UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: June 30, 2007

OR

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

For the transition period from ___to ___

Commission File Number: 0-25092

INSIGHT ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

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

1305 West Auto Drive, Tempe, Arizona 85284
(Address of principal executive offices) (Zip Code)

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

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

Yes o          No þ

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

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o

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

Yes o          No þ

     The number of shares outstanding of the issuer’s common stock as of August 2, 2007 was 49,100,749.

INSIGHT ENTERPRISES, INC.
QUARTERLY REPORT ON FORM 10-Q
Three Months Ended June 30, 2007

TABLE OF CONTENTS

		Page
PART I — Financial Information
Item 1 — Financial Statements:
Consolidated Balance Sheets (unaudited) - June 30, 2007 and December 31, 2006			5
Consolidated Statements of Earnings (unaudited) - Three and Six Months Ended June 30, 2007 and 2006			6
Consolidated Statements of Cash Flows (unaudited) - Six Months Ended June 30, 2007 and 2006			7
Notes to Consolidated Financial Statements (unaudited)			8
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3 — Quantitative and Qualitative Disclosures About Market Risk			34
Item 4 — Controls and Procedures			34
PART II — Other Information
Item 1 — Legal Proceedings			35
Item 1A — Risk Factors			36
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3 — Defaults Upon Senior Securities			37
Item 4 — Submission of Matters to a Vote of Security Holders			37
Item 5 — Other Information			37
Item 6 — Exhibits			38
Signatures			39
Certifications			40
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

INSIGHT ENTERPRISES, INC.

FORWARD-LOOKING INFORMATION

     Certain statements in this Quarterly Report on Form 10-Q, including statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this report, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include: projections of matters that affect net sales, gross profit, operating expenses, earnings from continuing operations, non-operating income and expenses, earnings from discontinued operations or net earnings; effects of acquisitions or dispositions; projections of capital expenditures and growth; hiring plans; plans for future operations; the availability of financing and our needs or plans relating thereto; plans relating to our products and services; the effect of new accounting principles or changes in accounting policies; the effect of guaranty and indemnification obligations; statements of belief; and statements of assumptions underlying any of the foregoing. Forward-looking statements are identified by such words as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “may” and variations of such words and similar expressions, and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Some of the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2006:

	•		changes in the information technology industry and/or the economic environment;
	•		our reliance on suppliers for product availability, marketing funds, purchasing incentives and competitive products to sell;
	•		disruptions in our information technology and voice and data networks, including migration of Software Spectrum to our information technology and voice and data networks;
	•		the integration and operation of Software Spectrum, including our ability to achieve the expected benefits of the acquisition;
	•		actions of our competitors, including manufacturers of products we sell;
	•		the informal inquiry from the Securities and Exchange Commission (“SEC”) and the fact that we could be subject to stockholder litigation related to the investigation by the Options Subcommittee of our Board of Directors into our historical stock option granting practices and the related restatement of our consolidated financial statements;
	•		the recently enacted changes in securities laws and regulations, including potential risk resulting from our evaluation of internal controls under the Sarbanes-Oxley Act of 2002;
	•		the risks associated with international operations;
	•		sales of software licenses are subject to seasonal changes in demand;
	•		increased debt and interest expense and lower availability on our financing facilities;
	•		increased exposure to currency exchange risks;
	•		our dependence on key personnel;
	•		risk that purchased goodwill or amortizable intangible assets become impaired;
	•		our failure to comply with the terms and conditions of our public sector contracts;
	•		risks associated with our very limited experience in outsourcing business functions to India;
	•		rapid changes in product standards; and
	•		intellectual property infringement claims.

Additionally, there may be other risks that are otherwise described from time to time in the reports that we file with the SEC.

     In addition, these forward-looking statements include statements regarding the informal inquiry commenced by the SEC and a stockholder’s demand to inspect our books and records pursuant to Section 220 of the Delaware General Corporation Law. There can be no assurances that forward-looking statements will be achieved, and actual results could differ materially from those suggested by the forward-looking statements.

INSIGHT ENTERPRISES, INC.

Important factors that could cause actual results to differ materially include: adjustments to the consolidated financial statements that may be required related to the SEC informal inquiry; and risks of litigation and governmental or other regulatory inquiries or proceedings arising out of or related to the Company’s historical stock option granting practices. Therefore, any forward-looking statements in this report should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others.

     We assume no obligation to update, and do not intend to update, any forward-looking statements. We do not endorse any projections regarding future performance that may be made by third parties.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

		June 30,				December 31,
		2007				2006
ASSETS
Current assets:
Cash and cash equivalents		$	46,144			$	54,697
Accounts receivable, net of allowances for doubtful accounts of $23,450 and $23,211, respectively			1,029,215				994,892
Inventories			98,419				97,751
Inventories not available for sale			20,040				31,112
Deferred income taxes			13,812				15,583
Other current assets			20,923				32,359
Total current assets			1,228,553				1,226,394
Property and equipment, net of accumulated depreciation of $92,000 and $87,046, respectively			137,546				129,256
Buildings held for lease, net of accumulated depreciation of $4,926 and $4,543, respectively			16,139				16,522
Goodwill			300,133				296,781
Intangible assets, net of accumulated amortization of $9,309 and $3,976, respectively			82,834				86,929
Deferred income taxes			2,908				—
Other long-term assets			18,618				18,269
		$	1,786,731			$	1,774,151
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	708,542			$	611,367
Accrued expenses and other current liabilities			116,797				136,401
Current portion of long-term debt			15,000				15,000
Deferred revenue			27,618				40,728
Line of credit			42,000				15,000
Total current liabilities			909,957				818,496
Long-term debt			84,500				224,250
Long-term deferred income taxes			17,787				19,403
Other long-term liabilities			25,574				21,652
			1,037,818				1,083,801
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.01 par value, 3,000 shares authorized; no shares issued			—				—
Common stock, $0.01 par value, 100,000 shares authorized; 49,101 shares at June 30, 2007 and 48,868 shares at December 31, 2006 issued and outstanding			491				489
Additional paid-in capital			371,424				363,308
Retained earnings			341,741				297,664
Accumulated other comprehensive income — foreign currency translation adjustment			35,257				28,889
Total stockholders’ equity			748,913				690,350
		$	1,786,731			$	1,774,151

