Benchmark Electronics Annual Report 2020

FY2020 Annual Report · Benchmark Electronics

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2020 Annual Report

Section Header Here2018 PROXY STATEMENT

Dear
Shareholders

For Benchmark, our customers, employees, and suppliers, the past year
of 2020 was unlike any other in our history. The company rallied and executed
well in an unprecedented operating environment and rapidly adjusted to meet the
fluid demand needs of our customers. This required tremendous effort across all
functions of our business, especially our front-line design engineers and
manufacturing personnel. Through our global COVID -19 Task Force, we made quick
decisions and put new protective measures in place, including enhanced cleaning
and social distancing protocols, contact tracing, and quarantines as needed. We also
implemented thermal imaging temperature checks, mandatory use of masks, and
at times performed rapid COVID-19 testing. We also introduced programs to help
impacted employees, including those at higher risk and those caring for family
members. I want to extend my personal gratitude for the enormous effort and
dedication of the entire Benchmark team.

Against the background of the global pandemic, we made significant progress
throughout the year on our 2020 strategic initiatives: (a) enhancing customer focus,
(b) growing our business, (c) driving enterprise efficiencies, and (d) engaging talent.

We exited the year with customer satisfaction at an all-time high from our
customer-focused initiatives. We also made progress on making it “easier to do
business” with Benchmark, along with improvements in deepening our strategic
relationships and growing our position with existing accounts. We have improved
customer and program retention significantly in the last eighteen months. While we
have room to improve customer satisfaction further, I am pleased with the positive
trends and the impact this is having on increasing business across our new and
existing customer base.

This customer-centric approach is an important foundation in growing our business.
As part of our vertical sector strategies, we aligned processes to invest in technology
to increase win rates. We had a record year of new bookings in which we sold the
full breadth of our services to customers. We also stepped up our focus on ensuring
bookings convert to revenue. To that end, we experienced annual revenue growth of
more than 33% in Semi-Cap and 11% in Medical.

We made solid progress on our enterprise efficiencies initiative in the past year
as we continued work on optimizing our global footprint, including completing
previously announced closures in some locations and opening new facilities or
introducing new capabilities in other locations. We divested our operations in

FOR BENCHMARK, OUR

CUSTOMERS, EMPLOYEES, AND

SUPPLIERS, THE PAST YEAR OF

2020 WAS UNLIKE ANY OTHER IN

OUR HISTORY. THE COMPANY

RALLIED AND EXECUTED

WELL IN AN UNPRECEDENTED

OPERATING ENVIRONMENT AND

RAPIDLY ADJUSTED TO MEET THE

FLUID DEMAND NEEDS OF OUR

CUSTOMERS.

Section Header Here2018 PROXY STATEMENTGuaymas, Mexico, and our aerospace turbine machining facility
in Tempe, Arizona. In parallel, we have been working on the
Angleton, Texas, site closure and executing the transition plan
which remains on target for 2021. We also performed a virtual
grand opening of our new Phoenix, Arizona, advanced
technology center this past summer.

Finally, we have made strides in engaging talent and shifting our
culture. Benchmark has a great collaboration attitude, engages
with integrity in all endeavors, and has a value system centered
on our customers. We have continued to invest in new diverse
skills and talent across our organization. Our ongoing
commitment to advancing Diversity and Inclusion efforts at all
levels in the company through our ESG processes, will make
Benchmark a more technologically rich, socially diverse and
innovative organization.

At present, the five tenets of our ESG strategy are Environmental
Responsibility, Our People, Our Community, Governance, and
the ongoing COVID-19 response. Under the oversight of our
Board, our internal ESG/Sustainability Council is comprised of an
enterprise-wide, cross-functional team tasked with defining and
implementing key projects and investments that will advance
these priority initiatives.

We have been monitoring and tracking energy reduction
programs for almost ten years in support of the environment. On
the governance front, we have a diverse corporate Board with
22% of directors represented by women; but we can and will do
more. We are also proud that over 50% of our employee popu-
lation is female. We have plans in flight to expand racial diversity
in the company, including our Board of Directors and overall
plans in the company to strengthen our Diversity and Inclusion
platform through strategy, training, and a focused recruiting plan.

We have also conducted a peer analysis and are mapping
current material ESG programs to SASB standards and we
expect to release a stand-alone Sustainability Report in 2022.
Future reports from Benchmark will include both qualitative and
quantitative measures reflecting updates and improvements as
we advance our overall ESG strategy.

In addition, we maintained our focus on expense management.
Through improved processes, G&A centralization activities, and
investment prioritization we managed to keep our SG&A expense
to $122 million for the year, which was significantly lower than
planned. Lastly, improving margins and effective working capital
management allowed us to exceed our cash flow targets for the
year. In 2020, operating cash flow was $120 million and free cash
flow was $81 million.

Our capital allocation framework is aligned to our business
strategy to drive value creation for our shareholders. We will
continue to focus on growth investments in our higher value
markets and continue efforts to optimize our balance sheet
through efficient working capital management and an
appropriate debt structure. We plan to continue our quarterly

dividend and, at a minimum, we will continue to repurchase
enough shares to offset our annual equity dilution. From 2018 to
2020, we executed $359 million in share repurchases and paid
$67 million in dividends to our shareholders.

As we look at the year ahead in 2021, we are focused on three
strategic priorities to further build a better Benchmark. The first
is “Growing Revenue", which is a top priority at Benchmark.
We have spent a considerable amount of time over the past
couple of years optimizing the customer experience through
recurring feedback mechanisms and enhancing our strategic
relationships. Our account management processes are
improving, and we are focused on increasing the attach rate of
design engagements to manufacturing wins through selling the
full breadth of services and capabilities to our customers. Once
we successfully win new programs, we are then laser focused on
supporting these program ramps, which are forecasted to be at
record levels in 2021.

Secondly, we must also invest in the “Sustainable
Infrastructure and Talent” needed to scale our business in order
to achieve our financial targets. Our ESG/Sustainability initiatives
and advancing Diversity and Inclusion programs underpin these
foundational efforts. This also involves creating an efficient and
scalable infrastructure to streamline the global delivery of our
shared services. We have rationalized our investments in
corporate infrastructure including our HR, IT, Finance and other
shared services and centralized these groups to achieve scale
while concurrently managing SG&A expense in support of our
financial targets.

Ultimately, our model reflects that we expect to “Grow
Earnings Faster than Revenue”. Revenue growth in our model
enables higher utilization to better leverage our fixed costs. We
are targeting a portfolio of customers with the right sector mix
that value our advanced technologies and leverages the breadth
of our services. Through these targeted customer engagements
that enable us to deliver higher valued services, coupled with
our ongoing operational excellence efforts, we will expand
margins and ROIC through 2021 and beyond.

In closing, Benchmark is well-positioned to build on the success
and momentum of our initiatives this year into 2021 and beyond.
I remain excited about the incredible depth and breadth of skills
and capabilities in the organization, and I am confident we have
the right strategy and team in place to execute to meet our
goals. We greatly appreciate our employees, customers,
suppliers, partners, and shareholders for their ongoing
commitment and support of us during this incredible journey.

Jeff Benck
President and CEO

Non-GAAP Financial Measures

Management discloses non‐GAAP information to
provide investors with additional information to analyze
the Company’s performance and underlying trends.
Management uses non‐GAAP measures that exclude
certain items in order to better assess operating
performance and help investors compare results with
our previous guidance. This document references
“free cash flow”, which the Company defines as
cash flow from operations less additions to property,
plant and equipment and purchased software. The
Company’s non‐GAAP information is not necessarily
comparable to the non‐GAAP information used by
other companies.

Non‐GAAP information should not be viewed as a
substitute for, or superior to, net income or other data
prepared in accordance with GAAP as a measure of
the Company’s profitability or liquidity. Readers should
consider the types of events and transactions for
which adjustments have been made.

2020 ANNUAL REPORT |

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
☑☑ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2020
or

☐☐ 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 1-10560
BENCHMARK ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)

Texas
(State or other jurisdiction of
incorporation or organization)

74-2211011
(I.R.S. Employer
Identification Number)

56 South Rockford Drive
Tempe, Arizona 85281
(623) 300-7000
(Address, including zip code, and telephone number, including area code, of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, par value $0.10 per share

Trading Symbol
BHE

Name of each exchange on which registered
New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Non-accelerated filer

☑

☐

Accelerated filer

☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness

of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Act). Yes ☐ No ☑
As of June 30, 2020, the number of outstanding common shares was 36,460,944. As of such date, the aggregate market value of the
common shares held by non-affiliates, based on the closing price of the common shares on the New York Stock Exchange on such date,
was approximately $0.8 billion.

As of February 25, 2021, there were 36,326,722 common shares of Benchmark Electronics, Inc., par value $0.10 per share,

outstanding.

Documents Incorporated by Reference:

Portions of the Company’s Proxy Statement for the 2021 Annual Shareholders Meeting are incorporated herein by reference (Part III,

Items 10-14).

TABLE OF CONTENTS

PART I

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

PART II

Item 5.

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.

PART III

Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases

of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related

Shareholder Matters

Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

PART IV

Item 15.
Item 16.
SIGNATURES

Exhibits and Financial Statement Schedules
Form 10-K Summary

Page

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78

Item 1. Business.

PART I

This Annual Report on Form 10-K (Report) contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended
(Exchange Act). These forward-looking statements are identified as any statement that does not relate strictly to
historical or current facts and may include words such as “anticipate,” “believe,” “intend,” “plan,” “project,”
“forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” “could,” “predict,” and
similar expressions or the negative or other variations thereof. In particular, statements, express or implied,
concerning future operating results, our ability to generate sales, income or cash flow, the anticipated impact of the
COVID-19 pandemic, our anticipated plans and responses to the COVID-19 pandemic, our expected revenue mix,
our business strategy and strategic initiatives, our repurchases of shares of our common stock and our intentions
concerning the payment of dividends, among others, are forward-looking statements. Although we believe these
statements are based upon reasonable assumptions, they involve risks, uncertainties and assumptions that are
beyond our ability to control or predict, relating to operations, markets and the business environment generally,
including those discussed under Part I, Item 1A of this Report and in any of our subsequent reports filed with the
Securities and Exchange Commission (SEC). In particular, these statements also depend on the duration, severity
and evolution of the COVID-19 pandemic and related risks, including government and other third-party responses
to it and the consequences for the global economy, our business and the businesses of our suppliers and customers,
as well as our ability (or inability) to execute on our plans to respond to the COVID-19 pandemic. Should one or
more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes,
including the future results of our operations, may vary materially from those indicated. Undue reliance should not
be placed on any forward-looking statements. Forward-looking statements are not guarantees of performance. All
forward-looking statements included in this document are based upon information available to us as of the date of
this document, and we assume no obligation to update them.

Our fiscal year ends on December 31. Consequently, references to 2020 relate to the calendar year ended December
31, 2020; references to 2019 relate to the calendar year ended December 31, 2019, etc.

General

Benchmark Electronics, Inc. (Benchmark) is a Texas corporation that began operations in 1979 and is today a
worldwide provider of innovative product design, engineering services, technology solutions and advanced
manufacturing services (both electronic manufacturing services (EMS) and precision technology services). In this
Report, references to Benchmark, the Company or use of the words “we”, “our” and “us” include Benchmark’s
subsidiaries unless otherwise noted.

From initial product concept to volume production, including direct order fulfillment and aftermarket services,
Benchmark has been providing integrated services and solutions to original equipment manufacturers (OEMs) since
1979. Today, Benchmark proudly serves the following industries: aerospace and defense (A&D), medical
technologies, complex industrials, semiconductor capital equipment (semi-cap), next-generation telecommunications
and high-end computing.

Our customer engagement focuses on three principal areas:

(cid:129)

(cid:129) Design & Engineering Services, which include design for manufacturability, manufacturing process and
test development, concurrent and sustaining engineering, turnkey product design and regulatory services.
Our engineering services may be for systems, sub-systems, printed circuit boards and assemblies, and
components. We provide these services across all the industries we serve, but focus primarily in regulated
industries such as medical, complex industrials, A&D, and semi-cap.
Technology Solutions, which involve developing a library of building blocks or reference designs primarily
in defense solutions, surveillance systems, radio frequency and high-speed design, and front-end managed
connectivity data collection systems. We often merge these technology solutions with engineering services
to provide turnkey product development from requirements through to volume production that we support
with our manufacturing services. Our building blocks can be utilized across a variety of industries but we
have significant capabilities in the A&D and the complex industrials markets. We have also developed
differentiated capabilities in radio frequency (RF) and high-speed design for both components and
substrates. The need to reduce size, weight, and power (SWaP) to accommodate high frequency electronics
communications is important to customers in the A&D, medical and next generation telecommunications
markets.

(cid:129) Manufacturing Services, which include printed circuit board assemblies (PCBAs) using both traditional
surface mount technologies (SMT) and microelectronics, subsystem assembly, system build and

integration. System builds and integration often involve building a finished assembly that includes PCBAs,
complex subsystem assemblies, mechatronics, displays, optics, and other components. These final products
may be configured to order and delivered directly to the end-customer across all the industries we serve.
Manufacturing services also includes precision technology services comprised of precision machining,
advanced metal joining, assembly and functional testing primarily for the semi-cap market (serving
semiconductor capital equipment customers) and A&D markets.

Our core strength lies in our ability to provide concept-to-production solutions in support of our customers. Our
global manufacturing presence increases our ability to respond to our customers’ needs by providing accelerated
time-to-market and time-to-volume production of high-quality products – especially for complex products with
lower volume and higher mix in regulated markets with higher reliability requirements. These capabilities enable us
to build strong strategic relationships with our customers and to become an integral part of their business.

We believe our primary competitive advantages are our leading edge technical capabilities in engineering services
(including product design in which we can take a product idea from concept to design to volume manufacturing),
technology solutions (especially high frequency RF solutions, microelectronics, and miniaturization), and
manufacturing services (including electronics and complex precision machining capabilities) provided by highly
skilled personnel. We also have diversified end market and regulated market experience in our targeted higher-value
markets. To support customers in these markets, we have invested in strategic global supply chain design and
execution.

In addition, we believe that a strong focus on human capital through the talent we hire and retain is critical to
maintaining our competitiveness. We are driving a customer-centric organization with a high degree of
accountability and ownership to develop processes necessary to exceed customer expectations and deliver financial
performance aligned to our goals. Through our employee feedback process, we solicit and act upon information to
improve our company and better support our customers and business processes in the future. We have taken steps to
attract the best leaders and are accelerating our efforts to increase our diversity and inclusion in our employee and
management ranks as we seek to develop an innovative and forward thinking workforce for the future.

Our Industry

Outsourcing engineering and manufacturing services enable OEMs to concentrate on their core strengths, such as
research and development, branding, and marketing and sales. In an outsourcing model, OEMs also benefit from
improved efficiencies and reduced production costs, volume purchasing leverage, reduced fixed capital investments,
improved inventory management, and access to global engineering and manufacturing resources. OEMs continue to
turn to outsourcing partners to reduce time-to-market and time-to-volume production through utilization of their
service providers’ product design and engineering services, technology solutions and manufacturing services.

Outsourcing rates fluctuate periodically, and not all industries we serve are outsourcing at the same growth rates.
The traditional markets of computing and telecommunications have used the outsourcing model for a number of
years and have a lower outsourcing growth potential than the less-outsourced medical, complex industrials, A&D,
and semi-cap markets, which we identify as our higher-value markets. The higher-value markets typically provide
the opportunity for increased value-add which leads to higher profitability than the traditional markets and in some
cases provide the potential for stable growth. The higher-value markets also align well with our expertise in more
complex and highly regulated products, and we believe we are well-positioned to capitalize on increased
outsourcing in these markets.

Our Strategy

Our goal is to be the solutions provider of choice to leading OEMs that we believe offer the greatest potential for
profitable growth. To meet this goal, we have implemented the following strategies:

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Focus on More Complex Products for Customers. EMS providers serve a wide range of OEMs in different
industries, offering scalable electronics assembly as a service. The product scope ranges from easy-to-
assemble, low-cost, high-volume products targeted for the consumer market to complicated, state-of-the-
art, mission-critical products. Higher-volume manufacturing customers in the more traditional markets of
computing and telecommunications often compete on price with short product life cycles and require less
value-add from EMS providers. We focus on lower-volume manufacturing customers in the A&D, medical,
and industrial markets, which are often in highly regulated industries where they are increasingly
outsourcing higher value-added services to their EMS providers to meet stringent regulatory and time-to-
market requirements. In the traditional markets, we focus on customers with more complex requirements

(cid:129)

such as high-performance computing and next generation telecommunications. In the higher-value markets
where outsourcing growth rates are increasing and product life cycles are longer, we focus on customers
where there is a strong match between our capabilities and their needs. Our objective is to achieve annual
sales from higher-value market customers around 80% of total revenue which may fluctuate from period to
period based on the mix of revenue between sectors.
Lead with Design & Engineering Services and Leverage Advanced Technology Solutions. In addition to
strength in manufacturing complex high-density PCBAs, complex mechanical systems, and full systems
integration, we offer customers specialized and tailored advanced design solutions, including technology
building blocks and engineering services. We provide this engineering expertise through our design centers
in the United States and Mexico (Americas), Asia and Europe. Leading with engineering is important to
our strategy to increase sales to customers in our targeted higher-value markets where products require high
quality, extreme reliability and low product failure rates. By leveraging our advanced technology and
engineering solutions, customers can focus on core branding and marketing initiatives while we focus on
bringing their products to market faster and more efficiently.

(cid:129) Maintain and Develop Close, Long-Term Relationships with our Customers. Our strategy is focused on

establishing long-term relationships with leading OEMs in growth industries by becoming an integral part
of their concept-to-production and full product life cycle requirements. To accomplish this, we rely on our
business development executives, account managers, site program managers and general management
teams to respond with speed and flexibility to frequently changing customer design specifications and
production requirements. We focus on caring for our customers and ensuring that their needs are
consistently met or exceeded.

(cid:129) Deliver Complete Manufacturing Solutions Globally. OEMs increasingly require a wide range of

specialized design engineering and manufacturing services from EMS providers in order to reduce costs
and accelerate their time-to-market and time-to-volume production. Building on our integrated engineering
and manufacturing capabilities, we offer services from initial product design and test to final product
assembly and distribution to OEM customers. Our precision technology services and complex mechanical
manufacturing, along with our systems integration assembly and direct order fulfillment services, allow our
customers the potential to reduce product cost and risk of product obsolescence by reducing their total
work-in-process and finished goods inventory. These services are available at many of our manufacturing
locations and allow us to offer customers the flexibility to move quickly from design and initial product
introduction to production and distribution. We also offer our customers the opportunity to combine the
benefits of low-cost manufacturing with the benefits and capabilities of our higher complexity support in
Americas, Asia and Europe.
Continue to Seek Cost Savings and Operational Excellence. We seek to optimize our network of facilities
to provide cost-efficient services for our customers. We have a global culture of continuous improvement,
sharing best practices and implementing lean principles. We will continue to drive lean and operational
excellence initiatives with common global processes that allow us to optimize our cost structure and
capacity. Our customers benefit from these initiatives by sharing in the cost savings and knowing that their
manufacturing partner can scale to meet their growth needs.

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(cid:129) Optimize our Global Footprint. We will continue to evaluate our global footprint to ensure we are

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improving the utilization of our facilities, expanding in the regional locations where customers would like
to do business with us, and investing capital in new capabilities that match identified market needs. This
effort has led to some site closures and site expansion across our network as appropriate.
Pursue Strategic Acquisitions. Our capabilities have continued to expand through acquisitions, and we will
continue to selectively seek acquisitions which expand our core technology capabilities and expand the
value of our services to new and existing customers.
Capital Allocation. In support of our financial goals, we will continue a strong focus on cash conversion
and appropriate capital management. We continue to be focused on effective capital deployment by
balancing appropriate investments to support ongoing business and driving organic growth while providing
returns to our shareholders through dividends and share repurchases. Future investments may include
augmenting internal technical capabilities complemented by targeted acquisitions.

Services We Provide

Through the Benchmark network, we offer a wide range of design, engineering, automation, test, manufacturing and
fulfillment solutions that support our customers’ products from initial concept and design through prototyping,
design validation, testing, ramp-to-volume production, worldwide distribution and aftermarket support. With our
balanced footprint, we have the ability to serve global and regional customers. We support all of our service
offerings with supply chain management systems, superior quality program management and integrated information

technology systems. Our comprehensive service offerings enable us to provide a complete solution for our
customers’ outsourcing requirements. All of our services are supported through a strong quality management system
designed to globally provide the process discipline to reliably deliver high quality services, solutions and products to
our customers.

Design & Engineering Services and Technology Solutions:

Our approach is to coordinate and integrate our concept, design, prototype and other engineering capabilities in
support of our customers’ go-to-market and product life cycle requirements. These services strengthen our
relationships with our manufacturing customers and help attract new customers that require specialized design and
engineering services. Early engagement with engineering-led solutions is key to our strategy of focusing on products
with greater complexity in our targeted verticals.

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New Product Design, Prototype, Testing and Related Engineering Services. We offer a full spectrum of
new product design, automation, test development, prototype and related engineering services for projects
contracted by our customers who pay for and own the resulting designs in our contract design services
business. We employ a proven seven-step process for concept-to-production in our design services model
that enables a shorter product development cycle and gives our customers a competitive advantage in time-
to-market and time-to-profit. Our multi-disciplined engineering teams provide expertise in a number of
core competencies critical to serving OEMs in our target markets, including award-winning industrial
design, mechanical and electrical hardware, firmware, software and systems integration and support. We
create specifications, designs and quick-turn prototypes, then validate and ramp our customers’ products
into volume manufacturing.
Custom Testing and Automation Equipment Design and Build Services. We provide our customers a
comprehensive range of custom circuit and functional test equipment, process automation and replication
solutions. We have expertise in tooling design, test solutions, equipment control and process, systems
planning, process automation, systems integration, replication and programming. Our custom test solutions,
process automation and replication services are available to our customers as part of our full-service
product design and manufacturing solutions package or on a stand-alone basis for products designed
elsewhere. We also provide custom test equipment and automation system solutions to OEMs, which pay
for and own the designs. Our ability to provide these solutions allows us to capitalize on OEMs’ increasing
needs for custom manufacturing solutions and provides an additional opportunity for us to introduce these
customers to our comprehensive engineering and manufacturing services.
Technology Solutions. We are investing in building blocks and solutions such as secure defense turnkey
design and reference platforms in avionics, ground vehicle electronics, munitions, and soldier platforms
that require ruggedization for harsh environments and secure communications. We are developing
advanced manufacturing capabilities for high density interconnect circuits using advanced substrates
including liquid crystal polymer, high-frequency filters and a data collection network that integrates
sensors, radios, and gateways for data analytics.

Manufacturing Services (Electronics Manufacturing and Testing Services):

As OEMs seek to provide greater functionality in smaller products, they increasingly require sophisticated
manufacturing technologies and processes. Our investment in advanced manufacturing equipment and process
development, as well as our experience in innovative packaging and interconnect technologies, enable us to offer a
variety of advanced manufacturing solutions. These packaging and interconnect technologies include but are not
limited to:

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Printed Circuit Board Assembly (PCBA) & Test. We offer our customers expertise in a wide variety of
traditional and advanced manufacturing technologies. Our technical expertise supports complex, PCBA and
test solutions, assembly of subsystems, circuitry and functionality testing of printed assemblies,
environmental and stress testing and component reliability testing.

We provide our customers with a comprehensive set of PCBA manufacturing technologies and solutions, which
include:

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Surface mount technology

- Micro-Ball Grid Array
Land Grid Array
-

-
-
-
-

Quad Flat No-Leads
Package-on-Package
01005 Chip Components
Circuit Design and Fabrication of Hybrid interconnect and CCDs

Substrate Technology; Rigid Epoxy, Flex, Ceramic, Glass, Rigid-Flex;
Plated through hole technology;
Pin-in-Paste Technology;

(cid:129)
(cid:129)
(cid:129)
(cid:129) Hybrid RoHS soldering processes;
(cid:129) Wafer-Level CSP (WLCSP);
(cid:129)
Flip Chip;
(cid:129)
Chip-on-Board and Wire-Bonding;
(cid:129)
In-Circuit Test;
(cid:129) Microelectronics, and

- Mixed SMT and Microelectronics assembly

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Inspection and Test solutions

Automated optical inspection (2D & 3D)
-
Automated x-ray inspection
-
Flying Probe
-
Boundary Scan Test
-
In-Circuit Test
-
Board Level Functional Testing
-
Device/System Integration Functional Test
-
-
Electrical Safety Test
- Microelectronics Test
-

Vibration, ESS, HASS and HALT

We also provide specialized solutions in support of our customers’ components, products and systems, which
include:

Conformal Coating and Potting;

(cid:129)
(cid:129) Underfill and Encapsulation;
(cid:129) Ultrasonic Welding;
(cid:129) Automation Solutions;
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129) Hybrid Optical/Electrical Printed Circuit Board Assembly and Testing; and
(cid:129)

Complex Final Assembly;
Configure | Build to Order;
Fluidics Assembly;
Splicing and Connectorization for Optical Applications;

Sub-Micron Alignment of Optical Sub-Assemblies.

(cid:129)

Component Engineering Services. We provide support to our customers to understand the evolving
international environmental laws and regulations on content, packaging, labeling and similar issues
concerning the environmental impact of their products, including: “RoHS” (EU Directive 2011/65/EC on
Restriction of certain Hazardous Substances); “WEEE” (EU Directive 2002/96/EC on Waste Electrical and
Electronic Equipment); “REACH” (EC Regulation No 1907/2006 on Registration, Evaluation and
Authorization of Chemicals); EU Member States’ Implementation of the foregoing; “Conflict Minerals” as
defined in the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act § 1502(b), implementing
legislation and rules; and the People’s Republic of China (PRC) Management Methods for the Restriction
of the Use of Hazardous Substances in Electrical and Electronic Products. Manufacturing sites in the
Americas, Asia and Europe regions are experienced with both water soluble and no-clean processes.
Systems Assembly & Test. We offer a full spectrum of subsystem and system integration services. These
include assembly, configuration and testing for all industries we service. We design, develop and build
product-specific manufacturing processes utilizing manual, mechanized or fully automated lines to meet
our customers’ product volume and quality requirements. We work with our customers to develop product-

specific test strategies. Our test capabilities include manufacturing defect analysis, in-circuit tests to check
the circuitry of the board and functional tests to confirm that the board or assembly operates in accordance
with its final design and manufacturing specifications. We either custom design test equipment and
software ourselves or use test equipment and software provided by our customers. We also offer our own
internally designed functional test solutions for greater cost savings and flexibility and provide
environmental stress tests of assemblies of boards or systems. We also provide product life cycle testing
services, such as ongoing reliability testing where units are continuously cycled for extended periods while
monitoring for early-life failures.
Failure Analysis. We offer an array of analytical solutions and expertise to help our customers address their
most challenging engineering and business issues. This includes focused techniques for failure mode,
failure mechanism, and root cause determination. Specialized analytical skill sets associated with electrical,
mechanical, and metallurgical disciplines are used in conjunction with a vast array of equipment such as
ion chromatography, x-ray florescence, and scanning electron microscopy. Our state-of-the-art lab facilities
provide customers with detailed reporting and support in an unbiased, timely and cost-effective manner.
Mastering emerging technologies, coupled with an understanding of potential failure mechanisms, positions
us to exceed customer expectations and maintain our technological diversity.

