Insight Enterprises, Inc. Reports Third Quarter 2008 Results

Insight Enterprises, Inc. (Nasdaq: NSIT) (the "Company”) today reported results of operations for the three months ended September 30, 2008.

Third Quarter Highlights

• Net sales for the quarter increased 5% to $1.17 billion.
• Gross profit for the quarter grew 3% to $154.1 million.
• Net earnings from continuing operations for the quarter decreased to $6.7 million from $9.1 million.
• Diluted EPS from continuing operations for the quarter declined to $0.15 from $0.18.
• Third quarter 2008 results include $3.3 million of foreign currency losses, primarily resulting from the strengthening of the U.S. Dollar against the Euro and the British Pound Sterling and the volatility of those exchange rates during the quarter. The 2007 results included $849,000 of net foreign currency losses.
• Third quarter 2008 results include $1.1 million of tax benefit related to federal and state research and development credits recorded during the quarter.
• Third quarter 2007 results include expenses of $2.5 million for professional fees associated with our stock option review.
• Completed the acquisition of MINX Limited on July 10, 2008.

"In the third quarter, the demand environment for IT solutions continued to be very challenging as the overall economy worsened, especially in September,” said Rich Fennessy, President and Chief Executive Officer. "In this environment, as we finish out 2008 and head into 2009, we are focused on optimizing our new sales coverage model and taking actions to reduce our base infrastructure costs and discretionary spending.”

SEGMENT OVERVIEW

Net sales in North America increased 5% to $854.7 million in the third quarter. The hardware net sales of Calence more than offset the decline in net sales in the Company’s legacy hardware business. The software and services categories are performing well, reporting growth of 2% and 126%, respectively, in the third quarter. Consistent with the first half of the year, pricing continued to sustain pressure in the third quarter. As a result, gross profit dollars in North America declined by 2% while gross margin decreased approximately 80 basis points. Selling and administrative expenses were 11.5% of net sales, a level that was consistent with the third quarter of last year because incremental selling and administrative expenses resulting from the Company’s growth through acquisitions were offset by expense management initiatives and reduced performance-based compensation expense. Additionally, during 2008, there were no professional fees associated with the prior year stock option review. As a result, earnings from operations in North America were down 43% in the quarter.

In this environment, we must continue to be aggressive in ensuring we decrease our base cost infrastructure and discretionary spending levels going into next year. As a result of actions we took earlier in the year, expected efficiencies from our systems upgrade project, and additional actions planned for the 4th quarter, we are targeting a year over year decrease in the net operating expenses of our legacy North America business in 2009 of approximately $20 million, or about 6%.

EMEA continued to execute well during the third quarter, which resulted in strong financial results for this segment. Net sales increased 6% to $281.4 million. In local currency, net sales across hardware, software and services grew in the quarter. Gross profit dollars grew 17% and for the third consecutive quarter, gross margin increased over 100 basis points year over year. As a result, earnings from operations more than doubled versus last year.

On July 10, 2008, we acquired MINX Limited, a United Kingdom-based networking services company with annual net sales of approximately $25.0 million. This acquisition, along with the Calence acquisition in North America in the second quarter, is consistent with our vision and strategy to become a global value added reseller ("G-VAR”) through continued investment in certain key technology categories, including networking and advanced communications.

In APAC, while net sales increased 20% to $32.8 million in the quarter, earnings from operations decreased year over year due to a decrease in fee based enterprise agreement sales and increased selling and administrative expenses the Company added to support long term growth in the region.

GUIDANCE

We expect the demand environment to continue to be soft in the fourth quarter. As a result, we expect fourth quarter 2008 diluted earnings per share to be between $0.27 and $0.34. This estimate includes no severance, restructuring or other one-time charges. The reason for such a wide range is that, worldwide, the current environment is quite unprecedented making forecasting more difficult. As such, this guidance reflects management’s expectations for the balance of 2008, but the factors that could affect performance are numerous.

CONFERENCE CALL AND WEBCAST

The Company will host a conference call and live webcast today at 5:00 p.m. ET to discuss third quarter 2008 results of operations. To access the teleconference, please dial 866-362-4831 (US & Canada) or 617-597-5347 (International) and enter the participant code 38460820. The live webcast (in listen-only mode) and subsequent replays of the conference call will be available online on the investor relations section of our website, insight.com, at http://www.insight.com/site/static/investor_relations.cfm for a limited period of time.

* A tabular reconciliation of financial measures prepared in accordance with GAAP to non-GAAP financial measures is included at the end of this press release.

USE OF NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures in 2008 exclude the goodwill impairment charge recorded in the second quarter and the tax effect of that item. We exclude goodwill impairment charges when internally evaluating earnings from operations, tax expense, net earnings and diluted earnings per share for the Company and earnings from operations for the individual 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 our results to competitors’ financial results. We believe that these non-GAAP financial measures are useful to investors because they allow for greater transparency, facilitate comparisons to prior periods and competitors’ results and assist in forecasting performance for future periods because they exclude items we believe to be outside of normal operating results. 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.

FORWARD-LOOKING INFORMATION

Certain statements in this release and the related conference call and webcast are "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including our projected diluted earnings per share for 2008 and the expected cost savings from restructuring activities, are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statement. Some of the important factors that could cause our 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 our Annual Report on Form 10-K for the year ended December 31, 2007:

• 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;
• disruptions in our information technology systems and voice and data networks, including the system upgrade and the migration of acquired businesses to our information technology systems and voice and data networks;
• the integration and operation of acquired businesses, including our ability to achieve expected benefits of the acquisitions;
• actions of our competitors, including manufacturers and publishers of products we sell;
• the risks associated with international operations;
• seasonal changes in demand for sales of software licenses;
• 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;
• exposure to currency exchange risks and volatility in the U.S. dollar exchange rate;
• our dependence on key personnel;
• risk that purchased goodwill or intangible assets become impaired;
• 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 release 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 made by third parties.