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
(unaudited)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
														As Restated (1)
Net sales		$	1,283,449			$	780,346			$	2,407,424			$	1,513,170
Costs of goods sold			1,098,636				678,200				2,069,436				1,313,918
Gross profit			184,813				102,146				337,988				199,252
Selling and administrative expenses			138,323				79,534				268,081				155,639
Severance and restructuring expenses			2,841				—				2,841				—
Earnings from operations			43,649				22,612				67,066				43,613
Non-operating (income) expense:
Interest income			(2,182	)			(1,086	)			(4,294	)			(2,008	)
Interest expense			4,767				272				10,526				1,069
Net foreign currency exchange (gain) loss			(3,002	)			(7	)			(3,656	)			24
Other expense, net			496				158				713				320
Earnings from continuing operations before income taxes			43,570				23,275				63,777				44,208
Income tax expense			16,761				8,106				24,672				15,597
Net earnings from continuing operations			26,809				15,169				39,105				28,611
Earnings from discontinued operations, net of taxes of $0, $1,005, $111 and $1,870, respectively			—				1,574				171				2,956
Gain on sale of discontinued operations, net of taxes of $0, $5,978, $3,135 and $5,978, respectively			—				9,144				4,801				9,144
Net earnings from discontinued operations			—				10,718				4,972				12,100
Net earnings		$	26,809			$	25,887			$	44,077			$	40,711
Net earnings per share — Basic:
Net earnings from continuing operations		$	0.55			$	0.32			$	0.80			$	0.60
Net earnings from discontinued operations			—				0.22				0.10				0.25
Net earnings per share		$	0.55			$	0.54			$	0.90			$	0.85
Net earnings per share — Diluted:
Net earnings from continuing operations		$	0.54			$	0.31			$	0.79			$	0.59
Net earnings from discontinued operations			—				0.22				0.10				0.25
Net earnings per share		$	0.54			$	0.53			$	0.89			$	0.84
Shares used in per share calculations:
Basic			49,099				48,277				49,054				48,140
Diluted			49,402				48,352				49,346				48,234

(1)		See Note 2 “Restatement of Consolidated Financial Statements.”

See accompanying notes to consolidated financial statements.

INSIGHT ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

		Six Months Ended June 30,
		2007				2006
						As Restated (1)
Cash flows from operating activities:
Net earnings from continuing operations		$	39,105			$	28,611
Plus: net earnings from discontinued operations			4,972				12,100
Net earnings			44,077				40,711
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			17,641				9,086
Provision for losses on accounts receivable			1,459				1,483
Write-downs of inventories			2,841				4,748
Non-cash stock-based compensation			5,663				6,254
Gain on sale of discontinued operation			(7,937	)			(15,122	)
Excess tax benefit from employee gains on stock-based compensation			(45	)			(895	)
Deferred income taxes			(2,753	)			(6,724	)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable			(42,488	)			20,048
Decrease in inventories			484				39,379
Decrease (increase) in other current assets			11,759				(2,120	)
Increase in other assets			(2,221	)			(14,625	)
Increase in accounts payable			105,175				55,459
Decrease in inventories financing facility			—				(4,281	)
Decrease in deferred revenue			(12,937	)			(6,521	)
Decrease in accrued expenses and other liabilities			(17,172	)			(95	)
Net cash provided by operating activities			103,546				126,785
Cash flows from investing activities:
Proceeds from sale of discontinued operation			28,631				46,500
Purchases of property and equipment			(18,867	)			(17,187	)
Net cash provided by investing activities			9,764				29,313
Cash flows from financing activities:
Repayments on short-term financing facility			—				(45,000	)
Borrowings on long-term financing facility			262,000				—
Repayments on long-term financing facility			(398,000	)			—
Repayments on term loan			(3,750	)			—
Net repayments on line of credit			27,000				(21,309	)
Proceeds from sales of common stock under employee stock plans			2,475				7,391
Excess tax benefit from employee gains on stock-based compensation			45				895
Decrease in book overdrafts			(15,606	)			—
Net cash used in financing activities			(125,836	)			(58,023	)
Cash flows from discontinued operation:
Net cash used in operating activities			—				(8,885	)
Net cash provided by investing activities			—				11,710
Net cash used in financing activities			—				(2,696	)
Net cash provided by discontinued operation			—				129
Foreign currency exchange effect on cash flow			3,973				4,903
(Decrease) increase in cash and cash equivalents			(8,553	)			103,107
Cash and cash equivalents at beginning of period			54,697				35,145
Cash and cash equivalents at end of period		$	46,144			$	138,252

(1)		See Note 2 “Restatement of Consolidated Financial Statements.”

See accompanying notes to consolidated financial statements

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

1. Basis of Presentation and Recently Issued Accounting Pronouncements

     We are a leading provider of brand-name information technology (“IT”) hardware, software and services to large enterprises, small- to medium-sized businesses and public sector institutions in North America, Europe, the Middle East, Africa and Asia-Pacific. We operate in three reportable geographic operating segments: North America; EMEA (Europe, the Middle East and Africa); and APAC (Asia-Pacific). Currently, our offerings in North America and the United Kingdom include brand-name IT hardware, software and services. Our offerings in the remainder of our EMEA segment and in APAC currently only include software and select software-related services.