(cid:129)

Precision Technology Services (Precision Machining and Complex Vertically Integrated Assemblies):

In addition to traditional EMS, we offer complex precision technology services including full electromechanical
assembly and testing services.

(cid:129)

Precision Technologies Group. We provide vertically integrated precision mechanical components and
complex electromechanical assemblies. The processes supporting these include:

Complex Small / Medium / Large Precision Machining;
-
-
Advanced metal joining including vacuum chamber welding, electron beam laser and brazing;
- Multi-Axis Robotic Grinding for demanding applications such as turbine blades and scientific

instruments;
Complex Clean Room Assembly and Functional Test;

-
- Major Electromechanical Assemblies;
-
-

Large precision and industrial frames; and
Sheet metal and paint.

Our global network of operations includes manufacturing facilities in eight countries, which are strategically located
to support full product life cycle services for our customers. We have domestic facilities in Alabama, Arizona,
California, Minnesota, New Hampshire and Texas and international facilities in China, Malaysia, Mexico,
Netherlands, Romania, Singapore and Thailand. Our network also includes engineering centers that lead customer
engagements and provide solutions to customers in the Americas, Asia and Europe. Additionally, we are compliant
with and/or hold the following accreditations, certifications and registrations by geography:

ISO 13485 – Medical
FDA/QSR Compliant – Medical
ISO 14971 – Medical Risk Management
MedAccred
AS9100 – Aerospace
ITAR (International Traffic and Arms)
Nadcap (National Aerospace & Defense Assoc. Program)
FAA Approved Parts Manufacturer – Aviation
IATF 16949 – Automotive
TL9000 – Telecommunications
ANSI ESD S20:20
ISO 9001 – Quality
ISO 14001 – Environmental Health and Safety
OHSAS 18001/ISO 45001 – Occupational Health and Safety

Americas Europe

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√
√
√
√
√
√
√
√
√
√
√

√

√
√

√
√
√
√

Asia
√
√

√
√

√

√
√
√
√

Supply Chain, Order Fulfillment, and Aftermarket Support Services:

Our customers often face challenges in designing supply chains, demand planning, procuring materials and
managing their inventories efficiently due to fluctuations in their customer demand, product design changes, short
product life cycles and component price fluctuations.

We employ enterprise resource planning (ERP) systems and lean manufacturing principles to manage procurement
and manufacturing processes in an efficient and cost-effective manner so that, where possible, components arrive on
a just-in-time, as-and-when-needed basis. Because we are a significant purchaser of electronic components and other
raw materials, we are able to capitalize on the economies of scale associated with our relationships with suppliers to
negotiate price discounts, obtain components and other raw materials that are in short supply, and return excess
components. Our agility and expertise in supply chain management and our relationships with suppliers across the
supply chain enable us to help reduce our customers’ cost of goods sold and inventory exposure.

In support of our engineering services, technology solutions and manufacturing services, we offer our customers a
wide array of capabilities from early supply chain design, to order fulfillment, to aftermarket services.

(cid:129)

Value-Added Support Systems. We support our engineering, manufacturing, distribution and aftermarket
support services with an efficient supply chain management system and a superior quality management
program. Our value-added support services are primarily implemented and managed through a web-based
information technology system that enables us to collaborate with our customers throughout all stages of
the engineering, manufacturing and order-fulfillment processes.
Supply Chain Management. We offer full end-to-end supply chain design, inventory-management and
volume-procurement capabilities to provide assurance of supply, optimized cost, and reduced total cycle
time. Our materials strategy focuses on leveraging our procurement volume company-wide while providing
local execution for maximum flexibility. We employ a full complement of electronic data interchange
transactions with our suppliers to coordinate forecasts, orders, reschedules, and inventory and component
lead times. Our ERP systems provide product and production information to our supply chain management,
engineering change management and floor control systems. Our information systems include a proprietary
module that controls serialization, production and quality data for all of our facilities around the world
using state-of-the-art statistical process control techniques for continuous process improvements. To
enhance our ability to rapidly respond to changes in our customers’ requirements by effectively managing
changes in our supply chain, we utilize web-based interfaces and real-time supply chain management
software products, which allow for scaling operations to meet customer needs, shifting capacity in response
to product demand fluctuations, reducing materials costs and effectively distributing products to our
customers or their end-customers.

(cid:129) Direct Order Fulfillment. We provide direct order fulfillment for some of our OEM customers. Direct order

fulfillment involves receiving customer orders, configuring products to quickly fill the orders and
delivering the products either to the OEM, a distribution channel or directly to the end customer. We
manage our direct order fulfillment processes using a core set of common systems and processes that
receive order information from the customer and provide comprehensive supply chain management,
including procurement and production planning. These systems and processes enable us to process orders
for multiple system configurations and varying production quantities, including single units. Our direct
order fulfillment services include build-to-order (BTO) and configure-to-order (CTO) capabilities. BTO
involves building a complete system in real-time to a highly customized configuration ordered by the
OEM’s end customer. CTO involves configuring systems to an end customer’s specifications at the time
the product is ordered. The end customer typically places this order by choosing from a variety of possible
system configurations and options. We are capable of meeting a 2- to 24-hour turnaround time for BTO and
CTO fulfillment. We support our direct order fulfillment services with logistics that include delivery of
parts and assemblies to the final assembly site, distribution and shipment of finished systems, and
processing of customer returns.
Aftermarket Non-Warranty Services. We provide our customers a range of aftermarket non-warranty
services, including repair, replacement, refurbishment, remanufacturing, exchange, systems upgrade and
spare part manufacturing throughout a product’s life cycle. These services are tracked and supported by
specific information technology systems that can be tailored to meet our customers’ individual
requirements.

(cid:129)

Marketing and Customers

We market our services and solutions primarily through a direct sales force organized by market sector. In addition,
our engineering, operational, and executive management teams are an integral part of our sales and marketing
approach. We generally enter into master supply agreements with our customers. These arrangements generally

govern the conduct of our business with customers relating to, among other things, the design and manufacturing of
products that in some cases were previously produced by the customer. The arrangements also generally identify the
specific products to be designed and manufactured, quality and production requirements, product pricing and
materials management. There can be no assurance that these arrangements will remain in effect or be renewed, but
we focus intently on customer care in an effort to anticipate and meet the current and future needs of our customers.

Our key customer accounts are supported by dedicated teams directly responsible for account management. These
teams coordinate activities across the Benchmark global network to effectively satisfy customer requirements and
have direct access to leadership and executive management to quickly address customer concerns. Local program
managers and customer account teams further support the global teams and are linked by a comprehensive
communications and information management infrastructure. In addition, our executive management is heavily
involved in customer relations and devotes significant attention to broadening existing and developing new customer
relationships.

The following table sets forth the percentages of our sales by sector for 2020, 2019 and 2018.

Higher-Value Markets
Industrials
A&D
Medical
Semi-Cap(1)

Traditional Markets
Computing
Telecommunications

Total

2020

2019

2018

18%
21
24
18
81%

20%
19
20
12
71%

2020

2019

2018

11
19%
100%

16%
13
29%
100%

19%
16
15
14
64%

23%
13
36%
100%

(1) Prior to the second quarter of 2019, results in the semi-cap sector were reported under test and instrumentation.

A substantial percentage of our sales are made to a small number of customers and the loss of a major customer, if
not replaced, would adversely affect us. Sales to our ten largest customers represented 41%, 38% and 44% of our
sales in 2020, 2019 and 2018, respectively. In 2020, sales to Applied Materials represented 12% of our sales. In
2019, no single customer represented 10% or more of our sales and in 2018, sales to International Business
Machines Corporation represented 13% of our sales.

During the first quarter of 2019, we indicated we would not renew a legacy computing contract with a long-standing
customer that represented $324 million and $285 million in revenue in 2018 and 2017, respectively. When this
contract was last renewed in early 2016, it was assumed that the related product line would go end-of-life or decline
substantially over time. The opposite happened and business performance on this contract deteriorated due to model
mix and supply chain changes. We notified the customer that we would not renew the contract past the expiration
date at the end of 2019. We coordinated a transition plan with the customer and fully exited the contract in the third
quarter of 2019. For additional information, see “Risk Factors—The loss of a major customer would adversely affect
us” in Part I, Item 1A of this Report and “2020 Overview” in Part II, Item 7 of this Report.

Seasonality

Seasonality in our business has historically been driven by customer complexion and product mix, particularly the
industries that our customers serve. Although we have historically experienced higher sales during the fourth
quarter, this pattern does not repeat itself every year. In addition, we typically experience our lowest sales volume in
the first quarter of each year.

Suppliers

We maintain a network of suppliers of components and other materials used in our operations. We procure
components when a purchase order or forecast is received from a customer and occasionally utilize components or
other materials for which a supplier is the single source of supply. If any of these single-source suppliers were
unable to provide these materials, a shortage of components could temporarily interrupt our operations and lower

our profits until an alternate component could be identified and qualified for use. For additional information, see
“Risk Factors—Shortages or price increases of components specified by our customers would delay shipments and
adversely affect our profitability” in Part I, Item 1A of this Report. Although we occasionally experience component
shortages and longer lead times for various components, we have generally been able to reduce the impact of
component shortages by working with customers to reschedule deliveries and with suppliers to provide the needed
components using just-in-time inventory programs, or by purchasing components at slightly higher prices from
distributors rather than directly from manufacturers. In addition, by developing long-term relationships with
suppliers, we have been better able to minimize the effects of component shortages compared to manufacturers
without such relationships. The goal of these procedures is to reduce our inventory risk.

Competition

The services we provide are available from many independent sources as well as from the in-house manufacturing
capabilities of current and potential customers. Our competitors include Celestica Inc., Flex Ltd., Hon Hai Precision
Industry Co., Ltd., Jabil Circuit, Inc., Plexus Corp and Sanmina Corporation. We believe that the principal
competitive factors in our targeted markets are engineering solutions capabilities, product quality, flexibility, cost
and timeliness in responding to design and schedule changes, reliability in meeting product delivery schedules,
pricing, technological sophistication and geographic location.

In addition, original design manufacturers (ODMs) that provide design and manufacturing services to OEMs have
significantly increased their share of outsourced manufacturing services provided to OEMs in traditional markets,
such as computing and telecommunication. Competition from ODMs may increase if our business in these markets
grows or if ODMs expand further into or beyond these markets.

Environmental, Social & Governance (ESG) & Sustainability

Benchmark continues to evolve and improve upon its ESG strategy and is implementing and managing long-term,
strategic sustainability initiatives. The Nominating/Governance Committee of our Board of Directors is sponsoring
this effort and in 2020, Benchmark established an ESG/Sustainability Council. The ESG/Sustainability Council is
currently chaired by Stephen J. Beaver, SVP, General Counsel & Chief Legal Officer, who is a member of our
senior executive leadership team. The Council also includes a cross-functional team of leaders representing
operations, human resources, supply chain, regulatory compliance, finance, marketing communications, investor
relations, facilities and the legal department. The team has performed a materiality assessment aligned with the
Sustainability Accounting Standards Board (SASB) with the goal of developing future reporting that will likely
include other frameworks such as the Global Reporting Initiative (GRI), United Nations Sustainable Development
Goals (SDG) and the Task Force on Climate-Related Financial Disclosures (TCFD). For additional information, see
“Human Capital Management” below.

Benchmark’s long-term commitment to sustainability is comprehensive, placing increased focus and emphasis on
environmental consciousness, social responsibility, ethics and corporate governance, and supply chain ecosystem
responsibility. Our goal is to do our part in contributing to a more sustainable world, while providing value to our
shareholders consistent with our business objectives. Our sustainability priorities include:

Environmental Responsibility:

• We are committed to protecting the natural environment and our community by complying with all

applicable legal and regulatory requirements.

• We engage our employees to accomplish this by conserving energy; reducing consumption of natural
resources; preserving air, soil, and water quality, managing waste properly and encouraging reuse or
recycling; reducing use of toxic substances and applying an ethical approach to source reduction and
disposal efforts.

• All Benchmark manufacturing facilities are either currently certified or undergoing certification to ISO
14001, which is a set of standards related to environmental management and systems. The ISO 14001
standards help organizations minimize adverse impacts to the environment, comply with applicable laws,
regulations and other requirements, and achieve continual improvement in these areas.

• Benchmark has launched a number of global initiatives designed to reduce energy consumption in our
facilities, including upgrades and or retrofits in LED and motion detector lighting, cooling towers,
compressed air and vacuum systems, and exhaust fans.

Care for Our People:

• We believe in upholding the principle of human rights, worker safety and observing fair labor practices

within our organization and our supply chain.

• We embrace diverse viewpoints and perspectives, recognizing that greater inclusion fosters innovation and
achieves better decision making and financial results. Thus, we are strengthening our diversity, equity and
inclusion programs with a planned set of actions around organizational training, refreshed company values,
and a revitalized recruitment strategy.

• We are committed to ensuring that proper working conditions exist for the safety of our employees, such as
the implementation of 6S and visual management practices, developing, implementing and continuously
improving our Occupational Health and Safety Management System, and providing appropriate education,
reporting and controls.

• We are committed to participating in the development of our surrounding communities and supporting

•

diversity.
In the fall of 2019, a strategic customer presented a Benchmark operation with a “Supplier ESG Excellence
Award” for their “participation, leadership and superiority during the Forced and Bonded Labor Prevention
Program.”

Ethics & Corporate Responsibility:

• We are committed to ensuring ethical organizational governance, promoting business ethics and integrity,

and embracing diversity and inclusion in the board room and throughout the organization.

• We are committed to observing fair, transparent and accountable operating practices.
• Benchmark believes that its ultimate responsibility is to help create and foster the best possible work
environment for everyone in our organization. To this end, we implemented a “Speak Up!” campaign
designed to promote a positive and ethical organizational culture. We believe that each team member,
regardless of position, shares in this responsibility, and we encourage all of them to “Speak Up!” with
questions or concerns about actual or potential ethical issues, questions about company policies,
suggestions about how we can make our organization better and to address any other concerns.
To facilitate open and honest communication, in 2018 we upgraded our Helpline to include global local
phone numbers together with language support that allows reporters to “Speak Up!” in over 150 native
languages. In addition, we added a web portal that allows online reporting of concerns, a place to ask
questions, or quickly access ethics and compliance policies.

•

• We believe these efforts strengthen our enterprise ethics and compliance efforts and foster the environment

where employees and stakeholders can express and have concerns resolved.

Supply Chain Responsibility:

(cid:129) We are committed to sourcing with suppliers willing to support our sustainability initiatives.
(cid:129)

Benchmark endorses the Responsible Business Alliance (RBA)(formerly the Electronics Industry
Citizenship Coalition or EICC) Code of Conduct, which provides guidance in five critical areas of
corporate social responsibility (CSR) performance, including labor, health and safety, environment,
management systems, and ethics. Benchmark also seeks the same endorsement from our business partners,
requesting that each business partner adhere to the RBA Code of Conduct or its equivalent at initial
engagement and flowing these requirements through our commercial contracts to our business partners and
supply chain. Benchmark also conducts a supply chain monitoring system to assess adherence in these
areas with regard to our supply chain partners.
Benchmark also endorses EcoVadis, a provider of sustainability ratings, intelligence and collaborative
performance improvement tools for global supply chains. The EcoVadis methodology evaluates criteria
across four themes: environment, fair labor practices, ethics/fair business practices and supply chains. In
2019, Benchmark was awarded the EcoVadis Silver Medal-Sustainability rating.
Benchmark also supports Rule 13p-1 under the Exchange Act (Conflict Minerals Law) and efforts to avoid
sourcing conflict minerals that directly or indirectly finance or benefit armed groups in the Democratic
Republic of Congo (DRC) and in adjoining countries. Consistent with the Conflict Minerals Law and the
OECD Due Diligence Guidance concerning conflict minerals, Benchmark adopted the Conflict Free
Sourcing Initiative Due Diligence reporting process and seeks to obtain conflict minerals content
declarations from its suppliers, all in an effort to promote supply chain transparency. Benchmark does not
directly source tin, tantalum, tungsten or gold (3TG) from mines, smelters or refiners, and is in most cases
several or more levels removed from these supply chain participants.

(cid:129)

Benchmark therefore expects:

− our suppliers to source 3TG only from smelters and refiners validated as being conflict free and that do

not directly or indirectly benefit or finance armed groups in the DRC or other covered country;
− our suppliers to fully-comply with the Conflict Minerals Law and provide all necessary declarations;
− our suppliers to pass these requirements through to their supply chain and determine the source and
chain of custody of specified minerals, including 3TG; and any suppliers not willing to comply with
these requirements shall be reviewed by global procurement with regard to future business and
sourcing declarations. This conflict minerals policy encourages our suppliers to respect and protect
human rights throughout the world.

Human Capital Management

Our employees are an indispensable contributor to our success. Only an inspired community of talented employees
enable us to realize our Company Vision of “positively impacting lives by solving complex challenges with our
customers, creating innovative products that no one imagined were possible.”

We believe we have a responsibility to foster the best possible work environment for everyone in our organization
through sound ethical and organizational governance, by promoting business ethics and integrity, and by embracing
equality, diversity and inclusion throughout our organization and even extending to the board room. For additional
information, see “Environmental, Social & Governance (ESG) & Sustainability—Ethics & Corporate
Responsibility,” in Part I, Item 1 of this Report.

As mentioned, we established an ESG/Sustainability Council in 2020 with Board oversight to drive the five tenets of
our long-term ESG strategy: Environmental Responsibility, Our People, Our Community, Governance and COVID-
19 Response. Our commitment to ESG and these tenets is a strategic imperative as we build a sustainable
infrastructure across the Company. In partnership with our employees, we are committed to protecting the natural
environment and our community through pollution prevention, conservation, responsible use and sustainable
practices. Through our sustainability initiatives, we further engage our employees to ensure that our business
practices support diversity and inclusion to build an innovative workforce and to strive toward having our
organization reflect the complexion of our customers and suppliers. We are strengthening our diversity and
inclusion programs with a planned set of actions around organizational training, refreshed company values, and a
revitalized recruitment strategy. In our view, the goals of providing value to shareholders and upholding the
principle of human rights and treating people fairly and with dignity are integrally interconnected. To this end, we
actively participate in the development of our surrounding community. In June 2020, our CEO Jeffrey Benck
broadly communicated our commitment to taking positive steps toward promoting equality and supporting racial
justice. In furtherance of this objective, in the fourth quarter of 2020, the One Benchmark Foundation made
donations to advance the cause around racial inequality.

The safety of our employees is also of paramount concern to us. We are committed to ensuring that proper working
conditions exist for the safety of our employees, such as the implementation of 6S and visual management practices,
developing, implementing and continuously improving our Occupational Health and Safety Management System,
and providing appropriate education, reporting and controls. We engage our employees to participate in decision-
making as part of our Occupational Health and Safety Management System to ensure that we are developing,
implementing and continuously improving our health and safety ecosystem and performance to prevent injury and
illness. From the onset of the COVID-19 pandemic, we established a COVID-19 Task Force, a cross-functional
advisory team of Company leaders committed to promoting the health and safety of our employees in accordance
with Centers for Disease Control and Prevention (CDC) guidelines and ensuring that our employees’ safety remains
a constant focal point. The COVID-19 Task Force has promulgated policies, procedures, protocols and guidelines
relating to symptom awareness and contact tracing, remote work requirements, effective hygiene practices, travel
restrictions, temperature screening and visitor protocols, social distancing, facial mask requirements, enhanced
cleaning protocols and decontamination procedures.

As of December 31, 2020, we employed approximately 11,234 people, approximately 376 of whom were engaged in
design and development engineering. None of our domestic employees are represented by a labor union. In certain
international locations, our employees are represented by labor unions and by works councils. Some European
countries also often have mandatory legal provisions regarding terms of employment, severance compensation and
other conditions of employment that are more restrictive than U.S. laws. We have never experienced a strike or
similar work stoppage, and we believe that our employee and labor relations are strong.

Segments and International Operations

We have manufacturing facilities in the Americas, Asia and Europe to serve our customers. Benchmark is operated
and managed geographically, and management evaluates performance and allocates resources on a geographic basis.
We currently operate outside the United States in China, Malaysia, Mexico, Netherlands, Romania, Singapore and
Thailand. During 2020, 2019 and 2018, 52%, 47% and 45%, respectively, of our sales were from our international
operations. See Note 9 and Note 14 to consolidated financial statements in Part II, Item 8 of this Report for segment
and geographical information.

Governmental Regulation

Our operations, and the operations of businesses that we acquire, are subject to foreign, federal, state and local
regulatory requirements relating to security clearance, trade compliance, anticorruption, environmental, waste
management, and health and safety matters. We are committed to operating in compliance with all applicable
requirements. Significant costs and liabilities may arise from these requirements or from new, modified or more
stringent requirements, which could affect our earnings and competitive position. In addition, our past, current and
future operations, and those of businesses we acquire, may give rise to claims of exposure by employees or the
public or to other claims or liabilities relating to environmental, waste management or health and safety concerns.

We periodically generate and temporarily handle limited amounts of materials that are considered hazardous waste
under applicable law. We contract for the off-site disposal of these materials and have implemented a waste
management program to address related regulatory issues. For additional information, see “Risk Factors—
Compliance or the failure to comply with environmental regulations could cause us significant expense” in Part I,
Item 1A of this Report.

Available Information

Our website may be viewed at http://www.bench.com. Reference to our website is for informational purposes only
and the information contained therein is not incorporated by reference into this Report. We make available free of
charge through our internet website our filings with the SEC, including our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after electronically filing such material
with, or furnishing it to, the SEC. All reports we file with the SEC are also available free of charge via EDGAR
through the SEC’s website at http://www.sec.gov.

Item 1A. Risk Factors.

The following risk factors should be read carefully when reviewing the Company’s business, the forward-looking
statements contained in this Report, and the other statements the Company or its representatives make from time to
time. Any of the following factors could materially and adversely affect the Company’s business, operating results,
financial condition and the actual results of the matters addressed by the forward-looking statements.

Operational Risks

Our business, financial condition and results of operations have been and are expected to continue to be
adversely affected by the recent COVID-19 pandemic, the extent of which is uncertain and difficult to predict.
The widespread outbreak of any other health epidemics could also adversely affect our business, financial
condition and results of operations.

Any outbreaks of contagious diseases and other adverse public health developments, particularly in countries where
we operate, could have a material and adverse effect on our business, financial condition and results of operations.
In late 2019, there was an outbreak of a new strain of coronavirus (COVID-19) first identified in Wuhan, Hubei
Province, China, which has since spread globally. On March 11, 2020, the World Health Organization declared
COVID-19 a pandemic. Further, the COVID-19 outbreak has resulted in government authorities around the world
implementing numerous measures to try to reduce the spread of COVID-19, such as travel bans and restrictions,
quarantines, “shelter-in-place,” “stay-at-home,” total lock-down orders, business limitations or shutdowns and
similar orders. As a result, the COVID-19 pandemic has negatively impacted the global economy, disrupted global
supply chains and workforce participation, and created significant volatility and disruption of financial markets.

Additionally, our business, financial condition and results of operations have been and may be further impacted in
several ways, including, but not limited to, the following:

(cid:129)

(cid:129)
(cid:129)
(cid:129)

(cid:129)
(cid:129)

further disruptions to our operations, including due to additional facility closures, restrictions on our
operations and sales, marketing and distribution efforts and/or interruptions to our engineering and design
processes and other important business activities;
reduced demand for our products and services, particularly due to disruptions to the businesses and
operations of our customers;
interruptions, availability or delays in global shipping to transport our products;
further slowdown or stoppage in the supply chain for our products, in addition to higher costs;
limitations on employee resources and availability, including due to sickness, government restrictions, the
desire of employees to avoid contact with large groups of people or mass transit disruptions, or a shortage
of available vaccinations;
greater difficulty in collecting customer receivables;
a fluctuation in foreign currency exchange rates or interest rates could result from market uncertainties;
an increase in the cost or the difficulty to obtain debt or equity financing could affect our financial
condition or our ability to fund operations or future investment opportunities;
any breach of financial covenants contained in the Credit Agreement;
current or near future trends may cause certain inventory to be slow-moving and trigger the need to review
for excess and obsolete inventory or the valuation of inventory;
changes to the carrying value of our goodwill and intangible assets; and
an increase in regulatory restrictions or continued market volatility could hinder our ability to execute
strategic business activities, as well as negatively impact our stock price.

The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee
work locations, and cancellation of physical participation in meetings, events and conferences), and we may take
further actions as may be required by government authorities or that we determine are in the best interests of our
employees, customers, partners, and suppliers. There is no certainty that such measures will be enough to mitigate
the risks posed by the virus, and our ability to perform critical functions could be harmed.

Any of the foregoing could adversely affect our business, financial condition and results of operations. The potential
effects of COVID-19 may also impact many of our other risk factors discussed in this Report. The exact extent of
the impact of the COVID-19 pandemic on our business, financial condition and results of operations will depend on
future developments, which are highly uncertain, continuously evolving and cannot be predicted, including, but not
limited to, the duration and spread of the COVID-19 outbreak, its severity, the actions to contain the virus or treat its
impact, including the availability of vaccinations and the rate of inoculations, and how quickly and to what extent
normal economic and operating conditions can resume which may not return fully to pre-pandemic levels.

Shortages or price increases of components specified by our customers would delay shipments and adversely
affect our profitability.

Substantially all of our sales are derived from manufacturing services in which we purchase components specified
by our customers. In the past, supply shortages have substantially curtailed production of all assemblies using a
particular component and industry-wide shortages of electronic components, particularly of memory and logic
devices, have occurred. For example, in 2011, we experienced disruptions to our global supply chain due to the
earthquake and tsunami in Japan, as well as floods in Thailand. More recently, the COVID-19 pandemic has resulted
in supply chain constraints for the Company. In some instances, such component shortages have resulted in delayed
shipments. Because of the continued increase in demand for surface mount components, we anticipate component
shortages and longer lead times for certain components to occur from time to time. Also, we may bear the risk of

component price increases that occur between periodic re-pricings of products during the term of a customer
contract. Accordingly, certain component price increases could adversely affect our gross profit margins.

We are dependent on the success of our customers and the markets in which they operate. When our
customers or the markets in which they operate experience declines or grow at a significantly slower pace
than anticipated, we may be adversely affected.

We are dependent on the continued growth, viability and financial stability of our customers. Our customers are
OEMs of:

industrial equipment,
equipment for the A&D industries;
telecommunication equipment;
computers and related products for business enterprises;

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semi-cap equipment.

