UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2009

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 0-25092

INSIGHT ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		86-0766246 (I.R.S. Employer Identification Number)

6820 South Harl Avenue, Tempe, Arizona 85283
(Address of principal executive offices) (Zip Code)

(480) 902-1001
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ     No o

Indicate by a checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o     No þ

The number of shares outstanding of the issuer’s common stock as of October 30, 2009 was 45,889,216.

 

 

INSIGHT ENTERPRISES, INC.
QUARTERLY REPORT ON FORM 10-Q
Three Months Ended September 30, 2009

TABLE OF CONTENTS

		Page
PART I — Financial Information
Item 1 — Financial Statements:
Consolidated Balance Sheets (unaudited) — September 30, 2009 and December 31, 2008			1
Consolidated Statements of Operations (unaudited) — Three and Nine Months Ended September 30, 2009 and 2008			2
Consolidated Statements of Cash Flows (unaudited) — Nine Months Ended September 30, 2009 and 2008			3
Notes to Consolidated Financial Statements (unaudited)			4
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3 — Quantitative and Qualitative Disclosures About Market Risk			36
Item 4 — Controls and Procedures			36
PART II — Other Information
Item 1 — Legal Proceedings			37
Item 1A — Risk Factors			38
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			39
Item 3 — Defaults Upon Senior Securities			39
Item 4 — Submission of Matters to a Vote of Security Holders			39
Item 5 — Other Information			39
Item 6 — Exhibits			40
Signatures			41
Exhibit 2.1
Exhibit 10.1
Exhibit 10.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

INSIGHT ENTERPRISES, INC.

FORWARD-LOOKING INFORMATION

Certain statements in this Quarterly Report on Form 10-Q, including statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this report, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include: projections of matters that affect the amount and timing of net sales, gross profit, operating expenses, earnings from continuing operations, non-operating income and expenses, net earnings or cash flows, the payment of accrued expenses and liabilities (including assumptions about currency fluctuations underlying such statements); projections of capital expenditures and uses of our working capital resources; our projections about our outlook for the remainder of 2009, including projected diluted earnings per share for the fourth quarter (excluding the impact of certain expenses and charges); our intention to use cash generated in excess of working capital needs to pay down debt and support capital expenditures; the sufficiency of our liquidity and capital resources; the availability of financing and our needs or plans relating thereto; the effect of new accounting principles or changes in accounting policies; the effect of guaranty and indemnification obligations and off-balance sheet arrangements; projections about the outcome of ongoing tax audits and unrecognized tax benefits for uncertain tax positions; statements related to accounting estimates, including fair value measurements and estimated stock option and other equity award forfeitures, and deferred compensation cost amortization periods; the timing of payments relating to previously accrued restructuring charges; projections about the outcome and effect of pending legal proceedings and the sufficiency of our provisions for estimated losses relating thereto; our plans with respect to dividends; statements of belief; and statements of assumptions underlying any of the foregoing. Forward-looking statements are identified by such words as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “may” and variations of such words and similar expressions, and 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 events discussed in the forward-looking statements will be achieved, and actual results could differ materially from results described by forward-looking statements. Some of the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following:

•

general economic conditions, including concerns regarding a global recession and credit constraints;

•

changes in the information technology industry and/or the economic environment;

•

our reliance on partners for product availability, marketing funds, purchasing incentives and competitive products to sell;

•

stockholder litigation related to the restatement of our consolidated financial statements;

•

our ability to collect our accounts receivable;

•

increased debt and interest expense and lower availability on our financing facilities and changes in the overall capital markets that could increase our borrowing costs or reduce future availability of financing;

•

disruptions in our information technology systems and voice and data networks, including our system upgrades and the migration of acquired businesses to our information technology systems and voice and data networks;

•

actions of our competitors, including manufacturers and publishers of products we sell;

•

the integration and operation of acquired businesses, including our ability to achieve expected benefits of the acquisitions;

•

seasonal changes in demand for sales of software licenses;

•

the risks associated with international operations;

•

exposure to changes in, or interpretations of, tax rules and regulations;

•

exposure to foreign currency exchange risks;

•

our dependence on key personnel;

•

failure to comply with the terms and conditions of our public sector contracts;

•

rapid changes in product standards; and

•

intellectual property infringement claims and challenges to our registered trademarks and trade names.

Additionally, there may be other risks that are otherwise described from time to time in the reports that we file with the Securities and Exchange Commission. Any forward-looking statements in this report should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. We assume no obligation to update, and do not intend to update, any forward-looking statements. We do not endorse any projections regarding future performance that may be made by third parties.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

INSIGHT ENTERPRISES, INC.

		September 30,				December 31,
		2009				2008
ASSETS
Current assets:
Cash and cash equivalents		$	68,968			$	49,175
Accounts receivable, net of allowances for doubtful accounts of $18,650 and $20,156, respectively			729,155				990,026
Inventories			86,823				103,130
Inventories not available for sale			29,750				30,507
Deferred income taxes			37,911				40,075
Other current assets			38,515				37,495
Total current assets			991,122				1,250,408
Property and equipment, net of accumulated depreciation of $152,682 and $131,633, respectively			155,079				157,334
Goodwill			11,298				—
Intangible assets, net of accumulated amortization of $36,541 and $25,663, respectively			85,807				93,400
Deferred income taxes			84,020				89,757
Other assets			14,741				16,741
		$	1,342,067			$	1,607,640
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	480,795			$	720,833
Accrued expenses and other current liabilities			184,674				175,769
Current portion of long-term debt			732				—
Deferred revenue			47,232				36,339
Total current liabilities			713,433				932,941
Long-term debt			157,582				228,000
Deferred income taxes			1,807				2,291
Other liabilities			17,732				22,440
			890,554				1,185,672
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value, 3,000 shares authorized; no shares issued			—				—
Common stock, $0.01 par value, 100,000 shares authorized; 45,886 shares at September 30, 2009 and 45,595 shares at December 31, 2008 issued and outstanding			459				456
Additional paid-in capital			373,685				371,664
Retained earnings			56,459				40,290
Accumulated other comprehensive income — foreign currency translation adjustments			20,910				9,558
Total stockholders’ equity			451,513				421,968
		$	1,342,067			$	1,607,640

