Insight Enterprises Inc. (NSIT, Financial) filed Quarterly Report for the period ended 2010-03-31.
Insight Enterprises Inc. has a market cap of $661 million; its shares were traded at around $14.38 with a P/E ratio of 13.5 and P/S ratio of 0.2. NSIT is in the portfolios of Arnold Schneider of Schneider Capital Management, Richard Pzena of Pzena Investment Management LLC, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Our focus on cash flow initiatives continued to yield benefits in the first quarter, and, as a result, we ended the quarter with outstanding long-term debt under our senior revolving credit facility of $80.0 million, a $67.0 million decrease from December 31, 2009, even with cash outlays of $11.8 million during the three months ended March 31, 2010 to settle trade credit liabilities as part of our previously announced program of compliance with state unclaimed property laws.
North Americas selling and administrative expenses decreased 11%, or $10.2 million, for the three months ended March 31, 2010 compared to the three months ended March 31, 2009, decreasing 210 basis points to 12.3% of net sales for the quarter. Salaries and benefits, including stock-based compensation, accounted for approximately $8.0 million of the decrease, of which $4.1 million results from the effect on the year over year comparison of the prior year charges related to the North America portion of the termination of an equity-based incentive compensation plan in February 2009. The remaining year over year decline in personnel costs is primarily attributable to cost reduction initiatives, offset partially by increases in variable costs as a result of increased net sales in the first quarter of 2010. In addition, we had a $2.9 million decline in legal and professional fees year over year, primarily related to professional fees and costs associated with the trade credits restatement. Selling and administrative expenses in the three months ended March 31, 2010 include $497,000 of related professional fees and costs compared to $4.1 million included in the three months ended March 31, 2009.
EMEAs selling and administrative expenses increased 10%, or $3.5 million in U.S. dollars, for the three months ended March 31, 2010 compared to the three months ended March 31, 2009. Excluding the effects of foreign currency movements, selling and administrative expenses increased 3% compared to the first quarter of last year. This increase year over year was primarily driven by increased salaries resulting from our investment in sales headcount focused on the middle market and public sector client groups and higher variable compensation on increased net sales. In addition, we incurred higher facility expenses in the first quarter of 2010 due to an office relocation in France. Selling and administrative expenses for the three months ended March 31, 2009 included $1.4 million of charges related to the EMEA portion of the termination of an equity-based incentive compensation plan in the prior year quarter that did not recur in the first quarter of 2010.
Severance and Restructuring Expenses. During the three months ended March 31, 2010, EMEA recorded net severance expense of $71,000 related to ongoing restructuring efforts. During the quarter, $306,000 in new severance costs was offset partially by $235,000 of adjustments to prior severance accruals due to current period changes in estimates. Comparatively, during the three months ended March 31, 2009, North America, EMEA and APAC recorded severance expense of $5.9 million, $417,000 and $71,000, respectively.
Our primary uses of cash during the three months ended March 31, 2010 were to fund working capital requirements, including cash payments to settle trade credit liabilities, and to pay down debt. Operating activities in the three month ended March 31, 2010 provided $110.0 million in cash, a 9% increase over the three months ended March 31, 2009. Our operating cash flows enabled us to reduce our long-term debt under our revolving credit facilities by $67.0 million and make net repayments under our inventory financing facility of $19.8 million since December 31, 2009, even with the cash payments of $11.8 million during the first quarter of 2010 as part of our previously announced program of compliance with state unclaimed property laws, and to increase our cash balance by $17.3 million since December 31, 2009. Capital expenditures were $2.8 million for the three months ended March 31, 2010, a 45% decrease from the three months ended March 31, 2009, primarily related to expenditures to upgrade our IT systems in EMEA. Cash flows for the three months ended March 31, 2010 and March 31, 2009 were each negatively affected by $2.6 million as a result of foreign currency exchange rates.