These markets are subject to rapid technological change, vigorous competition, short product life cycles and
consequent product obsolescence. When our customers are adversely affected by these factors, we may be similarly
affected. For example, the declines in demand throughout the broader semiconductor capital equipment market in
2018 and 2019 had a significant impact on us for those fiscal years.

The loss of a major customer would adversely affect us.

A substantial percentage of our sales are made to a small number of customers, and the loss of a major customer, if
not replaced, would adversely affect us. Further, developments adverse to our major customers or their products, or
the failure of a major customer to pay for components or services, could have an adverse effect on us. Sales to our
ten largest customers represented 41%, 38% and 44% of our sales in 2020, 2019 and 2018, respectively.

We expect to continue to depend on sales to our largest customers, and any material delay, cancellation or reduction
of orders from these customers or other significant customers would have a material adverse effect on our results of
operations. In addition, we generate significant accounts receivable in connection with providing services to our
customers. If one or more of our customers were to become insolvent or otherwise unable to pay for the services
provided by us, our operating results and financial condition would be adversely affected.

Most of our customers do not commit to long-term production schedules, which makes it difficult for us to
schedule production and achieve maximum efficiency of our manufacturing capacity.

The volume and timing of sales to our customers vary due to:

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changes in demand for their products;
their attempts to manage their inventory;
design changes;
changes in their manufacturing strategies; and
acquisitions of, or consolidations among, customers.

Due in part to these factors, most of our customers do not commit to firm production schedules for more than one
quarter in advance. Our inability to forecast the level of customer orders with certainty makes it difficult to schedule
production and maximize utilization of manufacturing capacity. In the past, we have been required to increase
staffing and other expenses in order to meet the anticipated demand of our customers. Anticipated orders from many
of our customers have, in the past, failed to materialize or delivery schedules have been deferred as a result of
changes in our customers’ business needs, thereby adversely affecting our results of operations. On other occasions,
our customers have required rapid increases in production, which have placed an excessive burden on our resources.
Such customer order fluctuations and deferrals have had a material adverse effect on us in the past, and may again in
the future. A business downturn resulting from any of these external factors could have a material adverse effect on
our operating income.

Winning business is subject to lengthy, competitive bid selection processes that often require us to incur
significant expense, from which we may ultimately generate no revenue.

Our business is dependent on us winning competitive bid selection processes. These selection processes are typically
lengthy and can require us to dedicate significant development expenditures and scarce engineering resources in
pursuit of a single customer opportunity. Failure to obtain a particular design win may prevent us from obtaining
design wins in subsequent generations of a particular product. This can result in lost revenue and could weaken our
position in future competitive bid selection processes.

Our customers may cancel their orders, change production quantities, delay production or change their
sourcing strategies.

EMS providers must provide increasingly rapid product turnaround for their customers. We generally do not obtain
firm, long-term purchase commitments from our customers, and we continue to experience reduced lead-times in
customer orders. Customers may cancel their orders, change production quantities, delay production or change their
sourcing strategy for a number of reasons. Cancellations, reductions, delays or changes in the sourcing strategy by a
significant customer or by a group of customers could negatively impact our operating income.

In addition, we make significant decisions, including determining the levels of business that we will seek and accept,
production schedules, component procurement commitments, personnel needs, capital expenditures and other
resource requirements, based on our estimate of customer requirements. The short-term nature of our customers’
commitments and the possibility of rapid changes in demand for their products impede our ability to accurately
estimate the future requirements of those customers.

The degree of success or failure of our customers’ products in the market also affects our business. On occasion,
customers require rapid increases in production, which can stress our resources and reduce operating margins. In
addition, because many of our costs and operating expenses are relatively fixed, a reduction in customer demand can
harm our gross profits and operating results.

We may encounter significant delays or defaults in payments owed to us by customers for products we have
manufactured or components that are unique to particular customers.

We structure our agreements with customers to mitigate our risks related to obsolete or unsold inventory. However,
enforcement of these contracts may result in material expense and delay in payment for inventory. If any of our
significant customers become unable or unwilling to purchase such inventory, our business may be materially
harmed.

Our financial results depend, in part, on our ability to perform on our U.S. government contracts, which are
subject to uncertain levels of funding, timing and termination.

We provide services both as a prime contractor and subcontractor for the U.S. government. Consequently, a portion
of our financial results depends on our performance under these contracts. Delays, cost overruns or product failures
in connection with one or more contracts, could lead to their termination and negatively impact our results of
operations, financial condition or liquidity. We can give no assurance that we would be awarded new contracts to
offset the revenues lost as a result of such a termination.

U.S. government programs require congressional appropriations, which are typically made for a single fiscal year
even though a program may extend over several years. Programs often are only partially funded, and additional
funding requires further congressional appropriations. The programs in which we participate compete with other
programs for consideration and funding during the budget and appropriations process, which can be impacted by
shifting and often competing political priorities.

Our government contracts often involve the development, application and manufacture of advanced defense and
technology systems and products aimed at achieving challenging goals. New technologies used for these contracts
may be untested or unproven and product requirements and specifications may be modified. Consequently,
technological and other performance difficulties may cause delays, cost overruns or product failures. Moreover,
there can be no assurance that the amounts we spend to develop new products or solutions to compete for a
government contract will be recovered since we may not be awarded the contract.

Our international operations are subject to certain risks.

During 2020, 2019 and 2018, 52%, 47% and 45%, respectively, of our sales were from our international operations.
These international operations are subject to a number of risks, including:

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public health crises, such as the COVID-19 pandemic, which can result in varying impacts to our business,
employees, customers, suppliers, vendors and partners internationally as discussed elsewhere in this “Risk
Factors” section;
difficulties in staffing and managing foreign operations;
coordinating communications and logistics across geographic distances and multiple time zones;
less flexible employee relationships, which complicate meeting demand fluctuations and can be difficult
and expensive to terminate;
political and economic instability (including acts of terrorism and outbreaks of war), which could impact
our ability to ship and/or receive product;
changes in foreign or domestic government policies, regulatory requirements and laws, which could impact
our business;
longer customer payment cycles and difficulty collecting accounts receivable;
export duties, import controls, tariffs, and trade barriers (including quotas and border taxes);
governmental restrictions on the transfer of funds;
risk of governmental expropriation of our property;
burdens of complying with a wide variety of foreign laws and labor practices, including various and
changing minimum wage regulations;
fluctuations in currency exchange rates, which could affect foreign taxes due, component costs, local
payroll, utility and other expenses; and
inability to utilize net operating losses incurred by our foreign operations which would increase our overall
effective tax rate.

Changes made that impact the way we operate internally could have a negative impact on us and reduce the demand
for our foreign manufacturing facilities. Moreover, any retaliatory actions by other countries where we operate could
also negatively impact our financial performance. In addition, changes in policies by the U.S. or other governments
could negatively affect our operating results due to trade wars, changes in duties, tariffs or taxes, currency exchange
rate fluctuations, or limitations on currency or fund transfers, as well as government-imposed restrictions on
producing certain products in, or shipping them to, specific countries. Also, our current facilities in Mexico operate
under the Mexican Maquiladora (IMMEX) program. This program provides for reduced tariffs and eased import
regulations. We could be adversely affected by changes in the IMMEX program or our failure to comply with its
requirements. Additionally, increasing tariffs and other trade protection measures between the U.S. and China may
affect the cost of our products originating in China as well as the demand for our products manufactured in China in
the event our customers reduce operations in China as a result of such tariffs or trade protection measures. These
actions could also affect the cost and/or availability of components that we procure from suppliers in China.

In addition, several of the countries where we operate have emerging or developing economies, which may be
subject to greater currency volatility, negative growth, high inflation, limited availability of foreign exchange and
other risks. Certain events, including natural disasters, can impact the infrastructure of a developing country more
severely than they would impact the infrastructure of a developed country. A developing country can also take
longer to recover from such events, which could lead to delays in our ability to resume full operations. These factors
may harm our results of operations, and any measures that we may implement to reduce the effect of volatile
currencies and other risks of our international operations may not be effective. In our experience, entry into new
international markets requires considerable management time as well as start-up expenses for market development,
hiring and establishing office facilities before any significant revenues are generated. As a result, initial operations
in a new market may operate at low margins or may be unprofitable.

Certain foreign jurisdictions, as well as the U.S. government, restrict the amount of cash that can be transferred to
the U.S. or impose taxes and penalties on such transfers of cash. To the extent we have excess cash in foreign
locations that could be used in, or is needed by, our operations in the United States, we may incur penalties and/or
taxes to repatriate these funds.

Another significant legal risk resulting from our international operations is compliance with the U.S. Foreign
Corrupt Practices Act (FCPA). In many foreign countries, particularly in those with developing economies, it may

be a local custom that businesses operating in such countries engage in business practices that are prohibited by the
FCPA, other U.S. laws and regulations, or similar laws of host countries and related anti-bribery conventions.
Although we have implemented policies and procedures designed to comply with the FCPA and similar laws, there
can be no assurance that all of our employees, agents, or those companies to which we outsource certain of our
business operations, will not take actions in violation of our policies. Any such violation, even if prohibited by our
policies, could have a material adverse effect on our business.

Start-up costs and inefficiencies related to new or transferred programs can adversely affect our operating
results and such costs may not be recoverable if the new programs or transferred programs are cancelled.

Start-up costs, the management of labor and equipment resources in connection with the establishment of new
programs and new customer relationships, and the need to estimate required resources in advance can adversely
affect our gross margins and operating results. These factors are particularly evident in the early stages of the life
cycle of new products and new programs or program transfers and in the opening of new facilities. These factors
also affect our ability to efficiently use labor and equipment. We are currently managing a number of new programs.
If any of these new programs or new customer relationships were terminated, our operating results could be harmed,
particularly in the short-term. We may not be able to recoup these start-up costs or replace anticipated new program
revenues.

Our business may be adversely impacted by natural disasters.

Some of our facilities, including our corporate headquarters, are located in areas that may be impacted by
hurricanes, earthquakes, water shortages, tsunamis, floods, typhoons, fires, extreme weather conditions and other
natural or manmade disasters. For example, our facilities in Thailand experienced extensive flooding in 2011. Our
insurance coverage for natural disasters is limited and is subject to deductibles and coverage limits. This coverage
may not be adequate or may not continue to be available at commercially reasonable rates and terms. See “We bear
the risk of uninsured losses.”

In addition, some of our facilities possess certifications necessary to work on specialized products that our other
locations lack. If work is disrupted at one of these facilities, it may be impractical, or we may be unable, to transfer
such specialized work to another facility without significant costs and delays. Thus, any disruption in operations at a
facility with specialized certifications could adversely affect our ability to provide products and services to our
customers, and thus negatively affect our relationships and financial results.

We bear the risk of uninsured losses.

As a result of extensive 2011 flooding in Thailand, we have been unable to obtain cost-effective flood insurance to
adequately cover assets at our facilities in Thailand. We continue to monitor the insurance market in Thailand;
however, we have made physical alterations to help mitigate a similar natural disaster. We maintain insurance on all
our properties and operations for risks and in amounts customary in the industry. While such insurance includes
general liability, property & casualty, and directors & officers liability coverage, not all losses are insured, and we
retain certain risks of loss through deductibles, limits and self-retentions. In the event we experience a significant
uninsured loss, it could have a material adverse effect on our business, financial condition and results of operations.

Energy price increases may negatively impact our results of operations.

Some of the components that we use in our manufacturing activities are petroleum-based. In addition, we, along
with our suppliers and customers, rely on various energy sources (including oil) in our transportation activities.
While significant uncertainty exists about the future levels of energy prices, a significant increase is possible.
Increased energy prices could cause an increase in our raw material and transportation costs. In addition, increased
costs of our suppliers or customers could be passed along to us, and we may not be able to increase our product
prices enough to offset them. Moreover, any increase in our product prices may reduce our future customer orders
and profitability.

Introducing programs requiring implementation of new competencies, including new process technology
within our mechanical operations, could affect our operations and financial results.

The introduction of programs requiring implementation of new competencies, including new process technology
within our mechanical operations, presents challenges in addition to opportunities. Deployment of such programs
may require us to invest significant resources and capital in facilities, equipment and/or personnel. We may not meet

our customers’ expectations or otherwise execute properly or in a cost-efficient manner, which could damage our
customer relationships and result in remedial costs or the loss of our invested capital and anticipated revenues and
profits. In addition, there are risks of market acceptance and product performance that could result in less demand
than anticipated and our having excess capacity. The failure or inability to reflect the anticipated costs, risks and
rewards of such an opportunity in our customer contracts could adversely affect our profitability. If we do not meet
one or more of these challenges, our operations and financial results could be adversely affected.

Customer relationships with start-up or emerging companies may present more risks than with established
companies.

Customer relationships with start-up or emerging companies present special risks because these companies do not
have an extensive product history. As a result, there is less demonstration of market acceptance of their products,
making it harder for us to anticipate needs and requirements than with established customers. In addition, funding
for such companies may be more difficult to obtain and these customer relationships may not continue or materialize
to the extent we plan or previously experienced. This tightening of financing for start-up customers, together with
many start-up customers’ lack of prior operations and unproven product markets increase our credit risk, especially
in trade accounts receivable and inventories. Although we perform ongoing credit evaluations of our customers and
adjust our allowance for doubtful accounts receivable for all customers, including start-up customers and emerging
companies, based on the information available, these allowances may not be adequate. This risk may exist for any
new start-up or emerging company customers in the future.

Industry Risks

We operate in a highly competitive industry; if we are not able to compete effectively in the EMS industry,
our business could be adversely affected.

We compete against many providers of electronics manufacturing services. Some of our competitors have
substantially greater financial, manufacturing or marketing resources than we do and have more geographically
diversified international operations than we do. Our competitors include Celestica Inc., Flex Ltd., Hon Hai Precision
Industry Co., Ltd., Jabil Circuit, Inc., Plexus Corp and Sanmina Corporation. In addition, we may in the future
encounter competition from other large electronic manufacturers that are selling, or may begin to sell, electronics
manufacturing services.

We also face competition from the manufacturing operations of our current and future customers, who are
continually evaluating the merits of manufacturing products internally against the advantages of outsourcing to EMS
providers. In addition, in recent years, ODMs that provide design and manufacturing services to OEMs, have
significantly increased their share of outsourced manufacturing services provided to OEMs in several markets, such
as notebook and desktop computers, personal computer motherboards, and consumer electronic products.
Competition from ODMs may increase if our business in these markets grows or if ODMs expand further into or
beyond these markets.

During periods of recession in the electronics industry, our competitive advantages in the areas of quick turnaround
manufacturing and responsive customer service may be of reduced importance to electronics OEMs, who may
become more price sensitive. We may also be at a competitive disadvantage with respect to price when compared to
manufacturers with lower cost structures, particularly those with more offshore facilities located where labor and
other costs are lower.

The availability of excess manufacturing capacity at many of our competitors creates intense pricing and
competitive pressure on the EMS industry as a whole. To compete effectively, we must continue to provide
technologically advanced manufacturing services, maintain strict quality standards, respond flexibly and rapidly to
customers’ design and schedule changes, deliver products globally on a reliable basis at competitive prices and seek
to create enhanced relationships with our customers with our advanced technology and engineering solutions. Our
inability to do so could have an adverse effect on us.

We may be affected by consolidation in the electronics industry, which could create increased pricing and
competitive pressures on our business.

Consolidation in the electronics industry could result in a decrease in manufacturing capacity as companies seek to
close plants or take other steps to increase efficiencies and realize synergies of mergers, creating increased pricing
and competitive pressures for the EMS industry as a whole and our business in particular. In addition, consolidation

could also result in an increasing number of very large electronics companies offering products in multiple sectors of
the electronics industry. The growth of these large companies, with significant purchasing and marketing power,
could also result in increased pricing and competitive pressures for us. Accordingly, industry consolidation could
harm our business. We may need to increase our efficiencies to compete and may incur additional restructuring
charges.

Regulatory, Compliance and Litigation Risks

Government contracts are subject to significant regulation, including rules related to bidding, billing,
kickbacks and false claims, and any non-compliance could subject us to fines and penalties or debarment.

Like all government contractors, we are subject to risks associated with this contracting. These risks include
substantial civil and criminal fines and penalties if we were to fail to follow procurement integrity and bidding rules
or cost accounting standards, employ improper billing practices, receive or pay kickbacks or file false claims. We
have been, and expect to continue to be, subjected to audits and investigations by U.S. and foreign government
agencies and authorities. The failure to comply with the terms of our government contracts could result in progress
payments being withheld, our suspension or debarment from future government contracts or harm to our business
reputation.

Regulatory, legislative or self-regulatory/standard developments regarding privacy and data security matters
could adversely affect our ability to conduct our business.

U.S. privacy and data security laws apply to our various businesses. We also do business globally in countries that
have more stringent data protection laws than those in the United States that may be inconsistent across jurisdictions
and are subject to evolving and differing interpretations. Governments, privacy advocates and class action attorneys
are increasingly scrutinizing how companies collect, process, use, store, share and transmit personal data. In Europe,
the General Data Protection Regulation (GDPR) requires us to protect the privacy of certain personal data of
European Union (EU) citizens. The California Consumer Privacy Act (CCPA), which went into effect January 1,
2020, has similar protections. While we have implemented processes and controls to comply with GDPR and CCPA
requirements, we could incur significant fines, individual damages and reputational risks if our controls and
processes are ineffective and we fail to comply.

Unanticipated changes in our tax position, the adoption of new tax legislation or exposure to additional tax
liabilities could adversely affect our financial results.

We base our tax position upon the anticipated nature and conduct of our business and upon our understanding of the
tax laws of the various countries in which we have assets or conduct activities. Our tax position, however, is subject
to review and possible challenge by taxing authorities and to possible changes in law. We cannot determine in
advance the extent to which some jurisdictions may assess additional tax or interest and penalties on such additional
taxes.

Several countries where we operate allow for tax holidays or provide other tax incentives to attract and retain
business. We have obtained holidays or other incentives where available. Our taxes could increase if certain tax
holidays or incentives were retracted, or if they were not renewed upon expiration, such as the nonrenewal of our tax
holiday in Malaysia in 2021, or tax rates applicable to us in such jurisdictions were otherwise increased. In addition,
further acquisitions may cause our effective tax rate to increase. Given the scope of our international operations and
our international tax arrangements, changes to the manner in which U.S. based multinational companies are taxed in
the U.S. could have a material impact on our financial results and competitiveness.

As a result of the U.S. Tax Cuts and Jobs Act (U.S. Tax Reform) enacted in December 2017, we incurred a net
estimated tax expense of $93.3 million due to the one-time mandatory transition tax on the deemed repatriation of
undistributed foreign earnings and the re-measurement of U.S. deferred tax assets and liabilities. See Note 9 to the
consolidated financial statements of this Report for additional information.

Based on the new executive branch administration in Washington D.C. and the new Congress for the calendar year
of 2021, our effective tax rates and overall cash taxes may change in the future and could have an impact on our
financial results.

Any litigation, even where a claim is without merit, could result in substantial costs and diversion of
resources.

In the past, we have been notified of claims relating to various matters including intellectual property rights,
contractual matters, labor issues or other matters arising in the ordinary course of business. In the event of any such
claim, we may be required to spend a significant amount of money and resources, even where the claim is without
merit. Accordingly, the resolution of such disputes, even those encountered in the ordinary course of business, could
have a material adverse effect on our business, consolidated financial conditions and results of operations. See Part
I, Item 3. Legal Proceedings.

Compliance or the failure to comply with environmental regulations could cause us significant expense.

We are subject to a variety of federal, state, local and foreign environmental laws and regulations relating to
environmental, waste management, and health and safety concerns, including the handling, storage, discharge and
disposal of hazardous materials used in or derived from our manufacturing processes. If we or companies we acquire
have failed or fail in the future to comply with such laws and regulations, then we could incur liabilities and fines
and our operations could be suspended. Such laws and regulations could also restrict our ability to modify or expand
our facilities, could require us to acquire costly equipment, or could impose other significant expenditures. In
addition, our operations may give rise to claims of property contamination or human exposure to hazardous
chemicals or conditions.

Our worldwide operations are subject to local laws and regulations. Some of our operations are subject to various
environmental laws and related regulations, including: the “RoHS” (EU Directive 2011/65/EC on Restriction of
certain Hazardous Substances); “WEEE” (EU Directive 2002/96/EC on Waste Electrical and Electronic
Equipment); “REACH” (EC Regulation No 1907/2006 on Registration, Evaluation and Authorization of
Chemicals); EU Member States’ Implementation of the foregoing; “Conflict Minerals” as defined in the U.S. Dodd-
Frank Wall Street Reform and Consumer Protection Act § 1502(b), implementing legislation and rules; and the
People’s Republic of China (PRC) Management Methods for the Restriction of the Use of Hazardous Substances in
Electrical and Electronic Products; and other environmental laws and regulations. These laws and regulations
impose administrative burdens on and restrict the sourcing and distribution of products containing certain
substances, including lead, within applicable geographies and require a manufacturer or importer to recycle products
containing those substances.

These directives affect the worldwide electronics and electronics components industries as a whole. If we or our
customers fail to comply with such laws and regulations, we could incur liabilities and fines and our operations
could be suspended.

In addition, as climate change concerns become more prevalent, the U.S. and foreign governments have sought to
limit the effects of any such changes. This increasing governmental focus on climate change may result in new
environmental regulations that may negatively affect us, our suppliers and our customers. This could cause us to
incur additional direct costs or obligations in complying with any new environmental regulations and reporting
requirements, as well as increased indirect costs resulting from our customers, suppliers or both incurring additional
compliance costs that get passed on to us. These costs may adversely impact our operations and financial condition.

If our manufacturing processes and services do not comply with applicable regulatory requirements, or if we
manufacture products containing design or manufacturing defects, demand for our services may decline and
we may be subject to liability claims.

We predominantly manufacture and design products to our customers’ specifications; in some cases, our processes
and facilities must comply with applicable regulatory requirements. For example, medical devices that we
manufacture or design, as well as the facilities and manufacturing processes that we use to produce them, are
regulated by the U.S. Food and Drug Administration or non-U.S. counterparts of this agency. Similarly, items we
manufacture for customers in the A&D industries, as well as the processes we use to produce them, are regulated by
the Department of Defense and the Federal Aviation Authority, which have increased their focus and penalties
related to counterfeit materials. In addition, our customers’ products and the manufacturing processes or
documentation that we use to produce them often are highly complex. As a result, products that we manufacture
may at times contain manufacturing or design defects, and our manufacturing processes may be subject to errors or
noncompliant with applicable statutory and regulatory requirements. Defects in the products we manufacture or
design, whether caused by a design, manufacturing or component failure or error, or deficiencies in our
manufacturing processes, may result in delayed shipments to customers or reduced or cancelled customer orders. If
these defects or deficiencies are significant, our business reputation could also be damaged. The failure of our

products, manufacturing processes or facilities to comply with applicable statutory and regulatory requirements
could subject us to fines or penalties and, in some cases, require us to shut down or incur considerable expense to
correct a product, process or facility. In addition, these defects may result in liability claims against us or expose us
to liability to pay for the recall of a product. The magnitude of any such claim may increase as we expand our
medical and aerospace and defense manufacturing services, as defects in medical, aerospace or defense devices or
systems could seriously harm or kill users of these products and others. Even if our customers are responsible for the
defects, they may not, or may not have resources to, assume responsibility for any costs or liabilities arising from
these defects, which could expose us to additional liability claims.

Technology Risks

If we are unable to maintain our technological and manufacturing process expertise, our business could be
adversely affected.

The market for our manufacturing and engineering services is characterized by rapidly changing technology and
continuing process development. We are continually evaluating the advantages and feasibility of new manufacturing
processes. We believe that our future success will depend upon our ability to develop and provide manufacturing
services that meet our customers’ changing needs. This requires that we maintain technological leadership and
successfully anticipate or respond to technological changes in manufacturing processes on a cost-effective and
timely basis. Our failure to maintain our technological and manufacturing process expertise could have a material
adverse effect on our business.

Our operations are subject to cyberattacks that could have a material adverse effect on our business.

We are increasingly dependent on digital technologies and services to conduct our business. We use these
technologies for internal purposes, including data storage, processing and transmissions, as well as in our
interactions with customers and suppliers. Examples of these digital technologies include ERP, shop floor control,
test equipment, and other similar business applications, our global infrastructure and networks as well as external
systems, analytics, automation, and cloud services. Digital technologies and services are subject to the risk of
cyberattacks and, given the nature of such attacks, some incidents can remain undetected for a period of time despite
our efforts to detect and respond to them in a timely manner. In particular, as discussed further below, our operations
have been, and may in the future be, subject to ransomware or cyber-extortion attacks, which could significantly
disrupt our operations. Generally, such attacks involve restricting access to computer systems or vital data.

We routinely monitor our systems for cyber threats and have processes in place to detect and remediate
vulnerabilities. Nevertheless, we have experienced cyberattacks and attempted breaches, including phishing emails
and other targeted attacks. In addition, in the fourth quarter of fiscal 2019, a ransomware incident encrypted
information on our systems and disrupted customer and employee access to our systems and services, which resulted
in the Company incurring costs relating to this event, including to retain third party consultants and forensic experts
to assist with the restoration and remediation of systems and, with the assistance of law enforcement, to investigate
the attack, as well as increased expenditures for our information technology (IT) infrastructure, systems and
network. This ransomware incident also adversely affected our operations and the Company’s fourth quarter 2019
revenue. See Note 19 to the consolidated financial statements in Item 8 of this Report for additional information.

Future cybersecurity incidents could result in the misappropriation of confidential information of the Company or
that of its customers, employees, business partners or others; litigation and potential liability; enforcement actions
and investigations by regulatory authorities; loss of customers and contracts; damage to the Company’s reputation
and/or otherwise harm its business. We also expect to incur substantial costs in the future to satisfy customer
requirements (including costs arising from the U.S. government’s Cybersecurity Maturity Model Certification
(CMMC) program) and to mitigate against cybersecurity attacks as threats are expected to continue to become more
persistent and sophisticated. If our systems for protecting against cybersecurity risks prove not to be sufficient, we
could be adversely affected by, among other things: loss of or damage to intellectual property, proprietary or
confidential information, or customer, supplier, or employee data; interruption of our business operations; and
increased costs required to prevent, respond to, or mitigate cybersecurity attacks. These risks could harm our
reputation and our relationships with customers, suppliers, employees and other third parties, and may result in
claims against us. These risks could have a material adverse effect on our business, consolidated results of
operations and consolidated financial condition.

Any delay in the upgrade of our information systems could disrupt our operations and cause unanticipated
increases in our costs.

We are currently upgrading our IT infrastructure and enterprise resource planning system, which we anticipate
taking several years. Failure to complete the upgrade timely or at all could leave us with sites without the systems

capability to flexibly support future customer requirements for manufacturing capabilities and data driven analytics,
as well as result in unanticipated increases in costs.

Financial Risks

Our level of indebtedness may limit our flexibility in operating our business and reacting to changes in our
business or industry, or prevent us from making payments on our debt or obtaining additional financing.