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
						As Restated								As Restated
						(1)								(1)
Net sales		$	969,935			$	1,165,056			$	2,958,257			$	3,665,139
Costs of goods sold			836,449				1,010,966				2,545,155				3,158,485
Gross profit			133,486				154,090				413,102				506,654
Operating expenses:
Selling and administrative expenses			117,623				139,137				374,831				427,476
Goodwill impairment			—				—				—				313,776
Severance and restructuring expenses			3,994				—				12,471				5,408
Earnings (loss) from operations			11,869				14,953				25,800				(240,006	)
Non-operating (income) expense:
Interest income			(45	)			(440	)			(333	)			(1,741	)
Interest expense			2,333				3,062				6,421				9,640
Net foreign currency exchange loss (gain)			93				3,307				(119	)			3,425
Other expense, net			217				297				697				787
Earnings (loss) from continuing operations before income taxes			9,271				8,727				19,134				(252,117	)
Income tax expense (benefit)			1,999				2,130				5,766				(91,812	)
Net earnings (loss) from continuing operations			7,272				6,597				13,368				(160,305	)
Net earnings from a discontinued operation			—				—				2,801				—
Net earnings (loss)		$	7,272			$	6,597			$	16,169			$	(160,305	)
Net earnings (loss) per share — Basic:
Net earnings (loss) from continuing operations		$	0.16			$	0.14			$	0.29			$	(3.42	)
Net earnings from a discontinued operation			—				—				0.06				—
Net earnings (loss) per share		$	0.16			$	0.14			$	0.35			$	(3.42	)
Net earnings (loss) per share — Diluted:
Net earnings (loss) from continuing operations		$	0.16			$	0.14			$	0.29			$	(3.42	)
Net earnings from a discontinued operation			—				—				0.06				—
Net earnings (loss) per share		$	0.16			$	0.14			$	0.35			$	(3.42	)
Shares used in per share calculations:
Basic			45,875				45,569				45,812				46,901
Diluted			46,445				45,929				46,164				46,901

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

		Nine Months Ended September 30,
		2009				2008
						As Restated
						(1)
Cash flows from operating activities:
Net earnings (loss)		$	16,169			$	(160,305	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Goodwill impairment			—				313,776
Depreciation and amortization			29,074				30,391
Provision for losses on accounts receivable			2,795				2,185
Write-downs of inventories			5,623				5,829
Non-cash stock-based compensation			7,974				6,313
Non-cash gain from arbitrated claim, net of tax			(2,801	)			—
Excess tax benefit from employee gains on stock-based compensation			—				(111	)
Deferred income taxes			1,706				(108,017	)
Changes in assets and liabilities:
Decrease in accounts receivable			282,463				210,298
Decrease (increase) in inventories			12,836				(2,473	)
(Increase) decrease in other current assets			(463	)			18,300
Decrease in other assets			3,935				2,877
Decrease in accounts payable			(257,413	)			(255,463	)
Increase (decrease) in deferred revenue			14,241				(18,845	)
(Decrease) increase in accrued expenses and other liabilities			(9,097	)			17,205
Net cash provided by operating activities			107,042				61,960
Cash flows from investing activities:
Acquisition of Calence, net of cash acquired			(12,834	)			(124,671	)
Acquisition of MINX, net of cash acquired			—				(957	)
Purchases of property and equipment			(11,739	)			(24,103	)
Other			—				(900	)
Net cash used in investing activities			(24,573	)			(150,631	)
Cash flows from financing activities:
Borrowings on senior revolving credit facility			833,373				712,089
Repayments on senior revolving credit facility			(905,873	)			(549,176	)
Borrowings on accounts receivable securitization financing facility			165,000				466,874
Repayments on accounts receivable securitization financing facility			(165,000	)			(444,500	)
Repayments on term loan			—				(56,250	)
Payments on capital lease obligation			(113	)			—
Net (repayments) borrowings under inventory financing facility			(4,446	)			18,213
Repayments on assumed debt			—				(10,978	)
Payment of deferred financing fees			(1,565	)			(3,355	)
Proceeds from sales of common stock under employee stock plans			—				5,031
Excess tax benefit from employee gains on stock-based compensation			—				111
Payment of payroll taxes on stock-based compensation through shares withheld			(463	)			(2,097	)
Repurchases of common stock			—				(50,000	)
Increase in book overdrafts			12,538				21,633
Net cash (used in) provided by financing activities			(66,549	)			107,595
Foreign currency exchange effect on cash flows			3,873				(3,191	)
Increase in cash and cash equivalents			19,793				15,733
Cash and cash equivalents at beginning of period			49,175				56,718
Cash and cash equivalents at end of period		$	68,968			$	72,451

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.

