Good day, ladies and gentlemen, and welcome to the Insight Enterprises, Inc. Fourth Quarter and Full Year 2013 Earnings Conference Call. [Operator Instructions] I would now like to introduce to your host for today’s program, Glynis Bryan, Chief Financial Officer. Please go ahead.

Welcome everyone and thank you for joining the Insight Enterprises’ Conference call, Today, we will be discussing the company’s operating results for the quarter and full year ended December 31, 2013. I am Glynis Bryan, Chief Financial Officer of Insight. And joining me is Ken Lamneck, President and Chief Executive Officer. If you do not have a copy of the earnings release that was posted this afternoon and filed with the Securities and Exchange Commission on Form 8-K, you will find it on our website at insight.com under our Investor Relations section. Today's call, including the question-and-answer period, is being webcast live and can be accessed via the Investor Relations page of our website at insight.com. An archived copy of the conference call will be available approximately two hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time sensitive information that is accurate only as of today, February 12, 2014. This call is the property of Insight Enterprises. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited. In today's conference call, we will refer to non-GAAP financial measures as we discuss the fourth quarter and the full year 2013 financial results. You will find a reconciliation of these non-GAAP measures to our actual GAAP results posted on our website on the investor relations page. Finally, let me remind you about forward-looking statements that will be made on today's call. All forward-looking statements that are made in this conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our annual report on Form 10-K for the year ended December 31, 2013. With that, I will now turn the call over to Ken to give you an overview of our fourth quarter 2013 operating results. Ken?

Hello, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2013 operating results. We are pleased with the financial results in the fourth quarter. We returned to year-over-year growth on the top line in North America and EMEA. We executed better than expected against recently announced partner program changes, and we continued to control our operating costs all leading to solid results in the quarter. For the fourth quarter of 2013, consolidated net sales grew 4% year-over-year to $1.4 billion. Gross profit was consistent year-to-year, while gross margin declined approximately 30 basis points to 13%. SG&A decreased 1%. Earnings from operations, excluding severance and restructuring expenses, increased 5% to $40.4 million. On a GAAP basis, earnings from operations decreased 2% to $35.9 million, and diluted earnings per share excluding severance and restructuring expenses increased 16% year-over-year to $0.57. On a GAAP basis, diluted earnings per share increased 4% year-over-year to $0.48 reflecting the effective share repurchases during the year. Within these results, the North America business delivered solid top line growth particularly in the hardware category, which grew 7% year-over-year in the quarter. We saw growth in hardware sales across all clients groups and by category, we saw continued strong demand for Networking Solutions. In the Software category, product sales increased year-over-year but reported net sales decreased 3% year-to-year due to higher mix of software maintenance sales, which are recorded net in our financial statements. And we saw 9% growth in our Services category driven by increased professional and managed services engagements. Gross profit grew 4% and gross margin was flat year-over-year in North America as increased services gross profit offset the adverse effects of partner program changes. Additionally, we maintained strong discipline around our cost in North America, which drove earnings from operations…

Thank you, Ken. For the full year 2013, consolidated net sales were $5.1 billion, down 3% year-to-year. North America net sales declined a 4% primarily due to lower hardware sales to large clients. North America software sales declined due to higher mix of software maintenance sales to public sector clients which are recorded net on our financial statements. In EMEA, net sales were flat year-to-year as lower hardware sales across all client groups were offset by increased software and services sales. In Asia-Pacific, net sales declined 3% due to lower software sales volume with large clients. Full year 2013 consolidated gross profit was approximately $700 million, down 3% and gross margin of 13.6% was flat year-over-year. Gross margin expanded in North America due to strong execution on the partner program and partner incentive program and higher services gross profit. These offset the adverse effects of partner program changes and lower hardware sales in EMEA. As Ken noted earlier, partner program changes by our largest software partner resulted in approximately $4 million of lower incentives in the software business primarily in our EMEA operating segment. Selling and administrative expenses for the full year of 2013 were $565 million, flat year-to-year. In North America, SG&A expenses increased $2.7 million year-over-year. Investments in sales and services resources were offset by lower margin and variable compensation expense. Also please recall that our 2012 SG&A results were favourably impacted by $2.2 million from the sale of certain services contracts and the recovery of legal fees from a third party. In EMEA, SG&A expenses declined approximately $2 million year-to-year in US dollars and $3.8 million in constant currency in 2013 due to restructuring actions taken during the year. And in Asia-Pacific, expenses declined $1.1 million year-to-year due to lower variable compensation expense. As a result of…