As of December 31, 2020, our total outstanding debt (excluding unamortized debt issuance costs and finance leases)
was $136.9 million, all of which represented borrowings under our term loan facility (the Term Loan). Our level of
indebtedness could have important consequences. For example, it could:

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increase our vulnerability to general adverse economic and industry conditions;
impair our ability to obtain additional debt or equity financing in the future for working capital, capital
expenditures, acquisitions or other purposes;
require us to dedicate a material portion of our cash flows from operations to the payment of principal and
interest on our indebtedness, thereby reducing the availability of our cash flows to fund working capital
needs, capital expenditures, acquisitions and other purposes;
expose us to the risk of increased interest rates since the Term Loan has a variable rate;
limit our flexibility in planning for, or reacting to, changes in our business or industry;
place us at a disadvantage compared to our competitors that have less debt; and

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(cid:129) make it more difficult for us to satisfy our debt obligations.

Any of these risks could materially impact our ability to fund our operations or limit our ability to expand our
business, which could have a material adverse effect on our business, financial condition and results of operations.

We are exposed to intangible asset risk; our goodwill may become impaired.

We have recorded intangible assets, including goodwill, in connection with business acquisitions. We are required to
assess goodwill and intangible assets for impairment at least on an annual basis and whenever events or
circumstances indicate that the carrying value may not be recoverable from estimated future cash flows. A
significant and sustained decline in our market capitalization could result in material charges in future periods that
could be adverse to our operating results and financial position. As of December 31, 2020, we had $192.1 million in
goodwill and $70.0 million of identifiable intangible assets. See Note 1(i) to the consolidated financial statements in
Item 8 of this Report.

We may be exposed to interest rate fluctuations.

We have exposure to interest rate risk on our outstanding borrowings under our variable rate credit agreement.
These borrowings’ interest rates are based on the spread, at our option, over the London interbank offered rate
(LIBOR), the bank’s prime rate or the federal funds rate. We are also exposed to interest rate risk on our invested
cash balances.

The elimination of LIBOR could adversely affect our business, results of operations or financial condition.
Borrowings under our credit facilities use LIBOR as a benchmark for establishing the applicable interest rate. The
UK’s Financial Conduct Authority announced that after 2021 it would no longer persuade or compel panel banks to
submit the rates required to calculate LIBOR. The consequences of these developments with respect to LIBOR
cannot be entirely predicted but could result in an increase in the cost of our variable rate indebtedness causing a
negative impact on our financial position, liquidity and results of operations. Specifically, the use of an alternative
reference rate could result in increased costs, including increased interest expense on our borrowings, and increased
borrowing costs in the future. Management continues to evaluate the LIBOR exposure risks.

Risks Related to the Ownership of Our Common Shares

We may experience fluctuations in quarterly results.

Our quarterly results may vary significantly depending on various factors, many of which are beyond our control.
These factors include:

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the volume of customer orders relative to our capacity;
customer introduction and market acceptance of new products;

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(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)

changes in demand for customer products;
seasonality in demand for customer products;
pricing and other competitive pressures;
the timing of our expenditures in anticipation of future orders;
our effectiveness in managing manufacturing processes;
changes in cost and availability of labor and components;
changes in our product mix;
changes in tax laws in the jurisdictions in which we operate;
changes in tariffs, trade agreements and other trade protection measures;
fluctuations in currency exchange rates;
changes in political and economic conditions;
disruptions caused by computer malfunctions or cybersecurity incidents; and
local factors and events that may affect our production volume, such as local holidays, pandemics or
natural disasters.

Additionally, as is the case with many high technology companies, a significant portion of our shipments typically
occur in the last few weeks of a given quarter. Accordingly, sales shifts from quarter to quarter may not be readily
apparent until the end of a given quarter and may have a significant effect on projected and reported results.
Further, the price of our common shares may experience volatility in response to fluctuating quarterly results.

Provisions in our governing documents and state law may make it harder for others to obtain control of the
Company.

Certain provisions of our governing documents and the Texas Business Organizations Code may delay, inhibit or
prevent someone from gaining control of the Company through a tender offer, business combination, proxy contest
or some other method, even if shareholders might consider such a development beneficial. These provisions include:

(cid:129)

a provision in our certificate of formation granting the Board of Directors authority to issue preferred stock
in one or more series and to fix the relative rights and preferences of such preferred stock;
provisions in our bylaws restricting shareholders from acting by less than unanimous written consent and
requiring advance notification of shareholder nominations and proposals;
a provision in our bylaws restricting anyone, other than the Chief Executive Officer, the President, the
Board of Directors or the holders of at least 10% of all outstanding shares entitled to vote, from calling a
special meeting of the shareholders;
a statutory restriction on the ability of shareholders to take action by less than unanimous written consent;
and
a statutory restriction on business combinations with some types of interested shareholders.

General Risk Factors

We are exposed to general economic and market conditions that could have a material adverse impact on our
business, operating results and financial condition.

Uncertainty over the erosion of global consumer confidence, geopolitical events, global pandemics, such as COVID-
19, the availability and cost of credit, concerns about volatile energy costs, declining asset values, inflation, rising
unemployment, and the stability and solvency of financial institutions, financial markets, businesses, and sovereign
nations can slow global economic growth and result in recessionary conditions. Any of these potential negative
economic conditions may reduce demand for our customers’ products and adversely affect our sales. Consequently,
our past operating results, earnings and cash flows may not be indicative of our future operating results, earnings
and cash flows.

In addition to our customers or potential customers reducing or delaying orders, a number of other negative effects
on our business could materialize, including the insolvency of key suppliers, which could result in production
delays, shorter payment terms from suppliers due to reduced availability of credit default insurance in the market,
the inability of customers to obtain credit, and the insolvency of one or more customers. Any of these effects could
impact our ability to effectively manage inventory levels and collect receivables, increase our need for cash, and
decrease our net revenue and profitability.

In cases where the evidence suggests a customer may not be able to satisfy its obligation to us, we establish reserves
in an amount we determine appropriate for the perceived risk. There can be no assurance that our reserves will be
adequate. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional receivable and inventory reserves may be required and restructuring charges may be
incurred.

Acquisitions may pose difficulties for us.

Our capabilities have historically grown through acquisitions, and we may pursue additional acquisitions in the
future. Our projections of results and successful integration of acquired operations into our network involve risks,
including:

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integration and management of the operations;
as noted above, demand can vary, and our projections of results may be wrong due to deferred or reduced
demand;
retention of key personnel;
integration of purchasing operations and information systems;
retention of the customer base of acquired businesses;

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(cid:129) management of an increasingly larger and more geographically disparate business;
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the possibility that past transactions or practices may lead to future commercial or regulatory risks;
diversion of management’s attention from other ongoing business concerns, and
inadequate internal control over financial reporting and our ability to bring such controls into compliance
with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner.

Our profitability will suffer if we are unable to successfully integrate an acquisition, if the acquisition does not
further our business strategy as we expected or if we do not achieve sufficient revenue to offset the increased
expenses associated with these acquisitions. We may overpay for, or otherwise not realize the expected return on,
our investments, which could adversely affect our operating results and potentially cause impairments to assets that
we record as a part of an acquisition including intangible assets and goodwill.

Our success will continue to depend to a significant extent on our key personnel.

We depend significantly on our executive officers and other key personnel. The unexpected loss of the services of
any one of these executive officers or other key personnel, or the failure to attract and retain new personnel, could
have an adverse effect on us.

Our business or stock price could be negatively affected by the actions of activist shareholders or others.

Responding to actions by activist shareholders or others can be costly and time-consuming, disrupt our operations
and divert the attention of management and our employees. Our ability to execute our strategic plan could also be
impaired. In addition, a proxy contest for the election of directors would require us to incur significant fees and
expenses, as well as requiring significant time and attention by management and our Board of Directors. Perceived
uncertainties as to our future direction also could affect the market price and volatility of our common shares, our
ability to attract and retain qualified personnel and business partners and may affect our relationships with vendors,
customers or others.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our customers market numerous products throughout the world and therefore need to access manufacturing services
on a global basis. To enhance our service offerings, we seek to locate our facilities either near our customers and our
customers’ end markets in major centers for the electronics industry or, where appropriate, in lower cost locations.

The following chart summarizes the approximate square footage of our principal manufacturing facilities by
country:

Location
Americas

United States:
Alabama
Arizona
California
Minnesota
New Hampshire
Texas
Mexico

Asia

China
Malaysia
Thailand

Europe

Netherlands
Romania

Total

Sq. Ft.

195,000
170,000
388,000
459,000
161,000
155,000
492,000

326,000
347,000
756,000

159,000
143,000
3,751,000

Our principal manufacturing facilities consist of 1.9 million square feet in facilities that we own, with the remaining
1.9 million square feet in leased facilities whose terms expire between 2021 and 2036. We currently lease our
corporate headquarters in Tempe, Arizona. This lease consists of approximately 64,000 square feet. We lease other
facilities with a total of 59,000 square feet dedicated to engineering, sales and procurement services.

Item 3. Legal Proceedings.

We are involved in various legal actions arising in the ordinary course of business. Information about our legal
proceedings is included in Note 17 to the consolidated financial statements in Item 8 of this Report and is
incorporated by reference herein. In the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on our consolidated financial position or results of operations.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.

Our common shares are listed on the New York Stock Exchange under the symbol “BHE.”

The last reported sale price of our common shares on February 25, 2021, as reported by the New York Stock
Exchange, was $27.96. There were approximately 500 record holders of our common shares as of
February 25, 2021. Because many of our common shares are held by brokers and other institutions on behalf of
shareholders, we are unable to estimate the total number of shareholders represented by these record holders.

Dividends

We began declaring and paying quarterly dividends of $0.15 per share during the first quarter of 2018. In the first
quarter of 2020, we increased the quarterly dividend from $0.15 to $0.16 per share. During 2020, cash dividends
paid totaled $23.0 million. The Board of Directors currently intends to continue paying quarterly dividends.
However, the Company’s future dividend policy is subject to its compliance with applicable law, and depending on,
among other things, our results of operations, financial condition, level of indebtedness, capital requirements,
contractual restrictions, restrictions in the our debt agreements, and other factors that the Board of Directors may
deem relevant, including the impact of the COVID-19 pandemic. Dividend payments are not mandatory or
guaranteed; there can be no assurance that we will continue to pay a dividend in the future.

Issuer Purchases of Equity Securities

The following table provides information about the Company’s repurchase of its equity securities that are registered
pursuant to Section 12 of the Exchange Act during the quarter ending December 31, 2020, at a total cost of
$5.9 million:

(a)
Total Number of
Shares (or
Units)
Purchased(1)

(b)
Average Price
Paid per Share
(or Unit)(2)

(d)
Maximum
Number (or
Approximate
Dollar Value)
of Shares (or
Units) that
May Yet Be
Purchased
Under the
Plans or
Programs(3)

— $
129,900
110,100
240,000 $

—
23.99
25.30
24.58

— $210.1 million
129,900 $207.0 million
110,100 $204.2 million
240,000

Period
October 1 to 31, 2020
November 1 to 30, 2020
December 1 to 31, 2020
Total

(1) All share repurchases were made on the open market.
(2) Average price paid per share is calculated on a settlement basis and excludes commissions.
(3) On March 6, 2018, the Board of Directors approved an expanded stock repurchase authorization granting the

Company authority to repurchase up to $250 million in common stock in addition to the $100 million previously
approved on December 7, 2015. On October 26, 2018, the Board of Directors authorized the repurchase of an
additional $100 million of the Company’s common stock. On February 19, 2020, the Board of Directors
authorized the repurchase of an additional $150 million of the Company’s common stock. Net of shares
repurchased to date, the total remaining authorization as of December 31, 2020 is $204.2 million. Stock
purchases may be made in the open market, in privately negotiated transactions or block transactions, at the
discretion of the Company’s management and as market conditions warrant. Purchases are funded from available
cash and may be commenced, suspended or discontinued at any time without prior notice. Shares of stock
repurchased under the program are retired.

During 2020, the Company repurchased a total of 1.0 million common shares for an aggregate of $25.2 million at an
average price of $26.16 per share. Since 2016, the Company has repurchased a total of 16.8 million common shares
for $430.5 million at an average price of $25.55 per share.

Performance Graph

The following graph compares the cumulative total shareholder return on our common shares for the five-year
period commencing December 31, 2015 and ending December 31, 2020, with the cumulative total return of the
Standard & Poor’s 500 Stock Index (which does not include Benchmark), and the Peer Group Index, which is
composed of Celestica Inc., Flex Ltd., Jabil Circuit, Inc., Plexus Corp and Sanmina Corporation. Dividend
reinvestment has been assumed.

$240.00

$180.00

$120.00

$60.00

$—

DEC - 15

DEC - 16

DEC - 17

DEC - 18

DEC - 19

DEC - 20

Benchmark Electronics, Inc.

Peer Group

S&P 500

Benchmark Electronics, Inc.
Peer Group
S&P 500

Dec-16

Dec-17

Dec-15
Dec-20
$ 100.00 $ 147.60 $ 140.80 $ 102.50 $ 166.20 $ 130.70
$ 100.00 $ 109.50 $ 130.80 $ 122.70 $ 158.10 $ 183.80
$ 100.00 $ 126.10 $ 142.00 $ 91.00 $ 141.00 $ 162.50

Dec-18

Dec-19

Item 6. Selected Financial Data.

(in thousands, except per share data)
Selected Statements of Income Data
Sales
Cost of sales(1)
Gross profit

Selling, general and administrative expenses(1)
Amortization of intangible assets
Restructuring charges and other costs(2)
Ransomware related incident costs (recovery), net(3)

Income from operations

Interest expense
Interest income
Other income (expense)
Income tax expense(4)
Net income (loss)
Earnings (loss) per share:(5)

Basic
Diluted

Weighted-average number of shares outstanding:

Basic
Diluted

Cash dividends per common share

(in thousands)
Selected Balance Sheet Data
Working capital
Total assets
Total debt
Shareholders’ equity

2020

Year Ended December 31,
2018

2019

2017

2016

$ 2,053,131 $ 2,268,095 $ 2,566,465 $ 2,454,479 $ 2,322,285
1,878,083 2,082,567 2,360,629 2,242,450 2,121,735
200,550
99,313
11,838
12,539
—
76,860
(9,304)
2,136
(282)
5,477
63,933

175,048
122,195
9,099
19,970
(1,350)
25,134
(8,364)
1,196
(673)
3,238
14,055 $

185,528
126,740
9,461
13,101
7,681
28,545
(6,664)
3,829
1,559
3,844
23,425 $

212,029
116,510
10,065
8,628
—
76,826
(9,405)
5,370
(1,786)
102,906
(31,901) $

205,836
128,448
9,485
9,365
—
58,538
(10,473)
6,848
628
32,724
22,817 $

$
$

0.38 $
0.38 $

0.61 $
0.60 $

0.49 $
0.49 $

(0.64) $
(0.64) $

1.30
1.28

36,524
36,817
0.64 $

38,338
38,763
0.60 $

46,332
46,655
0.60 $

49,680
49,680
— $

49,298
49,825
—

2020

2019

December 31,
2018

2017

2016

$ 721,215 $ 735,837 $ 866,391 $1,152,340 $1,133,043
1,744,235 1,759,874 1,899,783 2,109,304 2,008,925
223,648
$ 989,588 $1,014,832 $1,132,225 $1,339,138 $1,375,720

140,212

147,737

154,070

211,680

(1) For comparative purposes and based on ongoing evaluation of personnel roles involved in the production

process, prior year expenses associated with certain personnel have been reclassified from selling, general and
administrative expenses to cost of goods sold to conform to the current year presentation.

(2) See Note 18 to the consolidated financial statements for a discussion of the restructuring charges occurring in

2020, 2019 and 2018. In 2020, we incurred $5.7 million and $1.0 million in costs related to asset impairments in
the Americas and Asia, respectively. In 2019, we incurred $4.6 million in charges primarily related to our Chief
Executive Officer (CEO) transition and our 2019 proxy activity. During 2018 and 2017, we incurred $2.8 million
and $3.7 million, respectively, in costs related to the relocation and transition of our corporate headquarters to
Arizona. In 2018, we recognized $1.4 million related to a litigation arbitration decision against the Company. In
2016, we also recognized $4.3 million of costs in connection with a proxy contest relating to our 2016 annual
shareholders meeting, $3.0 million in connection with the separation of our former CEO in September 2016 and
$0.4 million in other charges.

(3) See Note 19 to the consolidated financial statements for a discussion of the ransomware related incident costs

(recovery), net occurring in 2020 and 2019.

(4) See Note 9 to the consolidated financial statements for a discussion of income taxes. During the first quarter of
2018, we changed our historical repatriation strategy. We have historically asserted our intention to indefinitely
reinvest undistributed foreign earnings. We no longer consider these earnings to be indefinitely reinvested in our
foreign subsidiaries. As a result of this change in assertion for undistributed earnings prior to December 31,
2017, we recorded a $30.8 million deferred tax expense for foreign withholding tax from Asia and $9.4 million
for deferred U.S. state income tax expense in the first quarter of 2018. During the fourth quarter of 2018, we
recorded estimated foreign tax credits totaling $9.2 million associated with the foreign withholding taxes. During
the fourth quarter of 2017, the Company recorded the estimated impact of the U.S. Tax Reform totaling $97.7
million. During the fourth quarter of 2016, the Company reduced its unrecognized tax benefits reserve by $8.3
million (including penalties and interest).

(5) See Note 1(j) to the consolidated financial statements for the basis of computing earnings per share.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidated financial statements and Notes thereto
in Part II, Item 8 of this Report. You should also bear in mind the Risk Factors set forth in Part I, Item 1A, any of
which could materially and adversely affect the Company’s business, operating results, financial condition and the
actual results of the matters addressed by the forward-looking statements contained in the following discussion.

In March 2019, the SEC amended its rules to modernize and simplify certain reporting requirements for public
companies. As part of this change, registrants may exclude discussion of the earliest of the three years in
Management’s Discussion and Analysis (MD&A). For further discussion and analysis regarding our financial
condition and results of operations for the year ended December 31, 2019 as compared to the year ended December
31, 2018, refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of
Operations, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on
March 2, 2020.

COVID-19 Pandemic Update

In late 2019, there was an outbreak of a new strain of coronavirus (COVID-19) first identified in Wuhan, Hubei
Province, China, which has since spread globally. On March 11, 2020, the World Health Organization declared
COVID-19 a pandemic. Further, the COVID-19 outbreak has resulted in government authorities around the world
implementing numerous measures to try to reduce the spread of COVID-19, such as travel bans and restrictions,
quarantines, “shelter-in-place,” “stay-at-home,” total lock-down orders, business limitations or shutdowns and
similar orders. As a result, the COVID-19 pandemic has negatively impacted the global economy, disrupted global
supply chains and workforce participation, and created significant volatility and disruption of financial markets. In
an effort to first and foremost protect the health and safety of our employees, we also took proactive action to adopt
social distancing policies at our locations globally, including working from home for certain employees, limiting the
number of employees attending meetings, reducing the number of people in our locations at any one time, and
significantly limiting employee travel.

Benchmark provides critical infrastructure products and essential services in each of our locations. However, as a
result of the COVID-19 pandemic, including the related responses from government authorities, the Company’s
operations were impacted worldwide starting in the first quarter of 2020. These impacts began with a shut-down of
the Company’s manufacturing facilities in Suzhou, China early in the first quarter of 2020 (which ramped back to
full capacity by mid-March). However, the disruptive impacts caused by the COVID-19 pandemic have since
affected our operations in all other regions. For example, starting in mid-March, our Penang, Malaysia operation,
which includes our largest precision machining facility, was significantly disrupted. As a result, our Penang,
Malaysia operation had been operating at approximately 30% of capacity through the end of the first quarter of
2020, at approximately 50% of capacity through April of 2020 and subsequently ramped to full production capacity
within a couple of weeks thereafter. Our California operations experienced significant disruptions through April
2020 due to “shelter-in-place” and “stay-at-home” orders and ordinances. Also, our operations in Tijuana and
Guadalajara, Mexico have experienced significant disruptions due to similar “shelter-in-place” and “stay-at-home”
orders and ordinances. We resumed operations in Tijuana and Guadalajara during the middle of May of 2020,
ramped production in phases during 2020, and are currently nearing full capacity.

As a result of the COVID-19 pandemic, our revenue during 2020 was negatively impacted primarily as a result of
operational inefficiencies relating to reduced productivity levels throughout our facilities and supply chain
constraints, which affected our ability to support customer demand. Additionally, the COVID-19 pandemic
negatively impacted our 2020 results due to increased direct costs associated with labor expenses and personal
protective equipment for our employees, as well as under absorption of fixed costs.

While our manufacturing and engineering services operations have essentially returned to pre-COVID-19
productivity levels, the COVID-19 pandemic continues to affect the Company’s operations into 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in the
United States in response to the COVID-19 pandemic. The CARES Act among other things, permits NOL
carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021, and contains
modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The Company has
evaluated the impact of these provisions and has determined these provisions did not have any impact on the year
ended December 31, 2020. In addition, the CARES Act allows for employee retention tax credits to be taken in U.S.
payroll tax filings and allows for the deferral of the employer portion of social security taxes with 50% to be paid at

the end of calendar years 2021 and 2022, respectively. Accordingly, the Company has deferred the payment of the
employer portion of social security taxes for the year ended December 31, 2020 until the end of 2021 and 2022,
respectively. The Company has also determined it is entitled to employee retention credits and has filed for the
credits in the second quarter payroll tax reports pursuant to the guidance provided by the Internal Revenue Service.
The amount of credits has been recorded in operating expenses for the year ended December 31, 2020.

International authorities in various jurisdictions have also allowed for cash grants, delay of tax filings, and delay of
tax payments for future quarters. We have taken advantage of these benefits by delaying our tax filings and
respective tax payments in various jurisdictions.

In response to uncertainties related to the impact of the COVID-19 virus, we have taken a series of actions to lower
our cost structure and reduce capital expenditures. On April 29, 2020, the Company announced a temporary 10%
salary reduction for all executive officers (including our named executive officers) effective April 27, 2020 through
December 31, 2020 and the Company’s Board of Directors approved a temporary 10% reduction in their quarterly
cash compensation effective April 27, 2020 through December 31, 2020. Other senior leaders in the Company took
a 7% salary reduction through September 29, 2020. Additional cost reduction actions in our U.S. factories consisted
of employees taking rotating time off depending on factory loading levels. Cost reduction actions in our non-U.S.
locations depend on local law requirements. Additionally, we have reduced other discretionary expenses, such as
travel. We also implemented actions to conserve our cash and cash equivalents such as reduced planned capital
expenditures, deferred certain planned investments, temporarily suspended our share repurchase activity, and
deferred payroll and income tax payments in accordance with the CARES Act. Finally, we continue to focus on
certain other procedures to manage potential risks related to working capital such as closely monitoring the financial
stability, payment terms and credit limits of our customers.

We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities,
including federal, state and local public health authorities, and may take additional actions based on their
recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our
operating plan. As such, the exact extent of the impact of the COVID-19 pandemic on our business, financial
condition and results of operations, is currently unknown and will depend on future developments, which are highly
uncertain, continuously evolving and cannot be predicted. This includes, but is not limited to, the duration and
spread of the COVID-19 pandemic, its severity, the actions to contain the virus or treat its impact, including the
availability of vaccinations and the rate of inoculations, and how quickly and to what extent normal economic and
operating conditions can resume which may not return fully to pre-pandemic levels.

Accordingly, our current results and financial condition discussed herein may not be indicative of future operating
results and trends. See “Risk Factors” in Part I, Item 1A of this Report for additional risks we face due to the
COVID-19 pandemic.

Ransomware Incident

During the fourth quarter ended December 31, 2019, some of the Company’s systems were affected by a
ransomware incident that encrypted information on its systems and disrupted customer and employee access to its
applications and services. The Company immediately took steps to isolate the impact and implemented measures to
prevent additional systems from being affected, including taking its network offline as a precaution. In connection
with this incident, third party consultants and forensic experts were engaged to assist with the restoration and
remediation of the Company’s systems and, with the assistance of law enforcement, to investigate the incident. The
Company has found no evidence that customer or employee data was exfiltrated from its network.

The Company restored connectivity and resumed operations quickly following the ransomware incident. However,
fourth quarter 2019 operations were adversely affected by the inefficiencies caused by taking the network offline for
a period of time. As a result, the Company’s fourth quarter 2019 revenue was also adversely affected as the
Company was unable to fulfill a portion of customer demand during the quarter.

In 2019, ransomware incident related costs incurred totaled $7.7 million, net of estimated insurance recoveries of
$5.0 million. These costs were primarily comprised of the certain employee related expenses and various third party
consulting services, including forensic experts, legal counsel and other IT professional expenses.

During the year ended December 31, 2020, the Company collected $6.6 million of insurance recoveries. Further
insurance recoveries will be recorded when considered probable.

2020 OVERVIEW

Sales for 2020 were $2.1 billion, a 9% decrease from sales of $2.3 billion in 2019. During 2020, sales to customers
in our various industry sectors fluctuated from 2019 as follows:

Industrials decreased by 18%,

(cid:129)
(cid:129) A&D decreased by 2%,
(cid:129) Medical increased by 11%,
(cid:129)
Semi-cap increased by 33%,
(cid:129)
Computing decreased by 53%, and
(cid:129)
Telecommunications decreased by 26%.

The overall revenue decrease was due primarily to lower demand from pandemic impacted customers in commercial
aerospace, oil and gas industrials, and elective medical sectors (as discussed below). Higher-value market revenues
were up 3% year-over-year from strength in the Semi-Cap and Medical sectors. Traditional market revenues were
down as a result of program transitions and the completion of a legacy contract with a large Computing customer
discussed further below.

Our sales depend on the success of our customers, some of which operate in businesses associated with rapid
technological change and consequent product obsolescence. Developments adverse to our major customers or their
products, or the failure of a major customer to pay for components or services, including in each case as a result of
the COVID-19 pandemic, can adversely affect us. A substantial percentage of our sales are made to a small number
of customers, and the loss of a major customer, if not replaced, would adversely affect us. Sales to our ten largest
customers represented 41% and 38% of our sales in 2020 and 2019, respectively. In 2020, sales to Applied Materials
represented 12% of our sales. In 2019, no single customer represented 10% or more of our sales.

As part of our ongoing process to review contracts that are marginal and dilutive to our gross margin, we made the
decision to not renew a legacy contract with a large Computing customer that was to expire at the end of 2019.
During the second quarter of 2019, we completed the final build out of this legacy contract and in the third quarter
had an immaterial amount of revenue from this contract as the transition was completed.

We experience fluctuations in gross profit from period to period. Different programs contribute different gross
profits depending on the type of services involved, location of production, size of the program, complexity of the
product and level of material costs associated with the various products. Moreover, new programs can contribute
relatively less to our gross profit in their early stages when manufacturing volumes are usually lower, resulting in
inefficiencies and unabsorbed manufacturing overhead costs. In addition, a number of our new program ramps
remain subject to competitive constraints that can exert downward pressure on our margins. During periods of low
production volume, we generally have idle capacity and reduced gross profit. Gross profit can also be impacted by
other situations, such as the ransomware incident experienced in 2019.