1. Basis of Presentation and Recently Issued Accounting Pronouncements

We are a leading provider of information technology (“IT”) hardware, software and services to small, medium and large businesses and public sector institutions in North America, Europe, the Middle East, Africa and Asia-Pacific. The Company is organized in the following three operating segments, which are primarily defined by their related geographies:

Operating Segment		Geography
North America		United States and Canada
EMEA		Europe, Middle East and Africa
APAC		Asia-Pacific

Currently, our offerings in North America and the United Kingdom include IT hardware, software and services. Our offerings in the remainder of our EMEA segment and in APAC are almost entirely software and select software-related services.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly our financial position as of September 30, 2009, our results of operations for the three and nine months ended September 30, 2009 and 2008 and our cash flows for the nine months ended September 30, 2009 and 2008. The consolidated balance sheet as of December 31, 2008 was derived from the audited consolidated balance sheet at such date. The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with the rules and regulations promulgated by the Securities and Exchange Commission (“SEC”) and consequently do not include all of the disclosures normally required by United States generally accepted accounting principles (“GAAP”).

The results of operations for such interim periods are not necessarily indicative of results for the full year, due in part to the seasonal nature of the business. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the related notes thereto, in our Annual Report on Form 10-K for the year ended December 31, 2008.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Additionally, these estimates and assumptions affect the reported amounts of net sales and expenses during the reported period. 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, 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.

The consolidated financial statements include the accounts of Insight Enterprises, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. References to “the Company,” “we,” “us,” “our” and other similar words refer to Insight Enterprises, Inc. and its consolidated subsidiaries, unless the context suggests otherwise.

Recently Issued Accounting Pronouncements

Effective for interim or annual periods ending after September 15, 2009, the Financial Accounting Standards Board (“FASB”) approved the FASB Accounting Standards Codification (“ASC”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as those published by the FASB, American Institute of Certified Public Accountants (“AICPA”), Emerging Issues Task Force (“EITF”) and other related literature, excluding guidance from the Securities and Exchange Commission (“SEC”), have been superseded by the ASC. All other non-grandfathered, non-SEC accounting literature not included in the ASC has become nonauthoritative.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

As a result of the Company’s implementation of the Codification during the quarter ended September 30, 2009, we are providing reference to both new and old guidance in the current quarter financial statements to assist in understanding the effects of recently adopted accounting literature, particularly for guidance adopted since the beginning of the current fiscal year but prior to the ASC.

There have been no material changes or additions to the recently issued accounting pronouncements as previously reported in Note 1 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2008 which affect or may affect our financial statements other than their subsequent codification within the ASC.

Effective January 1, 2009, we adopted the provisions of ASC 805, “Business Combinations,” previously Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), “Business Combinations,” ASC 350, “Intangibles — Goodwill and Other,” previously FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets,” and ASC 815, “Derivatives and Hedging,” previously SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement 133.” Other than the additional disclosures required by ASC 815 (see Note 9), the adoption of this accounting guidance had no effect on our financial statements.

Effective June 30, 2009, we adopted the provisions of ASC 855, “Subsequent Events,” previously SFAS No. 165 (revised 2007), “Subsequent Events.” Other than the additional disclosures required by ASC 855 (see Note 15), the adoption of this accounting guidance had no effect on our financial statements.

In September 2009, the FASB issued EITF Issue No. 08-1 “Revenue Arrangements with Multiple Deliverables.” EITF No. 08-1 amends ASC 605 “Revenue Recognition — Multiple-Element Arrangements,” previously EITF Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables,” to eliminate the requirement that all undelivered elements have objective and reliable evidence of their fair value before an entity can recognize the portion of an overall arrangement fee that is attributable to items that already have been delivered. In the absence of objective and reliable evidence of the standalone selling price for one or more delivered or undelivered elements in a multiple element arrangement, entities will be required to estimate the selling prices of those elements. The overall arrangement fee will be allocated to each element (both delivered and undelivered items) based on their relative selling prices, regardless of whether those selling prices are based on objective and reliable evidence or the entity’s estimated selling price. Application of the “residual method” of allocating an overall arrangement fee between delivered and undelivered elements will no longer be permitted upon adoption of EITF 08-1. Additionally, the new guidance will require entities to disclose more information about their multiple element revenue arrangements. Adoption of this amendment to ASC 605 is required for revenue arrangements entered into or materially modified during the year beginning January 1, 2011. Early adoption is permitted. We are in the process of determining the effect that the adoption of this accounting guidance will have on our consolidated financial statements and related disclosures.

In September 2009, the FASB issued EITF Issue No. 09-3 “Certain Revenue Arrangements That Include Software Elements.” EITF 09-3 amends ASC 985 “Software,” previously AICPA Statement of Position No. 97-2, “Software Revenue Recognition” and its related interpretive guidance, to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product’s essential functionality. Adoption of this amendment to ASC 985 is also required for revenue arrangements entered into or materially modified during the year beginning January 1, 2011. Early adoption is permitted. We are in the process of determining the effect that the adoption of this accounting guidance will have on our consolidated financial statements and related disclosures.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

2. Restatement of Consolidated Financial Statements

As discussed in our Annual Report in Form 10-K for the year ended December 31, 2008, on February 9, 2009, following an internal review we issued a press release announcing that our management had identified errors in the Company’s accounting for trade credits in prior periods dating back to December 1996. The internal review encompassed aged trade credits, including both aged accounts receivable credits and aged accounts payable credits, arising in the ordinary course of business that were recognized in the Company’s statements of operations prior to the legal discharge of the underlying liabilities under applicable domestic and foreign laws. In a Form 8-K filed on February 10, 2009, we reported that the Company’s financial statements, assessment of the effectiveness of internal control over financial reporting and related audit reports thereon in our Annual Report on Form 10-K for the year ended December 31, 2007, and the interim financial statements in our Quarterly Reports on Form 10-Q for the first three quarters of 2008, and all earnings press releases and similar communications issued by the Company relating to such financial statements, should no longer be relied upon.