Thank you, Glynis. Moving onto our outlook for 2014. For the full year 2014 we expect the global IT market to grow on a low- to mid-single digit range. We expect our business to grow slightly faster than the market. As a result, we expect earnings per share for the full year 2014 to be between $1.97 to $2.07. This outlook reflects the adverse effects on gross profit of previously announced partner program changes in the software category of between $15 and $20 million, an effective tax rate of 38% to 39%; the completion of our current share repurchase program of up to $42 million in the first half of the year; and capital expenditures of $15 million to $20 million. This outlook does not reflect severance and restructuring expenses. Thank you again for joining us today. I want to thank our team-mates, clients and partners for their dedication to Insight. That concludes my comments. We will now open the line to your questions.

[Operator Instructions] And our first question comes in the line of Matt Sheerin from Stifel. Matt Sheerin – Stifel Nicolaus: Ken, just regarding your outlook for the year, sort of backing into the number I'm given -- mid-single-digit revenue growth. It looks like gross margin could be down a little bit for reasons you stated. But operating margins should be up to get to that number, that EPS number. Is that going to come from SG&A leverage? And what should we be thinking about margin expansion in North America and Europe? Europe, obviously, you're off of a lower base; but what should be we thinking about margin expansion in both of those regions?

Thanks, Matt. Let me start and then Glynis will add as well. Yeah. As we indicated that we do expect of course to see growth of some of that, obviously growth that we’ll see in the profit line will come from the top line revenue growth. We will certainly be controlling SG&A. There will be some increases to it all related to sales and technical head count and again you’ll see an acceleration for us planning in some key areas like services, of course it’s coming at higher margin profiles for us. So that’s pretty much what we see in regards to what we’ll see that and now that will certainly more than offset the program impact changes that we talked about on the software side. Glynis, do you want to add a little bit more to that?

Sure. Matt, so what we will also see the $15 million to $20 million impact that we indicated we’d have from the partner program changes translate roughly to about 25- to 50-basis point reduction ultimately in our gross margin. And when you flow that through at the EFO line, you should anticipate that our EFO or earnings from operation margin would be relatively flat on a year-over-year basis after absorbing that impact and controlling our SG&A.

The margin percent line, that obviously gross –

Gross dollars. Matt Sheerin – Stifel Nicolaus: Got you. Flat gross margin, higher dollars on the volumes. But are you then looking to offset some of that margin pressure from the vendor relationships by continuing to add to your services business? Or is it hard to get a sense of how much that's going to move the needle at this point?

We certainly expect that we’ll increase our plan to certainly to increase and accelerate the services business. To help offset that, that’s a big part of the plan. Matt Sheerin – Stifel Nicolaus: Okay. And it sounds like in your comments regarding Europe, it sounds like you're looking at either down of your profitability, down year-over-year for the first couple of quarters from where you were, and then improve that in the second half of the year. Is that coming primarily, Ken, from the volumes that are expected to improve? Or do you also have cost-cutting initiatives and other organization initiatives to improve that?

Yeah. I think you coined it exactly right. Matt, that’s exactly what we expect to happen. So again in the first half we don’t expect to have increases year-over-year at the EFO line but we certainly expect to have that in the back half and lot of that of course is through acceleration with the team in place that we’ll start to see them, we’re confident from that perspective. And then we basically will be very, very focused on how we drive and continue to drive more of the remediation efforts as well on this one software program change.