We have undertaken initiatives to restructure our business operations with the intention of improving utilization and
reducing costs. During 2020, we recognized $13.2 million of restructuring and other costs due in part to expenses
associated with various site closures and restructuring activities. In addition, we incurred $5.7 million and $1.0
million in costs related to asset impairments in the Americas and Asia, respectively.

RESULTS OF OPERATIONS

The following table presents the percentage relationship that certain items in our consolidated statements of income
bear to sales for the periods indicated. The financial information and the discussion below should be read in
conjunction with the consolidated financial statements and Notes thereto in Part II, Item 8 of this Report.

Sales
Cost of sales

Gross profit

Selling, general and administrative expenses
Amortization of intangible assets
Restructuring charges and other costs
Ransomware related incident costs (recovery), net

Income from operations

Other expense, net

Income before income taxes

Income tax expense
Net income

2020 Compared With 2019

Sales

Year ended December 31,
2019

2018

2020

100.0%
91.5
8.5
6.0
0.4
1.0
(0.1)
1.2
(0.4)
0.8
0.2
0.7%

100.0%
91.8
8.2
5.6
0.4
0.6
0.3
1.3
(0.1)
1.2
0.2
1.0%

100.0%
92.0
8.0
5.0
0.4
0.4
0.0
2.3
(0.1)
2.2
1.3
0.9%

As noted above, sales decreased 9% in 2020. The percentages of our sales by sector were as follows:

Higher-Value Markets
Industrials
A&D
Medical
Semi-Cap

Traditional Markets
Computing
Telecommunications

Total

2020

2019

18%
21
24
18
81

8
11
19
100%

20%
19
20
12
71

16
13
29
100%

Industrials. 2020 sales decreased 18% to $373.1 million from $453.6 million in 2019. The decrease was primarily
due to softer demand from customers in the oil and gas industry partially related to the impact of the COVID-19
pandemic with additional impacts from the commercial and building infrastructure markets.

Aerospace and Defense. 2020 sales decreased 2% to $423.6 million from $431.9 million in 2019 primarily due to
the decline of the commercial aerospace sector related to the impact of the COVID-19 pandemic.

Medical. 2020 sales increased 11% to $498.5 million from $448.2 million in 2019 primarily due to higher demand
and program ramps from new and existing programs including programs used in the fight against COVID-19
partially offset by lower demand for elective medical programs.

Semiconductor Capital Equipment. 2020 sales increased 33% to $369.0 million from $277.8 million in 2019. The
increase was primarily due to higher demand with existing programs across our customer base.

Computing. 2020 sales decreased 53% to $171.3 million from $361.2 million in 2019. The decrease was primarily
due to our planned exit of a legacy Computing contract that was completed in 2019.

Telecommunications. 2020 sales decreased 26% to $217.7 million from $295.4 million in 2019. The decrease was
primarily due to program transitions.

Our international operations are subject to the risks of doing business abroad. See Item 1A for factors pertaining to
international sales, fluctuations in foreign currency exchange rates and a discussion of potential adverse effects in
operating results associated with the risks of doing business abroad. During 2020 and 2019, 52% and 47%,
respectively, of our sales were from international operations.

Gross Profit

Gross profit decreased 5.6% to $175.0 million for 2020 from $185.5 million in 2019. Gross margin decreased to
8.5% in 2020 from 8.8% in 2019 primarily due to lower revenues and the disruptive impacts caused by COVID-19
driven by reduced productivity levels throughout our facilities, increased direct costs associated with labor expenses
and personal protective equipment for our employees and under absorption of fixed costs.

Selling, General and Administrative (SG&A) Expenses

SG&A decreased to $122.2 million in 2020 from $126.7 million in 2019. The decrease was primarily due to a
decrease in the provision to accounts receivable for doubtful accounts, partially offset by the increase in variable
compensation and higher than expected COVID-19 related expenses. During 2020 and 2019, the provisions to
accounts receivable for doubtful accounts (net of recoveries) were $2.2 million and $8.6 million, respectively.

Amortization of Intangible Assets

Amortization of intangible assets was $9.1 million in 2020 and $9.5 million in 2019.

Restructuring Charges and Other Costs

During 2020, we recognized $13.2 million of restructuring and other costs due primarily to expenses associated with
announced site closures, reduction in force and other restructuring activities. In addition, we incurred $5.7 million
and $1.0 million in costs related to asset impairments in the Americas and Asia, respectively. During 2019, we
recognized $8.5 million of restructuring charges in connection with the announced closure of two facilities and other
reductions in workforce of certain facilities primarily in the Americas. In addition, we incurred $4.6 million in
charges primarily related to our CEO transition and our 2019 proxy activity. See Note 18 to the consolidated
financial statements in Part II, Item 8 of this Report for additional information on our restructuring charges.

Ransomware Incident Related Costs, Net

During the fourth quarter ended December 31, 2019, ransomware incident related costs incurred totaled $7.7
million, net of estimated insurance recoveries of $5.0 million. These costs were primarily comprised of certain
employee related expenses and various third party consulting services including forensic experts, legal counsel and
other IT professional expenses. During 2020, we collected $6.6 million of insurance recoveries. Further insurance
recoveries will be recorded when considered probable.

Interest Expense

Interest expense increased to $8.4 million during 2020 from $6.7 million during 2019 due to higher outstanding
amounts on our revolving credit facility during 2020 and increased interest rates based on our higher debt leverage
ratio as defined in our credit agreement.

Interest Income

Interest income decreased to $1.2 million in 2020 from $3.8 million in 2019 due to lower invested cash equivalents
and lower interest rates.

Income Tax Expense

Income tax expense of $3.2 million in 2020 represented an 18.3% effective tax rate for 2020, compared with $3.8
million for 2019 representing an effective tax rate of 14.1%. The higher effective tax rate in 2020 is the result of the
mix of profits in our foreign and U.S. jurisdictions with a higher amount of foreign earnings being taxed in the U.S.
from the Global Intangible Low Tax Income calculation method.

We have been granted certain tax incentives, including tax holidays, for our subsidiaries in Malaysia and Thailand
that will expire at various dates, unless extended or otherwise renegotiated, through 2021 in Malaysia and 2028 in
Thailand. See Note 9 to the consolidated financial statements in Part II, Item 8 of this Report.

Net Income

We reported a net income of $14.1 million, or $0.38 per diluted share for 2020, compared with a net income of
$23.4 million, or $0.60 per diluted share, for 2019. The net decrease of $9.3 million in 2020 is primarily the result of
items discussed above.

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed our organic growth and operations through funds generated from operations and
occasional borrowings under our revolving credit facility. Cash and cash equivalents and restricted cash totaled
$396.0 million at December 31, 2020 and $364.0 million at December 31, 2019, of which $207.3 million and $197.8
million, respectively, were held outside the U.S. in various foreign subsidiaries. During 2020 and 2019, we
repatriated $25.0 million and $52.1 million, respectively, of foreign earnings to the U.S.

Cash provided by operating activities was $120.4 million in 2020. The cash provided by operations during 2020
consisted primarily of $14.1 million of net income, adjusted for $48.8 million of depreciation and amortization, a
$13.6 million decrease in accounts receivable, an $18.3 million decrease in contract assets, a $46.6 million increase
in advance payments from customers, partially offset by a $10.8 million increase in inventories, a $15.6 million
decrease in accounts payable, and a $1.6 million decrease in income tax liabilities, net. Working capital was $0.7
billion at both December 31, 2020 and December 31, 2019.

We purchase components only after customer orders or forecasts are received, which mitigates, but does not
eliminate, the risk of loss on inventories. Supplies of electronic components and other materials used in operations
are subject to industry-wide shortages. In certain instances, suppliers may allocate available quantities to us. If
shortages of these components and other material supplies used in operations occur, vendors may not ship the
quantities we need for production, and we may be forced to delay shipments, which can increase backorders and
impact cash flows.

Cash used in investing activities was $34.4 million in 2020 primarily due to purchases of additional property, plant
and equipment totaling $34.6 million. The purchases of property, plant and equipment were primarily for machinery
and equipment in the Americas and Asia.

Cash used in financing activities was $57.5 million in 2020. Principal payments on the credit agreement and finance
lease obligations totaled $117.5 million and $1.4 million, respectively, borrowings under the credit agreement and
finance leases totaled $110.0 million and $0.9 million, respectively, share repurchases totaled $25.2 million,
dividends paid totaled $23.0 million, and we received $1.0 million from the exercise of stock options.

Under the terms of our $650.0 million credit agreement (Credit Agreement), in addition to the $150.0 million Term
Loan facility, we have a $500.0 million five-year revolving credit facility to be used for general corporate purposes,
both with a maturity date of July 20, 2023. The Credit Agreement includes an accordion feature pursuant to which
total commitments under the facility may be increased by an additional $275.0 million, subject to satisfaction of
certain conditions. As of December 31, 2020, we had $136.9 million in borrowings outstanding under the Term
Loan facility and $3.7 million in letters of credit outstanding under our revolving credit facility. $496.3 million
remains available for future borrowings under the revolving credit facility. See Note 6 to the consolidated financial
statements in Part II, Item 8 of this Report for more information regarding the terms of the Credit Agreement.

The Credit Agreement contains certain financial covenants related to interest coverage and debt leverage, and
certain customary affirmative and negative covenants, including restrictions on our ability to incur additional debt
and liens, pay dividends, repurchase shares, sell assets and merge or consolidate with other persons. Amounts due
under the Credit Agreement could be accelerated upon specified events of default, including a failure to pay
amounts due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or
insolvency, subject, in some cases, to cure periods. As of December 31, 2020, we were in compliance with all of
these covenants and restrictions.

Our operations, and the operations of businesses we acquire, are subject to certain foreign, federal, state and local
regulatory requirements relating to environmental, waste management, health and safety matters. We believe we
operate in substantial compliance with all applicable requirements and we seek to ensure that newly acquired
businesses comply or will comply substantially with applicable requirements. To date, the costs of compliance and
workplace and environmental remediation have not been material to us. However, material costs and liabilities may
arise from these requirements or from new, modified or more stringent requirements in the future. In addition, our

past, current and future operations, and the operations of businesses we have or may acquire, may give rise to claims
of exposure by employees or the public, or to other claims or liabilities relating to environmental, waste
management or health and safety concerns.

As of December 31, 2020, we had cash and cash equivalents, including restricted cash, totaling $396.0 million and
we have $496.3 million available for borrowings under the Credit Agreement. During the next 12 months, we
believe our capital expenditures will approximate $45 million to $50 million, principally for machinery and
equipment to help increase our production capacity to support anticipated revenue growth and our ongoing business
around the globe.

On March 6, 2018, our Board of Directors approved an expanded stock repurchase program granting us the authority
to repurchase up to $250 million in common stock in addition to the $100 million approved on December 7, 2015.
On October 26, 2018, the Board of Directors authorized an additional $100 million shares for repurchase above our
existing program. On February 19, 2020, the Board of Directors authorized the repurchase of an additional $150
million of the Company’s common stock. As of December 31, 2020, we had $204.2 million remaining under the
share repurchase authorization to purchase additional shares. We are under no commitment or obligation to
repurchase any particular amount of common stock.

The Company began declaring and paying quarterly dividends during the first quarter of 2018. In February 2020, the
Board of Directors approved a quarterly dividend increase, raising the quarterly dividend from $0.15 to $0.16 per
common share. During 2020 and 2019, cash dividends paid totaled $23.0 million and $23.3 million, respectively. On
December 11, 2020, the Company declared a quarterly cash dividend of $0.16 per share of the Company’s common
stock to shareholders of record as of December 30, 2020. The dividend of $5.8 million was paid on January 13,
2021. The Board of Directors currently intends to continue paying quarterly dividends. However, the Company’s
future dividend policy is subject to the Company’s compliance with applicable law, and depending on, among other
things, the Company’s results of operations, financial condition, level of indebtedness, capital requirements,
contractual restrictions, restrictions in the Company’s debt agreements, and other factors that the Board of Directors
may deem relevant, including the impact of the COVID-19 pandemic. Dividend payments are not mandatory or
guaranteed; there can be no assurance that the Company will continue to pay a dividend in the future.

Management believes that our existing cash balances and funds generated from operations will be sufficient to
permit us to meet our liquidity requirements over the next 12 months. Management further believes that our ongoing
cash flows from operations and any borrowings we may incur under our revolving credit facility will enable us to
meet operating cash requirements in future years. If we consummated significant acquisitions in the future, our
capital needs would increase and could possibly result in our need to increase available borrowings under our Credit
Agreement or access public or private debt and equity markets. There can be no assurance, however, that we would
be successful in raising additional debt or equity on acceptable terms.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis of financial condition and results of operations is based upon our
consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Our significant
accounting policies are summarized in Note 1 to the consolidated financial statements in Part II, Item 8 of this
Report. The preparation of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable,
inventories, revenue recognition, income taxes, long-lived assets, stock-based compensation and contingencies and
litigation. We base our estimates on historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially
from these estimates. We believe the following critical accounting policies affect our more significant judgments
and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

Our revenue is recognized when a contract exists and when, or as, we satisfy a performance obligation by
transferring control of a product or service to the customer. A contract exists when it has approval and commitment
from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial
substance and collectability of consideration is probable. A performance obligation is a promise in a contract to
transfer a distinct good or service to the customer. For the Company, the arrangement with the customer is generally

documented through a master agreement which outlines the general terms and conditions of the arrangement and a
specific purchase commitment from the customer.

Our performance obligations are satisfied over time as work progresses or at a point in time. The determination of
how our performance obligations are satisfied requires judgment and is assessed on a contract by contract basis.
Under the majority of our contracts, our performance obligations are satisfied over time as work progresses since the
customer controls all of the work-in-progress as products are being built. For these contracts, the selection of the
method to measure progress towards completion requires judgment and is based on the nature of the products or
services to be provided. We use a cost-based input measurement of progress because is best represents the transfer
of assets to the customer. For our other contracts, revenue is recognized upon transfer of control of the product or
service, which is generally upon shipment or delivery pending on the terms of the underlying contract. Revenue
from design, development and engineering services is generally recognized over time as the services are performed.

Generally, there are no subjective customer acceptance requirements or further obligations related to goods of
services provided. Our contracts with customer do not allow for a general right of return.

Income Taxes

We estimate our income tax provision in each of the jurisdictions where we operate, including estimating exposures
related to uncertain tax positions. We must also make judgments regarding the ability to realize our deferred tax
assets. We record a valuation allowance to reduce our deferred tax assets to the amount that we believe is more
likely than not to be realized. Our valuation allowance as of December 31, 2020 of $19.0 million primarily relates to
deferred tax assets from our foreign and U.S. state net operating loss tax carryforwards of $19.1 million.

Differences in our future operating results as compared to the estimates utilized in the determination of the valuation
allowances could result in adjustments in valuation allowances in future periods. For example, a significant increase
in our operations in the United States, future accretive acquisitions in the United States and any movement in the
mix of profits from our international operations to the United States would result in a reduction in the valuation
allowance and would increase income in the period such determination was made. Alternatively, significant
economic downturns in the United States generating additional operating loss carryforwards and potential
movements in the mix of profits to international locations would result in an increase in the valuation allowance and
would decrease income in the period such determination was made. In addition, any significant prolonged economic
downturns in some of our foreign locations would generate operating loss carryforwards and an increase in the
valuation allowance, respectively.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which provides
guidance on accounting for the tax effects of the U.S. Tax Reform. SAB 118 provided a measurement period that
would not extend beyond one year from the U.S. Tax Reform enactment date for companies to complete their
accounting of the impact on income taxes. Until the accounting was complete, companies could record provisional
estimates. As a result of the U.S. Tax Reform, we recorded provisional amounts in relation to the accounting of the
transition tax in 2017. We have finalized our accounting for SAB 118 as of December 31, 2018 within the
measurement period. See Note 9 to the consolidated financial statements in Item 8 of this Report.

We are subject to examination by tax authorities for different periods in various U.S. and foreign tax jurisdictions.
During the course of such examinations, disputes may occur as to matters of fact and/or law. In most tax
jurisdictions the passage of time without examination will result in the expiration of applicable statutes of
limitations, thereby precluding the taxing authority from examining the relevant tax period(s). We believe that we
have adequately provided for our tax liabilities.

Impairment of Long-Lived Assets and Goodwill

Long-lived assets, such as property, plant, and equipment and purchased intangibles subject to amortization, are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If
the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is
recognized by the amount that the carrying amount of the asset exceeds the fair value of the asset.

Goodwill is tested for impairment on an annual basis, at a minimum, and whenever events and circumstances
indicate that the carrying amount may be impaired. Circumstances that may lead to impairment include unforeseen

decreases in future performance or industry demand or the restructuring of our operations as a result of a change in
our business strategy. We perform a qualitative assessment to determine if goodwill is potentially impaired. If the
qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its
carrying amount, or if we elect not to perform a qualitative assessment, then we would be required to perform a
quantitative impairment test for goodwill. This process involves determining the fair values of the reporting units
and comparing those fair values to the carrying values, including goodwill, of the reporting unit. An impairment loss
would be recognized to the extent that the carrying amount exceeds the asset’s fair value. For purposes of
performing our goodwill impairment assessment, our reporting units are the same as our operating segments as
defined in Note 14 to the consolidated financial statements in Part II, Item 8 of this Report. As of December 31,
2020 and 2019, we had goodwill of approximately $192.1 million, respectively, associated with our Americas and
Asia business segments.

Based on our qualitative assessments of goodwill as of December 31, 2020, 2019 and 2018, we concluded that it
was more likely than not that the fair value of our Americas and Asia business segments were greater than their
carrying amounts, and therefore no further testing was required.

Changes in economic and operating conditions that occur after the annual impairment analysis or an interim
impairment analysis, and that impact these assumptions, may result in a future goodwill impairment charge.

Recently Enacted Accounting Principles

See Note 1(r) to the consolidated financial statements in Part II, Item 8 of this Report for a discussion of recently
enacted accounting principles.

CONTRACTUAL OBLIGATIONS

We have certain contractual obligations that extend beyond 2021 under lease obligations and debt arrangements.
Non-cancelable purchase commitments do not typically extend beyond the normal lead-time of several weeks.
Purchase orders beyond this time frame are typically cancelable. We do not use off-balance sheet financing
techniques other than traditional operating leases, and we have not guaranteed the obligations of any entity that is
not one of our wholly owned subsidiaries. The total contractual cash obligations in existence at December 31, 2020
due pursuant to contractual commitments are:

(in thousands)
Operating lease obligations
Finance lease obligations
Long-term debt obligations
Deemed repatriation tax(1)
Total obligations

Total

Less than
1 year

Payments due by period
1-3
years
$ 105,221 $ 14,284 $ 23,545 $ 19,168 $ 48,224
—
—
—
$ 308,335 $ 30,233 $ 174,137 $ 55,741 $ 48,224

2,010
2,706
7,500 129,374
18,512
6,439

5,071
136,874
61,169

355
—
36,218

More than
5 years

3-5
years

(1) U.S federal income tax on deemed mandatory repatriation is payable over 5 years pursuant to the U.S. Tax

Reform. See Note 9 to the consolidated financial statements in Part II, Item 8 of this Report.

OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2020, we did not have any significant off-balance sheet arrangements. See Note 11 to the
consolidated financial statements in Item 8 of this Report.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Our international sales comprise a significant portion of our net sales. We are exposed to risks associated with
operating internationally, including:

(cid:129)
(cid:129)
(cid:129)
(cid:129)

Foreign currency exchange risk;
Import and export duties, taxes and regulatory changes;
Inflationary economies or currencies; and
Economic and political instability.

Additionally, some of our operations are in developing countries. Certain events, including natural disasters, can
impact the infrastructure of a developing country more severely than they would impact the infrastructure of a
developed country. A developing country can also take longer to recover from such events, which could lead to
delays in our ability to resume full operations.

We transact business in various foreign countries and are subject to foreign currency fluctuation risks. We use
natural hedging and forward contracts to economically hedge transactional exposure primarily associated with trade
accounts receivable, other receivables and trade accounts payable that are denominated in a currency other than the
functional currency of the respective operating entity. We do not use derivative financial instruments for speculative
purposes. The forward contract in place as of December 31, 2020 has not been designated as an accounting hedge
and, therefore, changes in fair value are recorded within our consolidated statements of income.

Our sales are substantially denominated in U.S. dollars. Our foreign currency cash flows are generated in certain
European and Asian countries and Mexico.

We are also exposed to market risk for changes in interest rates on our financial instruments, a portion of which
relates to our invested cash balances. We do not use derivative financial instruments in our investing activities. We
place cash and cash equivalents and investments with various major financial institutions. We protect our invested
principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by generally
investing in investment grade securities.

We are also exposed to interest rate risk on borrowings under our Credit Agreement. As of December 31, 2020, we
had $136.9 million outstanding on the floating rate term loan facility, and we have an interest rate swap agreement
with a notional amount of $136.9 million. Under this swap agreement, we receive variable rate interest rate
payments and pay fixed rate interest payments. The effect of this swap is to convert our floating rate interest expense
to fixed interest rate expense. The interest rate swap is designated as a cash flow hedge.

For additional information, see Note 11 to the Notes to consolidated financial statements in Item 8 of this Report.

Item 8. Financial Statements and Supplementary Data.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

(in thousands, except par value)
Assets

Current assets:

Cash and cash equivalents
Restricted cash
Accounts receivable, net of allowance for doubtful accounts of
$1,371 and $10,085, respectively
Contract assets
Inventories
Prepaid expenses and other assets
Income taxes receivable
Total current assets
Property, plant and equipment, net
Operating lease right-of-use assets
Goodwill
Deferred income taxes
Other, net

Liabilities and Shareholders’ Equity

Current liabilities:

Current installments of long-term debt
Accounts payable
Advance payments from customers
Income taxes payable
Accrued liabilities

Total current liabilities

Long-term debt, less current installments
Operating lease liabilities
Other long-term liabilities
Deferred income taxes
Commitments and contingencies
Shareholders’ equity:

December 31,

2020

2019

390,808 $
5,182

347,558
16,398

309,331
142,779
327,377
26,457
417
1,202,351
185,272
79,966
192,116
4,924
79,606
1,744,235 $

9,161 $
282,208
84,122
5,572
100,073
481,136
131,051
72,120
65,552
4,788

324,424
161,061
314,956
29,566
1,119
1,195,082
205,819
76,859
192,116
5,274
84,724
1,759,874

8,825
302,994
37,511
7,895
102,020
459,245
138,912
67,898
65,483
13,504

Preferred stock, $0.10 par value; 5,000 shares authorized, none issued
Common stock, $0.10 par value; 145,000 shares authorized; issued and
outstanding – 36,295 and 36,957, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss

Total shareholders’ equity

—

3,629
510,405
492,205
(16,651)
989,588
1,744,235 $

3,696
512,019
515,876
(16,759)
1,014,832
1,759,874

See accompanying notes to consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Income

(in thousands, except per share data)
Sales
Cost of sales

Gross profit

Selling, general and administrative expenses
Amortization of intangible assets
Restructuring charges and other costs
Ransomware related incident costs (recovery), net

Income from operations

Interest expense
Interest income
Other income (expense)

Income before income taxes

Income tax expense
Net income
Earnings per share:

Basic
Diluted

Weighted-average number of shares outstanding:

Basic
Diluted

$
$

Year ended December 31,
2019
2,268,095 $
2,082,567
185,528
126,740
9,461
13,101
7,681
28,545
(6,664)
3,829
1,559
27,269
3,844
23,425 $

2020
2,053,131 $
1,878,083
175,048
122,195
9,099
19,970
(1,350)
25,134
(8,364)
1,196
(673)
17,293
3,238
14,055 $

2018
2,566,465
2,360,629
205,836
128,448
9,485
9,365
—
58,538
(10,473)
6,848
628
55,541
32,724
22,817

0.38 $
0.38 $

0.61 $
0.60 $

0.49
0.49

36,524
36,817

38,338
38,763

46,332
46,655

See accompanying notes to consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income

(in thousands)
Net income
Other comprehensive income (loss):

Foreign currency translation adjustments
Unrealized gain on investments, net of tax
Unrealized loss on derivative, net of tax
Other

Other comprehensive gain (loss)

Comprehensive income

Year ended December 31,
2019

2018

2020

14,055 $

23,425 $

22,817

4,050
—
(3,142)
(800)
108
14,163 $

(585)
—
(3,716)
(1,334)
(5,635)
17,790 $

(2,273)
41
(1,362)
619
(2,975)
19,842

See accompanying notes to consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity

(in thousands)
Balances, December 31, 2017

Stock-based compensation expense
Shares repurchased and retired
Stock options exercised
Vesting of restricted stock units
Shares withheld for taxes
Dividends declared
Net income
Other comprehensive income

Balances, December 31, 2018

Balances, December 31, 2020

Common

Additional
paid-in
capital

Retained
earnings

stock

— 10,089

20
31
(6)
—
—
—

Shares
49,143 $ 4,914 $634,192 $ 708,181 $
—
—
(823) (91,520) (119,515)
(8,236)
—
3,611
200
—
306
(31)
(1,402)
—
(56)
(27,209)
—
—
22,817
—
—
—
—
—
41,357 4,136 554,939 584,274
—
—
(69,202)
(4,719)
—
82
—
311
—
(74)
(22,621)
—
23,425
—
—
—
36,957 3,696 512,019 515,876
—
—
(14,419)
(964)
—
55
—
336
—
(89)
(23,307)
—
14,055
—
—
—
36,295 $ 3,629 $510,405 $ 492,205 $

— 10,194
(472) (52,436)
1,577
(31)
(2,224)
—
—
—

— 10,398
(97) (10,704)
953
(34)
(2,227)
—
—
—

8
31
(7)
—
—
—

5
34
(9)
—
—
—

Accumulated
other
comprehensive
loss

Total
shareholders’
equity

(8,149) $ 1,339,138
10,089
—
(211,858)
—
3,631
—
—
—
(1,408)
—
(27,209)
—
22,817
—
(2,975)
(2,975)
(11,124) 1,132,225
10,194
—
(122,110)
—
1,585
—
—
—
(2,231)
—
(22,621)
—
23,425
—
(5,635)
(5,635)
(16,759) 1,014,832
10,398
(25,220)
958
—
(2,236)
(23,307)
14,055
108
(16,651) $ 989,588

—
—
—
—
—
—
—
108

See accompanying notes to consolidated financial statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows

Year Ended December 31,
2019

2018

2020

14,055 $

23,425 $

22,817

(in thousands)
Cash flows from operating activities:

Net income
Adjustments to reconcile net income to net cash
provided by operating activities:

Depreciation
Amortization
Provision for doubtful accounts
Deferred income taxes
Asset impairments
Insurance recoveries
(Gain) loss on the sale of property, plant and equipment
Stock-based compensation expense

Changes in operating assets and liabilities, net of effects from
business acquisitions:
Accounts receivable
Contract assets
Inventories
Prepaid expenses and other assets
Accounts payable
Advance payments from customers
Accrued liabilities
Operating leases
Income taxes

Net cash provided by operations

Cash flows from investing activities:

Proceeds from sales of investments at par
Additions to property, plant and equipment
Proceeds from the sale of property, plant and equipment
Additions to purchased software
Cash received from business divestitures
Business acquisitions, net of cash acquired
Other

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from stock options exercised
Employee taxes paid for shares withheld
Dividends paid
Borrowings under credit agreement
Borrowings under finance leases
Principal payments on credit agreement
Principal payments on finance leases
Share repurchases
Debt issuance costs

Net cash used in financing activities

Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents and restricted
cash

Cash and cash equivalents and restricted cash at beginning of year
$
Cash and cash equivalents and restricted cash at end of year

37,739
11,053
2,160
(7,312)
6,950
—
(155)
10,398

13,586
18,282
(10,799)
4,080
(15,553)
46,611
(9,826)
724
(1,555)
120,438

—
(34,584)
368
(4,935)
4,714
—
54
(34,383)

958
(2,236)
(23,041)
110,000
864
(117,500)
(1,351)
(25,220)
—
(57,526)
3,505

37,112
11,315
8,608
(2,367)
834
(5,000)
53
10,194

134,926
(20,979)
(5,238)
2,494
(121,860)
9,254
19,623
1,029
(10,287)
93,136

50
(32,576)
259
(2,542)
—
—
(54)
(34,863)

1,585
(2,231)
(23,287)
—
—
(5,626)
(1,168)
(122,110)
—
(152,837)
418

32,034
363,956
395,990 $

(94,146)
458,102
363,956 $

38,439
13,400
1,712
7,628
96
—
(262)
10,089

(33,952)
6,414
(43,264)
10,238
61,391
7,275
(1,497)
—
(23,837)
76,687

522
(62,808)
239
(3,924)
—
(2,731)
(147)
(68,849)

3,631
(1,408)
(21,005)
50,000
—
(106,999)
(1,025)
(211,858)
(2,303)
(290,967)
(1,315)

(284,444)
742,546
458,102

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements
(amounts in thousands, except per share data, unless otherwise noted)

Note 1—Summary of Significant Accounting Policies

(a) Business

Benchmark Electronics, Inc. (the Company) is a Texas corporation that provides innovative product design,
engineering services, technology solutions and advanced manufacturing services. From initial product concept to
volume production, including direct order fulfillment and aftermarket services, the Company has been providing
integrated services and solutions to original equipment manufacturers (OEMs) since 1979. The Company serves the
following industries: aerospace and defense (A&D), medical technologies, complex industrials, semiconductor
capital equipment (semi-cap), next-generation telecommunications and high-end computing. The Company has
manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.

