Published: 2022-02-18 00:00:00 ET

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Description of Business

We empower organizations with technology, solutions and services to help our clients maximize the value of Information Technology (“IT”) today and drive (digital) transformation for tomorrow in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”). As a Fortune 500-ranked global technology provider of end-to-end secure digital transformation solutions and services, we help clients innovate and optimize their operations to run smarter. Our company is organized in the following three operating segments, which are primarily defined by their related geographies:

Operating Segment						Geography
North America						United States ("U.S.") and Canada
EMEA						Europe, Middle East and Africa
APAC						Asia-Pacific

Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services, including cloud solutions. Our offerings in the remainder of our EMEA and APAC segments are largely software and certain software-related services and cloud solutions.

Acquisitions

Effective February 28, 2020, we acquired vNext SAS (“vNext”), a French digital consulting services and managed services provider. The acquisition was funded using cash on hand.

Effective August 30, 2019, we acquired PCM, Inc. (“PCM”), a provider of multi-vendor technology offerings, including hardware, software and services, for a purchase price of approximately $745,562,000, including cash and cash equivalents of $84,637,000 and the payment of PCM’s outstanding debt. The acquisition was funded through a combination of using cash on hand and borrowings under our senior secured revolving credit facility (the “ABL facility”).

Our results of operations include the results of vNext and PCM from their respective acquisition dates. (See Note 20 for a discussion of our PCM acquisition).

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of Insight Enterprises, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Included in our accounts receivable, net balance at December 31, 2021 and 2020 is $15,316,000 and $8,398,000, respectively, of accounts receivable from an unconsolidated affiliate. References to “the Company,” “Insight,” “we,” “us,” “our” and other similar words refer to Insight Enterprises, Inc. and its consolidated subsidiaries, unless the context suggests otherwise.

Acquisition Accounting

The Company accounts for all business combinations using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes estimates and assumptions. Initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“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 reporting period. Actual results could differ from those

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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, valuation of inventories, 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.

Cash, Cash Equivalents and Restricted Cash

We consider all highly liquid investments with maturities at the date of purchase of three months or less to be cash equivalents.

Book overdrafts represent the amount by which outstanding checks issued, but not yet presented to our banks for disbursement, exceed balances on deposit in applicable bank accounts and a legal right of offset with our positive cash balances in other financial institution accounts does not exist. Our book overdrafts, which are not directly linked to a credit facility or other bank overdraft arrangement, do not result in an actual bank financing, but rather constitute normal unpaid trade payables at the end of a reporting period. These amounts are included within our accounts payable balance in our consolidated balance sheets. The changes in these book overdrafts are included within the changes in accounts payable line item as a component of cash flows from operating activities in our consolidated statements of cash flows.

Restricted cash generally includes any cash that is restricted as to withdrawal or usage. These amounts are included with cash and cash equivalents on the consolidated statement of cash flows. All cash receipts/payments with third parties directly to/from restricted cash accounts are reported as an operating, investing or financing cash flow, based on the nature of the transaction.

Allowance for Doubtful Accounts

We establish an allowance for doubtful accounts to reflect our best estimate of probable losses inherent in our accounts receivable balance. The allowance is based on our evaluation of the aging of the receivables, historical write-offs and the current economic environment. We write off individual accounts against the reserve when we no longer believe that it is probable that we will collect the receivable because we become aware of a client’s or partner’s inability to meet its financial obligations. Such awareness may be as a result of bankruptcy filings, or deterioration in the client’s or partner’s operating results or financial position.

Inventories

We state inventories, principally purchased IT hardware, at the lower of weighted average cost (which approximates cost under the first-in, first-out method) or net realizable value. We evaluate inventories for excess, obsolescence or other factors that may render inventories unmarketable at normal margins. Write-downs are recorded so that inventories reflect the approximate net realizable value and take into account contractual provisions with our partners governing price protection, stock rotation and return privileges relating to obsolescence. Because of the large number of transactions and the complexity of managing the price protection and stock rotation process, estimates are made regarding write-downs of the carrying amount of inventories. Additionally, assumptions about future demand, market conditions and decisions by manufacturers/publishers to discontinue certain products or product lines can affect our decision to write down inventories.

Property and Equipment

We record property and equipment at cost. We capitalize major improvements and betterments, while maintenance, repairs and minor replacements are expensed as incurred. Depreciation or amortization is provided using the straight-line method over the following estimated economic lives of the assets:

			Estimated Economic Life
Leasehold improvements			Shorter of underlying lease term or asset life
Furniture and fixtures			2 – 7 years
Equipment			3 – 5 years
Software			3 – 10 years
Buildings			29 years

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External direct costs of materials and services consumed in developing or obtaining internal-use computer software and payroll and payroll-related costs for teammates who are directly associated with and who devote time to internal-use computer software development projects, to the extent of the time spent directly on the project and specific to application development, are capitalized.

Reviews are regularly performed to determine whether facts and circumstances exist which indicate that the economic life is shorter than originally estimated or the carrying amount of assets may not be recoverable. When an indication exists that the carrying amount of long-lived assets may not be recoverable, we assess the recoverability of our assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Such impairment test is based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Impairment, if any, is based on the excess of the carrying amount over the estimated fair value of those assets.

Goodwill

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. Goodwill is tested for impairment at the reporting unit level on an annual basis in the fourth quarter and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. We may first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform a quantitative goodwill impairment test. Otherwise, the goodwill impairment test is not required. The quantitative goodwill impairment review process compares the fair value of the reporting unit in which goodwill resides to its carrying value. The Company has three reporting units, which are the same as our operating segments. Multiple valuation techniques would likely be used to assess the fair value of the reporting unit. These techniques include the use of estimates and assumptions that are inherently uncertain. Changes in these estimates and assumptions could materially affect the determination of fair value or goodwill impairment, or both.

Intangible Assets

We amortize finite lived intangible assets acquired in business combinations using the straight-line method over the estimated economic lives of the intangible assets from the date of acquisition.

We regularly perform reviews to determine if facts and circumstances exist which indicate that the economic lives of our intangible assets are shorter than originally estimated or the carrying amount of these assets may not be recoverable. When an indication exists that the carrying amount of intangible assets may not be recoverable, we assess the recoverability of our assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Such impairment test is based on the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Impairment, if any, is based on the excess of the carrying amount over the estimated fair value of those assets.

Leases

We adopted ASU No. 2016-02, “Leases” (Topic 842) with a date of initial application of January 1, 2019. As a result, we updated our accounting policy for leases. We determine if a contract or arrangement is, or contains, a lease at inception. Balances related to operating leases are included in other assets, other current liabilities, and other liabilities in our consolidated balance sheet. Balances related to financing leases are included in property and equipment, current portion of long-term debt, and long-term debt in our consolidated balance sheet. Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities of $65,922,000 and $70,512,000, respectively, were recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset includes any prepaid lease payments and additional direct costs and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

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Self-Insurance

We are self-insured in the U.S. for medical insurance up to certain annual stop-loss limits and workers’ compensation claims up to certain deductible limits. We establish reserves for claims, both reported and incurred but not reported, using currently available information as well as our historical claims experience.

Treasury Stock

We record repurchases of our common stock as treasury stock at cost. We also record the subsequent retirement of these treasury shares at cost. The excess of the cost of the shares retired over their par value is allocated between additional paid-in capital and retained earnings. The amount recorded as a reduction of paid-in capital is based on the excess of the average original issue price of the shares over par value. The remaining amount is recorded as a reduction of retained earnings.

Sales Recognition

Revenue is measured based on the consideration specified in a contract with a client, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product or service or by arranging for the sale of a vendor’s products or service to a client.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a client, are excluded from revenue.

We record the freight we bill to our clients as product net sales and the related freight costs we pay as product costs of goods sold.

Nature of Goods and Services

We sell hardware and software products on both a stand-alone basis without any services and as solutions bundled with services.

When we provide a combination of hardware and software products with the provision of services, we separately identify our performance obligations under our contract with the client as the distinct goods (hardware and/or software products) or services that will be provided. The total transaction price for an arrangement with multiple performance obligations is allocated at contract inception to each distinct performance obligation in proportion to its stand-alone selling price. The stand-alone selling price is the price at which we would sell a promised good or service separately to a client. We estimate the price based on observable inputs, including direct labor hours and allocable costs, or use observable stand-alone prices when they are available.

Product Offerings

Hardware

We recognize hardware product revenue on a gross basis at the point in time when a client takes control of the hardware, which typically occurs when title and risk of loss have passed to the client at its destination. Our selling terms and conditions specify Free On Board (“F.O.B.”) destination contractual terms such that control is transferred from the Company at the point in time when the product is received by the client. The transaction price for hardware sales is adjusted for estimated product returns that we expect to occur under our return policy based upon historical return rates.