     The accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly our financial position as of June 30, 2007, our results of operations for the three and six months ended June 30, 2007 and 2006 and our cash flows for the six months ended June 30, 2007 and 2006. The consolidated balance sheet as of December 31, 2006 was derived from the audited consolidated balance sheet at such date. The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with the rules and regulations promulgated by the Securities and Exchange Commission (“SEC”) and consequently do not include all of the disclosures normally required by United States generally accepted accounting principles (“GAAP”).

     The results of operations for such interim periods are not necessarily indicative of results for the full year, due in part to the seasonal nature of the business. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the related notes thereto, in our Annual Report on Form 10-K for the year ended December 31, 2006.

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

     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. References to “the Company,” “we,” “us,” “our” and other similar words refer to Insight Enterprises, Inc. and its consolidated subsidiaries, unless the context suggests otherwise.

Recently Issued Accounting Pronouncements

     There have been no material changes or additions to the recently issued accounting pronouncements as previously reported in Note 1 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2006 which effect the Company’s financial statements.

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

2. Restatement of Consolidated Financial Statements

     The following table presents the effect of the financial statement restatement adjustments on the Company’s previously reported consolidated statements of earnings for the six months ended June 30, 2006 (in thousands):

		Six Months Ended June 30, 2006
						Discontinued
		As Reported				Operation(B)				Adjustments				As Restated
Net sales		$	1,626,007			$	(112,837	)		$	—			$	1,513,170
Costs of goods sold			1,422,702				(108,784	)			—				1,313,918
Gross profit			203,305				(4,053	)							199,252
Operating expenses:
Selling and administrative expenses			159,263				(2,624	)			(1,000	)(A)			155,639
Earnings from operations			44,042				(1,429	)			1,000				43,613
Non-operating (income) expense:
Interest income			(2,008	)			—				—				(2,008	)
Interest expense			1,069				—				—				1,069
Net foreign currency exchange loss			24				—				—				24
Other expense, net			320				—				—				320
Earnings from continuing operations before income taxes			44,637				(1,429	)			1,000				44,208
Income tax expense			15,773				(566	)			390	(A)			15,597
Net earnings from continuing operations			28,864				(863	)			610				28,611
Net earnings from discontinued operation			11,237				863				—				12,100
Net earnings		$	40,101			$	—			$	610			$	40,711
Net earnings per share — Basic:
Net earnings from continuing operations		$	0.60			$	(0.02	)		$	0.02			$	0.60
Net earnings from discontinued operation			0.23				0.02				—				0.25
Net earnings per share		$	0.83			$	—			$	0.02			$	0.85
Net earnings per share — Diluted:
Net earnings from continuing operations		$	0.59			$	(0.02	)		$	0.02			$	0.59
Net earnings from discontinued operation			0.23				0.02				—				0.25
Net earnings per share		$	0.82			$	—			$	0.02			$	0.84
Shares used in per share calculations:
Basic			48,140				—				—				48,140
Diluted			48,710				—				(476	)(C)			48,234

(A)		Adjustment to record a legal settlement expense that was recorded in the first quarter of 2006, which should have been recorded in the fourth quarter of 2005, as described in Note 2 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2006.
(B)		Adjustment to reclassify the operations of PC Wholesale to discontinued operations as described in Note 11.
(C)		Effect of adjustment for stock-based compensation expense pursuant to APB No. 25 and the associated income tax benefit, as described in Note 2 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2006.

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

     The following table presents the effect of the restatement adjustments on the Company’s previously reported cash flow amounts for the six months ended June 30, 2006 (in thousands):

		Six Months Ended June 30, 2006
						Discontinued
		As Reported				Operation(B)				Adjustments				As Restated
Cash flows from operating activities:
Net earnings from continuing operations		$	28,864			$	(863	)		$	610	(A)		$	28,611
Plus: net earnings from discontinued operations			11,237				863				—				12,100
Net earnings			40,101				—				610				40,711
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			9,086				—				—				9,086
Provisions for losses on accounts receivable			1,483				—				—				1,483
Write-downs of inventories			4,748				—				—				4,748
Non-cash stock-based compensation expense			6,254				—				—				6,254
Gain on sale of discontinued operation			(15,122	)			—				—				(15,122	)
Deferred income taxes			(6,724	)			—				—				(6,724	)
Excess tax benefit from employee gains on stock-based compensation			(2,232	)			—				1,337	(C)			(895	)
Change in assets and liabilities:
Decrease in accounts receivable			20,048				—				—				20,048
Decrease in inventories			39,379				—				—				39,379
Increase in other current assets			(2,120	)			—				—				(2,120	)
Increase in other assets			(14,625	)			—				—				(14,625	)
Increase in accounts payable			55,459				—				—				55,459
Decrease in inventories financing facility			(4,281	)			—				—				(4,281	)
Decrease in deferred revenue			(6,521	)			—				—				(6,521	)
Increase (decrease) in accrued expenses and other liabilities			515				—				(610	)(A)			(95	)
Net cash provided by operating activities			125,448				—				1,337				126,785
Cash flows from investing activities:							—				—
Proceeds from sale of discontinued operation			46,500				—				—				46,500
Purchases of property and equipment			(17,187	)			—				—				(17,187	)
Net cash provided by investing activities			29,313				—				—				29,313
Cash flows from financing activities:
Repayments on short-term financing facility			(45,000	)			—				—				(45,000	)
Net repayments on line of credit			(21,309	)			—				—				(21,309	)
Proceeds from sales of common stock under employee stock plans			7,391				—				—				7,391
Excess tax benefit from employee gains on stock-based compensation			2,232				—				(1,337	)(C)			895
Net cash used in financing activities			(56,686	)			—				(1,337	)			(58,023	)