(b) Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States (U.S. GAAP) and include the financial statements of Benchmark Electronics, Inc. and
its wholly owned and majority owned subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.

For comparative purposes and based on ongoing evaluation of personnel roles involved in the production process,
prior year expenses associated with certain personnel have been reclassified from selling, general and administrative
expenses to cost of goods sold to conform to the current year presentation.

The Company considers all highly liquid debt instruments with an original maturity at the date of purchase of three
months or less to be cash equivalents. Cash equivalents of $131.7 million and $154.4 million at December 31, 2020
and 2019, respectively, consisted primarily of money-market funds and time deposits with an initial term of less than
three months. Restricted cash represents cash received from customers to settle invoices sold under accounts
receivable purchase agreements that is contractually required to be set aside until the cash is remitted to the
purchaser.

(d) Allowance for Doubtful Accounts

Accounts receivable are recorded net of allowances for amounts not expected to be collected. In estimating the
allowance, management considers a specific customer’s financial condition, payment history, current conditions,
and various information or disclosures by the customer or other publicly available information. Accounts receivable
are charged against the allowance after all reasonable efforts to collect the full amount (including litigation, where
appropriate) have been exhausted. During 2020, 2019 and 2018, the Company recorded $2.2 million, $8.6 million
and $1.7 million in charges for a provision to accounts receivable, net of recoveries.

The following table summarizes the activity in the Company’s allowance for doubtful accounts during 2020, 2019
and 2018:

(in thousands)
Year ended December 31, 2020:

Allowance for doubtful accounts(1)

Year ended December 31, 2019:

Allowance for doubtful accounts(1)

Year ended December 31, 2018:

Allowance for doubtful accounts(1)

Balance at
Beginning Charges to
of Period Operations Deductions

Balance at
End of
Period

10,085

2,160

(10,874) $

1,371

1,733

10,323

(1,971) $

10,085

105

1,718

(90) $

1,733

(1) Deductions in the allowance for doubtful accounts represent write-offs, net of recoveries, of amounts determined

to be uncollectible.

(e) Inventories

Inventories include material, labor and overhead and are stated at the lower of cost (principally first-in, first-out
method) or net realizable value.

(f) Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is calculated on the straight-line method over the
useful lives of the assets – 5 to 40 years for buildings and building improvements, 2 to 15 years for machinery and
equipment, 2 to 12 years for furniture and fixtures and 2 to 8 years for vehicles. Leasehold improvements are
amortized on the straight-line method over the shorter of the useful life of the improvement or the remainder of the
lease term.

(g) Leases

The Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) on its effective date
of January 1, 2019 using the effective date as its date of initial application under the modified retrospective
approach. Therefore, financial information for prior periods were not restated. Management elected the package of
practical expedients in transition for leases that commenced prior to January 1, 2019, which permits the Company to
carry forward its original assessment about lease identification, lease classification and initial directs costs. For all
new and modified leases after adoption, management elected the short-term lease recognition exemption for all of
the Company’s leases that qualify, in addition to the practical expedient to not separate lease and nonlease
components.

Lease assets and liabilities are initially recognized based on the present value of lease payments over the lease term
calculated using the Company’s incremental borrowing rate, unless the implicit rate is readily determinable. Our
incremental borrowing rate represents the rate of interest that we would have to pay to borrow on a collateralized
basis over a similar term in a similar economic environment. Lease assets also include any upfront lease payments
made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is
reasonably certain that those options will be exercised. Leases are classified as finance or operating, with
classification affecting the pattern and classification of expense recognition in the consolidated statements of
income. See Note 7.

(h) Goodwill and Other Intangible Assets

Goodwill represents the excess of purchase price over fair value of net assets acquired. Goodwill and intangible
assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but
instead assessed for impairment at least annually. Intangible assets, including those acquired in a business
combination, with estimable useful lives are amortized over their respective estimated useful lives to their estimated
residual values.

(i) Impairment of Long-Lived Assets and Goodwill

Long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying
amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying
amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the
amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. Assets to be
disposed of would be separately disclosed and reported at the lower of the carrying amount or estimated fair value
less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for
sale would be disclosed separately in the appropriate asset and liability sections of the consolidated balance sheets.

Goodwill is tested for impairment on an annual basis, during the fourth quarter, and whenever events and changes in
circumstances suggest that the carrying amount may be impaired. Circumstances that may lead to the impairment of
goodwill include unforeseen decreases in future performance or industry demand or the restructuring of our
operations as a result of a change in our business strategy. A qualitative assessment is allowed to determine if
goodwill is potentially impaired. Based on this qualitative assessment, if the Company determines that it is more
likely than not that the reporting unit’s fair value is less than its carrying value, then it performs a quantitative
assessment, otherwise no further analysis is required. In connection with its annual qualitative goodwill impairment
assessments as of December 31, 2020, 2019 and 2018, the Company concluded that goodwill was not impaired.

(j) Earnings Per Share

Basic earnings per share is computed using the weighted-average number of shares outstanding. Diluted earnings
per share is computed using the weighted-average number of shares outstanding adjusted for the incremental shares
attributed to outstanding stock equivalents. Stock equivalents include common shares issuable upon the exercise of
stock options and other equity instruments and are computed using the treasury stock method. Under the treasury
stock method, the exercise price of a share and the amount of compensation cost, if any, for future service that the
Company has not yet recognized are assumed to be used to repurchase shares in the current period.

The following table sets forth the calculation of basic and diluted earnings per share.

(in thousands, except per share data)
Net income
Denominator for basic earnings per share – weighted-average
number of common shares outstanding during the period
Incremental common shares attributable to exercise of dilutive
options
Incremental common shares attributable to outstanding restricted
stock units
Denominator for diluted earnings per share
Basic earnings per share
Diluted earnings per share

Year Ended December 31,
2019

2018

2020

14,055 $

23,425 $

22,817

36,524

38,338

46,332

104

257
36,817
0.38 $
0.38 $

335
38,763
0.61 $
0.60 $

219
46,655
0.49
0.49

$
$

Potentially dilutive securities totaling less than 0.1 million common shares in both 2020 and 2019, and 0.1 million
common shares in 2018, were not included in the computation of diluted earnings per share because their effect
would have been anti-dilutive.

(k) Revenue Recognition

The Company recognizes revenue as the customer takes control of the manufactured products built to customer
specifications. Under the majority of the Company’s manufacturing contracts with customers, the customer controls
all of the work-in-progress as products are being built. Revenues under these contracts are recognized over time
based on the cost-to-cost method. Under other manufacturing contracts, the customer does not take control of the
product until it is completed. Under these contracts, the Company recognizes revenue upon transfer of control of
product to the customer, which is generally when the goods are shipped. Revenue from design, development and
engineering services is recognized over time as the services are performed.

The Company’s performance obligations generally have an expected duration of one year or less. The Company
applies the practical expedient related to short-term performance obligations and does not disclose information about

remaining performance obligations that have original expected durations of one year or less or any significant
financing components in the contracts.

The Company recognizes the incremental costs, if any, of obtaining contracts as an expense when incurred since the
amortization period of the assets that the Company otherwise would have recognized is one year less.

(l) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income taxes 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. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. The Company records a valuation allowance to reduce its deferred tax assets to the
amounts that are more likely than not to be realized. The Company has considered the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning strategies in assessing the need for the valuation
allowance.

(m) Stock-Based Compensation

All share-based payments to employees, including grants of employee stock options (which have not been awarded
since 2015), are recognized in the consolidated financial statements based on their grant date fair values. The total
compensation cost recognized for stock-based awards was $10.4 million, $10.2 million and $10.1 million for 2020,
2019 and 2018, respectively. The future tax benefit of these stock-based awards as of the grant date was $2.4 million
for each of 2020, 2019 and 2018. The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model. Awards of restricted stock units and performance-based restricted stock units
are valued at the closing market price of the Company’s common stock on the date of grant. For performance-based
restricted stock units, compensation expense is based on the probability that the performance goals will be achieved,
which is monitored by management throughout the requisite service period. When it becomes probable, based on the
Company’s expectation of performance during the measurement period, that more or less than the previous estimate
of the awarded shares will vest, an adjustment to stock-based compensation expense is recognized as a change in
accounting estimate.

As of December 31, 2020, the unrecognized compensation cost and remaining weighted-average amortization period
related to stock-based awards were as follows:

(in thousands)

Unrecognized compensation cost
Remaining weighted-average amortization period

Restricted
Stock Units

Performance-
based
Restricted
Stock Units (1)

19,616 $

2.5 years

3,335
2.2 years

(1) Based on the probable achievement of the performance goals identified in each award.

The total cash received as a result of stock option exercises in 2020, 2019 and 2018 was approximately $1.0 million,
$1.6 million and $3.6 million, respectively. The actual tax benefit realized as a result of stock option exercises and
the vesting of other share-based awards during 2020, 2019 and 2018 was $2.1 million, $2.3 million and $2.5 million,
respectively. For 2020, 2019 and 2018, the total intrinsic value of stock options exercised was $0.5 million, $0.7
million and $2.3 million, respectively.

The Company awarded performance-based restricted stock units to employees during 2020, 2019 and 2018. The
number of performance-based restricted stock units that will ultimately be earned will not be determined until the
end of the corresponding performance periods, and may vary from as low as zero to as high as 2.5 times the target
number depending on the level of achievement of certain performance goals. The level of achievement of these
goals is based upon the financial results of the Company for the last full calendar year within the performance
period. The performance goals consist of certain levels of achievement using the following financial metrics:
revenue, operating income margin, and return on invested capital. If the performance goals are not met based on the
Company’s financial results, the applicable performance-based restricted stock units will not vest and will be
forfeited. Shares subject to forfeited performance-based restricted stock units will be available for issuance under the
Company’s 2019 Omnibus Incentive Compensation Plan (the 2019 Plan).

(n) Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in
accordance with U.S. GAAP with consideration given to the potential impacts of COVID-19. However, actual
results could differ materially from these estimates and be significantly affected by the severity and duration of the
pandemic, the extent of actions to contain or treat COVID-19, how quickly and to what extent normal economic and
operating activity can resume, and the severity and duration of the global economic downturn that results from the
pandemic. On an ongoing basis, management evaluates these estimates, including those related to accounts
receivable, inventories, income taxes, long-lived assets, leases, goodwill, stock-based compensation and
contingencies and litigation. Actual results could differ from those estimates.

(o) Fair Values of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. A three-tier fair value hierarchy of inputs is employed to determine fair value
measurements.

(cid:129)
(cid:129)

(cid:129)

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 inputs are observable prices that are not quoted on active exchanges, such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active; and model-derived valuations
whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs are unobservable inputs employed for measuring the fair value of assets or liabilities.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of
unobservable inputs when determining fair value.

The Company’s financial instruments include cash equivalents, accounts and other receivables, accounts payable,
accrued liabilities and long-term debt and financing lease obligations. The Company believes that the carrying
values of these instruments approximate their fair value. As of December 31, 2020, the Company’s derivative
instruments were recorded at fair value using Level 3 inputs. See Note 11.

(p) Foreign Currency

For foreign subsidiaries using the local currency as their functional currency, assets and liabilities are translated at
exchange rates in effect at the balance sheet date and income and expenses are translated at average exchange rates.
The effects of these translation adjustments are reported in other comprehensive income. Exchange losses arising
from transactions denominated in a currency other than the functional currency of the entity involved are included in
other expense and totaled approximately $1.8 million, $1.7 million and $1.0 million in 2020, 2019 and 2018,
respectively. These amounts include the amount of gain (loss) recognized in income due to forward currency
exchange contracts.

(q) Derivative Instruments

All derivative instruments are recorded on the balance sheet at fair value. The Company uses derivative instruments
to manage the variability of foreign currency obligations and interest rates. The Company does not enter into
derivative arrangements for speculative purposes. Generally, if a derivative instrument is designated as a cash flow
hedge, the change in the fair value of the derivative is recorded in other comprehensive income to the extent the
derivative is effective and recognized in the consolidated statements of income when the hedged item affects
earnings. Changes in fair value of derivatives that are not designated as hedges are recorded in earnings. Cash
receipts and cash payments related to derivative instruments are recorded in the same category as the cash flows
from the items being hedged on the consolidated statements of cash flows.

(r) New Accounting Pronouncements

Adopted in 2020

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial

Instruments, which replaces the current incurred loss impairment methodology with a methodology that reflects
expected credit losses and requires consideration of a broader range of reasonable and supportable information to
inform credit loss estimates. This update is effective for annual reporting periods beginning after December 15,
2019. The Company adopted this update effective January 1, 2020 and the implementation of this update did not
have a material impact on its consolidated financial position, results of operations or cash flows.

Not Yet Adopted

The Company has determined that other recently issued accounting standards will either have no material impact on
its consolidated financial position, results of operations or cash flows, or will not apply to its operations.

Note 2—Acquisition

During 2018, the Company completed an individually immaterial business acquisition for $2.7 million. The
allocation of the net purchase price resulted in $0.5 million of goodwill. The goodwill recognized in connection with
the acquisition represents the future economic benefit arising from assets acquired that could not be individually
identified and separately recognized, and is attributable to the general reputation, acquisition synergies and expected
future cash flows of the acquisition.

Note 3—Inventories

Inventory costs are summarized as follows:

(in thousands)
Raw materials
Work in process
Finished goods

Note 4—Property, Plant and Equipment

Property, plant and equipment consists of the following:

(in thousands)
Land
Buildings and building improvements
Machinery and equipment
Furniture and fixtures
Vehicles
Leasehold improvements
Construction in progress

Less accumulated depreciation

December 31,

2020

2019

312,856 $
8,687
5,834
327,377 $

304,069
8,282
2,605
314,956

December 31,

2020

2019

5,689 $
85,672
521,382
10,426
1,142
39,716
1,679
665,706
(480,434)
185,272 $

6,169
87,605
538,037
10,558
1,268
35,366
5,504
684,507
(478,688)
205,819

Note 5—Goodwill and Other Intangible Assets

The changes each year in goodwill allocated to the Company’s reportable segments were as follows:

(in thousands)
Goodwill as of December 31, 2017
Acquisition
Goodwill as of December 31, 2018
Goodwill as of December 31, 2019
Goodwill as of December 31, 2020

Americas

Asia

Total

$
$
$

153,514 $
500
154,014 $
154,014 $
154,014 $

38,102 $
—
38,102 $
38,102 $
38,102 $

191,616
500
192,116
192,116
192,116

During 2018, the Company completed an individually immaterial business acquisition for $2.7 million. See Note 2.

Other assets, net consist primarily of acquired identifiable intangible assets and capitalized purchased software costs.
Acquired identifiable intangible assets and purchased software as of December 31, 2020 and 2019 were as follows:

(in thousands)
Customer relationships
Purchased software costs
Technology licenses
Trade names and trademarks
Other
Intangible assets, December 31, 2020

(in thousands)
Customer relationships
Purchased software costs
Technology licenses
Trade names and trademarks
Other
Intangible assets, December 31, 2019

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

100,228 $
46,183
28,800
7,800
868
183,879 $

(53,429) $
(33,307)
(26,833)
—
(333)
(113,902) $

46,799
12,876
1,967
7,800
535
69,977

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

100,123 $
41,604
28,800
7,800
868
179,195 $

(46,981) $
(32,012)
(24,100)
—
(309)
(103,402) $

53,142
9,592
4,700
7,800
559
75,793

Customer relationships are being amortized on a straight-line basis over a period of 10 to 14 years. Capitalized
purchased software costs are amortized straight-line over the estimated useful life of the related software, which
ranges from 2 to 14 years. Technology licenses are being amortized over their estimated useful lives in proportion to
the economic benefits consumed. During 2020, 2019 and 2018, $4.9 million, $2.5 million and $3.9 million,
respectively, of purchased software costs were capitalized. Amortization on the statements of cash flow for 2020,
2019 and 2018 was as follows:

(in thousands)
Amortization of intangible assets
Amortization of capitalized purchased software costs
Amortization of debt costs

Year Ended December 31,
2019

2018

2020

9,099 $
1,493
461
11,053 $

9,461 $
1,393
461
11,315 $

9,485
1,198
2,717
13,400

The estimated future amortization expense of acquired intangible assets for each of the next five years is as follows
(in thousands):

Year ending December 31,
2021
2022
2023
2024
2025

Amount

6,647
6,766
6,408
5,277
5,215

Note 6—Borrowing Facilities

Long-term debt outstanding as of December 31, 2020 and 2019 consists of the following:

(in thousands)
Revolving credit facility, due 2023
Term loan, due 2023
Less unamortized debt issuance costs
Long-term debt

December 31,

2020

2019

—
136,874
(1,155)
135,719

—
144,375
(1,616)
142,759

On July 20, 2018, the Company entered into a $650 million credit agreement (the Credit Agreement) by and among
the Company, certain of its subsidiaries, the lenders party thereto and Bank of America, N.A., as Administrative
Agent, Swingline Lender and a L/C Issuer. The Credit Agreement is comprised of a five-year $500 million
revolving credit facility (the Revolving Credit Facility) and a five-year $150 million term loan facility (the Term
Loan Facility), both with a maturity date of July 20, 2023. The Term Loan Facility proceeds were used to (i)
refinance a portion of existing indebtedness and terminate all commitments under the Company’s prior $430 million
credit agreement and (ii) pay the fees, costs and expenses associated with the foregoing and the negotiation,
execution and delivery of the Credit Agreement.

The Revolving Credit Facility is available for general corporate purposes. The Credit Agreement includes an
accordion feature pursuant to which the Company is permitted to add one or more incremental term loan and/or
increase commitments under the Revolving Credit Facility in an aggregate amount not exceeding $275 million,
subject to the satisfaction of certain conditions.

The Term Loan Facility is payable in quarterly principal installments of $1.9 million commencing June 30, 2019,
with the balance payable on July 20, 2023.

Interest on outstanding borrowings under the Credit Agreement (other than swingline loans) accrues, at the
Company’s option, at (a) the London Interbank Offered Rate (LIBOR) plus 1.0% to 2.0% or (b) the base rate plus
0.0% to 1.0%.

As of December 31, 2020, $136.9 million of the outstanding debt under the Credit Agreement is effectively at a
fixed interest rate of 2.928% as a result of a $136.9 million notional interest rate swap contract discussed in Note 11.
A commitment fee of 0.20% to 0.30% per annum (based on the debt to EBITDA ratio) on the unused portion of the
revolving credit line is payable quarterly in arrears.

The Credit Agreement is generally secured by a pledge of (a) all the capital stock of the Company’s domestic
subsidiaries and 65% of the capital stock of its directly owned foreign subsidiaries, (b) all or substantially all other
personal property of Benchmark and its domestic subsidiaries (including, but not limited to, accounts receivable,
contract assets, inventory, intellectual property and fixed assets of Benchmark and its domestic subsidiaries), in each
case, subject to customary exceptions and limitations, and (c) all proceeds and products of the property and assets
described in (a) and (b) above.

The Credit Agreement contains certain financial covenants related to interest coverage and debt leverage, and
certain customary affirmative and negative covenants, including restrictions on the Company’s ability to incur
additional debt and liens, pay dividends, repurchase shares, sell assets and merge or consolidate with other persons.
Amounts due under the Credit Agreement could be accelerated upon specified events of default, including a failure
to pay amounts due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or
insolvency, subject, in some cases, to cure periods.

As of December 31, 2020, the Company had $136.9 million in borrowings outstanding under the Term Loan Facility
and $3.7 million in letters of credit outstanding under the Revolving Credit Facility. The Company had $496.3
million available for future borrowings under the Revolving Credit Facility subject to compliance with financial
covenants as to interest coverage and debt leverage, in addition to other debt covenant restrictions.

The aggregate maturities of long-term debt for each of the five years subsequent to December 31, 2020 are as
follows: 2021, $7.5 million; 2022, $7.5 million; and 2023, $121.9 million.

Note 7 – Leases

The Company determines if a contract is or contains a lease at inception. The Company has entered into leases for
certain facilities, vehicles and other equipment. The Company’s leases consist mainly of operating leases which
expire at various dates through 2036. Variable lease payments are generally expensed as incurred and include certain
index-based changes in rent, certain nonlease components, such as maintenance and other services provided by the
lessor, and other charges included in the lease.

The components of lease expense were as follows:

(in thousands)
Finance lease cost:

Amortization of right-of-use assets (included in depreciation expense)
Interest on lease liabilities

Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost

Other information:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows used for finance lease
Operating cash flows used for operating leases
Financing cash flows used for finance lease

Right-of-use assets obtained in exchange for new operating lease liabilities

Year Ended December 31,

2020

2019

727
428
15,930
573
1,748
19,406

711
548
17,014
566
1,899
20,738

$
462
$
15,627
1,351
$
17,607 $

578
15,169
1,168
15,501

$
$
$
$

The lease assets and liabilities as of December 31, 2020 were as follows (in thousands):

$
Finance lease right-of-use assets (included in other assets)
Operating lease right-of-use assets
$
Finance lease liability, current (included in current installments of long-term debt) $
$
Finance lease liability, noncurrent (included in long-term debt)
$
Operating lease liabilities, current (included in accrued liabilities)
Operating lease liabilities, noncurrent
$
Weighted average remaining lease term – finance leases
Weighted average remaining lease term – operating leases
Weighted average discount rate – finance leases
Weighted average discount rate – operating leases

December 31,

2020

2,448
79,966
1,661
2,832
11,516
72,120
3.0 years
10.0 years

$
$
$
$
$
$

2019

2,311
76,859
1,325
3,654
11,043
67,898
3.5 years
10.2 years

9.0%
4.4%

10.1%
4.7%

Future annual minimum lease payments and finance lease commitments as of December 31, 2020 were as follows
(in thousands):

Year ending December 31,
2021
2022
2023
2024
2025
2026 and thereafter
Total minimum lease payments
Less: imputed interest
Present value of lease liabilities

Operating
Leases

Finance
Leases

14,284 $
12,480
11,065
10,052
9,116
48,224
105,221 $
(21,585)
83,636 $

2,010
2,047
659
194
161
—
5,071
(578)
4,493

As of December 31, 2020, the Company’s future operating leases that have not yet commenced are immaterial.

Note 8—Common Stock and Stock-Based Awards Plans

Dividends
The Company began declaring and paying quarterly dividends during the first quarter of 2018. During 2020, 2019
and 2018, cash dividends paid totaled $23.0 million, $23.3 million and $21.0 million, respectively. In February
2020, the Board of Directors approved a quarterly dividend increase, raising the quarterly dividend from $0.15 to
$0.16 per common share. On December 11, 2020, the Company declared a quarterly cash dividend of $0.16 per
share of the Company’s common stock to shareholders of record as of December 30, 2020. The dividend of $5.8
million was paid on January 13, 2021. The Board of Directors currently intends to continue paying quarterly
dividends. However, the Company’s future dividend policy is subject to the Company’s compliance with applicable
law, and depending on, among other things, the Company’s results of operations, financial condition, level of
indebtedness, capital requirements, contractual restrictions, restrictions in the Company’s debt agreements, and other
factors that the Board of Directors may deem relevant, including the impact of the COVID-19 pandemic. Dividend
payments are not mandatory or guaranteed; there can be no assurance that the Company will continue to pay a
dividend in the future.

Share Repurchase Authorization
On March 6, 2018, the Board of Directors approved an expanded stock repurchase authorization granting the
Company authority to repurchase up to $250 million in common stock in addition to the $100 million previously
approved on December 7, 2015. On October 26, 2018, the Board of Directors authorized the repurchase of an
additional $100 million of the Company’s common stock. On February 19, 2020, the Board of Directors authorized
the repurchase of an additional $150 million of the Company’s common stock. As of December 31, 2020, the
Company had $204.2 million remaining under the stock repurchase authorization.

Share purchases may be made in the open market, in privately negotiated transactions or block transactions, at the
discretion of the Company’s management and as market conditions warrant. Purchases will be funded from
available cash and may be commenced, suspended or discontinued at any time without prior notice. Shares
repurchased under the program are retired. During 2020, the Company repurchased a total of 1.0 million common
shares for an aggregate of $25.2 million at an average price of $26.16 per share. During 2019, the Company
repurchased a total of 4.7 million common shares for an aggregate of $122.1 million at an average price of $25.86
per share. During 2018, the Company repurchased a total of 8.2 million common shares for an aggregate of $211.9
million at an average price of $25.71 per share.