We leverage drop-shipment arrangements with many of our partners and suppliers to deliver products to our clients without having to physically hold the inventory at our warehouses, thereby increasing efficiency and reducing costs. We recognize revenue for drop-shipment arrangements on a gross basis as the principal in the transaction when the product is received by the client because we control the product prior to transfer to the client. In addition to other factors considered, we assume primary responsibility for fulfillment in the arrangement, we assume inventory risk if the product is returned by the client, we set the price of the product charged to the client and we work closely with our clients to determine their hardware specifications.

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Bill and Hold Transactions

We offer a service to our customers whereby clients may purchase product that we procure on their behalf and, at our clients’ direction, store the product in our warehouse for a designated period of time, with the intention of deploying the product to the clients’ designated locations at a later date. These warehousing services are designed to help our clients with inventory management challenges associated with technology roll-outs, product that is moving to end of life, or clients needing integrated stock available for immediate deployment. The client is invoiced and title transfers to the client upon receipt of the product at our warehouse. These product contracts are non-cancelable with customary credit terms beginning the date the product is received in our warehouse and the warranty periods begin on the date of invoice. Revenue is recognized for the sale of the product to the client upon receipt of the product at our warehouse.

Software

We recognize revenue from software sales on a gross basis at the point in time when the client acquires the right to use or copy software under license and control transfers to the client. For renewals, revenue is recognized upon the commencement of the software license agreement or when the renewal term begins, as applicable.

A substantial portion of the software licenses we sell are perpetual software licenses and do not require renewal or extension after their initial purchase by the client. Such perpetual licenses are periodically subject to true-up, whereby additional perpetual licenses are sold under the client’s pre-existing master agreement. Such true-ups are generally sold in arrears, and clients are invoiced for the additional licenses they had already been utilizing. Since the client already possessed copies of the licensed software prior to the true-up, software revenue related to the underlying additional licenses is recognized when we agree to the true-up with our client and the partner.

For sales transactions for certain security software products that are sold with integral third-party delivered software maintenance, we record the software license on a net basis, as the agent in the arrangement.

Services Offerings

Software Maintenance

Software maintenance agreements provide our clients with the right to obtain any software upgrades, bug fixes and help desk and other support services directly from the software publisher at no additional charge during the term of the software maintenance agreements. We act as the software publisher’s agent in selling these software maintenance agreements and do not assume any performance obligation to the client under the agreements. As a result, we are the agent in these transactions and these sales are recorded on a net sales recognition basis. Under net sales recognition, the cost of the software maintenance agreement is recorded as a reduction to sales, resulting in net sales equal to the gross profit on the transaction, and there are no costs of goods sold. Because we are acting as the software publisher’s agent, revenue is recognized when the parties agree to the initial purchase, renewal or extension as our agency services are then complete. We report all fees earned from activities reported net within our services net sales category in our consolidated statements of operations.

Vendor Direct Support Services Contracts

Clients may purchase a vendor direct support services contract through us. Under these contracts, our clients call the manufacturer/publisher or its designated service organization directly for both the initial technical triage and any follow-up assistance. We act as the manufacturer/publisher’s agent in selling these support service contracts and do not assume any performance obligation to the client under the arrangements. As a result, these sales are recorded on a net sales recognition basis similar to software maintenance agreements, as discussed above. Because we are acting as the agent, revenue is recognized when the parties agree to the purchase of the support services contract as our agency services are then complete.

Cloud / Software-as-a-Service Offerings

Cloud or software-as-a-service (“SaaS”) subscription products provide our clients with access to software products hosted in the public cloud without the client taking possession of the software. We act as the agent in selling these software-as-a service subscription products. We do not take control of the software products or assume any performance obligations to the clients related to the provisioning of the

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offerings in the cloud. As a result, these sales are recorded on a net sales recognition basis. We report all fees earned from activities recognized net within our services net sales category in our consolidated statements of operations. Because we are acting as the agent in the transaction, revenue is recognized when the parties agree to the purchase of the cloud or SaaS offerings as our agency services are then complete. Often, these agency fees are based on end-client usage and therefore are variable throughout the term of the service contract. Where this variable consideration is uncertain, we recognize our agency revenue to the extent that a significant reversal will not occur.

Insight Delivered Services

We design, procure, deploy, implement and manage solutions that combine hardware, software and services to help businesses run smarter. Such services are provided by us or third-party sub-contract vendors as part of bundled arrangements, or are provided separately on a stand-alone basis as technical, consulting or managed services engagements. If the services are provided as part of a bundled arrangement with hardware and software, the hardware, software and services are generally distinct performance obligations. In general, we recognize revenue from services engagements as we perform the underlying services and satisfy our performance obligations.

We recognize revenue from sales of services by measuring progress toward complete satisfaction of the related service performance obligation. Billings for such services that are made in advance of the related revenue recognized are recorded as a contract liability.

Specific revenue recognition practices for certain of our services offerings are described in further detail below.

Time and Materials Services Contracts

We recognize revenue for professional services engagements that are on a time and materials basis based upon hours incurred for the performance completed to date for which we have the right to consideration, even if such amounts have not yet been invoiced as of period end.

Fixed Fee Services Contracts

We recognize revenue on fixed fee professional services contracts using a proportional performance method of revenue recognition based on the ratio of direct labor and other allocated costs incurred to total estimated direct labor and other allocated costs.

OneCall Support Services Contracts

When we sell certain hardware and/or software products to our clients, we also enter into service contracts with them. These contracts are support service agreements for the hardware and/or software products that were purchased from us. Under certain support services contracts, although we purchase third-party support contracts for maintenance on the specific hardware or software products we have sold, our internal support desk assists the client first by performing an initial technical triage to determine the source of the problem and whether we can direct the client on how to fix the problem. We refer to these services as “OneCall.” We act as the principal in the transaction because we perform the OneCall services over the term of the support service contract and we set the price of the service charged to the client. As a result, we recognize revenue from OneCall extended service contracts on a gross sales recognition basis. We recognize the revenue ratably over the contract term of the stand ready obligation, generally one to three years.

On our consolidated balance sheet, a significant portion of our contract liabilities balance relates to OneCall support services agreements for which clients have paid or have been invoiced but for which we have not yet recognized the applicable services revenue. We also defer incremental direct costs to fulfill our service contracts that we prepay to third parties for direct support of our fulfillment of the service contract to our clients under our contract terms and amortize them into operations over the term of the contracts.

Third-party Provided Services

A majority of our third-party sub-contractor services contracts are entered into in conjunction with other services contracts under which the services are performed by Insight teammates. We have concluded that we control all services under the contract and can direct the third-party sub-contractor to provide the requested services. As such, we act as the principal in the transaction and record the services under a gross sales recognition basis, with the selling price being recorded in sales and our cost to the third-party service

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provider being recorded in costs of goods sold. For certain third-party service contracts in which we do not control the services prior to transferring to our clients because we are not responsible for fulfillment of the services, we have concluded that we are an agent in the transaction and record revenue on a net sales recognition basis.

Costs of Goods Sold

Costs of goods sold include product costs, direct costs incurred associated with delivering services, outbound and inbound freight costs and provisions for inventory reserves. These costs are reduced by provisions for supplier discounts and certain payments and credits received from partners, as described under “Partner Funding” below.

Selling and Administrative Expenses

Selling and administrative expenses include salaries and wages for teammates who are not directly associated with delivering services, bonuses and incentives, stock-based compensation expense, employee-related expenses, facility-related expenses, marketing and advertising expense, reduced by certain payments and credits received from partners related to shared marketing expense programs, as described under “Partner Funding” below, depreciation of property and equipment, professional fees, amortization of intangible assets, provisions for losses on accounts receivable and other operating expenses.

Partner Funding

We receive payments and credits from partners, including consideration pursuant to volume sales incentive programs, volume purchase incentive programs and shared marketing expense programs. Partner funding received pursuant to volume sales incentive programs is recognized as it is earned as a reduction to costs of goods sold. Partner funding received pursuant to volume purchase incentive programs is allocated as a reduction to inventories based on the applicable incentives earned from each partner and is recorded in cost of goods sold as the related inventory is sold. Partner funding received pursuant to shared marketing expense programs is recorded as it is earned as a reduction of the related selling and administrative expenses in the period the program takes place if the consideration represents a reimbursement of specific, incremental, identifiable costs. Consideration that exceeds the specific, incremental, identifiable costs is classified as a reduction of costs of goods sold. The amount of partner funding recorded as a reduction of selling and administrative expenses in our statements of operations totaled $103,447,000, $85,888,000 and $77,668,000 in 2021, 2020 and 2019, respectively.

Concentrations of Risk

Credit Risk

Although we are affected by the international economic climate, management does not believe material credit risk concentration existed at December 31, 2021. We monitor our clients’ financial condition and do not require collateral. No single client accounted for more than 10% of our consolidated net sales in 2021.