We determined that corrections to our consolidated financial statements were required to reverse material prior period reductions of costs of goods sold and the related income tax effects as a result of these incorrect releases of aged trade credits. These trade credits arose from unclaimed credit memos, duplicate payments, payments for returned product or overpayments made to us by our clients, and, to a lesser extent, from goods received by us from suppliers for which we were never invoiced.

During the three months ended September 30, 2009, we recognized $1,910,000 in reductions of costs of goods sold as a result of the extinguishment of certain of these trade credit liabilities through negotiated settlements with clients or suppliers or other legal release of the underlying obligations.

In addition to the restatements for aged trade credits, we also corrected previously reported financial statements for other miscellaneous accounting adjustments as a result of a detailed review of our critical accounting policies. These adjustments are detailed in Note 2 “Restatement of Consolidated Financial Statements” in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2008.

All prior period financial information contained in this Quarterly Report on Form 10-Q gives effect to the restatement of our consolidated financial statements as described above. Financial information included in reports previously filed or furnished by Insight Enterprises, Inc. for the periods from January 1, 1996 through September 30, 2008 should not be relied upon and is superseded by the information in our Annual Report on Form 10-K for the year ended December 31, 2008, which was filed with the Securities and Exchange Commission on May 12, 2009, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009 and this Quarterly Report on Form 10-Q.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following table presents the effect of the restatement adjustments on the Company’s previously reported statement of operations amounts for the three and nine months ended September 30, 2008 (in thousands):

		Three Months Ended September 30, 2008												Nine Months Ended September 30, 2008
		As												As
		Reported				Adjustments				As Restated				Reported				Adjustments				As Restated
						(1)				(1)								(1)				(1)
Net sales		$	1,168,916			$	(3,860	)		$	1,165,056			$	3,674,427			$	(9,288	)		$	3,665,139
Costs of goods sold			1,014,844				(3,878	)			1,010,966				3,165,458				(6,973	)			3,158,485
Gross profit			154,072				18				154,090				508,969				(2,315	)			506,654
Operating expenses:
Selling and administrative expenses			139,198				(61	)			139,137				424,061				3,415				427,476
Goodwill impairment			—				—				—				313,949				(173	)			313,776
Severance and restructuring expenses			—				—				—				5,408				—				5,408
Earnings (loss) from operations			14,874				79				14,953				(234,449	)			(5,557	)			(240,006	)
Non-operating (income) expense:
Interest income			(440	)			—				(440	)			(1,741	)			—				(1,741	)
Interest expense			3,085				(23	)			3,062				9,749				(109	)			9,640
Net foreign currency exchange loss			3,307				—				3,307				3,425				—				3,425
Other expense, net			297				—				297				787				—				787
Earnings (loss) from continuing operations before income taxes			8,625				102				8,727				(246,669	)			(5,448	)			(252,117	)
Income tax expense (benefit)			1,912				218				2,130				(89,625	)			(2,187	)			(91,812	)
Net earnings (loss) from continuing operations			6,713				(116	)			6,597				(157,044	)			(3,261	)			(160,305	)
Net earnings from a discontinued operation			—				—				—				—				—				—
Net earnings (loss)		$	6,713			$	(116	)		$	6,597			$	(157,044	)		$	(3,261	)		$	(160,305	)
Net earnings (loss) per share — Basic:
Net earnings (loss) from continuing operations		$	0.15			$	(0.01	)		$	0.14			$	(3.35	)		$	(0.07	)		$	(3.42	)
Net earnings from a discontinued operation			—				—				—				—				—				—
Net earnings (loss) per share		$	0.15			$	(0.01	)		$	0.14			$	(3.35	)		$	(0.07	)		$	(3.42	)
Net earnings (loss) per share — Diluted:
Net earnings (loss) from continuing operations		$	0.15			$	(0.01	)		$	0.14			$	(3.35	)		$	(0.07	)		$	(3.42	)
Net earnings from a discontinued operation			—				—				—				—				—				—
Net earnings (loss) per share		$	0.15			$	(0.01	)		$	0.14			$	(3.35	)		$	(0.07	)		$	(3.42	)

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following table presents the effect of the restatement adjustments on the Company’s previously reported cash flow amounts for the nine months ended September 30, 2008 (in thousands):

		Nine Months Ended September 30, 2008
		As Reported				Adjustments				As Restated
						(1)				(1)
Cash flows from operating activities:
Net loss		$	(157,044	)		$	(3,261	)		$	(160,305	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment			313,949				(173	)			313,776
Depreciation and amortization			30,287				104				30,391
Provision for losses on accounts receivable			2,185				—				2,185
Write-downs of inventories			5,829				—				5,829
Non-cash stock-based compensation			7,556				(1,243	)			6,313
Excess tax benefit from employee gains on stock-based compensation			(108	)			(3	)			(111	)
Deferred income taxes			(108,593	)			576				(108,017	)
Changes in assets and liabilities:
Decrease in accounts receivable			201,010				9,288				210,298
Decrease (increase) in inventories			6,294				(8,767	)			(2,473	)
Decrease in other current assets			18,300				—				18,300
Decrease in other assets			2,877				—				2,877
Decrease in accounts payable			(253,561	)			(1,902	)			(255,463	)
Decrease in deferred revenue			(18,845	)			—				(18,845	)
Increase in accrued expenses and other liabilities			11,985				5,220				17,205
Net cash provided by operating activities			62,121				(161	)			61,960
Cash flows from investing activities:
Acquisition of Calence, net of cash acquired			(124,671	)			—				(124,671	)
Acquisition of MINX, net of cash acquired			(957	)			—				(957	)
Purchases of property and equipment			(23,994	)			(109	)			(24,103	)
Other			(900	)			—				(900	)
Net cash used in investing activities			(150,522	)			(109	)			(150,631	)
Cash flows from financing activities:
Borrowings on senior revolving credit facility			712,089				—				712,089
Repayments on senior revolving credit facility			(549,176	)			—				(549,176	)
Borrowings on accounts receivable securitization financing facility			466,874				—				466,874
Repayments on accounts receivable securitization financing facility			(444,500	)			—				(444,500	)
Repayments on term loan			(56,250	)			—				(56,250	)
Net borrowings under inventory financing facility			18,213				—				18,213
Repayments on assumed debt			(10,978	)			—				(10,978	)
Payment of deferred financing fees			(3,355	)			—				(3,355	)
Proceeds from sales of common stock under employee stock plans			5,031				—				5,031
Excess tax benefit from employee gains on stock-based compensation			108				3				111
Payment of payroll taxes on stock-based compensation through shares withheld			(2,097	)			—				(2,097	)
Repurchases of common stock			(50,000	)			—				(50,000	)
Increase in book overdrafts			21,633				—				21,633
Net cash provided by financing activities			107,592				3				107,595
Foreign currency exchange effect on cash flows			(3,458	)			267				(3,191	)
Increase in cash and cash equivalents			15,733				—				15,733
Cash and cash equivalents at beginning of period			56,718				—				56,718
Cash and cash equivalents at end of period		$	72,451			$	—			$	72,451

