign currency movements,
net sales increased 3% year over year. Results for the fourth quarter of 2012
include Inmac, which the Company acquired effective February 1, 2012. Net
sales of hardware and services were up 24% and 37%, respectively, year over
year, while net sales of software declined 7% year to year, all in U.S.
dollars. Excluding the effects of foreign currency movements, hardware and
services net sales increased 21% and 38%, respectively, while net sales of
software declined 6% compared to the fourth quarter of 2011. Gross profit of
$50.9 million was up 4% in U.S. dollars, also 4% excluding the effects of
foreign currency movements, with gross margin increasing to 13.4% for the
fourth quarter of 2012 from 13.2% in the fourth quarter of 2011. Selling and
administrative expenses in EMEA in the fourth quarter of 2012 were up 13%, or
$5.3 million, compared to the fourth quarter of 2011 in U.S. dollars and,
excluding the effects of foreign currency movements, were up 14% year over
year. During the fourth quarter of 2012, EMEA recorded severance and
restructuring expenses of $1.3 million, $991,000 net of tax, compared to
$163,000, $114,000 net of tax, reported for the fourth quarter of 2011. As a
result, earnings from operations in EMEA decreased 53% year to year to $4.0
million, or 1.1% of net sales, in the fourth quarter of 2012 compared to $8.5
million, or 2.3% of net sales, in the fourth quarter of 2011.

The Company's APAC operating segment reported net sales of $59.9 million for
the fourth quarter of 2012, a decrease of 12% compared to the fourth quarter
of 2011 in U.S. dollars, 15% excluding the effects of foreign currency
movements. Gross profit was $12.0 million, an increase of 25% year over year
in U.S. dollars, 21% excluding the effects of foreign currency movements, with
gross margin increasing to 20.0% for the fourth quarter of 2012, an
improvement of approximately 600 basis points compared to 14.0% in the fourth
quarter of 2011. Selling and administrative expenses in APAC increased
$653,000, or 11%, year over year in U.S. dollars, 8% excluding the effects of
foreign currency movements. As a result, earnings from operations in APAC
increased 52% year over year to $5.1 million, or 8.5% of net sales, in the
fourth quarter of 2012 compared to $3.4 million, or 4.9% of net sales, in the
fourth quarter of 2011.

Throughout this "Segment Overview" section, the Company refers to changes in
net sales, gross profit and selling and administrative expenses in EMEA and
APAC excluding the effects of foreign currency movements. In computing these
changes and percentages, the Company compares the current year amount as
translated into U.S. dollars under the applicable accounting standards to the
prior year amount in local currency translated into U.S. dollars utilizing the
average translation rate for the current period.

Net of tax amounts referenced above were computed using the statutory tax rate
for the taxing jurisdictions in the operating segment in which the related
expenses were recorded.

                               UPDATED GUIDANCE

For the full year of 2013, the Company expects the global IT market to grow in
the low single digit range, with trends improving throughout the year. The
Company expects its business to grow slightly faster than the market as it
continues to invest in its sales force and expand its capabilities into key
markets. For the full year of 2013, the Company expects diluted earnings per
share to be between $2.22 and $2.32.

This outlook includes:

  *The adverse effect on gross profit of previously announced partner program
    changes in the Company's software category, which is estimated to be
    between $8 and $12 million;
  *an effective tax rate of 36% to 38%;
  *the completion of a share repurchase program of up to $50 million in the
    first half of the year; and
  *capital expenditures of $18 to $22 million.

This outlook excludes severance and restructuring expenses.

                         CONFERENCE CALL AND WEBCAST

The Company will host a conference call and live web cast today at 5:00 p.m.
ET to discuss fourth quarter and full year 2012 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 1-877-402-8904 if located in
the U.S., 678-809-1029 for international callers, and enter the access code
92525863.