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Insight Enterprises Inc. has a market cap of $661 million; its shares were traded at around $14.38 with a P/E ratio of 13.5 and P/S ratio of 0.2. NSIT is in the portfolios of Arnold Schneider of Schneider Capital Management, Richard Pzena of Pzena Investment Management LLC, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Consolidated net sales were $1.05 billion in the first quarter of 2010, an increase of 10% from the $951.2 million reported in the first quarter of 2009. Gross profit for the three months ended March 31, 2010 also increased 10% to $145.0 million, and gross margin declined slightly to 13.8%.Our focus on cash flow initiatives continued to yield benefits in the first quarter, and, as a result, we ended the quarter with outstanding long-term debt under our senior revolving credit facility of $80.0 million, a $67.0 million decrease from December 31, 2009, even with cash outlays of $11.8 million during the three months ended March 31, 2010 to settle trade credit liabilities as part of our previously announced program of compliance with state unclaimed property laws.
North Americas selling and administrative expenses decreased 11%, or $10.2 million, for the three months ended March 31, 2010 compared to the three months ended March 31, 2009, decreasing 210 basis points to 12.3% of net sales for the quarter. Salaries and benefits, including stock-based compensation, accounted for approximately $8.0 million of the decrease, of which $4.1 million results from the effect on the year over year comparison of the prior year charges related to the North America portion of the termination of an equity-based incentive compensation plan in February 2009. The remaining year over year decline in personnel costs is primarily attributable to cost reduction initiatives, offset partially by increases in variable costs as a result of increased net sales in the first quarter of 2010. In addition, we had a $2.9 million decline in legal and professional fees year over year, primarily related to professional fees and costs associated with the trade credits restatement. Selling and administrative expenses in the three months ended March 31, 2010 include $497,000 of related professional fees and costs compared to $4.1 million included in the three months ended March 31, 2009.
EMEAs selling and administrative expenses increased 10%, or $3.5 million in U.S. dollars, for the three months ended March 31, 2010 compared to the three months ended March 31, 2009. Excluding the effects of foreign currency movements, selling and administrative expenses increased 3% compared to the first quarter of last year. This increase year over year was primarily driven by increased salaries resulting from our investment in sales headcount focused on the middle market and public sector client groups and higher variable compensation on increased net sales. In addition, we incurred higher facility expenses in the first quarter of 2010 due to an office relocation in France. Selling and administrative expenses for the three months ended March 31, 2009 included $1.4 million of charges related to the EMEA portion of the termination of an equity-based incentive compensation plan in the prior year quarter that did not recur in the first quarter of 2010.
Severance and Restructuring Expenses. During the three months ended March 31, 2010, EMEA recorded net severance expense of $71,000 related to ongoing restructuring efforts. During the quarter, $306,000 in new severance costs was offset partially by $235,000 of adjustments to prior severance accruals due to current period changes in estimates. Comparatively, during the three months ended March 31, 2009, North America, EMEA and APAC recorded severance expense of $5.9 million, $417,000 and $71,000, respectively.
Our primary uses of cash during the three months ended March 31, 2010 were to fund working capital requirements, including cash payments to settle trade credit liabilities, and to pay down debt. Operating activities in the three month ended March 31, 2010 provided $110.0 million in cash, a 9% increase over the three months ended March 31, 2009. Our operating cash flows enabled us to reduce our long-term debt under our revolving credit facilities by $67.0 million and make net repayments under our inventory financing facility of $19.8 million since December 31, 2009, even with the cash payments of $11.8 million during the first quarter of 2010 as part of our previously announced program of compliance with state unclaimed property laws, and to increase our cash balance by $17.3 million since December 31, 2009. Capital expenditures were $2.8 million for the three months ended March 31, 2010, a 45% decrease from the three months ended March 31, 2009, primarily related to expenditures to upgrade our IT systems in EMEA. Cash flows for the three months ended March 31, 2010 and March 31, 2009 were each negatively affected by $2.6 million as a result of foreign currency exchange rates.
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