Partner Risk

Purchases from Microsoft, TD Synnex (a distributor) and Ingram Micro (a distributor) accounted for approximately 22%, 15%, and 10% respectively, of our aggregate purchases in 2021. No other partner accounted for more than 10% of purchases in 2021. Our top five partners as a group for 2021 were Microsoft, TD Synnex (a distributor), Ingram Micro (a distributor), Dell and Cisco Systems, and approximately 60% of our total purchases during 2021 came from this group of partners. Although brand names and individual products are important to our business, we believe that competitive sources of supply are available in substantially all of our product categories such that, with the exception of Microsoft, we are not dependent on any single partner for sourcing products.

Advertising Costs

Advertising costs are expensed as they are incurred. Advertising expense of $66,375,000, $60,865,000 and $62,913,000 was recorded in 2021, 2020 and 2019, respectively. These amounts were predominantly offset by partner funding earned pursuant to shared marketing expense programs recorded as a reduction of selling and administrative expenses, as discussed in “Partner Funding” above.

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Stock-Based Compensation

Stock-based compensation is measured based on the fair value of the award on the date of grant and the corresponding expense is recognized over the period during which an employee is required to provide service in exchange for the reward. Stock-based compensation expense is classified in the same line item of our consolidated statements of operations as other payroll-related expenses specific to the employee. Compensation expense related to service-based restricted stock units (“RSUs”) is recognized on a straight-line basis over the requisite service period for the entire award. Compensation expense related to performance-based RSUs is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards (i.e., a graded vesting basis). Forfeitures are recognized as they occur.

Foreign Currencies

We use the U.S. dollar as our reporting currency. The functional currencies of our foreign subsidiaries are typically the local currencies. Accordingly, assets and liabilities of the subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet dates. Income and expense items are translated at the average exchange rate for each month within the year. The resulting translation adjustments are recorded directly in accumulated other comprehensive income, net of tax – foreign currency translation adjustments as a separate component of stockholders’ equity. Net foreign currency transaction gains/losses, including transaction gains/losses on intercompany balances that are not of a long-term investment nature and non-functional currency cash balances, are reported in other expense (income), net within non-operating (income) expense in our consolidated statements of operations.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable earnings in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date.

We recognize net deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

We record uncertain tax positions on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. Interest and penalties related to unrecognized tax benefits are recognized within the income tax expense line in our consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line in our consolidated balance sheets.

Contingencies

From time to time, we are subject to potential claims and assessments from third parties. We are also subject to various government agency, client and partner audits. We continually assess whether or not such claims have merit and warrant accrual. An accrual is made if it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Such estimates are subject to change and may affect our results of operations and our cash flows.

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Net Earnings Per Share (“EPS”)

Basic EPS is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during each year. 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 RSUs and certain shares underlying our outstanding convertible senior notes (the "Notes").

A reconciliation of the denominators of the basic and diluted EPS calculations follows (in thousands, except per share data):

			Years Ended December 31,
			2021						2020						2019
Numerator:
Net earnings			$	219,345					$	172,640					$	159,407
Denominator:
Weighted-average shares used to compute basic EPS			35,011						35,117						35,538
Dilutive potential common shares due to:
Dilutive RSUs, net of tax effect			399						327						421
The convertible senior notes			1,453						—						—
Weighted-average shares used to compute diluted EPS			36,863						35,444						35,959
Net earnings per share:
Basic			$	6.27					$	4.92					$	4.49
Diluted			$	5.95					$	4.87					$	4.43

In 2021, 2020 and 2019, approximately 2,000, 122,000 and 42,000, respectively, of our RSUs were not included in the diluted EPS calculations because their inclusion would have been anti-dilutive. These share-based awards could be dilutive in the future. In the years ended December 31, 2021, 2020, and 2019 certain potential outstanding shares from the warrants relating to the Call Spread Transactions (as defined in Note 8) were not included in the diluted EPS calculations because their inclusion would have been anti-dilutive. In the years ended December 31, 2020 and 2019 certain potential outstanding shares from the Notes were not included in the diluted EPS calculations because their inclusion would have been anti-dilutive.

Recently Issued Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. The new guidance is intended to simplify the accounting for certain convertible instruments with characteristics of both liability and equity. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. As a result, after the adoption of this guidance, an entity’s convertible debt instrument will be wholly accounted for as debt. The guidance also expands disclosure requirements for convertible instruments and simplifies areas of the guidance for diluted earnings-per-share calculations by requiring the use of the if-converted method. The guidance is effective for fiscal years beginning after December 15, 2021 and can be adopted on either a fully retrospective or modified retrospective basis. We adopted the new standard as of January 1, 2022 on a modified retrospective basis. The cumulative effect adjustment from prior periods that we recognized in our consolidated balance sheet as of the adoption date as an adjustment to increase retained earnings was approximately $18,000,000.

In December 2020, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes.” The new standard is intended to simplify various aspects of accounting for income taxes by removing specific exceptions and amending certain requirements. The new standard is effective for interim and annual periods beginning after December 15, 2020, and early adoption is permitted. We adopted the new standard as of January 1, 2021. The adoption of this new standard did not have a material effect on our consolidated financial statements.

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Contract Balances

The following table provides information about receivables and contract liabilities as of December 31, 2021 and 2020 (in thousands):

			December 31, 2021						December 31, 2020
Current receivables, which are included in “Accounts receivable, net”			$	2,936,732					$	2,685,448
Non-current receivables, which are included in “Other assets”			147,139						154,662
Contract liabilities, which are included in “Accrued expenses and other current liabilities” and “Other liabilities”			116,067						107,158

Significant changes in the contract liabilities balances during the year ended December 31, 2021 are as follows (in thousands):

			Increase (Decrease)
Balances at December 31, 2019			$	84,814
Recognition of the beginning contract liabilities to revenue, as the result of performance obligations satisfied			(59,553)
Cash received in advance and not recognized as revenue			81,897
Balances at December 31, 2020			$	107,158
Recognition of the beginning contract liabilities to revenue, as the result of performance obligations satisfied			(77,622)
Cash received in advance and not recognized as revenue			86,531
Balances at December 31, 2021			$	116,067

Transaction price allocated to the remaining performance obligations

The following table includes estimated net sales related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2021 that are expected to be recognized in the future (in thousands):

			Services
2022			138,941
2023			44,382
2024			23,967
2025 and thereafter			15,271
Total remaining performance obligations			$	222,561

With the exception of remaining performance obligations associated with our OneCall Support Services contracts which are included in the table above regardless of original duration, remaining performance obligations that have original expected duration of one year or less are not included in the table above. Amounts not included in the table above have an average original expected duration of nine months. Additionally, for our time and material services contracts, whereby we have the right to consideration from a client in an amount that corresponds directly with the value to the client of our performance completed to date, we recognized revenue in the amount to which we have a right to invoice as of December 31, 2021 and do not disclose information about related remaining performance obligations in the table above. Our open time and material contracts at December 31, 2021, have an average expected duration of 23 months.

The majority of our product backlog historically has been and continues to be open cancellable purchase orders. We do not believe that backlog as of any particular date is predictive of future results, therefore we do not include performance obligations under open cancellable purchase orders, which do not qualify for revenue recognition as of December 31, 2021, in the table above.

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Assets recognized for costs of obtaining a contract with a customer

Sales commissions are the only significant incremental costs incurred to obtain contracts with our clients. The majority of our contracts are completed within a one-year performance period, and for contracts with a specified term of one year or less, we recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less. We record sales commissions on contracts with performance periods that exceed one year as an asset and amortize the asset to expense over the related contract performance period. As of December 31, 2021 and 2020, the related asset balance was $20,549,000 and $3,770,000, respectively. The expense is expected to be recognized over the next 36 months.

Property and equipment consist of the following (in thousands):

			December 31,
			2021						2020
Software			$	160,633					$	159,413
Buildings			83,405						66,842
Equipment			52,653						62,209
Furniture and fixtures			32,471						38,133
Leasehold improvements			42,246						35,665
Land			38,641						39,819
			410,049						402,081
Accumulated depreciation and amortization			(233,786)						(256,065)
Property and equipment, net			$	176,263					$	146,016

Depreciation and amortization expense related to property and equipment was $23,376,000, $28,025,000 and $22,538,000 in 2021, 2020 and 2019, respectively.

On November 1, 2019, we completed the purchase of real estate in Chandler, Arizona for approximately $48,000,000 that we intend to use as our global corporate headquarters. The property contains a building and some infrastructure in place that we expect will be ready for our use in 2022.