                      USE OF NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures exclude severance and restructuring expenses
in 2012 and 2011, a gain on bargain purchase in 2012, and the tax effect of
these items, as well as a tax benefit from a reorganization of certain foreign
operations in 2011. The Company excludes these charges when internally
evaluating earnings from operations, tax expense, net earnings and diluted
earnings per share for the Company and earnings from operations for each of
the Company's operating segments. These non-GAAP measures are used to evaluate
financial performance against budgeted amounts, to calculate incentive
compensation, to assist in forecasting future performance and to compare the
Company's results to those of the Company's competitors. The Company believes
that these non-GAAP financial measures are useful to investors because they
allow for greater transparency, facilitate comparisons to prior periods and
the Company's competitors' results and assist in forecasting performance for
future periods. These non-GAAP financial measures are not prepared in
accordance with GAAP and may be different from non-GAAP financial measures
presented by other companies. Non-GAAP financial measures should not be
considered as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP.

                                                                 
FINANCIAL SUMMARY TABLE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
                                                                 
             Three Months Ended December 31, Years Ended December 31,
Insight                                %                              %
Enterprises,  2012       2011      change 2012      2011      change
Inc.
Net sales     $1,346,675  $1,360,353 (1%)   $5,301,441 $5,287,228 --
Gross profit  $180,393    $178,983   1%     $719,676   $709,157   1%
Earnings from $36,580     $42,225    (13%)  $148,153   $147,383   1%
operations
Net earnings  $20,767     $34,654    (40%)  $92,763    $100,235   (7%)
Diluted EPS   $0.46       $0.78      (41%)  $2.07      $2.18      (5%)
                                                                 
North America                                                     
Net sales     $908,295    $922,537   (2%)   $3,626,357 $3,672,492 (1%)
Gross profit  $117,554    $120,539   (2%)   $478,522   $476,776   --
Earnings from $27,490     $30,378    (10%)  $116,054   $107,585   8%
operations
                                                                 
EMEA                                                              
Net sales     $378,438    $369,435   2%     $1,463,607 $1,398,421 5%
Gross profit  $50,874     $48,882    4%     $203,845   $198,073   3%
Earnings from $3,981      $8,487     (53%)  $20,383    $30,106    (32%)
operations
                                                                 
APAC                                                              
Net sales     $59,942     $68,381    (12%)  $211,477   $216,315   (2%)
Gross profit  $11,965     $9,562     25%    $37,309    $34,308    9%
Earnings from $5,109      $3,360     52%    $11,716    $9,692     21%
operations

                                      

                                                
         North America       EMEA                 APAC
         Three Months Ended  Three Months Ended   Three Months Ended
          December 31,      December 31,       December 31,
Sales Mix 2012 2011 %                  %            2011 %
                      change* 2012 2011 change* 2012       change*
Hardware  60%  62%  (5%)    34%   28%  24%     2%   1%   416%
Software  35%  32%  8%      64%   70%  (7%)    94%  97%  (15%)
Services  5%   6%   (21%)   2%   2%  37%     4% 2% 42%
         100% 100% (2%)    100%  100% 2%      100% 100% (12%)
                                                      

                                      

         North America        EMEA                 APAC
         Years Ended         Years Ended        Years Ended
          December 31,       December 31,       December 31,
                     %                   %                  %
Sales Mix 2012 2011 change* 2012 2011 change* 2012 2011 change*
Hardware  62%   64%   (4%)    37%    31%  23%     2%    1%   193%
Software  32%   30%   7%      61%    67% (4%)    94%   96%  (4%)
Services  6%    6%    (13%)   2%    2%  17%     4%  3% 15%
         100%  100%  (1%)    100%   100% 5%      100%  100% (2%)
* Represents growth/decline in category net sales on a U.S. dollar         
basis.
                                                          

                         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 expectations for growth in the global information
technology ("IT") market and the Company's business and the Company's expected
2013 diluted earnings per share, and the assumptions relating thereto, 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 statements.There can be no assurances that the results
discussed by the forward-looking statements will be achieved, and actual
results may differ materially from those set forth in the forward-looking
statements.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, 2011:

  othe Company's reliance on partners for product availability and
    competitive products to sell as well as the Company's competition with its
    partners;
  othe Company's reliance on partners for marketing funds and purchasing
    incentives;
  odisruptions in the Company's IT systems and voice and data networks,
    including risks and costs associated with the integration and upgrade of
    the Company's IT systems;
  ogeneral economic conditions;
  othe security of the Company's electronic and other confidential
    information;
  oactions of the Company's competitors, including manufacturers and
    publishers of products the Company sells;
  othe integration and operation of acquired businesses, including the
    Company's ability to achieve expected benefits of the acquisitions;
  ochanges in the IT industry and/or rapid changes in product standards;
  ofailure to comply with the terms and conditions of the Company's
    commercial and public sector contracts;
  othe variability of the Company's net sales and gross profit;
  othe risks associated with the Company's international operations;
  oexposure to changes in, interpretations of, or enforcement trends related
    to tax rules and regulations;
  othe Company's dependence on key personnel; and
  ointellectual 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 Securities and Exchange
Commission.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. NSIT-F