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

3. Net Earnings (Loss) from Continuing Operations Per Share (“EPS”)

Basic EPS is computed by dividing net earnings (loss) from continuing operations available to common stockholders by the weighted average number of common shares outstanding during each period. 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 stock options and restricted stock units. A reconciliation of the denominators of the basic and diluted EPS calculations follows (in thousands, except per share data):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
						As Restated								As Restated
						(1)								(1)
Numerator:
Net earnings (loss) from continuing operations		$	7,272			$	6,597			$	13,368			$	(160,305	)
Denominator:
Weighted average shares used to compute basic EPS			45,875				45,569				45,812				46,901
Dilutive potential common shares due to dilutive options and restricted stock units, net of tax effect			570				360				352				—
Weighted average shares used to compute diluted EPS			46,445				45,929				46,164				46,901
Net earnings (loss) from continuing operations:
Basic		$	0.16			$	0.14			$	0.29			$	(3.42	)
Diluted		$	0.16			$	0.14			$	0.29			$	(3.42	)

During the three and nine months ended September 30, 2009, 1,425,000 and 1,851,000 weighted average outstanding stock options, respectively, were not included in the diluted EPS calculation because the exercise prices of these options were greater than the average market price of our common stock during the period. During the three months ended September 30, 2008, 2,607,000 weighted average outstanding stock options were not included in the diluted EPS calculation because the exercise prices of these options were greater than the average market price of our common stock during the period. No potential common shares were included in the diluted EPS computation for the nine months ended September 30, 2008 because of the net loss in that period, which would have resulted in an antidilutive per share effect.

4. Goodwill

During the nine months ended September 30, 2009, we accrued $11,298,000 of additional purchase price consideration and the related accrued interest thereon as a result of Calence, LLC (“Calence”), acquired April 1, 2008, achieving certain performance targets. In April 2009, a cash payment of $12,834,000 was made to the former owners of Calence related to this additional purchase price consideration and the related interest thereon accrued through March 31, 2009. Such amount is reflected as an investing activity within the Consolidated Statement of Cash Flows. Additional purchase price consideration and the related accrued interest thereon of $8,826,000 that was accrued during the period from March 31, 2009 through September 30, 2009 is included in accrued expenses and other current liabilities within the Consolidated Balance Sheet. Such amount is expected to be paid to the former owners of Calence in November 2009. We also expect that Calence will achieve the remaining performance targets specified in the purchase agreement, and, if Calence does achieve those targets, we will recognize approximately $5,000,000, including accrued interest, in additional purchase price consideration in the fourth quarter of 2009 and the first quarter of 2010. Accordingly, we anticipate making a final cash payment to the former owners of Calence in the second quarter of 2010.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

5. Debt, Capital Lease Obligation and Inventory Financing Facility

Debt

Our long-term debt consists of the following (in thousands):

		September 30,				December 31,
		2009				2008
Senior revolving credit facility		$	155,500			$	228,000
Accounts receivable securitization financing facility (the “ABS facility”)			—				—
Capital lease obligation			2,814				—
Total			158,314				228,000
Less: current portion of obligation under capital lease			(732	)			—
Less: current portion of revolving credit facilities			—				—
Long-term debt		$	157,582			$	228,000

Our senior revolving credit facility has a maximum borrowing capacity of $300,000,000 and matures April 1, 2013.

On July 24, 2009, we amended our ABS facility, which was to have expired on September 17, 2009, to, among other changes, (i) add software receivables from the legacy Software Spectrum business as eligible receivables under the facility, (ii) reduce our eligible receivables under the facility by $52,341,000 to reflect the trade credit liabilities that were recorded as part of our financial statement restatement described in Note 2 as well as certain other accounts receivable related to sales where revenue recognition from the sale has been deferred (iii) establish a new 364-day term ending July 23, 2010 and (iv) increase the variable interest rate by approximately 75 basis points for funds provided under the ABS facility, calculated as the specified Pooled Commercial Paper Rate, as defined in the ABS facility, plus 2.25%. The $150,000,000 maximum borrowing capacity and the maximum leverage, minimum fixed charge and asset coverage ratio financial covenant requirements under the ABS facility were not modified as part of the amendment. While the ABS facility has a stated maximum amount, the actual availability under the ABS facility is limited by the quantity and quality of the underlying accounts receivable.