Included within the software, buildings and land values presented above for 2021 are assets in the process of being readied for use in the amounts of approximately $7,016,000, $62,286,000 and $11,700,000, respectively. Included within the software, buildings and land values presented above for 2020 are assets in the process of being readied for use in the amounts of approximately $5,650,000, $29,427,000 and $11,700,000, respectively. Depreciation on these assets will commence, as appropriate, when they are ready for use and placed in service.

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The changes in the carrying amount of goodwill for the year ended December 31, 2021 are as follows (in thousands):

			North America						EMEA						APAC						Consolidated
Goodwill			$	720,240					$	163,011					$	20,732					$	903,983
Accumulated impairment losses			(323,422)						(151,439)						(13,973)						(488,834)
Goodwill acquired during 2020			—						4,865						—						4,865
Measurement period adjustments during 2020			5,711						(677)						—						5,034
Foreign currency translation adjustment			947						2,767						606						4,320
Balance at December 31, 2020			$	403,476					$	18,527					$	7,365					$	429,368
Foreign currency translation adjustment			115						(792)						(345)						(1,022)
Balance at December 31, 2021			$	403,591					$	17,735					$	7,020					$	428,346

On February 28, 2020, we acquired vNext, which has been integrated into our EMEA business. Under the acquisition method of accounting, the purchase price for the acquisition was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over fair value of net assets acquired was recorded as goodwill in the EMEA reporting unit. The primary driver for this acquisition was to strengthen our capacity to deliver consulting and implementation services to support clients’ digital transformation initiatives.

On August 30, 2019, we acquired PCM, which has been integrated into our North America and EMEA businesses. Under the acquisition method of accounting, the preliminary purchase price for the acquisition was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over fair value of net assets acquired of approximately $253,894,000, net of measurement period adjustment of $5,034,000 recognized in 2020, was recorded as goodwill in the North America and EMEA reporting units (see Note 20). The primary driver for this acquisition was to help existing PCM clients in positioning their businesses for future growth, transforming and securing their data platforms, creating modern and mobile experiences for their workforce and optimizing the procurement of technology. The addition of PCM complements our supply chain optimization solution offering, adding scale and clients in the mid-market and corporate space in North America.

During 2021, we periodically assessed whether any indicators of impairment existed which would require us to perform an interim impairment review. As of each interim period end during the year, we concluded that a triggering event had not occurred that would more likely than not reduce the fair value of our reporting units below their carrying values. We performed our annual test of goodwill for impairment during the fourth quarter of 2021. The results of the qualitative goodwill impairment test indicated that the fair values of our North America, EMEA and APAC reporting units were in excess of their respective carrying values.

Intangible assets consist of the following (in thousands):

			December 31,
			2021						2020
Customer relationships			$	320,323					$	342,492
Other			5,374						7,906
			325,697						350,398
Accumulated amortization			(110,909)						(103,483)
Intangible assets, net			$	214,788					$	246,915

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During 2021, we periodically assessed whether any indicators of impairment existed related to our intangible assets. As of each interim period end during the year, we concluded that a triggering event had not occurred that would more likely than not reduce the fair value of our intangible assets below their carrying values.

Amortization expense recognized in 2021, 2020 and 2019 was $32,045,000, $37,535,000 and $23,671,000, respectively.

Future amortization expense for the remaining unamortized balance as of December 31, 2021 is estimated as follows (in thousands):

Years Ending December 31,						Amortization Expense
2022						$	31,166
2023						29,764
2024						28,310
2025						27,990
2026						27,990
Thereafter						69,568
Total amortization expense						$	214,788

We have entered into agreements with financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions, as described below. The amounts outstanding under these facilities are classified separately as accounts payable - inventory financing facilities in the accompanying consolidated balance sheets.

Inventory Financing Facilities

During 2021, we increased our maximum availability for vendor purchases under our unsecured inventory financing facility with MUFG Bank Ltd (“MUFG”) from $250,000,000 to $280,000,000. In August 2021, we increased our maximum availability under our unsecured inventory financing facility with PNC Bank, N.A. ("PNC"). The aggregate availability for vendor purchases under the PNC facilities is $300,000,000, including a new $25,000,000 facility in Canada (the "Canada facility"). In addition, we have a $40,000,000 unsecured inventory financing facility with Wells Fargo in EMEA (the "EMEA facility"). As of December 31, 2021, our combined inventory financing facilities had a total maximum capacity of $620,000,000, of which $311,878,000 was outstanding at December 31, 2021.

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Debt

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

			December 31,
			2021						2020
ABL revolving credit facility			$	53,000					$	140,000
Convertible senior notes due 2025			308,543						296,419
Finance leases and other financing obligations			63						2,267
Total			361,606						438,686
Less: current portion of long-term debt			(36)						(1,105)
Long-term debt			$	361,570					$	437,581

On August 30, 2019, we entered into a credit agreement (the “credit agreement”) providing for a senior secured revolving credit facility (the “ABL facility”), which has an aggregate U.S. dollar equivalent maximum borrowing amount of $1,200,000,000, including a maximum borrowing capacity that could be used for borrowing in certain foreign currencies of $150,000,000. While the ABL facility has a stated maximum amount, the actual availability under the ABL facility is limited by specified percentages of eligible accounts receivable and certain eligible inventory, in each case as set forth in the credit agreement. From time to time and at our option, we may request to increase the aggregate amount available for borrowing under the ABL facility by up to an aggregate of the U.S. dollar equivalent of $500,000,000, subject to customary conditions, including receipt of commitments from lenders. The ABL facility is guaranteed by certain of our material subsidiaries and is secured by a lien on certain of our assets and certain of each other borrower’s and each guarantor’s assets. The ABL facility matures on August 30, 2024. As of December 31, 2021, eligible accounts receivable and inventory were sufficient to permit access to the full $1,200,000,000 facility amount, of which $53,000,000 was outstanding.

The interest rates applicable to borrowings under the ABL facility are based on the average aggregate excess availability under the ABL facility as set forth on a pricing grid in the credit agreement. Amounts outstanding under the ABL facility bear interest, payable quarterly, at a floating rate equal to LIBOR, EURIBOR, or SONIA, as applicable, plus a pre-determined spread of 1.25% to 1.50%. The floating interest rate applicable at December 31, 2021 was 1.35% per annum for the ABL facility. In addition, we pay a quarterly commitment fee on the unused portion of the facility of 0.25%, and our letter of credit participation fee ranges from 1.25% to 1.50%. During 2021, weighted average borrowings under our ABL facility were $292,127,000. Interest expense associated with the ABL facility was $11,065,000 in 2021, including the commitment fee and amortization of deferred financing fees.

The ABL facility contains customary affirmative and negative covenants and events of default. If a default occurs (subject to customary grace periods and materiality thresholds) under the credit agreement, certain actions may be taken, including, but not limited to, possible termination of commitments and required payment of all outstanding principal amounts plus accrued interest and fees payable under the credit agreement.

Convertible Senior Notes

In August 2019, we issued $350,000,000 aggregate principal amount of Notes that mature on February 15, 2025. The Notes bear interest at an annual rate of 0.75% payable semiannually, in arrears, on February 15th and August 15th of each year. The Notes are general unsecured obligations of Insight and are guaranteed on a senior unsecured basis by Insight Direct USA, Inc., a wholly owned subsidiary of Insight.

Holders of the Notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding June 15, 2024, under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price of our common stock per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of

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the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call any or all of the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after June 15, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, the holders may convert their notes at any time, regardless of the foregoing circumstances.

Our convertible notes exceeded the market price trigger of $88.82 in the fourth quarter of 2021 making the Notes convertible at the option of the holders through March 31, 2022. None of the note holders have exercised their rights at this time.

Upon conversion, we will pay or deliver cash equal to the principal amount of the notes, plus cash or shares of our common stock or a combination of the two for any additional amounts due. The conversion rate will initially be 14.6376 shares of common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $68.32 per share of common stock). The conversion rate is subject to change in certain circumstances and will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date or following our issuance of a notice of redemption, the conversion rate is subject to an increase for a holder who elects to convert their notes in connection with those events or during the related redemption period in certain circumstances.

If we undergo a fundamental change, the holders may require us to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of December 31, 2021, none of the criteria for a fundamental change or a conversion rate adjustment had been met.

The maximum number of shares issuable upon conversion, including the effect of a fundamental change and subject to other conversion rate adjustments, would be 6,788,208.

We may redeem for cash all or any portion of the Notes, at our option, on or after August 20, 2022 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.

The Notes are subject to certain customary events of default and acceleration clauses. As of December 31, 2021, no such events have occurred.

The Notes consist of the following balances reported within the consolidated balance sheet as of December 31, 2021 and 2020 (in thousands):

			December 31,
			2021						2020
Liability:
Principal			$	350,000					$	350,000
Less: debt discount and issuance costs, net of accumulated accretion			(41,457)						(53,581)
Net carrying amount			$	308,543					$	296,419
Equity, net of deferred tax			$	44,731					$	44,731

The remaining life of the debt discount and issuance cost accretion is approximately 3.12 years. The effective interest rate on the liability component of the Notes is 4.325%.