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

		Six Months Ended June 30, 2006
						Discontinued
		As Reported				Operation(B)				Adjustments				As Restated
Cash flows from discontinued operation:
Net cash used in operating activities			(8,885	)			—				—				(8,885	)
Net cash provided by investing activities			11,710				—				—				11,710
Net cash used in financing activities			(2,696	)			—				—				(2,696	)
Net cash provided by discontinued operation			129				—				—				129
Foreign currency exchange effect on cash flow			4,903				—				—				4,903
Increase in cash and cash equivalents			103,107				—				—				103,107
Cash and cash equivalents at beginning of period			35,145				—				—				35,145
Cash and cash equivalents at end of period		$	138,252			$	—			$	—			$	138,252

(A)		Adjustment to record a legal settlement expense that was recorded in the first quarter of 2006, which should have been recorded in the fourth quarter of 2005, as described in Note 2 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2006.
(B)		Adjustment to reclassify the operations of PC Wholesale to discontinued operations as described in Note 11.
(C)		Adjustment to correct presentation of the excess tax benefit from employee gains on stock-based compensation.

3. Earnings Per Share (“EPS”)

     Basic EPS is computed by dividing net earnings from continuing operations available to common stockholders by the weighted-average number of common shares outstanding during each quarter. Diluted EPS includes the effect of stock options assumed to be exercised and restricted stock using the treasury stock method. A reconciliation of the denominators of the basic and diluted EPS calculations is as follows (in thousands, except per share data):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
														As Restated (1)
Numerator:
Net earnings from continuing operations		$	26,809			$	15,169			$	39,105			$	28,611
Denominator:
Weighted-average shares used to compute basic EPS			49,099				48,277				49,054				48,140
Dilutive potential common shares due to dilutive options and restricted stock, net of tax effect			303				75				292				94
Weighted-average shares used to compute diluted EPS			49,402				48,352				49,346				48,234
Net earnings from continuing operations per share:
Basic		$	0.55			$	0.32			$	0.80			$	0.60
Diluted		$	0.54			$	0.31			$	0.79			$	0.59

(1)		See Note 2 “Restatement of Consolidated Financial Statements.”

     The following weighted-average outstanding stock options during the three and six months ended June 30, 2007 and 2006 were not included in the diluted EPS calculations because the exercise prices of these options were greater than the average market price of our common stock during the respective periods (in thousands):

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

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Weighted-average outstanding stock options excluded from the diluted EPS calculation			1,480				3,491				2,456				2,836

4. Goodwill

     The changes in the carrying amount of goodwill for the six months ended June 30, 2007 are as follows (in thousands):

		North America				EMEA				APAC				Consolidated
Balance at December 31, 2006		$	217,469			$	62,714			$	16,598			$	296,781
Foreign currency translation adjustments			990				1,432				930				3,352
Balance at June 30, 2007		$	218,459			$	64,146			$	17,528			$	300,133

     Goodwill represents the excess of the purchase price over the estimated fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed from previous acquisitions. In accordance with current accounting standards, goodwill is not amortized and will be tested for impairment annually in the fourth quarter of our fiscal year, or more frequently if indicators of potential impairment exist.

5. Debt

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

		June 30,				December 31,
		2007				2006
Term loan		$	67,500			$	71,250
Accounts receivable securitization financing facility			32,000				168,000
Total			99,500				239,250
Less: current portion of term loan			(15,000	)			(15,000	)
Long-term debt		$	84,500			$	224,250

     Our financing facilities contain various covenants, including the requirement that we comply with leverage and minimum fixed charge ratio requirements. If we fail to comply with these covenants, the lenders would be able to demand payment within a specified period of time. Because we were not current with our reporting obligations under the Securities Exchange Act of 1934 beginning on September 30, 2006 and ending on July 26, 2007, we would have been in violation of our financial reporting covenants had we not obtained agreements with our lenders regarding the delivery of substitute financial information to them. The agreements with our lenders waived our obligation to provide the filed reports and waived any events of default occurring under the facility as a result of our failure to comply with the financial reporting covenants. We have since provided all late reports filed with the SEC to our lenders and are in compliance with this reporting covenant at July 26, 2007 and all other covenants at June 30, 2007.

6. Income Taxes

     Our effective tax rates from continuing operations for the three months ended June 30, 2007 and 2006 were 38.5% and 34.8%, respectively. For the three months ended June 30, 2007, our effective tax rate was higher than the United States federal statutory rate of 35.0% due primarily to state income taxes, net of federal tax, as well as non-deductible expenses related to executive compensation. For the three months ended June 30, 2006, the effective tax rate approximated the United States federal statutory rate because increases due primarily to state

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

income taxes, net of federal tax, were offset by internal initiatives implemented during the three months ended June 30, 2006 that reduced certain state income taxes.

     Our effective tax rates from continuing operations for the six months ended June 30, 2007 and 2006 were 38.7% and 35.3%, respectively. For the six months ended June 30, 2007, our effective tax rate was higher than the United States federal statutory rate of 35.0% due primarily to state income taxes, net of federal tax, as well as non-deductible expenses related to executive compensation and an increase in tax reserves in the first quarter of 2007. For the six months ended June 30, 2006, our effective tax rate increased over the United States federal statutory rate of 35.0% due primarily to state income taxes, net of federal tax, offset partially by a decrease in tax reserves in the first quarter of 2006 due to the closing of an audit and a tax benefit recorded in the second quarter of 2006 for internal initiatives that reduced certain state income taxes.