Stock-Based Compensation
The Company’s 2019 Omnibus Incentive Compensation Plan (the 2019 Plan) authorizes the Company, upon
approval of the Compensation Committee of the Board of Directors, to grant a variety of awards, including stock
options, restricted shares and restricted stock units (both time-based and performance-based) and other forms of
equity awards, or any combination thereof, to any director, officer, employee or consultant (including any
prospective director, officer, employee or consultant) of the Company. Stock options (which have not been awarded
since 2015) are granted to employees with an exercise price equal to the market price of the Company’s common
stock on the date of grant, generally vest over a four-year period from the date of grant and have a term of 10 years.
Time-based restricted stock units granted to employees generally vest over a four-year period from the date of grant,
subject to the continued employment of the employee by the Company. Performance-based restricted stock units
generally vest over a three-year performance cycle, which includes the year of the grant, and are based upon the
Company’s achievement of specified performance metrics. Awards under the 2019 Plan to non-employee directors
have been in the form of restricted stock units, which vest in annually, starting on the grant date.

As of December 31, 2020, 2.9 million additional common shares were available for issuance under the Company’s
2019 Plan.

The following table summarizes activities related to the Company’s stock options:

(in thousands, except per share data)
Outstanding as of December 31, 2017
Exercised
Forfeited or expired
Outstanding as of December 31, 2018
Exercised
Forfeited or expired
Outstanding as of December 31, 2019
Exercised
Forfeited or expired
Outstanding and Exercisable as of December 31, 2020

Weighted-
Average
Exercise
Price

Number of
Options

Weighted-
Average
Remaining
Contractual
Term
(Years)

Aggregate
Intrinsic
Value

596 $
(200)
(22)
374
(100)
(4)
270
(76)
(6)
188 $

19.72
18.21
22.99
20.35
21.21
21.29
20.02
19.87
23.08
19.98

2.55 $

1,324

The aggregate intrinsic value in the table above is before income taxes and is calculated as the difference between
the exercise price of the underlying options and the Company’s closing stock price as of the last business day of
2020 for options that had exercise prices that were below the closing price.

As of December 31, 2020, 2019 and 2018, the number of options exercisable was 0.2 million, 0.3 million and
0.3 million, respectively, and the weighted-average exercise price of those options was $19.98, $20.02 and $20.07,
respectively.

Restricted stock units, time-based and performance-based, remain outstanding as detailed below.

The following table summarizes the activities related to the Company’s time-based restricted stock units:

(in thousands, except per share data)
Non-vested awards outstanding as of December 31, 2017
Granted
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2018
Granted
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2019
Granted
Vested
Forfeited
Non-vested awards outstanding as of December 31, 2020

Number of
Units

Weighted-
Average
Grant Date
Fair Value

593 $
407
(306)
(99)
595
632
(254)
(80)
893
533
(336)
(64)
1,026 $

27.47
29.44
27.25
27.52
28.93
27.36
28.09
28.97
28.06
26.52
27.69
28.54
27.35

The following table summarizes the activities related to the Company’s performance-based restricted stock units:

(in thousands, except per share data)
Non-vested units outstanding as of December 31, 2017
Granted(1)
Forfeited
Non-vested units outstanding as of December 31, 2018
Granted(1)
Vested
Forfeited
Non-vested units outstanding as of December 31, 2019
Granted(1)
Forfeited
Non-vested units outstanding as of December 31, 2020

Weighted-
Average
Grant Date
Fair Value

Number of
Units

346 $
120
(147)
319
198
(57)
(76)
384
165
(181)
368 $

26.88
29.60
24.06
29.19
27.45
31.40
21.23
28.89
28.02
30.04
27.93

(1) Represents target number of units that can vest based on the achievement of the performance goals.

Note 9—Income Taxes

Income tax expense (benefit) based on income before income taxes consisted of the following:

(in thousands)
Current:

U.S. Federal
State and local
Foreign

Deferred:

U.S. Federal
State and local
Foreign

Year Ended December 31,
2019

2018

2020

1,406 $
24
9,120
10,550

(3,784)
(1,021)
(2,507)
(7,312)
3,238 $

(1,697) $
(3,567)
11,474
6,210

1,815
1,409
(5,590)
(2,366)
3,844 $

(14,831)
10,110
29,817
25,096

(249)
(550)
8,427
7,628
32,724

Worldwide income (loss) before income taxes consisted of the following:

(in thousands)
United States
Foreign

Year Ended December 31,
2019

2018

2020

(33,790) $
51,083
17,293 $

(13,756) $
41,025
27,269 $

(23,645)
79,186
55,541

Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to
income before income taxes as a result of the following:

(in thousands)
Tax at statutory rate
State taxes, net of federal tax effect
Effect of foreign operations and tax incentives
Change in valuation allowance
Stock-based compensation
Provisional impact of U.S. Tax Reform
Impact of cash repatriation
GILTI
Losses in foreign jurisdictions for which no benefit has
been provided
Change in uncertain tax benefits reserve
Other
Total income tax expense

Year Ended December 31,
2019

2018

2020

3,632 $
(788)
(6,372)
(3,029)
347
—
—
1,667

5,798
(31)
2,014
3,238 $

5,727 $
(1,705)
(5,870)
(2,283)
118
—
—
955

4,379
200
2,323
3,844 $

11,664
7,553
(11,945)
2,114
(143)
(4,353)
21,612
3,206

1,423
(317)
1,910
32,724

The U.S. Tax Cuts and Jobs Act (U.S. Tax Reform), which was signed into law on December 22, 2017, significantly
changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax
system, adding a global intangible taxation regime and imposing a transition (Transition Tax) tax on deemed
repatriated cumulative earnings of foreign subsidiaries. The U.S. Tax Reform reduced the U.S. corporate income tax
rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The Company recorded the effects of the
changes in the tax rate in the Company’s deferred tax assets and liabilities as of December 31, 2017.

To minimize tax base erosion with a territorial tax system, the U.S. Tax Reform enacted a new global intangible
low-taxed income (GILTI) provision that requires the Company to include in its U.S. income tax return foreign
subsidiary earnings in excess of an allowable return on the foreign subsidiaries tangible assets. The taxable earnings
can be offset by a limited deemed paid foreign tax credit with no carrybacks or carryforwards available. The
Company is subject to the GILTI provisions. The Company elected to account for the GILTI as a period cost and
include the effect in the period in which it is incurred and not include it as a factor in the determination of deferred
taxes.

On December 22, 2017, additional guidance was issued on accounting for the tax effects of the U.S. Tax Reform
(Staff Accounting Bulletin No. 118 (SAB 118)). SAB 118 provided a measurement period that should not extend
beyond one year from the U.S. Tax Reform enactment date for companies to complete their accounting. The
Company recorded a provisional tax expense of $101.6 million for the Transition Tax, and recognized a provisional
deferred tax benefit of $3.9 million for a total net expense of $97.7 million as of December 31, 2017. As of
December 31, 2018, the Company completed the accounting for the tax effects of U.S. Tax Reform within the
period required from the enactment date. The Company recognized during the fourth quarter of 2018 after filing its
U.S. income tax return, a discrete tax benefit adjustment of $6.4 million for the Transition Tax, and recorded a
discrete tax expense adjustment of $2.0 million for the finalization of the deferred tax assets and liabilities for a net
total adjustment of $4.4 million. These adjustments were based on additional analysis of undistributed cumulative
foreign earnings, cumulative foreign taxes, changes in interpretations, and additional regulatory guidance that was
issued during 2018 by the Internal Revenue Service (IRS).

As a result of the completed accounting for the Transition Tax, the Company determined that its total Transition Tax
liability as of December 31, 2020 is currently $51.9 million after reduction for U.S. tax carryforward losses, U.S. tax
credit carryforwards, and foreign tax credit carrybacks that are allowed to be utilized against the total liability. The
Company intends to pay this liability over the remaining five year payment period as prescribed by the U.S. Tax
Reform and regulatory guidance issued by the IRS. $45.5 million of the Transition Tax liability is included in other
long term liabilities.

During 2020 and 2019, the Company repatriated $25.0 million and $52.1 million, respectively, of foreign earnings
to the U.S. As of December 31, 2020, the Company has approximately $333.6 million in cumulative undistributed
foreign earnings of its foreign subsidiaries. These earnings would not be subject to U.S. federal income tax, if
distributed to the Company. The Company changed its assertion during 2018 on its foreign subsidiaries earnings that
are permanently reinvested. A certain amount of earnings from specific foreign subsidiaries are permanently
reinvested, and certain foreign earnings from other specific foreign subsidiaries is considered to be non-permanently
reinvested and is available for immediate distribution to the Company. Income taxes have been accrued on the non-
permanently reinvested foreign earnings including the 2017 Transition Tax, the U.S. tax on GILTI, and any
applicable foreign or local withholding taxes. The Company estimates that it has approximately $3.7 million of
unrecognized deferred tax liability related to any remaining undistributed permanently reinvested foreign earnings
that have not already been subject to the 2017 Transition Tax, the U.S. tax on GILTI, and any applicable foreign
income tax or local withholding taxes on cash distributions.

As a result of this change in assertion during 2018, in relation to undistributed earnings prior to December 31, 2017,
the Company recorded a net tax expense of $21.6 million consisting of tax expense of $30.8 million relating to
foreign withholding tax from Asia and a net benefit of $9.2 million for U.S. foreign tax credits to offset the foreign
taxes paid during 2018. In addition, the Company recorded applicable U.S. state income tax expense net of federal
benefits related to the cash repatriation. Also during 2018, the Company incurred a net $4.4 million benefit
associated with finalizing the provisional impact of the U.S. Tax Reform described above as required by SAB 118,
and incurred a $3.2 million tax expense as a result of GILTI.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred
tax liabilities are presented below:

(in thousands)
Deferred tax assets:

Carrying value of inventories
Accrued liabilities and allowances deductible for tax purposes on a cash
basis
Goodwill
Stock-based compensation
Operating right-of-use lease liabilities
Net operating loss carryforwards
Tax credit carryforwards
Interest rate swap liabilities
Other

Less: valuation allowance
Net deferred tax assets

Deferred tax liabilities:

Plant and equipment, due to differences in depreciation
Operating right-of-use lease assets
Intangible assets, due to differences in amortization
Foreign withholding tax
Other
Gross deferred tax liability
Net deferred tax liability

The net deferred tax liability is classified as follows:

Long-term asset
Long-term liability
Total

December 31,

2020

2019

3,470 $

3,212

13,086
1,704
2,559
20,003
19,120
3,368
2,263
5,025
70,598
(19,038)
51,560

(7,899)
(19,742)
(14,078)
(6,102)
(3,603)
(51,424)
136 $

4,924 $
(4,788)
136 $

8,945
1,976
2,500
19,087
19,493
2,421
1,210
3,938
62,782
(15,992)
46,790

(10,428)
(18,826)
(16,302)
(7,181)
(2,283)
(55,020)
(8,230)

5,274
(13,504)
(8,230)

All deferred taxes are classified as non-current on the balance sheet as of December 31, 2020 and 2019. All deferred
tax assets and liabilities are offset and presented as a single net noncurrent amount by each tax jurisdiction.

The net change in the total valuation allowance for 2020, 2019 and 2018 was a $3.0 million increase, a $2.3 million
increase and a $2.1 million decrease, respectively. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based
upon the level of historical taxable income and projections for future taxable income over the periods which the
deferred tax assets are deductible, management believes it is more likely than not the Company will realize the
benefits of these deductible differences, net of the existing valuation allowances as of December 31, 2020.

As of December 31, 2020, the Company had $8.5 million in U.S. Federal operating loss carryforwards which will
expire from 2027 to 2036; state operating loss carryforwards of approximately $44.5 million which will expire from
2021 to 2031; foreign operating loss carryforwards of approximately $13.0 million with indefinite carryforward
periods; and foreign operating loss carryforwards of approximately $38.9 million which will expire at varying dates
through 2030. The utilization of these net operating loss carryforwards is limited to the future operations of the
Company in the tax jurisdictions in which such carryforwards arose. The Company has state tax credit carryforwards
of $1.8 million which will expire at varying dates through 2026. The Company also has U.S. R&D tax credit
carryforwards of $1.6 million which will expire from 2038 through 2040.

The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Malaysia and
Thailand that will expire at various dates, unless extended or otherwise renegotiated in 2021 in Malaysia and 2028 in
Thailand, and are subject to certain conditions with which the Company expects to comply. The Company expects to
obtain an extension of the Malaysia tax holiday in 2021 which will extend the tax holiday for another five years until
2026. The net impact of these tax incentives was to lower income tax expense for 2020, 2019, and 2018 by
approximately $7.4 million (approximately $0.20 per diluted share), $5.0 million (approximately $0.13 per diluted
share) and $7.9 million (approximately $0.17 per diluted share), respectively, as follows:

(in thousands)
China
Malaysia
Thailand

Year Ended December 31,
2019

2018

2020

— $
4,945
2,496
7,441 $

— $
3,010
2,025
5,035 $

1,884
3,287
2,715
7,886

The Company must determine whether it is “more-likely-than-not” that a tax position will be sustained upon
examination, including resolution of any related appeals or litigation processes, based on the technical merits of the
position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is
measured to determine the amount of benefit to recognize in the financial statements. As of December 31, 2020, the
total amount of the reserve for uncertain tax benefits including interest and penalties was $0.6 million. A
reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is
as follows:

(in thousands)
Balance as of January 1
Additions related to current year tax positions
Additions related to prior year tax positions
Decreases related to prior year tax positions
Balance as of December 31

2020

December 31,
2019

2018

513 $
—
—
(14)
499 $

313 $
—
200
—
513 $

708
137
—
(532)
313

During 2020, the Company released $14.0 thousand of uncertain tax benefits related to prior year tax positions.
During 2019, the Company recorded $0.2 million of uncertain tax benefits related to prior year tax positions. During
2018, the Company released $0.5 million of uncertain tax benefits from an IRS audit. During the first quarter of
2018, the IRS indicated that this examination of years 2013 to 2015 was closed. In addition, the IRS also notified the
Company during the first quarter 2018 that the examination of the Company’s consolidated U.S. income tax return
filings for 2014 was also closed with no additional tax costs.

The reserve is classified as a current or long-term liability in the consolidated balance sheets based on the
Company’s expectation of when the items will be settled. The Company records interest expense and penalties
accrued in relation to uncertain income tax benefits as a component of current income tax expense. The amount of
accrued potential interest on unrecognized tax benefits included in the reserve as of December 31, 2020 is $0.1
million. The reserve for potential penalties is $17.0 thousand. The Company did not record any interest and penalties
during 2020 or 2019. The total amount of interest and penalties included in income tax expense was $0.1 million
during 2018.

The Company and its subsidiaries in Brazil, China, Ireland, Malaysia, Mexico, Netherlands, Romania, Singapore,
Thailand and the United States remain open to examination by the various local taxing authorities, in total or in part,
for fiscal years 2012 to 2020. Currently, the Company does not have any ongoing income tax examinations by any
jurisdiction. During the course of such income tax examinations, disputes may occur as to matters of fact or law.
Also, in most tax jurisdictions, the passage of time without examination will result in the expiration of applicable
statutes of limitations thereby precluding examination of the tax period(s) for which such statute of limitation has
expired. The Company believes that it has adequately provided for its tax liabilities.

Note 10—Major Customers

The Company’s customers operate in industries that are, to a varying extent, subject to rapid technological change,
vigorous competition and short product life cycles. Developments adverse to the electronics industry, the
Company’s customers or their products could impact the Company’s overall credit risk.

The Company extends credit based on evaluation of its customers’ financial condition and generally does not require
collateral or other security from its customers and would incur a loss equal to the carrying value of the accounts
receivable if its customer failed to perform according to the terms of the credit arrangement.

Sales to the ten largest customers represented 41%, 38% and 44% of total sales for 2020, 2019 and 2018,
respectively. Sales to our largest customers were as follows for the indicated periods:

(in thousands)
Applied Materials, Inc.
International Business Machines Corporation

* amount is less than 10% of total sales.

$
$

Year ended December 31,
2019

2020
241,522 $
* $

* $
* $

2018

*
323,795

During 2020, net sales attributable to our largest customer were reported in the Americas and Asia reportable
segments. During 2018, net sales attributable to our largest customer were reported in the Americas reportable
segment.

Note 11—Financial Instruments and Concentration of Credit Risk

The Company’s financial instruments include cash equivalents, accounts and other receivables, accounts payable,
accrued liabilities and long-term debt and finance lease obligations. The Company believes that the carrying values
of these instruments approximate fair value. As of December 31, 2020, the Company’s derivative instruments were
recorded at fair value using Level 3 inputs. The Company uses derivative instruments to manage the variability of
foreign currency obligations and interest rates. The Company does not enter into derivative arrangements for
speculative purposes.

The forward currency exchange contract in place as of December 31, 2020 has not been designated as accounting
hedge and, therefore, changes in fair value are recorded within the consolidated statements of income.

The Company has an interest rate swap agreement with a notional amount of $136.9 million and $144.4 million as
of December 31, 2020 and 2019, respectively, to hedge a portion of its interest rate exposure on outstanding
borrowings under the Credit Agreement. Under this interest rate swap agreement, the Company receives variable
rate interest payments based on the one-month LIBOR rate and pays fixed rate interest payments. The fixed interest
rate for the contract is 2.928%. The effect of this swap is to convert all of the floating rate interest expense to fixed
interest rate expense. Based on the terms of the interest rate swap contract and the underlying borrowings
outstanding under the Credit Agreement, the interest rate contract was determined to be highly effective, and thus
qualifies and has been designated as a cash flow hedge. As such, changes in the fair value of the interest rate swap
are recorded in other comprehensive income on the accompanying consolidated balance sheets until earnings are

affected by the variability of cash flows. As of December 31, 2017, the Company had an interest rate swap
agreement with a notional amount of $155.3 million with a fixed interest rate of 1.4935%. During 2018, the
Company terminated this agreement for $3.5 million and the gain was amortized to offset interest expense over the
remaining term of the swap agreement which ended November 2020.

The fair value of the interest rate swap agreements was a $9.0 million liability as of December 31, 2020 and a $6.3
million liability as of December 31, 2019 recorded in accrued liabilities in the consolidated balance sheets. During
the year ended December 31, 2020, the Company recorded unrealized losses of $2.7 million ($2.0 million net of tax)
on the swaps in other comprehensive loss and transferred unrealized gains of $1.5 million ($1.1 million net of tax)
on the swaps to interest expense. During the year ended December 31, 2019, the Company recorded unrealized gains
of $3.3 million ($2.5 million net of tax) on the swap in other comprehensive loss and transferred unrealized gains of
$1.7 million ($1.2 million net of tax) on the swaps to interest expense. During the year ended December 31, 2018,
the Company recorded unrealized gains of $1.5 million ($1.1 million net of tax) on the swap in other comprehensive
loss and transferred unrealized gains of $0.3 million ($0.2 million net of tax) on the swap in other comprehensive
loss. See Note 21.

Financial instruments that subject the Company to credit risk consist of cash and cash equivalents and restricted cash
and trade accounts receivable. The Company maintains cash and cash equivalents with recognized financial
institutions. One of the most significant credit risks is the ultimate realization of accounts receivable. This risk is
mitigated by (i) sales to well established companies, (ii) ongoing credit evaluation of customers, and (iii) frequent
contact with customers, thus enabling management to monitor current changes in business operations and to respond
accordingly. Management considers these concentrations of credit risks in establishing our allowance for doubtful
accounts and believes these allowances are adequate. The Company had one customer whose gross accounts
receivable exceeded 10% of total gross accounts receivable as of December 31, 2020. That customer represented
11.8% of our total gross accounts receivable.

Note 12—Concentrations of Business Risk

Substantially all of the Company’s sales are derived from manufacturing services in which the Company purchases
components specified by its customers. The Company uses numerous suppliers of electronic components and other
materials for its operations. Some components used by the Company have been subject to industry-wide shortages,
and suppliers have been forced to allocate available quantities among their customers. The Company’s inability to
obtain any needed components during periods of allocation could cause delays in manufacturing and could adversely
affect results of operations.

Note 13—Accounts Receivable Sale Program

As of December 31, 2020, in connection with a trade accounts receivable sale program with unaffiliated financial
institutions, the Company may elect to sell, at a discount, on an ongoing basis, up to a maximum of $120.0 million
of specific accounts receivable at any one time.

During the years ended December 31, 2020, 2019 and 2018, the Company sold $305.8 million, $284.0 million and
$160.0 million, respectively, of accounts receivable under this program, and in exchange, the Company received
cash proceeds of $305.2 million, $283.2 million and $159.5 million, respectively, net of the discount. The loss on
the sale resulting from the discount was recorded to other expense within the consolidated statements of income.

Note 14—Segment and Geographic Information

The Company currently has manufacturing facilities in the Americas, Asia and Europe to serve its customers. The
Company is operated and managed geographically, and management evaluates performance and allocates the
Company’s resources on a geographic basis. Intersegment sales are generally recorded at prices that approximate
arm’s length transactions. Operating segments’ measure of profitability is based on income from operations. The
accounting policies for the reportable operating segments are the same as for the Company taken as a whole. The
Company has three reportable operating segments: Americas, Asia, and Europe. Information about operating
segments is as follows:

(in thousands)
Net sales:

Americas
Asia
Europe
Elimination of intersegment sales

Depreciation and amortization:

Americas
Asia
Europe
Corporate

Income from operations:

Americas
Asia
Europe
Corporate and intersegment eliminations

Interest expense
Interest income
Other income (expense)
Income before income taxes

Capital expenditures:

Americas
Asia
Europe
Corporate

Total assets:
Americas
Asia
Europe
Corporate

Year Ended December 31,
2019

2018

2020

1,209,032 $
746,661
174,547
(77,109)
2,053,131 $

1,428,795 $
741,630
176,384
(78,714)
2,268,095 $

1,647,402
801,312
186,517
(68,766)
2,566,465

22,802 $
11,018
2,842
12,130
48,792 $

32,629 $
63,880
6,077
(77,452)
25,134
(8,364)
1,196
(673)
17,293 $

24,392 $
7,836
1,838
5,453
39,519 $

21,784 $
11,108
3,035
12,500
48,427 $

55,749 $
47,862
6,983
(82,049)
28,545
(6,664)
3,829
1,559
27,269 $

15,822 $
9,493
3,702
6,101
35,118 $

22,668
11,496
3,498
14,177
51,839

61,731
72,442
10,229
(85,864)
58,538
(10,473)
6,848
628
55,541

44,204
14,400
2,388
5,740
66,732

777,658 $
532,793
146,277
287,507
1,744,235 $

792,180 $
533,508
139,977
294,209
1,759,874 $

852,776
540,094
113,165
393,748
1,899,783

Geographic net sales information provided below reflects the destination of the product shipped. Long-lived assets
information is based on the physical location of the asset and includes property, plant and equipment, net, operating
lease right-of-use assets, and other long-term assets, net.

(in thousands)
Geographic net sales:
United States
Asia
Europe
Other

Long-lived assets:
United States
Asia
Europe
Other

Note 15 – Revenue

Year Ended December 31,
2019

2018

2020

1,322,728 $
390,785
240,672
98,946
2,053,131 $

1,508,966 $
391,029
266,216
101,884
2,268,095 $

1,741,321
423,245
299,676
102,223
2,566,465

235,193 $
69,669
18,002
21,980
344,844 $

247,074 $
76,507
20,258
23,563
367,402 $

190,056
79,051
9,537
22,945
301,589

The Company’s revenues are generated primarily from the sale of manufactured products built to customer
specifications. The Company also generates revenue from design, development and engineering services, in addition
to the sale of other inventory.

Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes
revenue when it satisfies a performance obligation by transferring control over a manufactured product to a
customer. The Company’s contracts with customers are generally short-term in nature. Customers are generally
billed when the product is shipped or as services are performed. Under the majority of the Company’s
manufacturing contracts with customers, the customer controls all of the work-in-progress as products are being
built. Revenues under these contracts are recognized progressively based on the cost-to-cost method. For other
manufacturing contracts, the customer does not take control of the product until it is completed. Under these
contracts, the Company recognizes revenue upon transfer of control of the product to the customer. Revenue from
design, development and engineering services is recognized over time as the services are performed. The Company
assumes no significant obligations after shipment as it typically warrants workmanship only. Therefore, the warranty
provisions are generally not significant.

If the Company records revenue, but does not issue an invoice, a contract asset is recognized. The contract asset is
transferred to accounts receivable when the entitlement to payment becomes unconditional.

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

Shipping and handling costs associated with outbound freight after control over a product has transferred to a
customer are accounted for as fulfillment costs and are included in cost of sales.

Disaggregation of revenue

In the following tables, revenue is disaggregated by market sector. The tables also include a reconciliation of the
disaggregated revenue with the reportable operating segments.

(in thousands)
Market Sector:
Industrials
A&D
Medical
Semi-Cap
Computing
Telecommunications
External revenue

Elimination of intersegment sales

Segment revenue

(in thousands)
Market Sector:
Industrials
A&D
Medical
Semi-Cap
Computing
Telecommunications
External revenue

Elimination of intersegment sales

Segment revenue

(in thousands)
Market Sector:
Industrials
A&D
Medical
Semi-Cap
Computing
Telecommunications
External revenue

Elimination of intersegment sales

Segment revenue

Reportable Operating Segments
Year Ended December 31, 2020

Americas

Asia

Europe

Total

110,063 $
401,599
255,246
158,380
140,109
96,937
1,162,334
46,698
$ 1,209,032 $

196,209 $
—
211,567
159,016
31,228
119,987
718,007
28,654
746,661 $

66,789 $
21,972
31,657
51,578
—
794

373,061
423,571
498,470
368,974
171,337
217,718
172,790 2,053,131
77,109
174,547 $ 2,130,240

1,757

Year Ended December 31, 2019

Americas

Asia

Europe

Total

165,163 $
400,326
263,688
102,908
308,077
143,686
1,383,848
44,947
$ 1,428,795 $

214,575 $
—
167,296
123,764
53,051
149,890
708,576
33,054
741,630 $

73,838 $
31,597
17,218
51,093
85
1,840

453,576
431,923
448,202
277,765
361,213
295,416
175,671 2,268,095
78,714
176,384 $ 2,346,809

713

Year Ended December 31, 2018

Americas

Asia

Europe

Total

184,500 $
374,852
235,287
155,687
504,391
162,813
1,617,530
29,872
$ 1,647,402 $

241,765 $
—
144,528
135,299
69,657
171,520
762,769
38,543
801,312 $

66,798 $
31,550
14,152
63,992
6,797
2,877

493,063
406,402
393,967
354,978
580,845
337,210
186,166 2,566,465
68,766
186,517 $ 2,635,231

351

During 2020, 2019 and 2018, 90.2%, 91.5% and 93.0%, respectively, of the Company’s revenue was recognized as
products and services were transferred over time.