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The following table summarizes the interest expense components resulting from the Notes reported within the consolidated statement of operations for the year ended December 31, 2021 and 2020 (in thousands):

			December 31,
			2021						2020
Contractual coupon interest			$	2,625					$	2,625
Amortization of debt discount			$	10,702					$	10,226
Amortization of debt issuance costs			$	1,422					$	1,359

As a result of our adoption of ASU 2020-06, effective January 1, 2022, we will no longer reflect any debt discount on the Notes in our consolidated balance sheet, nor will we recognize amortization of debt discount within our consolidated statement of operations. Also in January 2022, we filed an irrevocable settlement election notice with the Note holders to inform them of our election to settle the principal amount of the Notes in cash. As a result of this election, at period ends where the market price, or other conversion triggers are met, the Notes will be classified in our consolidated balance sheet as current.

Convertible Note Hedge and Warrant Transaction

In connection with the issuance of the Notes, we entered into certain convertible note hedge and warrant transactions (the “Call Spread Transactions”) with respect to the Company’s common stock.

The convertible note hedge consists of an option to purchase up to 5,123,160 common stock shares at a price of $68.32 per share. The hedge expires on February 15, 2025 and can only be concurrently executed upon the conversion of the Notes. We paid approximately $66,325,000 for the convertible note hedge transaction.

Additionally, we sold warrants to purchase 5,123,160 shares of common stock at a price of $103.12 per share. The warrants expire on May 15, 2025 and can only be exercised at maturity. The Company received aggregate proceeds of approximately $34,440,000 for the sale of the warrants.

The Call Spread Transactions have no effect on the terms of the Notes and reduce potential dilution by effectively increasing the initial conversion price of the Notes to $103.12 per share of the Company’s common stock.

Finance Leases and Other Financing Obligations

From time to time, we enter into finance leases and other financing agreements with financial intermediaries to facilitate the purchase of products from certain vendors.

The current and long-term portions of our finance lease and other financing obligations are included in the current and long-term portions of long-term debt in the table above and in our consolidated balance sheets as of December 31, 2021 and 2020.

We lease office space, distribution centers, land, vehicles and equipment. Lease agreements with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at our sole discretion. Some agreements also include options to purchase the leased property. The estimated life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Certain of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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The following table provides information about the financial statement classification of our lease balances reported within the consolidated balance sheets as of December 31, 2021 and December 31, 2020 (in thousands):

Leases			Classification			December 31, 2021						December 31, 2020
Assets
Operating lease assets			Other assets			$	72,605					$	79,418
Finance lease assets			Property and equipment(a)			80						2,103
Total lease assets						$	72,685					$	81,521
Liabilities
Current
Operating lease liabilities			Accrued expenses and other current liabilities			$	20,667					$	20,848
Finance lease liabilities			Current portion of long-term debt			36						1,105
Non-current
Operating lease liabilities			Other liabilities			58,442						65,192
Finance lease liabilities			Long-term debt			27						1,162
Total lease liabilities						$	79,172					$	88,307

			(a)			Recorded net of accumulated amortization of $27,000 and $2,162,000 as of December 31, 2021 and 2020, respectively.

The following table provides information about the financial statement classification of our lease expenses reported within the consolidated statement of operations for the year ended December 31, 2021 and 2020 (in thousands):

Lease cost			Classification			Year ended December 31, 2021						Year ended December 31, 2020
Operating lease cost (a) (b)			Selling and administrative expenses			$	24,839					$	25,918
Finance lease cost
Amortization of leased assets			Selling and administrative expenses			697						1,301
Interest on lease liabilities			Interest expense, net			33						104
Total lease cost						$	25,569					$	27,323

			(a)			Includes immaterial amounts recorded to cost of goods sold.
			(b)			Excludes short-term and variable lease costs, which are immaterial.

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Future minimum lease payments under non-cancelable leases as of December 31, 2021 are as follows (in thousands):

			Operating leases						Finance leases						Total
2022			$	22,387					$	36					$	22,423
2023			16,757						27						16,784
2024			11,509						—						11,509
2025			9,525						—						9,525
2026			8,232						—						8,232
After 2026			18,261						—						18,261
Total lease payments			86,671						63						86,734
Less: Interest			(7,562)						—						(7,562)
Present value of lease liabilities			$	79,109					$	63					$	79,172

Operating lease payments include $13.4 million related to options to extend lease terms that are reasonably certain of being exercised.

The following table provides information about the remaining lease terms and discount rates applied as of December 31, 2021 and 2020:

			December 31, 2021						December 31, 2020
Weighted average remaining lease term (years):
Operating leases			5.79						6.01
Finance leases			1.75						2.37
Weighted average discount rate (%):
Operating leases			3.09						3.35
Finance leases			1.49						3.27

The following table provides other information related to leases for the year ended December 31, 2021 and 2020 (in thousands):

			December 31, 2021						December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	24,640					$	25,849
Leased assets obtained in exchange for new operating lease liabilities			15,980						25,583

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

			Years Ended December 31,
			2021						2020						2019
North America			$	13,699					$	13,151					$	12,055
EMEA			3,844						3,953						3,437
APAC			658						623						519
Total Consolidated			$	18,201					$	17,727					$	16,011

Company Plan

On April 3, 2020, our Board of Directors adopted and approved the new Insight Enterprises, Inc. 2020 Omnibus Plan (the “Plan”), subject to stockholder approval.  The Plan was approved by our stockholders at our 2020 annual meeting on May 20, 2020 and, unless sooner terminated, will remain in place until May 30, 2030. The Plan allows the Company to grant options, stock appreciation rights, stock awards, restricted stock, stock units (which may also be referred to as “restricted stock units”), performance shares, performance units, cash-based awards and other awards payable in cash or shares of common stock to eligible non-employee directors, employees and consultants. Consultants and independent contractors are eligible if they provide bona fide services that are not related to capital raising or promoting or maintaining a market for the Company’s stock.

The Company previously adopted the Amended Insight Enterprises, Inc. 2007 Omnibus Plan (the “Prior Plan”). The Prior Plan was approved by our stockholders on May 18, 2011 at our 2011 annual meeting. The Prior Plan shall remain in effect until all awards granted under the Prior Plan have been exercised, forfeited or cancelled or have otherwise expired or terminated. Any shares that remain outstanding or otherwise become available under the terms of the Prior Plan following the date the Plan is approved by the Company’s stockholders shall become available for issuance under the Plan. No further awards will be made under the Prior Plan.

The Plan is administered by the Compensation Committee of Insight’s Board of Directors, and, except as provided below, the Compensation Committee has the exclusive authority to administer the Plan, including the power to determine eligibility, the types of awards to be granted, the price and the timing of awards. Under the Plan, the Compensation Committee may delegate some of its authority to our Chief Executive Officer to grant awards to individuals other than individuals who are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended. As of December 31, 2021, of the 2,571,000 shares of common stock reserved and available for grant under the Plan, 2,395,000 shares of common stock remain available for grant under the Plan.

Accounting for Restricted Stock Units

We issue RSUs as incentives to certain officers and teammates and as compensation to members of our Board of Directors. We recognize compensation expense associated with the issuance of such RSUs over the vesting period for each respective RSU. The total compensation expense associated with RSUs represents the value based upon the number of RSUs awarded multiplied by the closing price of our common stock on the date of grant. The number of RSUs to be awarded under our service-based RSUs is fixed at the grant date. The number of RSUs ultimately awarded under our performance-based RSUs varies based on whether the Company achieves certain financial results. We record compensation expense each period based on our estimate of the most probable number of RSUs that will be issued under the grants of performance-based RSUs. Recipients of RSUs do not have voting or dividend rights until the vesting conditions are satisfied and shares are released.

As of December 31, 2021, total compensation cost related to nonvested RSUs not yet recognized is $28,391,000, which is expected to be recognized over the next 1.29 years on a weighted-average basis.

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The following table summarizes our RSU activity during 2021:

			Number						Weighted Average Grant Date Fair Value						Fair Value
Nonvested at the beginning of year			863,718						$	52.61
Granted			292,838						$	85.07
Vested, including shares withheld to cover taxes			(396,886)						$	49.08					$	19,479,165		(a)
Forfeited			(68,982)						$	65.19
Nonvested at the end of year			690,688						$	67.60					$	73,627,341		(b)

(a)			The aggregate fair value of vested RSUs represents the total pre-tax fair value, based on the closing stock price on the day of vesting, which would have been received by holders of RSUs had all such holders sold their underlying shares on that date. The aggregate intrinsic value for RSUs which vested during 2020 and 2019 was $16,410,202 and $24,837,997, respectively.