Our financing facilities contain various covenants. If we fail to comply with these covenants, the lenders would be able to demand payment within a specified period of time. At September 30, 2009, we were in compliance with all such covenants.

Capital Lease Obligation

In July 2009, we entered into a four-year lease for certain IT equipment. The obligation under the capitalized lease is included in long-term debt in our Consolidated Balance Sheet as of September 30, 2009. The current and long-term portions of the obligation are included in the table above. The capital lease was a non-cash transaction and, accordingly, has been excluded from our Consolidated Statement of Cash Flows for the nine months ended September 30, 2009.

The value of the equipment held under the capitalized lease, $2,927,000, is included in property and equipment. These capital lease assets are amortized on a straight-line basis over the lease term. The related amortization expense is included in selling and administrative expenses in our Consolidated Statement of Operations for the nine months ended September 30, 2009. As of September 30, 2009, accumulated amortization on the capital lease assets was $112,000.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Future minimum payments under the capitalized lease consist of the following as of September 30, 2009 (in thousands):

2009		$	192
2010			768
2011			768
2012			768
2013			448
Total minimum lease payments			2,944
Less amount representing interest			(130	)
Present value of minimum lease payments		$	2,814

Inventory Financing Facility

As of September 30, 2009 and December 31, 2008, $76,458,000 and $80,904,000, respectively, was included in accounts payable within the Consolidated Balance Sheet related to our inventory financing facility.

6. Income Taxes

Our effective tax rate from continuing operations for the three and nine months ended September 30, 2009 was 21.6% and 30.1%, respectively. For the three and nine months ended September 30, 2009, our effective tax rate was lower than the United States federal statutory rate of 35.0% due primarily to lower taxes on income in foreign jurisdictions, total benefits of $1,544,000 recognized during the quarter primarily related to the true-up of foreign tax credits resulting from the filing of our 2008 United States federal tax return and the recognition of certain tax benefits resulting from the settlement of audits, partially offset by state income taxes, net of federal benefit.

Our effective tax rate for the three months ended September 30, 2008 was 24.4% on $8,727,000 of earnings from continuing operations. Our effective tax rate for the nine months ended September 30, 2008 was 36.4% on a $252,117,000 loss from continuing operations. The effective tax rate for the three months ended September 30, 2008 differed from the United States federal statutory rate of 35.0% due primarily to the benefit of federal and state research and development credits of $1,179,000 recorded during the quarter when the credits were identified and appropriate returns were filed, state income taxes, net of federal tax, and lower taxes on income earned in foreign jurisdictions. The effective tax rate for the nine months ended September 30, 2008 differed from the United States federal statutory rate of 35.0% due primarily to state income taxes, net of federal tax, and lower taxes on income earned in foreign jurisdictions, offset by the non-deductible portion of the goodwill impairment charge during the nine months ended September 30, 2008.

Several of our subsidiaries are currently under audit for the 2002 through 2006 tax years. It is reasonably possible that the examination phase of these audits may conclude in the next 12 months and that the related unrecognized tax benefits for uncertain tax positions may change, potentially having a material effect on our effective tax rate. However, based on the status of the various examinations in multiple jurisdictions, an estimate of the range of reasonably possible outcomes cannot be made at this time.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

7. Severance, Restructuring and Acquisition Integration Activities

Severance Costs Expensed for 2009 Resource Actions

During the three months ended September 30, 2009, North America and EMEA recorded severance expense totaling $4,656,000 and $339,000, respectively, and APAC recorded an adjustment to previous accrued severance costs resulting in a reduction of severance expense of $11,000. During the nine months ended September 30, 2009, North America, EMEA and APAC recorded severance expense totaling $10,515,000, $2,656,000 and $290,000, respectively, related to the departure of our President and Chief Executive Officer from the Company and ongoing restructuring efforts to reduce operating expenses.

The following table details the changes in these liabilities during the nine months ended September 30, 2009 (in thousands):

		North America				EMEA				APAC				Consolidated
Severance costs		$	10,515			$	2,656			$	290			$	13,461
Foreign currency translation adjustments			—				140				(2	)			138
Cash payments			(9,666	)			(1,088	)			(250	)			(11,004	)
Balance at September 30, 2009		$	849			$	1,708			$	38			$	2,595

All remaining outstanding obligations are expected to be paid during the year ending December 31, 2009 and are therefore included in accrued expenses and other current liabilities.

Severance Costs Expensed for 2008 Resource Actions

During the year ended December 31, 2008, North America, EMEA and APAC recorded severance expense related to ongoing restructuring efforts to reduce operating expenses related to support functions. The following table details the changes in these liabilities during the nine months ended September 30, 2009 (in thousands):

		North America				EMEA				APAC				Consolidated
Balance at December 31, 2008		$	775			$	1,939			$	—			$	2,714
Foreign currency translation adjustments			—				10				—				10
Adjustments			(188	)			(94	)			—				(282	)
Cash payments			(563	)			(1,784	)			—				(2,347	)
Balance at September 30, 2009		$	24			$	71			$	—			$	95

All remaining outstanding obligations are expected to be paid during the year ending December 31, 2009 and are therefore included in accrued expenses and other current liabilities.

Acquisition-Related Costs Capitalized in 2006 as a Cost of Acquisition of Software Spectrum

In 2006, we recorded $9,738,000 of employee termination benefits and $1,676,000 of facility based costs in connection with the integration of Software Spectrum. These costs were recognized as a liability assumed in the purchase business combination and included in the allocation of the cost to acquire Software Spectrum.