The Insight Enterprises, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=13985

                                                   
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
                                                   
                          Three Months Ended        Years Ended
                           December 31,            December 31,
                          2012       2011      2012       2011
Net sales                  $ 1,346,675 $ 1,360,353 $ 5,301,441 $ 5,287,228
Costs of goods sold        1,166,282   1,181,370   4,581,765   4,578,071
Gross profit               180,393     178,983     719,676     709,157
Operating expenses:                                            
Selling and administrative 141,952     136,131     565,206     556,689
expenses
Severance and              1,861       627         6,317       5,085
restructuring expenses
Earnings from operations   36,580      42,225      148,153     147,383
Non-operating (income)                                         
expense:
Interest income            (340)       (392)       (1,468)     (1,686)
Interest expense           1,351       1,718       6,101       6,927
Gain on bargain purchase   --          --          (2,022)     --
Net foreign currency       409         (605)       (463)       (1,136)
exchange loss (gain)
Other expense, net         385         349         1,337       1,589
Earnings before income     34,775      41,155      144,668     141,689
taxes
Income tax expense         14,008      6,501       51,905      41,454
Net earnings               $20,767     $34,654     $92,763     $100,235
                                                              
Net earnings per share:                                        
Basic                      $0.47       $0.79     $2.09       $2.20
Diluted                    $0.46       $0.78      $2.07       $2.18
                                                              
                                                              
Shares used in per share                                       
calculations:
Basic                      44,571      43,891      44,413      45,474
Diluted                    45,003      44,434      44,834      46,021

                                      

                                                      
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
                                                      December 31,
                                                      2012      2011
ASSETS                                                            
Current assets:                                                  
Cash and cash equivalents                             $152,119   $128,336
Accounts receivable, net                               1,371,356  1,208,276
Inventories                                            100,896    114,763
Inventories not available for sale                     31,249     43,816
Deferred income taxes                                  16,387     17,344
Other current assets                                   29,543     23,144
Total current assets                                  1,701,550  1,535,679
                                                                 
Property and equipment, net                            143,513    140,705
Goodwill                                               26,257     26,257
Intangible assets, net                                 47,405     59,021
Deferred income taxes                                  64,013     70,771
Other assets                                           18,765     25,178
                                                     $2,001,503 $1,857,611
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY                              
Current liabilities:                                              
Accounts payable                                       $982,611   $882,384
Accrued expenses and other current liabilities         158,621    178,749
Current portion of long-term debt                      602        1,017
Deferred revenue                                       40,287     47,012
Total current liabilities                             1,182,121  1,109,162
                                                                 
Long-term debt                                         80,000     115,602
Deferred income taxes                                  2,312      1,186
Other liabilities                                      31,779     34,829
                                                      1,296,212  1,260,779
Stockholders' equity:                                             
Preferred stock                                        --         --
Common stock                                           446        439
Additional paid-in capital                             369,300    360,370
Retained earnings                                      315,888    223,125
Accumulated other comprehensive income – foreign       19,657      12,898
currency translation adjustments
Total stockholders' equity                            705,291    596,832
                                                      $2,001,503 $1,857,611

                                      

                                                  
                                                  
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
                                                  
                                                   Years Ended December 31,
                                                  2012       2011
Cash flows from operating activities:                         
Net earnings                          $92,763     $100,235
Adjustments to reconcile net earnings to net cash              
provided by operating activities:
Depreciation and amortization                      41,177      39,139
Provision for losses on accounts receivable        4,195       4,267
Write-downs of inventories                         3,089       6,830
Write-off of property and equipment                596         1,390
Non-cash stock-based compensation                  8,548       7,919
Gain on bargain purchase                           (2,022)     --
Excess tax benefit from employee gains on          (1,966)     (1,809)
stock-based compensation
Deferred income taxes                              8,978       4,552
Changes in assets and liabilities:                             
Increase in accounts receivable                    (141,182)   (78,883)
Decrease (increase) in inventories                 27,477      (8,247)
(Increase) decrease in other current assets        (5,816)     25,895
Decrease (increase) in other assets                9,207       (12,107)
Increase in accounts payable                       56,442      45,205
Decrease in deferred revenue                      (11,196)    (17,926)
Decrease in accrued expenses and other liabilities (22,848)    (735)