     FIN 48 requires that companies recognize the effect of a tax position in their consolidated financial statements if there is a greater likelihood than not of the position being sustained upon audit based on the technical merits of the position. We adopted the provisions of FIN 48 effective January 1, 2007. The adoption of FIN 48 resulted in no cumulative effect adjustment to our retained earnings. However, in order to conform to the balance sheet presentation requirements of FIN 48, we reclassified certain unrecognized tax benefits on our balance sheet from current assets to non-current assets.

     As of January 1, 2007 (the date we adopted FIN 48) and June 30, 2007 the Company had approximately $10,300,000 and $12,000,000, respectively, of unrecognized tax benefits. Of these amounts, approximately $1,500,000 and $2,000,000, respectively, relate to accrued interest.

     Our policy to classify interest and penalties relating to uncertain tax positions as a component of income tax expense in our consolidated statement of earnings did not change as a result of implementing the provisions of FIN 48.

     As of January 1, 2007, if recognized, $1,100,000 of the liability associated with uncertain tax positions would affect the Company’s effective tax rate. The remaining $9,200,000 balance arose from business combinations that, if recognized, ultimately would be recorded as an adjustment to goodwill or a receivable with no effect on the Company’s effective tax rate.

     Several of our subsidiaries are currently under audit for the 2002 through 2005 tax years. It is reasonably possible that the examination phase of these audits may conclude in the next twelve months, and the related unrecognized tax benefits for certain tax positions will significantly decrease. However, based on the status of the examination, an estimate of the range of reasonably possible outcomes cannot be made at this time.

     We, including our subsidiaries, file income tax returns in the U.S. federal jurisdiction, and many state and local and non-U.S. jurisdictions. In the U.S., federal income tax returns for 2003 through 2006 remain open to examination. For U.S. state and local as well as non-U.S. jurisdictions, the statute of limitations generally varies between three and ten years.

7. Restructuring and Acquisition Integration Activities

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

     We recorded $11,414,000 of employee termination benefits and facility based costs in connection with the integration of Software Spectrum. These costs were accounted for under EITF Issue No. 95-3, “Recognition of Liabilities in Connection with Purchase Business Combinations,” and were based on the integration plans that have been committed to by management. Accordingly, these costs were recognized as a liability assumed in the purchase business combination and included in the allocation of the cost to acquire Software Spectrum.

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

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

     The following table details the changes in these liabilities during the six months ended June 30, 2007 (in thousands):

		North America				EMEA				Consolidated
Balance at December 31, 2006		$	997			$	9,528			$	10,525
Foreign currency translation adjustments			—				201				201
Cash payments			(24	)			(1,134	)			(1,158	)
Balance at June 30, 2007		$	973			$	8,595			$	9,568

Severance and restructuring activities expensed in 2005

     During the year ended December 31, 2005, our EMEA operations moved into a new facility in the United Kingdom and recorded restructuring costs of $7,458,000, of which $6,447,000 represented the present value of the remaining lease obligations on the previous lease and $1,011,000 represented duplicate rent expense for the new facility for the last half of 2005. At December 31, 2006, the balance of these restructuring accruals was $6,468,000. During the six months ended June 30, 2007, adjustments of $115,000 and $117,000 were recorded to reflect the accretion of interest for the present value of the remaining lease obligations and fluctuations in the British pound sterling exchange rates, respectively. Cash payments of $3,365,000 were made during the six months ended June 30, 2007, resulting in an accrual balance of $3,335,000 at June 30, 2007. In the accompanying consolidated balance sheet at June 30, 2007, all amounts are expected to be paid within the next year and included in accrued expenses and other current liabilities.

8. Stock-Based Compensation

     On January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share Based Payment” (“SFAS No. 123R”), which requires stock-based compensation to be measured based on the fair value of the award on the date of grant and the corresponding expense to be recognized over the period during which an employee is required to provide service in exchange for the award. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, “Share-Based Payment” (“SAB No. 107”), relating to SFAS No. 123R. We have applied the provisions of SAB No. 107 in our adoption of SFAS No. 123R. Prior to January 1, 2006, we issued stock options and restricted stock shares. After January 1, 2006, we have elected to issue service-based and performance-based restricted stock units (“RSUs”) instead of stock options and restricted stock shares.

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

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
North America		$	2,979			$	2,799			$	4,865			$	5,686
EMEA			479				283				844				568
APAC			24				—				38				—
Total Continuing Operations		$	3,482			$	3,082			$	5,747			$	6,254
Discontinued Operations		$	—			$	714			$	—			$	1,017

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

Accounting for Stock Options After SFAS No. 123R Implementation

     There were no stock options granted during the three months ended June 30, 2007 or 2006, and we do not currently plan to grant any stock options in 2007. The current expense for all outstanding stock options granted prior to January 1, 2006, net of estimated forfeitures, has been recognized in our consolidated statements of earnings for the three and six months ended June 30, 2007 and 2006. Forfeitures were estimated and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

     For the three months ended June 30, 2007 and 2006, we recorded in continuing operations stock-based compensation expense related to stock options, net of forfeitures, of $856,000 and $ 2,124,000, respectively. For the six months ended June 30, 2007 and 2006, we recorded in continuing operations stock-based compensation expense related to stock options, net of forfeitures, of $2,123,000 and $4,627,000, respectively. As of June 30, 2007, total compensation cost related to nonvested stock options not yet recognized is $1,896,000, which is expected to be recognized over the next 0.60 years on a weighted-average basis.

     We used the criteria in SFAS No. 123R to calculate and establish the beginning balance of the additional paid-in capital pool (“APIC pool”) related to the tax effects of employee stock-based compensation and to determine the subsequent effect on the APIC pool and consolidated statements of cash flows of the tax effects of employee stock-based compensation awards that were outstanding upon adoption of SFAS No. 123R.