One other – Matt, to expand a little bit on Ken’s comments. One of the other things that we anticipate is that we would see some recovery in the UK. We were… we didn’t have a very strong 2013 performance in UK. So one of the elements that’s going to aid the recovery in Europe is the recovery in the UK, which has a full complement of hardware, software and services in that regard. Matt Sheerin – Stifel Nicolaus: And just in terms of the demand environment, it sounds, you sound relatively upbeat about the demand outlook, you’re calling for above market growth. And I think last year, you were little below market for various reasons. What gives you confidence that you can grow faster than the market? And what are the key demand drivers that you see happening this year?

I think certainly we have some of the headwinds that we were looking at last year this time in regards to still completing the SAP migration here and then of course our ERP integration in Europe. So we have those completed. And then last year we did continue to invest in sales resources, on both continents and we expect to certainly start to see that result and we didn’t see that of course in the Q4 results. So we see that continuing. Matt Sheerin – Stifel Nicolaus: And then in terms of demand drivers just overall?

I think that – when you talk to the segments that we see – that are, I think, doing well. The networking segment continues to grow, we think very strongly from what we can see in all the -- our participation as well as the data that we analyze. Storage, we certainly continue to see that to grow. We do think we will start to see some rebound on the service side this year and that was a pretty tough market overall from a market perspective, last year we do think that we’d start to see that rebounding. And desktop and notebooks continue to actually increase in volume even with all the discussion about it when you look at the NPV data it shows clearly that in the channel desktop notebooks as a category [indiscernible].

Our next question comes from the line of Brian Alexander from Raymond James. Jeff Koche – Raymond James & Associates: Hey guys, it's Jeff Koche in for Brian. Real quick -- a little surprised by the weakness in the gross margin. I know you guys -- it sounded like you didn't have quite as much pressure from the change in the vendor program, and you're obviously benefiting from the change to net in the software side, or selling more net -- recording that more on a net basis. And I'm just wondering, so what drove the gross margin decline this quarter?

Partly is the – while the program changes may not have been as severe as we initially anticipated, there was a $4 million impact in the fourth quarter primarily in EMEA and it was a 100% margin. So the impact on the margin line is greater than the impact on the dollar line, if you want to think about it that way. That’s why we are also seeing when you look at the $15 million to $20 million impact that we say we are going to have in 2014 from the partner program changes that we anticipate is going to be an impact on the margin also of the 25 to 60 basis points. Jeff Koche – Raymond James & Associates: So to be clear, it’s not like the – the competitive environment is getting –

It’s not the competitive environment, not at all. Jeff Koche – Raymond James & Associates: And then you said that the gross margin, the 25 to 50 bp is the headwind you're facing. Can you give us a little -- what's your outlook for a year-on-year change? Should we expect you guys can offset that completely? Or should we expect that gross margin will be down?

I don’t think we should anticipate that, there will be some softness in gross margin which we will make up ultimately through SG&A control. We are going to invest in the sales and technical resources but we will control other SG&A such that we anticipate being relatively flat at the EFO margin line. Jeff Koche – Raymond James & Associates: And then can you just talk about demand improvement in North America? And maybe break it down by customer segment and product segment?

Yes, we definitely saw a nice increase in the quarter in the large enterprise space. We saw that to be strong and we saw a good participation at the SMB side as well for us. And we had good growth, pretty much in all the categories in regards to public sector, and some key verticals like healthcare, K2-12 and so forth as well. So I think there wasn’t any – it wasn’t completely robust but all categories certainly participated in growth. Jeff Koche – Raymond James & Associates: And then last night, actually, there was a press release that CDW is partnering or training [ph] their relationship with Google. Do you guys see any potential or possibility for you guys to expand relationships with some of, maybe, Microsoft's competitors?

Yeah we are certainly always looking – for us of course it’s always based upon what our clients are demanding. So we’ve got to be able to afford our clients’ needs. We’re certainly always out looking at all the alternatives there. In that regard we do a Chromebook offering, and that we do have signed – so we do have the appliance there for Chromebooks. We don't currently sell the Google apps if that’s what you are referring to and the announcement I saw as well that CDW does – we are currently not doing that.