The employee termination benefits relate to severance payments for Software Spectrum teammates in North America and EMEA who have been or will be terminated in connection with integration plans. The facilities based costs relate to future lease payments or lease termination costs associated with vacating certain Software Spectrum facilities in EMEA.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following table details the changes in these liabilities during the nine months ended September 30, 2009 (in thousands):

		North America				EMEA				Consolidated
Balance at December 31, 2008		$	341			$	2,806			$	3,147
Foreign currency translation adjustments			—				118				118
Adjustments			—				(818	)			(818	)
Cash payments			—				(530	)			(530	)
Balance at September 30, 2009		$	341			$	1,576			$	1,917

In the accompanying consolidated balance sheet at September 30, 2009, $1,375,000 is included in accrued expenses and other current liabilities, and $542,000 is included in other liabilities (long-term). An adjustment of $818,000 was recorded as a reduction of selling and administrative expenses recorded during the nine months ended September 30, 2009 and the related severance accrual in EMEA due to a change in estimate of the costs of the integration plan.

Restructuring Costs Expensed in 2005

During the year ended December 31, 2005, Insight UK moved into a new facility and recorded facilities-based restructuring costs of $7,458,000.

The following table details the changes in this liability during the nine months ended September 30, 2009 (in thousands):

		EMEA
Balance at December 31, 2008		$	1,050
Foreign currency translation adjustments			132
Adjustments			(708	)
Cash payments			(407	)
Balance at September 30, 2009		$	67

The remaining accrual of $67,000 is expected to be paid in 2009, as the leases expire in October 2009, and is therefore included in accrued expenses and other current liabilities. An adjustment of $708,000 was recorded as a reduction of severance and restructuring expenses recorded during the three and nine months ended September 30, 2009 and the related lease accrual in EMEA due to a change in estimate of the costs of exiting the leased facilities upon negotiation of the final settlement with the landlord during the three months ended September 30, 2009.

8. Stock-Based Compensation

We recorded the following pre-tax amounts for stock-based compensation, by operating segment, in our consolidated financial statements (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
						As Restated								As Restated
						(1)								(1)
North America		$	697			$	457			$	5,822			$	4,516
EMEA			68				(45	)			2,000				1,631
APAC			44				12				152				166
Total		$	809			$	424			$	7,974			$	6,313

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Stock Options

For the three months ended September 30, 2009 and 2008, we recorded stock-based compensation expense related to stock options, net of an estimate of forfeitures, of $72,000 and $120,000, respectively. For the nine months ended September 30, 2009 and 2008, we recorded stock-based compensation expense related to stock options, net of an estimate of forfeitures, of $207,000 and $413,000, respectively. As of September 30, 2009, total compensation cost not yet recognized related to nonvested stock options is $447,000, which is expected to be recognized over the next .74 years on a weighted-average basis.

The following table summarizes our stock option activity during the nine months ended September 30, 2009:

														Weighted
										Aggregate				Average
						Weighted				Intrinsic Value				Remaining
		Number				Average				(in-the-money				Contractual
		Outstanding				Exercise Price				options)				Life (in years)
Outstanding at January 1, 2009			2,536,673			$	19.47
Granted			—				—
Exercised			—				—			$	—
Forfeited or expired			(1,813,765	)			19.72
Outstanding at September 30, 2009			722,908				18.86			$	—				1.30
Exercisable at September 30, 2009			589,575				19.10			$	—				0.87
Vested and expected to vest			711,241				18.87			$	—				1.26

There is no aggregate intrinsic value reflected in the preceding table because our closing stock price of $12.21 as of September 30, 2009 was less than the exercise price of all outstanding options. Stock options forfeited during the nine months ended September 30, 2009 include 750,000 options which had been granted to our former President and Chief Executive Officer.

The following table summarizes the status of outstanding stock options as of September 30, 2009:

		Options Outstanding												Options Exercisable
						Weighted				Weighted								Weighted
						Average				Average								Average
Range of		Number of				Remaining				Exercise				Number of				Exercise
Exercise		Options				Contractual				Price Per				Options				Price Per
Prices		Outstanding				Life (in years)				Share				Exercisable				Share
$13.94 – 17.34			38,476				1.21			$	15.46				38,476			$	15.46
17.76 – 17.77			200,833				3.20				17.77				67,500				17.77
17.79 – 18.15			33,476				0.48				18.02				33,476				18.02
18.35 – 18.53			161,840				0.34				18.53				161,840				18.53
18.64 – 41.00			288,283				0.61				20.35				288,283				20.35
			722,908				1.30				18.86				589,575				19.10

Restricted Stock

For the three months ended September 30, 2009 and 2008, we recorded stock-based compensation expense, net of estimated forfeitures, related to restricted stock units (“RSUs”) of $737,000 and $304,000, respectively. For the nine months ended September 30, 2009 and 2008, we recorded stock-based compensation expense, net of estimated forfeitures, related to restricted stock shares and RSUs of $7,767,000 and $5,900,000, respectively. The expense for the nine months ended September 30, 2009 includes a non-cash charge of $5,478,000 that was recognized as a result of the cancellation of certain long-term incentive awards discussed below. As of September 30, 2009, total compensation cost not yet recognized related to nonvested RSUs is $5,811,000, which is expected to be recognized over the next 1.04 years on a weighted-average basis.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following table summarizes our RSU activity during the nine months ended September 30, 2009:

						Weighted Average
		Number				Grant Date Fair Value				Fair Value
Nonvested at January 1, 2009			1,520,156			$	13.71
Granted			1,160,780				3.15
Vested, including shares withheld to cover taxes			(397,818	)			19.37			$	1,862,681	(a)
Forfeited			(1,070,252	)			8.73
Nonvested at September 30, 2009			1,212,866				6.14			$	14,809,094	(b)
Expected to vest			1,037,239							$	12,664,688	(b)

During the nine months ended September 30, 2009, the RSUs that vested for teammates in the United States were net-share settled such that we withheld shares with value equivalent to the teammates’ minimum statutory United States tax obligation for the applicable income and other employment taxes and remitted the corresponding cash amount to the appropriate taxing authorities. The total shares withheld during the nine months ended September 30, 2009 of 107,041 were based on the value of the RSUs on their vesting date as determined by our closing stock price on such vesting date. For the nine months ended September 30, 2009, total payments for the employees’ tax obligations to the taxing authorities were $463,000 and are reflected as a financing activity within the Consolidated Statements of Cash Flows. These net-share settlements had the economic effect of repurchases of 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 a repurchase of shares or an expense to us.