     The following table summarizes our stock option activity during the three months ended June 30, 2007:

														Weighted
														Average
										Aggregate				Remaining
		Number				Weighted Average				Intrinsic Value				Contractual
		Outstanding				Exercise Price				(in-the-money options)				Life (in years)
Outstanding at the beginning of period			5,076,391			$	19.39
Granted			—			$	—
Exercised			(325	)		$	8.81			$	3,278
Expired			(260,273	)		$	23.29
Forfeited			(1,466	)		$	19.60
Outstanding at the end of period			4,814,327			$	19.18			$	16,931,582				2.38
Exercisable at the end of period			3,818,754			$	19.20			$	13,483,238				2.37
Vested and expected to vest			4,766,148			$	19.18			$	16,766,414				0.11

     The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $22.57 as of June 30, 2007, which would have been received by the option holders had all option holders exercised options and sold the underlying shares on that date.

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

     The following table summarizes the status of outstanding stock options as of June 30, 2007:

		Options Outstanding												Options Exercisable
						Weighted				Weighted								Weighted
						Average				Average								Average
Range of		Number of				Remaining				Exercise				Number of				Exercise
Exercise		Options				Contractual				Price Per				Options				Price Per
Prices		Outstanding				Life (in years)				Share				Exercisable				Share
$5.88 — 17.94			1,003,406				2.47			$	14.71				882,399			$	14.67
17.98 — 18.64			1,004,246				2.71			$	18.49				700,468			$	18.47
18.67 — 19.90			1,086,219				2.36			$	19.66				783,335			$	19.64
19.92 — 21.25			1,046,398				1.87			$	20.93				778,494			$	20.94
21.30 — 41.00			674,058				2.58			$	23.39				674,058			$	23.39
			4,814,327				2.38			$	19.18				3,818,754			$	19.20

Accounting for Restricted Stock

      We have issued shares of restricted common stock and RSUs as incentives to certain officers and teammates and plan to do so in the future. We recognize compensation expense associated with the issuance of such shares and RSUs over the vesting period for each respective share and RSU. The total compensation expense associated with restricted stock represents the value based upon the number of shares or RSUs awarded multiplied by the closing price on the date of grant. Recipients of restricted stock shares are entitled to receive any dividends declared on our common stock and have voting rights, regardless of whether such shares have vested. Recipients of RSUs do not have voting or dividend rights until the vesting conditions are satisfied and shares are released.

     Starting in 2006, we have elected to issue service-based and performance-based RSUs instead of stock options and restricted stock shares. The number of RSUs ultimately awarded under the performance-based RSUs will vary based on whether we achieve certain financial results. We will 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. Additionally, the compensation expense will be reduced for our estimate of forfeitures.

     For the three months ended June 30, 2007 and 2006, we recorded in continuing operations stock-based compensation expense, net of forfeitures, related to restricted stock shares and RSUs of $2,626,000 and $958,000, respectively. For the six months ended June 30, 2007 and 2006, we recorded in continuing operations stock-based compensation expense, net of forfeitures, related to restricted stock shares and RSUs of $3,624,000 and $1,627,000, respectively. As of June 30, 2007, total compensation cost related to nonvested restricted stock shares and RSUs was $15,650,000, which is expected to be recognized over the next 1.4 years on a weighted-average basis.

     The following table summarizes our restricted stock activity, including restricted stock shares and RSUs, during the three months ended June 30, 2007:

						Weighted Average
		Number				Grant Date Fair Value				Fair Value
Nonvested at the beginning of period			1,344,186			$	20.11
Granted			100			$	18.65
Vested			(16,506	)		$	19.56			$	329,039	(a)
Forfeited			(19,989	)		$	18.57
Nonvested at the end of period			1,307,791			$	20.14			$	28,689,336	(b)
Expected to vest			1,126,750							$	25,430,754	(b)

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

		stock price on the day of vesting, which would have been received by holders of restricted stock shares and RSUs had all such holders sold their underlying shares on that date.
(b)		The aggregate fair value of the nonvested restricted stock shares and the RSUs expected to vest represents the total pre-tax fair value, based on our closing stock price of $22.57 as of June 30, 2007, which would have been received by holders of restricted stock shares and RSUs had all such holders sold their underlying shares on that date.

9. Share Repurchase Program

     In January 2006, our Board of Directors authorized the repurchase of up to $50,000,000 of our common stock. As of June 30, 2007, we have not purchased any shares under this authorization.

10. Commitments and Contingencies

Contractual

     We have entered into a sponsorship agreement through 2013 with the Valley of the Sun Bowl Foundation, d/b/a Insight Bowl, which is the not-for-profit entity that conducts the Insight Bowl post-season intercollegiate football game. We have committed to pay an aggregate amount of approximately $9,650,000 over the next eight years for sponsorship arrangements, ticket purchases and miscellaneous expenses.

     We have committed to pay the Arizona Cardinals an aggregate of approximately $9,900,000 over the next ten years for advertising and marketing events at the University of Phoenix stadium, the home of the Arizona Cardinals.

     We have entered into a transition services agreement with Level 3 Communications, Inc. (“Level 3”) related to our acquisition of Software Spectrum. We have committed to pay an aggregate amount of approximately $1,000,000 during 2007 as part of the physical separation of Software Spectrum’s IT environment from Level 3.

     In July 2007, we signed a Statement of Work with Wipro Limited to assist us in integrating our hardware, services and software distribution operations in US, Canada, EMEA and APAC on mySAP. We have committed to pay Wipro an aggregate amount of approximately $17,350,000 against milestones in 2007 through 2009, as set forth in the Statement of Work.