(b)			The aggregate fair value of the nonvested RSUs and the RSUs expected to vest represents the total pre-tax fair value, based on our closing stock price of $106.60 as of December 31, 2021, which would have been received by holders of RSUs had all such holders sold their underlying shares on that date.

During each of the years in the three-year period ended December 31, 2021, the RSUs that vested for teammates in the United States were net-share settled such that we withheld shares with value equivalent up to the teammates’ maximum statutory United States tax obligation for the applicable income and other employment taxes and remitted the equivalent cash amount to the appropriate taxing authorities. The total shares withheld during 2021, 2020 and 2019 of 105,434, 101,159 and 115,831, respectively, were based on the value of the RSUs on their vesting dates as determined by our closing stock price on such dates. For 2021, 2020 and 2019, total payments for our teammates’ tax obligations to the taxing authorities were $9,109,000, $5,964,000 and $6,572,000, respectively, and are reflected as a financing activity within the accompanying consolidated statements of cash flows. These net-share settlements had the effect of repurchases of our 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 an expense to us.

The following table presents the U.S. and foreign components of earnings before income taxes and the related income tax expense (in thousands):

			Years Ended December 31,
			2021						2020						2019
Earnings before income taxes:
United States			$	200,657					$	154,788					$	142,410
Foreign			91,900						73,664						69,306
			$	292,557					$	228,452					$	211,716
Income tax expense:
Current:
U.S. Federal			$	29,478					$	38,732					$	20,254
U.S. State and local			7,391						8,203						5,457
Foreign			24,485						22,123						19,180
			61,354						69,058						44,891
Deferred:
U.S. Federal			11,104						(10,048)						9,180
U.S. State and local			3,239						(1,779)						1,210
Foreign			(2,485)						(1,419)						(2,972)
			11,858						(13,246)						7,418
			$	73,212					$	55,812					$	52,309

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The following schedule reconciles the differences between the U.S. federal income taxes at the U.S. statutory rate and our income tax expense (dollars in thousands):

			2021												2020												2019
Statutory federal income tax rate			$	61,437					21.0%						$	47,975					21.0%						$	44,460					21.0%
State income tax expense, net of federal income tax benefit			10,666						3.6						6,280						2.7						7,239						3.4
Audits and adjustments, net			2,131						0.7						662						0.3						2,556						1.2
Change in valuation allowances			1,317						0.5						476						0.2						(2,739)						(1.3)
Foreign income taxed at different rates			4,308						1.5						3,825						1.7						4,024						1.9
Research and development credits			(4,352)						(1.5)						(1,858)						(0.8)						(5,438)						(2.6)
Other, net			(2,295)						(0.8)						(1,548)						(0.7)						2,207						1.1
Effective tax rate			$	73,212					25.0%						$	55,812					24.4%						$	52,309					24.7%

On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide certain relief as a result of the COVID-19 pandemic, which included, among other things, provisions relating to net operating loss carrybacks and other beneficial income tax changes. In 2020, we recorded a tax benefit of approximately $1,712,000 related to the CARES Act, which was reflected in our effective tax rate reconciliation in ‘Other, net’.

As of December 31, 2021, we have accumulated undistributed earnings generated by our foreign subsidiaries, most of which have been taxed in the U.S. as a result of the Tax Cuts and Jobs Act of 2017. For foreign subsidiary earnings not yet taxed under these provisions, we continue to assert permanent reinvestment of earnings earned in foreign jurisdictions which impose a withholding tax on dividends and, accordingly, have not accrued any additional income or withholding taxes on the potential repatriation of these earnings. At the present time, given the various complexities involved in repatriating earnings, it is not practicable to estimate the amount of tax that may be payable if these earnings were not reinvested indefinitely.

The significant components of deferred tax assets and liabilities are as follows (in thousands):

			December 31,
			2021						2020
Deferred tax assets:
Net operating losses			$	25,791					$	27,453
Foreign tax credits			13,518						16,027
Other			27,445						25,786
Gross deferred tax assets			66,754						69,266
Valuation allowances			(36,948)						(40,098)
Total deferred tax assets			29,806						29,168
Deferred tax liabilities:
Goodwill and other intangibles			(49,987)						(48,831)
Property and equipment			(19,351)						(6,715)
Other			(1,852)						(2,540)
Total deferred tax liabilities			(71,190)						(58,086)
Net deferred tax liabilities			$	(41,384)					$	(28,918)

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The net non-current deferred tax assets and liabilities are as follows (in thousands):

			December 31,
			2021						2020
Net non-current deferred tax assets, which are included in "Other assets"			$	5,689					$	4,291
Net non-current deferred tax liabilities			(47,073)						(33,209)
Net deferred tax liabilities			$	(41,384)					$	(28,918)

As of December 31, 2021, we have U.S. state net operating loss carryforward (“NOLs”) that will expire between 2021 and 2040. We also have foreign NOLs of $93,771,000, certain of which will expire between 2022 and 2027, while the majority have no expiration date. Certain state NOLs relate to pre-acquisition losses from acquired subsidiaries and are subject to annual limitations as to their use under the provisions of Internal Revenue Code Section 382.

We have provided valuation allowances for certain of our deferred tax assets where we believe it is more likely than not that the related tax benefits will not be realized. At December 31, 2021 and 2020, our valuation allowances totaled $36,948,000 and $40,098,000, respectively, relating primarily to state and foreign NOLs and foreign tax credits. Changes to our valuation allowance for the year ended December 31, 2021 were driven by the expiration of foreign tax credits and changes in our foreign and state NOLs.

As of December 31, 2021 and 2020, we had approximately $12,664,000 and $10,546,000, respectively, of unrecognized tax benefits. Of these amounts, approximately $1,250,000 and $749,000, respectively, related to accrued interest. The changes in the unrecognized tax benefits balance during the year reflect additions for tax positions taken in prior and current periods, net of reductions related to audit settlements and statute expirations.

In the future, if recognized, the liability associated with uncertain tax positions would affect our effective tax rate. We do not believe there will be any changes over the next 12 months that would have a material effect on our effective tax rate.

We are currently under audit in various jurisdictions for tax years 2015 through 2019. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible that the examination phase of these audits may be concluded within the next 12 months which could significantly increase or decrease the balance of our gross unrecognized tax benefits. 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, but the estimated effect on our income tax expense and net earnings is not expected to be significant.

In the U.S., federal income tax returns for years subsequent to 2015 remain open to examination. For state and foreign jurisdictions, the statute of limitations generally varies between three and ten years. However, to the extent allowable by law, the tax authorities may have a right to examine and make adjustment to prior periods when amended returns have been filed, or when net operating losses or tax credits were generated and carried forward for subsequent utilization.

Interest Rate Risk

We have interest rate exposure arising from our financing facilities, which have variable interest rates. These variable interest rates are affected by changes in short-term interest rates. We currently do not hedge our interest rate exposure.

We do not believe that the effect of reasonably possible near-term changes in interest rates will be material to our financial position, results of operations and cash flows. Our financing facilities expose our net earnings to changes in short-term interest rates since interest rates on the underlying obligations are variable. We had $53,000,000 outstanding under our ABL facility and $308,543,000 outstanding under the Notes at December 31, 2021. The interest rate attributable to the borrowings under our ABL facility and the Notes was 1.35% and 0.75%, respectively, per annum at December 31, 2021. The change in annual pre-tax earnings from operations resulting from a hypothetical 10% increase or decrease in the applicable interest rate would have been immaterial.

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Although the Notes are based on a fixed rate, changes in interest rates could impact the fair market value of such notes. As of December 31, 2021, the fair market value of the Notes was $553,875,000.

Foreign Currency Exchange Risk

We have foreign currency exchange risk related to the translation of our foreign subsidiaries’ operating results, assets and liabilities (see Note 1 for a description of our Foreign Currencies policy). We also maintain cash accounts denominated in currencies other than the functional currency, which expose us to fluctuations in foreign exchange rates. Remeasurement of these cash balances results in gains/losses that are also reported in other expense (income), net within non-operating (income) expense. We monitor our foreign currency exposure and selectively enter into forward exchange contracts to mitigate risk associated with certain non-functional currency monetary assets and liabilities related to foreign denominated payables, receivables and cash balances. Transaction gains and losses resulting from non-functional currency assets and liabilities are offset by gains and losses on forward contracts in non-operating (income) expense, net in our consolidated statements of operations. The counterparties associated with our foreign exchange forward contracts are large creditworthy 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 Company does not have a significant concentration of credit risk with any single counterparty.

Fair value measurements are determined based on the following three categories:

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.