The timing of revenue recognition, billings and cash collections result in billed accounts receivable, contract assets
and advance payments from customers.

As of December 31, 2020 and 2019, the Company had $142.8 million and $161.1 million, respectively, in contract
assets from contracts with customers. The contract assets primarily relate to the Company’s right to consideration
for work completed but not billed at the reporting date. The contract assets are transferred to accounts receivable
when the rights become unconditional.

(in thousands)
Beginning balance as of December 31
Revenue recognized
Amounts collected or invoiced
Ending balance as of December 31

December 31,

2020

161,061 $
1,848,807
(1,867,089)
142,779 $

2019

140,082
2,076,680
(2,055,701)
161,061

As of December 31, 2020 and 2019, the Company had $84.1 million and $37.5 million, respectively, in advance
payments from customers. Of those amounts $54.9 million and $35.7 million, respectively, were customer deposits
and prepayments of inventory and $29.2 million and $1.8 million, respectively, were related to the contractual
timing of payments. The advance payments are not considered a significant financing component because they are
used to meet working capital demands of a contract, offset inventory risks and protect the company from the failure
of other parties to fulfill obligations under a contract.

Note 16—Employee Benefit Plans

The Company has defined contribution plans qualified under Section 401(k) of the Internal Revenue Code for the
benefit of all its U.S. employees. The Company’s contributions to the plans are based on employee contributions and
compensation. During 2020, 2019 and 2018, the Company made contributions to the plans of approximately $3.1
million, $6.2 million and $5.6 million, respectively. The Company also has defined contribution benefit plans for
certain of its international employees primarily dictated by the custom of the regions in which it operates. During
each of 2020, 2019 and 2018, the Company made contributions to the international plans of approximately $0.1
million.

Note 17—Contingencies

The Company is involved in various legal actions arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s
consolidated financial position or results of operations.

Note 18—Restructuring Charges

The Company has undertaken initiatives to restructure its business operations to improve utilization and realize cost
savings. These initiatives have included changing the number and location of production facilities, largely to align
capacity and infrastructure with current and anticipated customer demand. This alignment includes transferring
programs from higher cost geographies to lower cost geographies. The process of restructuring entails moving
production between facilities, reducing staff levels, realigning our business processes, reorganizing our management
and other activities.

The Company recognized restructuring charges during 2020, 2019 and 2018 primarily related to the closure of
facilities in the Americas, capacity reduction and reductions in workforce in certain facilities across various regions.

The following table summarizes the 2020 activity in the accrued restructuring balances related to the various
restructuring activities initiated prior to December 31, 2020:

(in thousands)
2020 Restructuring:

Severance
Lease facility costs
Other exit costs

2019 Restructuring:

Severance
Lease facility costs
Other exit costs

Total

Balance as of
December 31, Restructuring

Cash

2019

Charges

Payment

Balance as of
Non-Cash December 31,
Activity

2020

— $
—
—
—

3,956
—
—
3,956
3,956 $

8,171 $
165
733
9,069

(1,161)
3,551
1,441
3,831
12,900 $

(4,182) $
—
(202)
(4,384)

(2,484)
(2,394)
(453)
(5,331)
(9,715) $

(232) $
(127)
(383)
(742)

(72)
(1,145)
(728)
(1,945)
(2,687) $

3,757
38
148
3,943

239
12
260
511
4,454

The components of the restructuring charges initiated during 2020 were as follows:

(in thousands)
Severance costs
Lease facility costs
Other exit costs

Americas
$

6,977 $
165
733
7,875 $

Asia

Europe

Total

1,181 $
—
—
1,181 $

13 $
—
—
13 $

8,171
165
733
9,069

During 2020, the Company recognized $8.2 million of employee termination costs associated with the involuntary
terminations (both executed and planned) of 648 employees in connection with reductions in workforce worldwide.
The identified involuntary employee terminations by reportable geographic region amounted to approximately 421,
210 and 17 for the Americas, Asia and Europe, respectively.

In addition, during the year ended December 31, 2020, we incurred $5.7 million and $1.0 million in costs related to
asset impairments in the Americas and Asia, respectively.

The following table summarizes the 2019 activity in the accrued restructuring balances related to the various
restructuring activities initiated prior to December 31, 2019:

(in thousands)
2019 Restructuring:

Severance
Other exit costs

2018 Restructuring:

Severance
Other exit costs

2017 Restructuring:

Severance
Other exit costs

Total

Balance as of
December 31, Restructuring

Cash

2018

Charges

Payment

Foreign

Balance as of
Non-Cash Exchange December 31,
Adjustments
Activity

2019

— $
—
—

6,449 $
1,597
8,046

(2,493) $
(653)
(3,146)

— $
(944)
(944)

282
918
1,200

—
135
135
1,335 $

—
461
461

(282)
(1,379)
(1,661)

—
—
—
8,507 $

—
(124)
(124)
(4,931) $

—
—
—

—
—
—
(944) $

— $
—
—

—
—
—

—
(11)
(11)
(11) $

3,956
—
3,956

—
—
—

—
—
—
3,956

The components of the restructuring charges initiated during 2019 were as follows:

(in thousands)
Severance costs
Other exit costs

Americas
$

4,499 $
1,561
6,060 $

Asia

Europe

Total

1,950 $
36
1,986 $

— $
—
— $

6,449
1,597
8,046

During 2019, the Company recognized $6.4 million of employee termination costs associated with the involuntary
terminations (both executed and planned) of 468 employees in connection with reductions in workforce worldwide.
The identified involuntary employee terminations by reportable geographic region amounted to approximately 386,
81 and 1 for the Americas, Asia and Europe, respectively.

The components of the restructuring charges initiated during 2018 were as follows:

(in thousands)
Severance costs
Other exit costs

Americas
$

2,496 $
1,773
4,269 $

Asia

Europe

Total

274 $
—
274 $

45 $
—
45 $

2,815
1,773
4,588

During 2018, the Company recognized $2.8 million of employee termination costs associated with the involuntary
terminations (both executed and planned) of 490 employees in connection with reductions in workforce worldwide.
The identified involuntary employee terminations by reportable geographic region amounted to approximately 432,
23 and 35 for the Americas, Asia and Europe, respectively.

Note 19—Ransomware Incident

We do have insurance coverage, including cyber insurance, and are working diligently with our insurance carriers
on claims to recover costs incurred.

In 2019, ransomware incident related costs incurred totaled $7.7 million, net of estimated insurance recoveries of
$5.0 million, respectively. These costs were primarily comprised of certain employee related expenses and various
third party consulting services including forensic experts, legal counsel and other IT professional expenses. During
the year ended December 31, 2020, the Company collected $6.6 million of insurance recoveries. Any further
insurance recoveries will be recorded when considered probable.

Note 20—Quarterly Financial Data (Unaudited)

The following table sets forth certain unaudited quarterly information with respect to the Company’s results of
operations for the years 2020, 2019 and 2018. Earnings per share are computed independently for each of the
quarters presented. Therefore, the sum of the quarterly earnings per share may not equal the total earnings per share
amounts for the fiscal year.

(in thousands, except per share data)
Sales
Gross profit
Net income (loss)
Earnings (loss) per share:

Basic
Diluted

(in thousands, except per share data)
Sales
Gross profit
Net income (loss)
Earnings (loss) per share:

Basic
Diluted

(in thousands, except per share data)
Sales
Gross profit
Net income (loss)
Earnings (loss) per share:

Basic
Diluted

2020 Quarter

1st
514,964 $
43,361
3,852

2nd
490,966 $
34,672
(3,407)

3rd
525,951 $
46,354
5,915

4th
521,250
50,661
7,695

0.10
0.10

(0.09)
(0.09)

0.16
0.16

0.21
0.21

2019 Quarter

1st
602,820 $
50,037
13,773

2nd
601,602 $
49,223
9,447

3rd
555,229 $
48,955
7,136

4th
508,444
37,313
(6,931)

0.34
0.34

0.25
0.24

0.19
0.19

(0.19)
(0.19)

2018 Quarter

1st
608,136 $
54,200
(23,641)

2nd
660,591 $
50,548
10,943

3rd
640,688 $
48,995
7,799

4th
657,050
52,093
27,716

(0.49)
(0.49)

0.23
0.23

0.17
0.17

0.64
0.64

Note 21—Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss by component were as follows:

(in thousands)
Balances, December 31, 2017

Other comprehensive gain (loss) before
reclassifications
Amounts reclassified from accumulated
other comprehensive loss

Net current period other comprehensive gain (loss)
Balances, December 31, 2018

Other comprehensive gain (loss) before
reclassifications
Amounts reclassified from accumulated
other comprehensive loss

Net current period other comprehensive gain (loss)
Balances, December 31, 2019

Other comprehensive gain (loss) before
reclassifications
Amounts reclassified from accumulated
other comprehensive loss

Net current period other comprehensive gain (loss)
$
Balances, December 31, 2020

Foreign
currency Derivative
translation instruments, investments,
adjustments net of tax net of tax Other Total
$

Unrealized
loss on

(9,567)

1,478

(41)

(19) $ (8,149)

(2,273)

(1,126)

619

(2,739)

—
(2,273)
(11,840)

(236)
(1,362)
116

—
41
—

(236)
—
619
(2,975)
600 (11,124)

(585)

(2,474)

—

(1,334)

(4,393)

—
(585)
(12,425)

(1,242)
(3,716)
(3,600)

—
—
—

—
(1,334)

(1,242)
(5,635)
(734) (16,759)

4,050

(2,024)

—

(800)

1,226

—
4,050
(8,375) $

(1,118)
(3,142)
(6,742) $

(1,118)
—
—
—
108
(800)
— $ (1,534) $ (16,651)

See Note 11 for further explanation of the change in derivative instruments that is recorded to accumulated other
comprehensive loss. Amounts reclassified from accumulated other comprehensive loss during 2020, 2019 and 2018
primarily affected interest expense and selling, general and administrative expenses, respectively.

Note 22—Supplemental Cash Flow and Non-Cash Information

The following is additional information concerning supplemental disclosures of cash payments.

(in thousands)
Income taxes paid, net
Interest paid
Non-cash investing activity:
Additions to property, plant and equipment in accounts payable

$
$

Year ended December 31,
2019

2018

2020

18,071 $
9,048 $

16,895 $
8,347 $

48,918
7,868

3,164 $

9,119 $

6,148

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Benchmark Electronics, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Benchmark Electronics, Inc. and subsidiaries (the
Company) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive
income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31,
2020, and the related notes (collectively, the consolidated financial statements). We also have audited the
Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S. generally
accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2020 based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Notes 1 and 7 to the consolidated financial statements, the Company has changed its method of
accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842,
Leases.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the
Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting

includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.

Evaluation of income tax expense

As discussed in Notes 1 and 9 to the consolidated financial statements, the Company has recorded income
tax expense of $3.2 million for the year ended December 31, 2020. The Company serves international
markets and is subject to income taxes in the United States and foreign jurisdictions, which affect the
Company’s income tax expense. Income tax expense is an estimate based on the Company’s understanding
of current enacted tax laws and tax rates of each tax jurisdiction.

We identified the evaluation of income tax expense as a critical audit matter. Complex auditor judgment
was required in evaluating the Company’s interpretation and application of tax laws and the related impacts
to income tax expense. There is complexity in the evaluation of the U.S. income tax expense due to the
impact of U.S. tax reform on multinational operations such as the U.S. tax on global intangible low-taxed
income (GILTI) and foreign tax credits. There is also complexity in evaluating the impact of changing
foreign tax laws on income tax expense.

The following are the primary procedures we performed to address this critical audit matter. We evaluated
the design and tested the operating effectiveness of certain internal controls over the Company’s income tax
expense process. This included controls over the identification of changes to tax laws in the jurisdictions in
which the Company operates and the Company’s evaluation of the determination of GILTI and foreign tax
credits. We involved tax professionals with specialized skills and knowledge who assisted in evaluating the
application of the relevant tax laws and regulations in the determination of the Company’s tax expense. In
addition, we evaluated the Company’s methodology used in the determination of GILTI and foreign tax
credits.

We have served as the Company’s auditor since 1986.

Phoenix, Arizona
March 1, 2021

Management’s Report

Benchmark’s management has prepared and is responsible for the consolidated financial statements and related
financial data contained in this Report. The consolidated financial statements were prepared in accordance with U.S.
generally accepted accounting principles and necessarily include certain amounts based upon management’s best
estimates and judgments. The financial information contained elsewhere in this Report is consistent with that in the
consolidated financial statements.

The Company maintains internal accounting control systems that are adequate to prepare financial records and to
provide reasonable assurance that the assets are safeguarded from loss or unauthorized use. We believe these
systems are effective, and the cost of the systems does not exceed the benefits obtained.

The Audit Committee, composed exclusively of independent, outside directors, has reviewed all financial data
included in this Report and recommended to the full Board inclusion of the audited financial statements contained in
the Report. The committee meets periodically with the Company’s management and independent registered public
accountants on financial reporting matters. The independent registered public accountants have complete access to
the Audit Committee and may meet with the committee, without management present, to discuss their audit results
and opinions on the quality of financial reporting.

The role of independent registered public accountants is to render a professional, independent opinion on
management’s financial statements to the extent required by the standards of the Public Company Accounting
Oversight Board (United States). Benchmark’s responsibility is to conduct its affairs according to the highest
standards of personal and corporate conduct.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

As of the end of the period covered by this Report, the Company’s management (with the participation of its chief
executive officer and chief financial officer) conducted an evaluation pursuant to Rule 13a-15 promulgated under
the Exchange Act, of the effectiveness of the design and operation of the Company’s disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act). Based on this evaluation,
the Company’s chief executive officer and chief financial officer concluded that as of the end of the period covered
by this Report such disclosure controls and procedures were effective to provide reasonable assurance that
information required to be disclosed by the Company in reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC,
and include controls and procedures designed to ensure that information required to be disclosed by the Company in
such reports is accumulated and communicated to the Company’s management, including the Company’s chief
executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting
(as such term is defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act). Under the supervision and with
the participation of our management, including our principal executive officer and principal financial officer, we
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework
in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on our evaluation under the framework, our management concluded that our
internal control over financial reporting was effective as of December 31, 2020.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 has been
audited by KPMG LLP, an independent registered public accounting firm, as stated in their report included in Part
II, Item 8 of this Report.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the last fiscal quarter
covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting. Although we have modified our workplace practices globally due to the pandemic, resulting
in some of our employees working remotely, this has not materially affected our internal controls over financial
reporting. We are continually monitoring and assessing the impacts and disruptions caused by the pandemic to
ensure there are no material effects on our internal control over financial reporting and to minimize such impacts on
their design and operating effectiveness.

Limitations on Effectiveness of Controls and Procedures

Our management, including our chief executive officer and chief financial officer, does not expect that our
disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if
any, within the company have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by
management override of the control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions; over time, a control may become inadequate because
of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of
the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be
detected.

Item 9B. Other Information.

Not applicable.

Item 10. Directors, Executive Officers and Corporate Governance.

PART III

The information required by this item can be found in the Company’s Proxy Statement for the 2021 Annual
Shareholders Meeting (the 2021 Proxy Statement), to be filed not later than 120 days after the end of the Company’s
fiscal year and is incorporated herein by reference.

Item 11. Executive Compensation.

The information required by this item can be found in the 2021 Proxy Statement and is incorporated herein by
reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters.

The following table sets forth certain information relating to our equity compensation plans as of December 31,
2020:

Plan Category
Equity compensation plans approved by security
holders

Number of
securities
to be issued
upon exercise
of outstanding
options, warrants
and rights

Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights

Number of
securities
remaining
available
for future
issuance

1,584,024(1)

$19.98(1) 2,879,601

(1) Includes 1,393,503 restricted share units and performance restricted share units. The weighted-average exercise

price does not take these awards into account.

Additional information required by this item can be found in the 2021 Proxy Statement and is incorporated herein by
reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item can be found in the 2021 Proxy Statement and is incorporated herein by
reference.

Item 14. Principal Accountant Fees and Services.

The information required by this item can be found in the 2021 Proxy Statement and is incorporated herein by
reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)

(1) Financial statements of the Company filed as part of this Report:

See Part II, Item 8 - Financial Statements and Supplementary Data of this Report.

See accompanying Report of Independent Registered Public Accounting Firm incorporated herein by reference.

(b) Exhibits

2.1

3.1

3.2

4.1

4.2

10.1

10.2 (1)

10.3 (1)

10.4 (1)

10.5 (1)

10.6 (1)

10.7 (1)

10.8 (1)

10.9 (1)

Purchase Agreement dated October 20, 2015 (incorporated by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated November 12, 2015 (Commission file number 1-10560))

Restated Certificate of Formation dated May 17, 2016 (incorporated by reference to Exhibit 3.1 to the
Company’s Current Report on Form 8-K dated May 17, 2016) (Commission file number 1-10560)

Amended and Restated Bylaws of the Company dated December 2, 2020 (incorporated by reference to
Exhibit 3.2 to the Company’s Current Report on Form 8-K dated December 7, 2020 (Commission file
number 1-10560))

Specimen form of certificate evidencing the Common Shares (incorporated by reference to Exhibit 4.1
to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014)
(Commission file number 1-10560)

Description of Company’s securities (incorporated by reference to Exhibit 4.2 to the Company’s Annual
Report on Form 10-K for the year ended December 31, 2019 (Commission file number 1-10560))

Form of Indemnity Agreement between the Company and its directors and senior officers (incorporated
by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed for the quarter
ended June 30, 2017 (Commission file number 1-10560))

Benchmark Electronics, Inc. 2000 Stock Awards Plan (2000 Plan) (incorporated by reference to Exhibit
4.8 to the Company’s Registration Statement on Form S-8 (Registration Number 333-54186))

Form of nonqualified stock option agreement for use under the 2000 Plan (incorporated by reference to
Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
(Commission file number 1-10560))

Benchmark Electronics, Inc. 2002 Stock Option Plan for Non-Employee Directors (2002 Plan)
(incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule
14A filed April 15, 2002 (Commission file number 1-10560))

Amendment No. 1 to the 2002 Plan (incorporated by reference to Exhibit 99.3 to the Company’s Current
Report on Form 8-K dated May 19, 2006 (Commission file number 1-10560))

Benchmark Electronics, Inc. 2010 Omnibus Incentive Compensation Plan (2010 Plan) (incorporated by
reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (Registration Number
333-168427))

First Amendment to the 2010 Plan (incorporated by reference to Annex A to the Company's Definitive
Proxy Statement on Schedule 14A filed March 28, 2014 (Commission file number 1-10560))

Form of option award agreement for use under the 2010 Plan (incorporated by reference to Exhibit 4.10
to the Company’s Registration Statement on Form S-8 (Registration Number 333-168427))

Form of restricted share award agreement for use under the 2010 Plan (incorporated by reference to
Exhibit 4.11 to the Company’s Registration Statement on Form S-8 (Registration Number 333-168427))

10.10 (1) Form of restricted stock unit award agreement for use under the 2010 Plan (incorporated by reference to
Exhibit 4.12 to the Company’s Registration Statement on Form S-8 (Registration Number 333-168427))

10.11 (1) Amended form of restricted stock unit award agreement for use under the 2010 Plan (incorporated by

reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2017 (Commission file number 1-10560))

10.12 (1) Form of performance-based restricted stock unit award agreement for use under the 2010 Plan

(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on
May 10, 2016 (Commission file number 1-10560))

10.13 (1) Amended form of performance-based restricted stock unit award agreement for use under the 2010 Plan

(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2017 (Commission file number 1-10560))

10.14 (1) Benchmark Electronics, Inc. Deferred Compensation Plan dated as of December 16, 2008 (incorporated
by reference to Exhibit 99.1 to the Company’s Form S-8 (Registration Number 333-156202))

10.15 (1) Form of Executive Severance Agreement (incorporated by referent to Exhibit 10.15 to the Company’s

Annual Report on Form 10-K for the year ended December 31, 2015 (Commission file number 1-
10560))

10.16

10.17

10.18

Code of Conduct (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2009 (Commission file number 1-10560))

Credit Agreement, dated July 20, 2018, by and among the Company, certain of its subsidiaries, the
lenders party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and a L/C
Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated
July 23, 2018 (Commission file number 1-10560))

Cooperation Agreement, dated as of December 19, 2016, by and among the Company and Engaged
Capital, LLC, Engaged Capital Flagship Master Fund, LP, Engaged Capital Flagship Fund, LP, Engaged
Capital Flagship Fund, Ltd. and Engaged Capital Holdings, LLC (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K dated December 19, 2016 (Commission file number
1-10560))

10.19 (1) Form of Key Management Severance Agreement (incorporated by reference to Exhibit 10.1 to the

Company’s Current Report on Form 8-K dated December 11, 2017 (Commission file number 1-10560))

10.20 (1) Employment Agreement, dated February 26, 2019, between the Company and Jeffrey W. Benck
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated
February 28, 2019 (Commission file number 1-10560))

10.21 (1) Benchmark Electronics, Inc. 2019 Omnibus Incentive Compensation Plan (incorporated by reference to
Annex A to the Company’s Definitive Proxy Statement on Schedule 14A filed April 5, 2019)
(Commission file number 1-10560)

10.22

Amendment No. 1 to the Credit Agreement, dated May 17, 2019, by and among the Company, certain of
its subsidiaries, the lenders party thereto and Bank of America, N.A., as Administrative Agent,
Swingline Lender and a L/C Issuer (incorporated by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2019) (Commission file number 1-
10560)

10.23 (1) (2) Form of restricted stock unit award agreement for use under the 2019 Plan

10.24 (1) (2) Form of performance-based restricted stock unit award agreement for use under the 2019 Plan

21 (2)

Subsidiaries of Benchmark Electronics, Inc.

23 (2)

Consent of Independent Registered Public Accounting Firm

31.1 (2)

Section 302 Certification of Chief Executive Officer

31.2 (2)

Section 302 Certification of Chief Financial Officer

32.1 (2)

Section 1350 Certification of Chief Executive Officer

32.2 (2)

Section 1350 Certification of Chief Financial Officer

101.INS (2) Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File

because its XBRL tags are embedded within the Inline XBRL document

101.SCH (2) Inline XBRL Taxonomy Extension Schema Document

101.CAL (2)

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF (2)

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB (2) Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE (2) Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 (2)

Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101

(1) Indicates management contract or compensatory plan or arrangement.
(2) Filed/furnished herewith.

Item 16. Form 10-K Summary.

None.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

BENCHMARK ELECTRONICS, INC.
/s/ Jeffrey W. Benck

By:

Jeffrey W. Benck
Chief Executive Officer

Date:March 1, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the registrant, in the capacities and on the dates indicated.

Name

/s/ David W. Scheible
David W. Scheible

Position

Date

Chairman of the Board

March 1, 2021

/s/ Jeffrey W. Benck
Jeffrey W. Benck

President, Chief Executive Officer and Director
(principal executive officer)

/s/ Roop K. Lakkaraju
Roop K. Lakkaraju

/s/ Bruce A. Carlson
Bruce A. Carlson

/s/ Anne De Greef-Safft
Anne De Greef-Safft

/s/ Douglas G. Duncan
Douglas G. Duncan

/s/ Robert K. Gifford
Robert K. Gifford

/s/ Kenneth T. Lamneck
Kenneth T. Lamneck

/s/ Jeffrey S. McCreary
Jeffrey S. McCreary

/s/ Merilee Raines
Merilee Raines

Chief Financial Officer
(principal financial and accounting officer)

Director

Corporate and Shareholder Data

EXECUTIVE OFFICERS

Jeffrey W. Benck (4)
President and
Chief Executive Officer

Roop K. Lakkaraju (4)
Executive Vice President,
Chief Financial Officer

Michael D. Buseman (4)
Executive Vice President,
Chief Operating Officer

Stephen J. Beaver, Esq. (4)
Senior Vice President,
General Counsel and
Chief Legal Officer,
Corporate Secretary

Robert B. Crawford
Senior Vice President,
Chief Revenue Officer

Scott M. Hicar
Senior Vice President,
Chief Information Officer

Jan M. Janick (4)
Senior Vice President,
Chief Technology Officer

Rhonda R. Turner
Senior Vice President,
Chief Human Resources Officer

Lisa K. Weeks
Senior Vice President,
Chief Strategy Officer

LEGAL COUNSEL

Snell & Wilmer L.L.P.
Phoenix, Arizona

(1) Chairman of the Board
(2) Member of Audit Committee
(3) Member of Compensation

Committee

(4) Named Executive Officer
(5) Member of Nominating/
Governance Committee

INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS

KPMG LLP
Phoenix, Arizona

DIRECTORS

David W. Scheible (1) (3) (5)
Chairman of the Board
of the Company and Current
Operating Advisor to the funds
of Clayton, Dubilier & Rice

Bruce A. Carlson (2)
Retired General
United States Air Force

Anne De Greef-Safft (3) (5)
Advisor to Private Equity Firms and
Their Portfolio Companies through
ADS Consulting

Douglas G. Duncan (2) (5)
Retired President and Chief
Executive Officer
FedEx Freight Corporation

Robert K. Gifford (3)
President and
Chief Operating Officer
BeachBody LLC

Kenneth T. Lamneck (2) (5)
President and
Chief Executive Officer
Insight Enterprises, Inc.

Jeffrey S. McCreary (3 (5)
Retired Interim President and
Chief Executive Officer
Isola Group

Merilee Raines (2)
Retired Chief Financial Officer
IDEXX Laboratories, Inc.

Jeffrey W. Benck (4)
President and
Chief Executive Officer
Benchmark Electronics, Inc.

Stock Trading

The common shares of Benchmark
Electronics, Inc. trade on the New York
Stock Exchange under the symbol BHE.

Stock Transfer Agent and Registrar

Communications concerning stock transfer
requirements, lost certificates or changes of
address should be directed to:

Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, Kentucky 40233
800-962-4284

SEC Form 10-K

Our annual report on Form 10-K that has
been filed with the Securities and Exchange
Commission (excluding exhibits) is included
as part of this Annual Report. A copy of
exhibits will be provided without charge
upon written request to:

Investor Relations
Benchmark Electronics, Inc.
56 South Rockford Drive
Tempe, Arizona 85281

Available Information

We make available free of charge through
our internet website (www.bench com)
our annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on
Form 8-K, and amendments to those reports
filed or furnished pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of
1934 as soon as reasonably practicable after
we electronically file them with,
or furnish them to, the Securities and
Exchange Commission.

Financial Mailing List

Shareholders whose stock is held in trust
or by a brokerage firm may receive timely
financial mailings directly from Benchmark
by writing to Investor Relations at the above
address.

Annual Meeting

Shareholders are invited to attend the
Benchmark Electronics, Inc. annual meeting,
which will be held at

Benchmark Electronics, Inc.
56 South Rockford Drive
Tempe, Arizona 85281
Wednesday, May 12, 2021
8:00 a.m. Arizona time

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Benchmark Electronics, Inc., 56 South Rockford Drive, Tempe, AZ 85281 | 833.236.2400 | www.bench.com

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