On January 23, 2008, the Compensation Committee of our Board of Directors approved a special long-term incentive award for the Chief Executive Officer, the President of our North America/APAC operating segments and the President of our EMEA operating segment. The approved grant level targets were as follows:

•

Richard A. Fennessy, President and Chief Executive Officer — 300,000 RSUs;

•

Mark T. McGrath, President, North America/APAC — 150,000 RSUs; and

•

Stuart A. Fenton, President, EMEA — 100,000 RSUs.

The plan provided for the award of RSUs that were to be issued based upon achievement of specific stock price hurdles within specific timeframes over a three-year period from 2009—2011. However, due to the economic climate and the decrease in Insight’s stock price, on February 19, 2009, Messrs. Fennessy, Fenton and McGrath agreed to forfeit the awards, resulting in the termination of the awards. Accordingly, no shares were, or will be, issued under these awards. A non-cash charge of $5,478,000 was recognized as a result of the cancellation of these awards. Such amount is included in selling and administrative expenses in the Consolidated Statement of Operations for the nine months ended September 30, 2009.

9. Derivative Financial Instruments

We use derivatives to partially offset our exposure to fluctuations in certain foreign currencies. We do not enter into derivatives for speculative or trading purposes. Derivatives are recorded at fair value on the balance sheet and gains or losses resulting from changes in fair value of the derivative are recorded currently in income. The Company does not designate its hedges for hedge accounting.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Non-Designated Hedges

We use foreign exchange forward contracts to hedge certain non-functional currency assets and liabilities from changes in exchange rate movements. Our non-functional currency assets and liabilities are primarily related to foreign currency denominated payables, receivables, and cash balances. The foreign currency forward contracts, carried at fair value, typically have a maturity of one month or less. We currently enter into approximately four foreign exchange forward contracts per month with an average notional value of $7,500,000 and an average maturity of approximately one week. Additional information on our purpose for entering into derivatives is described in “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2008.

The counterparties associated with our foreign exchange forward contracts are large credit worthy commercial banks. The derivatives transacted with these institutions are short in duration and therefore we do not consider counterparty concentration and non-performance to be material risks.

The following table summarizes our derivative financial instruments as of September 30, 2009 (in thousands):

		Asset Derivatives								Liability Derivatives
		Balance Sheet Location				Fair Value				Balance Sheet Location		Fair Value
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts		Other current assets				$	26			Accrued expenses and other current liabilities		$	—
Total derivatives not designated as hedging instruments						$	26					$	—

The following table summarizes the effect of our derivative financial instruments on our results of operations during the three and nine months ended September 30, 2009 (in thousands):

Amount of Loss Recognized in

Earnings on Derivatives

Derivatives Not Designated as

Location of Loss Recognized

Three Months Ended

Nine Months Ended

Hedging Instruments

in Earnings on Derivatives

September 30, 2009

September 30, 2009

Foreign exchange forward contracts

Net foreign currency exchange loss (gain)

$

467

$

2,284

Total

$

467

$

2,284

10. Fair Value Measurements

The following table summarizes the valuation of our financial instruments by the following three categories as of September 30, 2009 (in thousands):

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

INSIGHT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

						Quoted				Significant
						Market Prices				Other				Significant
		Value as of				in Active				Observable				Unobservable
		September 30,				Markets				Inputs				Inputs				Balance Sheet
		2009				(Level 1)				(Level 2)				(Level 3)				Classification
Assets:
Foreign Exchange Derivatives		$	26			$	—			$	26			$	—			Other current assets
Total Assets at Fair Value		$	26			$	—			$	26			$	—
Liabilities:
Foreign Exchange Derivatives		$	—			$	—			$	—			$	—			Accrued expenses and other current liabilities
Total Liabilities at Fair Value		$	—			$	—			$	—			$	—

We have elected to use the income approach to value our foreign exchange derivatives, using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount assuming that participants are motivated, but not compelled, to transact. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR rates, foreign exchange rates, and foreign exchange forward points). Mid-market pricing is used as a practical expedient for fair value measurements. The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of these derivative instruments. Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments.

As of September 30, 2009, we have no nonfinancial assets or liabilities that are measured 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 and accrued expenses and other current liabilities. The estimated fair values of our cash equivalents is determined based on quoted prices in active markets for identical assets. The fair value of the other financial assets and liabilities is based on the value that would be received or paid in an orderly transaction between market participants and approximates the carrying value due to their nature and short duration.

11. Comprehensive Income (Loss)

Comprehensive income (loss) for the three and nine months ended September 30, 2009 and 2008 includes the following component (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
						As Restated								As Restated
						(1)								(1)
Net earnings (loss)		$	7,272			$	6,597			$	16,169			$	(160,305	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			2,714				(22,327	)			11,352				(14,475	)
Total comprehensive income (loss)		$	9,986			$	(15,730	)		$	27,521			$	(174,780	)