Employment Contracts

     We have employment contracts with certain officers and management teammates under which severance payments would become payable and accelerated vesting of stock-based compensation would occur in the event of specified terminations without cause or terminations under certain circumstances after a change in control. If such persons were terminated without cause or under certain circumstances after a change of control, and the severance payments under the current employment agreements were to become payable, the severance payments would generally be equal to either one or two times the teammates’ annual salary and bonus. Additionally, we would record additional compensation expense for the acceleration of the vesting of any stock-based compensation.

     On May 2, 2007, we announced the retirement of Stanley Laybourne, the Company’s chief financial officer, secretary and treasurer and a member of our Board of Directors. In connection with his retirement, we have agreed to provide him payments and benefits consistent with those required for termination without cause under his existing employment agreement, which has been previously filed with the SEC. Accordingly, we expect to pay him a lump sum severance payment equal to two times his base salary plus two times his 2006 bonus. The total severance amount related to this retirement is estimated to be approximately $2,842,000, including non-cash stock-based compensation expense for a ninety day extension of the post termination exercise

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

period for stock options, which was recorded as severances expenses during the three months ended June 30, 2007.

Guaranties

     In the ordinary course of business, we may guarantee the indebtedness of our subsidiaries to vendors and clients. We have not recorded specific liabilities for these guaranties in the consolidated financial statements because we have recorded the underlying liabilities associated with the guaranties. In the event we are required to perform under the related contracts, we believe the cost of such performance would not have a material adverse effect on our consolidated financial position or results of operations.

Indemnifications

     In the ordinary course of business, we enter into contractual arrangements under which we may agree to indemnify either our client or a third-party service provider in the arrangement from any losses incurred relating to services performed on our behalf or for losses arising from certain defined events, which may include litigation or claims relating to past performance. These arrangements include, but are not limited to, our indemnification of our officers and directors to the maximum extent under the laws of the State of Delaware, the indemnification of our lessors 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 June 30, 2007 and, if incurred, would be immaterial. Accordingly, we have not accrued any liabilities related to such indemnifications in our consolidated interim financial statements.

     In connection with our sale of Direct Alliance in June 2006, the sale agreement contains certain indemnification provisions pursuant to which we are required to indemnify the buyer for a limited period of time for liabilities, losses or expenses arising out of breaches of covenants and certain breaches of representations and warranties relating to the condition of the business prior to and at the time of sale. Management believes that payments related to these indemnifications, if any, are not probable at June 30, 2007 and, if incurred, would be immaterial.

     In connection with our sale of PC Wholesale in March 2007, the sale agreement contains certain indemnification provisions pursuant to which we are required to indemnify the buyer for a limited period of time for liabilities, losses or expenses arising out of breaches of covenants and certain breaches of representations and warranties relating to the condition of the business prior to and at the time of sale. Management believes that payments related to these indemnifications, if any, are not probable at June 30, 2007 and, if incurred, would not have a material adverse effect on our results of operations.

Legal Proceedings

     We are party to various legal proceedings arising in the ordinary course of business, including asserted preference payment claims in client bankruptcy proceedings, claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights and claims of alleged non-compliance with contract provisions.

     In accordance with SFAS No. 5, “Accounting for Contingencies” (“SFAS No. 5”), we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and are adjusted to reflect the effects of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular claim. Although litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that the results of our operations or cash flows could be materially and adversely affected in any particular period by the resolution of a legal proceeding. Legal

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

expenses related to defense, negotiations, settlements, rulings and advice of outside legal counsel are expensed as incurred.

     In June 2006, our subsidiary, Software Spectrum, Inc. was named as a defendant in a civil lawsuit, Allocco v. Gardner (Superior Court, County of San Diego), regarding certain software resale transactions with Peregrine Systems, Inc. The subsidiary was named as successor to Corporate Software & Technology, Inc. (“CS&T”) and alleges that during October 2000 CS&T participated in or aided and abetted a fraudulent scheme by Peregrine to inflate Peregrine’s stock price. Pursuant to the terms of the agreement by which we acquired Software Spectrum, Inc. from Level 3 (the former corporate parent of Software Spectrum, Inc.), Level 3 has agreed to indemnify, defend and hold us harmless for this matter. The discovery process is on-going, and we strongly dispute any allegations of participation in fraudulent behavior. On our behalf Level 3 is vigorously defending this matter.

     In October 2006, we received a letter of informal inquiry from the SEC requesting certain documents relating to our stock option grants and practices. We have cooperated with the SEC and will continue to do so. We cannot predict the outcome of this investigation.

     Software Spectrum, as successor to CS&T, is party to litigation brought in the Belgian courts regarding a dispute over the terms of a tender awarded by the Belgian Ministry of Defence (“MOD”) in November 2000. In February 2001, CS&T brought a breach of contract suit against MOD in the Court of First Instance in Brussels and claimed breach of contract damages in the amount of approximately $150,000. MOD counterclaimed against CS&T for cost to cover in the amount of approximately $2,700,000, and, in July 2002, CS&T added a Belgian subsidiary of Microsoft as a defendant. We believe that MOD’s counterclaims are unfounded, and we are vigorously defending the claim.

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 vendor audits. We continually assess whether or not such claims have merit and warrant accrual under the “probable and estimable” criteria of SFAS No. 5. Where appropriate, we accrue estimates of anticipated liabilities in the consolidated financial statements. Such estimates are subject to change and may affect our results of operations and our cash flows.

11. Discontinued Operations

PC Wholesale

     On March 1, 2007, we completed the sale of PC Wholesale, a division of our North America operating segment that sells to other resellers. The transaction generated proceeds of $28.7 million, including net assets sold that are subject to certain post-closing adjustments. We expect to have resolution of the post-closing adjustments by the end of August 2007, which may result in additional gain recorded on the sale. The sale of PC Wholesale is consistent with our strategic plan as we concluded that selling IT products to other resellers is not a core element of our growth strategy.