As of December 31, 2021, we have no non-financial assets or liabilities that are measured and recorded 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, accrued expenses and other current liabilities and long-term debt. The estimated fair values of our cash and cash equivalents approximate their carrying values and are determined based on quoted prices in active markets for identical assets. The estimated fair values of our long-term debt balances, excluding the Notes, approximate their carrying values based on their variable interest rate terms that are based on current market interest rates for similar debt instruments. The Notes were initially recorded at their estimated fair value based on market interest rates for similar debt instruments. The fair market value of the Notes as of December 31, 2021 is disclosed in footnote 12. The fair values of the other financial assets and liabilities are based on the values that would be received or paid in an orderly transaction between market participants and approximate their carrying values due to their nature and short duration.

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In each of February 2020 and February 2018, our Board of Directors authorized the repurchase of up to $50,000,000 of our common stock. In May 2021, our Board of Directors authorized the repurchase of up to $125,000,000 of common stock, including the $25,000,000 that remained available from the February 2020 authorization. As of December 31, 2021, approximately $75,000,000 remained available under the May 2021 share repurchase plan and none remained available under the February 2018 share repurchase plan. Our share repurchases may be made on the open market, subject to Rule 10b-18 or in privately negotiated transactions, through block trades, through 10b5-1 plans or otherwise, at management’s discretion.

The following table summarizes the shares of our common stock that we repurchased on the open market under these repurchase programs during the years ended December 31, 2021, 2020 and 2019, respectively, in thousands, except per share amounts:

Year						Total Number of Shares Purchased						Average Price Paid per Share						Approximate Dollar Value of Shares Purchased
2021						497						$	100.55					$	50,000
2020						445						56.20						25,000
2019						541						51.56						27,899
Total						1,483												$	102,899

All shares repurchased were retired.

Contractual

In the ordinary course of business, we issue performance bonds to secure our performance under certain contracts or state tax requirements. As of December 31, 2021, we had approximately $28,348,000 of performance bonds outstanding. These bonds are issued on our behalf by a surety company on an unsecured basis; however, if the surety company is ever required to pay out under the bonds, we have contractually agreed to reimburse the surety company.

Management believes that payments, if any, related to these performance bonds are not probable at December 31, 2021. Accordingly, we have not accrued any liabilities related to such performance bonds in our consolidated financial statements.

Employment Contracts and Severance Plans

We have employment contracts with, and plans covering, certain officers and management teammates under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances after a change in control. In addition, vesting of outstanding nonvested RSUs would accelerate following a change in control. If severance payments under the current employment agreements or plan payments were to become payable, the severance payments would generally range from one to twenty-four months of salary.

Indemnifications

From time to time, in the ordinary course of business, we enter into contractual arrangements under which we agree to indemnify either our clients or third-party service providers from certain losses incurred relating to services performed on our behalf or for losses arising from defined events, which may include litigation or claims relating to past performance. These arrangements include, but are not limited to, the indemnification of our clients for certain claims arising out of our performance under our sales contracts, the indemnification of our landlords for certain claims arising from our use of leased facilities and the indemnification of the lenders that provide our credit facilities for certain claims arising from their extension of credit to us. Such indemnification obligations may not be subject to maximum loss clauses.

Management believes that payments, if any, related to these indemnifications are not probable at December 31, 2021. Accordingly, we have not accrued any liabilities related to such indemnifications in the accompanying consolidated financial statements.

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We have entered into separate indemnification agreements with certain of our executive officers and with each of our directors. These agreements require us, among other requirements, to indemnify such officers and directors against expenses (including attorneys’ fees), judgments and settlements incurred by such individual in connection with any action arising out of such individual’s status or service as our executive officer or director (subject to exceptions such as where the individual failed to act in good faith or in a manner the individual reasonably believed to be in, or not opposed to, the best interests of the Company) and to advance expenses incurred by such individual with respect to which such individual may be entitled to indemnification by us. There are no pending legal proceedings that involve the indemnification of any of the Company’s directors or officers.

Contingencies Related to Third-Party Review

From time to time, we are subject to potential claims and assessments from third parties. We are also subject to various governmental, client and partner audits. We continually assess whether or not such claims have merit and warrant accrual. Where appropriate, we accrue estimates of anticipated liabilities in our consolidated financial statements. Such estimates are subject to change and may affect our results of operations and our cash flows.

Legal Proceedings

From time to time, we are party to various legal proceedings incidental to the business, including preference payment claims asserted in client bankruptcy proceedings, indemnification claims, claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights, employment claims, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made. Although litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the work required pursuant to any legal proceedings or the resolution of any legal proceedings during such period. Legal expenses related to defense of any legal proceeding or the negotiations, settlements, rulings and advice of outside legal counsel in connection with any legal proceedings are expensed as incurred.

In connection with the acquisition of PCM, the Company has effectively assumed responsibility for PCM litigation matters, including various disputes related to PCM’s acquisition of certain assets of En Pointe Technologies in 2015. The seller of En Pointe Technologies and related entities providing various post-closing support functions to PCM have asserted claims regarding the sufficiency of earnout payments paid by PCM under the asset purchase agreement and the unwinding of the support functions post-closing. PCM rejected and vigorously responded to those claims, and the Company continues to pursue various counterclaims. The disputes are being heard by multiple courts and arbitrators in several different jurisdictions including California, Delaware and Pakistan. The Company cannot determine with certainty the costs or outcome of these matters. However, the Company is not involved in any pending or threatened legal proceedings, including the PCM litigation matters, that it believes would reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.

Additions and deductions related to the allowance for doubtful accounts receivable for 2021, 2020 and 2019 were as follows (in thousands):

			Balance at Beginning of Year						Additions						Deductions						Balance at End of Year
Allowance for doubtful accounts receivable:
Year ended December 31, 2021			$	15,106					$	7,862					$	(6,027)					$	16,941
Year ended December 31, 2020			$	10,762					$	10,163					$	(5,819)					$	15,106
Year ended December 31, 2019			$	10,462					$	5,079					$	(4,779)					$	10,762

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Cash payments for interest on indebtedness and cash payments for taxes on income were as follows (in thousands):

			Years Ended December 31,
			2021						2020						2019
Supplemental disclosures of cash flow information:
Cash paid during the year for interest			$	8,852					$	16,605					$	6,246
Cash paid during the year for income taxes, net of refunds			$	75,986					$	62,545					$	42,484

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

Disaggregation of Revenue

In the following table, revenue is disaggregated by our reportable operating segments, which are primarily defined by their related geographies, as well as by major product offering, by major client group and by recognition on either a gross basis as a principal in the arrangement, or on a net basis as an agent, for the years ended December 31, 2021, 2020 and 2019 (in thousands):

			Year Ended December 31, 2021
			North America						EMEA						APAC						Consolidated
Major Offerings
Hardware			$	5,163,225					$	676,815					$	49,470					$	5,889,510
Software			1,315,412						825,361						89,844						2,230,617
Services			1,041,686						201,875						72,425						1,315,986
			$	7,520,323					$	1,704,051					$	211,739					$	9,436,113
Major Client Groups
Large Enterprise / Corporate			$	5,356,915					$	1,219,601					$	93,796					$	6,670,312
Commercial			1,495,311						65,728						61,627						1,622,666
Public Sector			668,097						418,722						56,316						1,143,135
			$	7,520,323					$	1,704,051					$	211,739					$	9,436,113
Revenue Recognition based on acting as Principal or Agent in the Transaction
Gross revenue recognition (Principal)			$	7,138,852					$	1,591,156					$	184,418					$	8,914,426
Net revenue recognition (Agent)			381,471						112,895						27,321						521,687
			$	7,520,323					$	1,704,051					$	211,739					$	9,436,113

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			Year Ended December 31, 2020
			North America						EMEA						APAC						Consolidated
Major Offerings
Hardware			$	4,418,295					$	617,825					$	31,953					$	5,068,073
Software			1,260,757						760,562						82,763						2,104,082
Services			935,980						176,838						55,606						1,168,424
			$	6,615,032					$	1,555,225					$	170,322					$	8,340,579
Major Client Groups
Large Enterprise / Corporate			$	4,507,041					$	1,101,557					$	62,734					$	5,671,332
Commercial			1,395,298						61,535						60,740						1,517,573
Public Sector			712,693						392,133						46,848						1,151,674
			$	6,615,032					$	1,555,225					$	170,322					$	8,340,579
Revenue Recognition based on acting as Principal or Agent in the Transaction
Gross revenue recognition (Principal)			$	6,284,948					$	1,452,115					$	146,770					$	7,883,833
Net revenue recognition (Agent)			330,084						103,110						23,552						456,746
			$	6,615,032					$	1,555,225					$	170,322					$	8,340,579

			Year Ended December 31, 2019
			North America						EMEA						APAC						Consolidated
Major Offerings
Hardware			$	3,957,507					$	622,949					$	34,965					$	4,615,421
Software			1,269,983						753,729						92,988						2,116,700
Services			796,815						149,966						52,288						999,069
			$	6,024,305					$	1,526,644					$	180,241					$	7,731,190
Major Client Groups
Large Enterprise / Corporate			$	4,466,384					$	1,126,388					$	59,786					$	5,652,558
Commercial			960,432						76,666						65,033						1,102,131
Public Sector			597,489						323,590						55,422						976,501
			$	6,024,305					$	1,526,644					$	180,241					$	7,731,190
Revenue Recognition based on acting as Principal or Agent in the Transaction
Gross revenue recognition (Principal)			$	5,759,247					$	1,432,300					$	156,279					$	7,347,826
Net revenue recognition (Agent)			265,058						94,344						23,962						383,364
			$	6,024,305					$	1,526,644					$	180,241					$	7,731,190

The method for determining what information regarding operating segments, products and services, geographic areas of operation and major clients to report is based upon the “management approach,” or the way that management organizes the operating segments within a company, for which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. Our CODM is our Chief Executive Officer.