Net cash provided by operating activities          67,442      115,725
Cash flows from investing activities:                         
Acquisitions, net of cash acquired                 (3,831)     (13,769)
Purchases of property and equipment                (30,152)    (27,093)
Net cash used in investing activities              (33,983)    (40,862)
Cash flows from financing activities:                         
Borrowings on senior revolving credit facility     803,953     1,314,500
Repayments on senior revolving credit facility     (885,953)   (1,289,500)
Borrowings on accounts receivable securitization   581,000     90,000
financing facility
Repayments on accounts receivable securitization   (534,000)   (90,000)
financing facility
Payments on capital lease obligation              (1,017)     (997)
Net borrowings (repayments) under inventory        22,900      (41,179)
financing facility 
Payment of deferred financing fees                 (2,777)     --
Proceeds from sales of common stock under employee 2,641       37
stock plans 
Excess tax benefit from employee gains on          1,966       1,809
stock-based compensation
Payment of payroll taxes on stock-based            (3,288)      (2,697)
compensation through shares withheld
Repurchases of common stock                        --          (50,000)
Net cash used in financing activities             (14,575)    (68,027)
Foreign currency exchange effect on cash flows    4,899       (2,263)
Increase in cash and cash equivalents              23,783      4,573
Cash and cash equivalents at beginning of year     128,336    123,763
Cash and cash equivalents at end of year          $152,119    $128,336

                                                                 
INSIGHT ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
                                                                 
                                       Three Months Ended Years Ended
                                       December 31,       December 31,
                                       2012      2011     2012      2011
Consolidated Earnings from Operations:                            
GAAP                                    $ 36,580  $ 42,225 $ 148,153 $ 147,383
Severance and restructuring expenses    1,861     627      6,317     5,085
Non-GAAP                                $ 38,441  $ 42,852 $ 154,470 $ 152,468
                                                                 
Consolidated Net Earnings:                                        
GAAP                                    $ 20,767  $ 34,654 $ 92,763  $ 100,235
Severance and restructuring expenses,   1,327     399      4,264     3,358
net of tax
Gain on bargain purchase, net of tax    --        --       (1,699)   --
Tax benefits from the reorganization of --        (6,802) --        (6,802)
certain foreign operations
Non-GAAP                                $ 22,094  $ 28,251 $ 95,328  $ 96,791
                                                                 
Consolidated Diluted EPS:                                         
GAAP                                    $ 0.46    $ 0.78   $ 2.07    $ 2.18
Severance and restructuring expenses,   0.03      0.01     0.10      0.07
net of tax
Gain on bargain purchase, net of tax    --        --       (0.04)    --
Tax benefits from the reorganization of --        (0.15)   --        (0.15)
certain foreign operations
Non-GAAP                                $ 0.49    $ 0.64   $ 2.13    $ 2.10
                                                         
North America Earnings from Operations:                           
GAAP                                   $ 27,490  $ 30,378 $ 116,054 $ 107,585
Severance and restructuring expenses   535       464      2,834     2,380
Non-GAAP                               $ 28,025  $ 30,842 $ 118,888 $ 109,965
                                                                 
EMEA Earnings from Operations:                                    
GAAP                                   $ 3,981   $ 8,487  $ 20,383  $ 30,106
Severance and restructuring expenses   1,326     163      3,483     2,705
Non-GAAP                               $ 5,307   $ 8,650  $ 23,866  $ 32,811
                                                                 

CONTACT: GLYNIS BRYAN
         CHIEF FINANCIAL OFFICER
         TEL.  480-333-3390
         EMAIL glynis.bryan@insight.com
        
         HELEN  JOHNSON
         SENIOR VP, TREASURER
         TEL.  480-333-3234
         MAIL  helen.johnson@insight.com

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