     In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), we have accounted for PC Wholesale as a discontinued operation, and we have reported the results of operations of PC Wholesale as a discontinued operation in the consolidated statements of earnings for all periods presented. We did not allocate interest, general corporate overhead expense or non-specific vendor funding to the discontinued operation. PC Wholesale’s accounts receivable and inventory was approximately $15 million and $6 million, respectively, at December 31, 2006. Other assets and liabilities of PC Wholesale included in the consolidated balance sheets as of December 31, 2006 were not material.

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

     The following amounts for the three and six months ended June 30, 2007 and 2006, respectively, represent PC Wholesale’s results of operations. The following amounts have been segregated from continuing operations and reflected as a discontinued operation (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Net sales		$	—			$	56,758			$	30,142			$	112,837
Costs of goods sold			—				54,652				29,092				108,784
Gross profit			—				2,106				1,050				4,053
Selling and administrative expenses			—				1,239				768				2,624
Earnings from discontinued operation before income taxes			—				867				282				1,429
Income tax expense			—				345				111				566
Net earnings from discontinued operation		$	—			$	522			$	171			$	863

Direct Alliance

     On June 30, 2006, we completed the sale of 100% of the outstanding stock of Direct Alliance for a purchase price of $46,500,000, subject to a working capital adjustment. The purchase price did not include real estate and intercompany receivables, which had an estimated fair value of $49,400,000 (book value of $43,237,000) and were distributed to us immediately prior to closing. In addition to payment of the purchase price, the buyer is obligated to make a one-time bonus payment to us if Direct Alliance achieves certain gross profit levels for the year ended December 31, 2006 (“Earn Out”). Additionally, the buyer is entitled to a claw back of the purchase price of up to $5,000,000 if certain Direct Alliance client contracts are not renewed on terms prescribed in the sale agreement. The Company is in the process of negotiating the final resolution of the Earn Out and the claw back, which may result in additional gain recorded on the sale. Additionally, on June 30, 2006, we paid $2,696,000 to the holders of 1,997,500 exercised Direct Alliance stock options. If additional gain is recorded on the sale as a result of final resolution of the Earn Out and clawback, additional amounts will also be paid to the holders of 1,997,500 exercised Direct Alliance stock options.

     In accordance with SFAS No. 144, we have reported the results of operations of Direct Alliance as a discontinued operation in the consolidated statements of earnings for all periods presented. We did not allocate interest or general corporate overhead expense to the discontinued operation.

     On June 30, 2006, in connection with the sale of Direct Alliance, we entered into a lease agreement with Direct Alliance pursuant to which Direct Alliance will lease from us the facilities it used prior to the sale. The initial lease term is for eighteen months starting July 1, 2006. Accordingly, we have separately presented the value of the land and buildings as “buildings held for lease” on the consolidated balance sheet at June 30, 2007. Lease income related to these buildings was $272,000 and $524,000 for the three and six months ended June 30, 2007, respectively, and is classified as net sales. Depreciation expense related to these buildings was $183,000 and $366,000 for the three and six months ended June 30, 2007, respectively, and is classified as costs of goods sold.

12. Segment Information

     We operate in three reportable geographic operating segments: North America; EMEA; and APAC. Currently, our offerings in North America and the United Kingdom include brand-name IT hardware, software and services. Our offerings in the remainder of our EMEA segment and in APAC currently only include software and select software-related services.

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

     Statement of Financial Accounting Standards No. 131, “Disclosure About Segments of an Enterprise and Related Information,” (“SFAS No. 131”) requires disclosures of certain information regarding operating segments, products and services, geographic areas of operation and major clients. The method for determining what information to report under SFAS No. 131 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 intercompany transactions are eliminated upon consolidation, and there are no differences between the accounting policies used to measure profit and loss for our segments and 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 for the three and six months ended June 30, 2007.

     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 efficiently use resources. These expenses, collectively identified as corporate charges, include senior management expenses, legal, tax, insurance services, treasury and other corporate infrastructure expenses. Charges are allocated to our operating segments, and the allocations have been 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 as of and for the three and six months ended June 30, 2007 and 2006 (in thousands):

		Three Months Ended June 30, 2007
		North America				EMEA				APAC				Consolidated
Net sales		$	923,899			$	331,903			$	27,647			$	1,283,449
Costs of goods sold			789,710				286,863				22,063				1,098,636
Gross profit			134,189				45,040				5,584				184,813
Operating expenses:
Selling and administrative expenses			101,092				33,470				3,761				138,323
Severance and restructuring expenses			2,841				—				—				2,841
Earnings from operations		$	30,256			$	11,570			$	1,823			$	43,649
Non-operating income, net															79
Earnings from continuing operations before income taxes															43,570
Income tax expense															16,761
Net earnings from continuing operations															26,809
Net earnings from discontinued operation															—
Net earnings														$	26,809
Total assets		$	2,168,691			$	485,673			$	42,112			$	1,786,731	*

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

		Three Months Ended June 30, 2006
		North America				EMEA				APAC				Consolidated
Net sales		$	665,023			$	115,323			$	—			$	780,346
Costs of goods sold			580,300				97,900				—				678,200
Gross profit			84,723				17,423				—				102,146
Operating expenses:
Selling and administrative expenses			65,027				14,507				—				79,534
Earnings from operations		$	19,696			$	2,916			$	—				22,612
Non-operating income, net															(663	)
Earnings from continuing operations before income taxes															23,275
Income tax expense															8,106
Net earnings from continuing operations															15,169
Net earnings from discontinued operation															10,718
Net earnings														$	25,887
Total assets		$	1,184,765			$	123,913			$	—			$	930,077	*