All significant intercompany transactions are eliminated upon consolidation, and there are no differences between the accounting policies used to measure profit and loss for our segments or on a consolidated basis. Net sales are defined as net sales to external clients. None of our clients exceeded ten percent of consolidated net sales in 2021, 2020 or 2019.

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

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determined on a basis that we considered to be a reasonable reflection of the utilization of services provided to or benefits received by the operating segments.

The tables below present information about our reportable operating segments (in thousands):

			Year Ended December 31, 2021
			North America						EMEA						APAC						Consolidated
Net Sales:
Products			$	6,478,637					$	1,502,176					$	139,314					$	8,120,127
Services			1,041,686						201,875						72,425						1,315,986
Total net sales			7,520,323						1,704,051						211,739						9,436,113
Costs of goods sold:
Products			5,874,551						1,380,221						126,136						7,380,908
Services			510,322						64,968						32,358						607,648
Total costs of goods sold			6,384,873						1,445,189						158,494						7,988,556
Gross profit			1,135,450						258,862						53,245						1,447,557
Operating expenses:
Selling and administrative expenses			869,766						210,616						36,748						1,117,130
Severance and restructuring expenses			(3,129)						1,328						167						(1,634)
Earnings from operations			$	268,813					$	46,918					$	16,330					$	332,061

			Year Ended December 31, 2020
			North America						EMEA						APAC						Consolidated
Net Sales:
Products			$	5,679,052					$	1,378,387					$	114,716					$	7,172,155
Services			935,980						176,838						55,606						1,168,424
Total net sales			6,615,032						1,555,225						170,322						8,340,579
Costs of goods sold:
Products			5,130,851						1,261,236						104,914						6,497,001
Services			462,793						57,943						22,900						543,636
Total costs of goods sold			5,593,644						1,319,179						127,814						7,040,637
Gross profit			1,021,388						236,046						42,508						1,299,942
Operating expenses:
Selling and administrative expenses			790,913						192,485						30,367						1,013,765
Severance and restructuring expenses			9,273						2,989						132						12,394
Acquisition-related expenses			2,004						204						—						2,208
Earnings from operations			$	219,198					$	40,368					$	12,009					$	271,575

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			Year Ended December 31, 2019
			North America						EMEA						APAC						Consolidated
Net Sales:
Products			$	5,227,490					$	1,376,678					$	127,953					$	6,732,121
Services			796,815						149,966						52,288						999,069
Total net sales			6,024,305						1,526,644						180,241						7,731,190
Costs of goods sold:
Products			4,748,608						1,258,974						117,778						6,125,360
Services			404,583						40,587						22,562						467,732
Total costs of goods sold			5,153,191						1,299,561						140,340						6,593,092
Gross profit			871,114						227,083						39,901						1,138,098
Operating expenses:
Selling and administrative expenses			664,374						186,957						29,406						880,737
Severance and restructuring expenses			4,946						334						145						5,425
Acquisition-related expenses			11,342						—						—						11,342
Earnings from operations			$	190,452					$	39,792					$	10,350					$	240,594

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

			December 31, 2021						December 31, 2020
North America			$	4,920,220					$	4,837,155
EMEA			828,456						735,771
APAC			148,737						155,761
Corporate assets and intercompany eliminations, net			(1,208,333)						(1,417,955)
Total assets			$	4,689,080					$	4,310,732

The following is a summary of our geographic net sales and long-lived assets, consisting of property and equipment, net (in thousands):

			United States						United Kingdom						Other Foreign						Total
2021
Net sales			$	7,046,742					$	826,800					$	1,562,571					$	9,436,113
Total long-lived assets			$	144,777					$	9,282					$	22,204					$	176,263
2020
Net sales			$	6,237,901					$	805,401					$	1,297,277					$	8,340,579
Total long-lived assets			$	110,161					$	11,042					$	24,813					$	146,016
2019
Net sales			$	5,696,422					$	776,051					$	1,258,717					$	7,731,190

Net sales by geographic area are presented by attributing net sales to external customers based on the domicile of the selling location.

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

			Years Ended December 31,
			2021						2020						2019
Depreciation and amortization of property and equipment:
North America			$	18,532					$	22,396					$	17,827
EMEA			4,256						5,073						4,166
APAC			588						556						545
			23,376						28,025						22,538
Amortization of intangible assets:
North America			29,576						34,990						22,382
EMEA			1,971						2,088						828
APAC			498						457						461
			32,045						37,535						23,671
Total			$	55,421					$	65,560					$	46,209

PCM

On August 30, 2019, we completed our acquisition of PCM, acquiring 100 percent of the issued and outstanding shares of PCM for a cash purchase price of $745,562,000, which included cash and cash equivalents acquired of $84,637,000 and the payment of PCM’s outstanding debt. PCM was a provider of multi-vendor technology offerings, including hardware, software and services to small, mid-sized and corporate/enterprise commercial clients, state, local and federal governments and educational institutions across the United States, Canada and the United Kingdom. Based in El Segundo, California, PCM had 40 office locations in North America and the United Kingdom and more than 4,000 teammates. We believe that this acquisition allowed us to help PCM clients in positioning their businesses for future growth, transforming and securing their data platforms, creating modern and mobile experiences for their workforce and optimizing the procurement of technology. The addition of PCM complemented our supply chain expertise, adding scale and clients in the commercial space primarily in North America.

The following table summarizes the purchase price and the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Purchase price net of cash and cash equivalents acquired						$	660,925
Fair value of net assets acquired:
Current assets			$	531,941
Identifiable intangible assets - see description below			191,370
Property and equipment			91,213
Other assets			32,699
Current liabilities			(369,183)
Long-term liabilities, including deferred taxes			(71,009)
Total fair value of net assets acquired						407,031
Excess purchase price over fair value of net assets acquired ("goodwill")						$	253,894

Under the acquisition method of accounting, the total purchase price as shown in the table above was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over fair value of net assets acquired was recorded as goodwill. In the fourth quarter of 2020, an adjustment of $56,700,000 was recorded to goodwill primarily due to a change in the customer relationships valuation based on updated information received for key inputs as well as an associated change in deferred taxes.

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The estimated fair values of current assets and liabilities are based upon their historical costs on the date of acquisition due to their short-term nature. The estimated fair values of the majority of property and equipment excluding acquired real estate are also based upon historical costs as they approximate fair value. Certain long-term assets, including PCM’s IT systems, have been written down to the estimated fair value.

The estimated fair value of net assets acquired was approximately $407,031,000, including $191,370,000 of identifiable intangible assets, consisting primarily of customer relationships of $178,900,000. The fair value of the customer relationships were determined using the multiple-period excess earnings method.

The identifiable intangibles resulting from the acquisition are amortized using the straight-line method over the following estimated useful lives:

Intangible Assets			Estimated Economic Life
Customer relationships			10- 12 years
Trade name			1 Year
Non-compete agreements			2 - 3 Years

Goodwill of $253,894,000, which was recorded in our North America and EMEA operating segments, represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed from PCM. The goodwill is not amortized and will be tested for impairment annually in the fourth quarter of our fiscal year. The addition of the PCM technical employees to our team and the opportunity to grow our business are the primary factors making up the goodwill recognized as part of the transaction. None of the goodwill is tax deductible. The purchase price allocation was finalized during the third quarter of 2020.

We have consolidated the results of operations for PCM since its acquisition on August 30, 2019.

The following table reports pro forma information as if the acquisition of PCM had been completed at the beginning of the earliest period presented (in thousands, except per share amounts):

						Year Ended December 31,
						2019
Net sales			As reported			$	7,731,190
			Pro forma			$	9,207,512
Net earnings			As reported			$	159,407
			Pro forma			$	171,102
Diluted earnings per share			As reported			$	4.43
			Pro forma			$	4.76

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