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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
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)
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TEXAS 74-2211011
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3000 TECHNOLOGY DRIVE 77515
ANGLETON, TEXAS (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(409) 849-6550
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value New York Stock Exchange, Inc.
$0.10 per share
Preferred Stock Purchase Rights New York Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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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 [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 26, 1999, the number of outstanding shares of Common Stock was
11,666,083. As of such date, the aggregate market value of the shares of Common
Stock held by non-affiliates, based on the closing price of the Common Stock on
the New York Stock Exchange on such date, was approximately $328.8 million.
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Portions of the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 1998 (Part II Items 5-8 and Part IV Item
14(a)(1)).
(2) Portions of the Company's Proxy Statement for the 1999 Annual Meeting of
Shareholders (Part III, Items 10-13).
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Business................................................. 1
ITEM 2. Properties............................................... 7
ITEM 3. Legal Proceedings........................................ 8
ITEM 4. Submission of Matters to a Vote of Security Holders...... 8
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Shareholder Matters.................................... 8
ITEM 6. Selected Financial Data.................................. 8
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 8
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk............................................ 8
ITEM 8. Financial Statements and Supplementary Data.............. 8
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 9
PART III
ITEM 10. Directors and Executive Officers of the Registrant....... 9
ITEM 11. Executive Compensation................................... 9
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management............................................. 9
ITEM 13. Certain Relationships and Related Transactions........... 9
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K............................................... 9
ii
PART I
ITEM 1. BUSINESS
GENERAL
Benchmark Electronics, Inc. (the "Company") provides contract electronics
manufacturing and design services to original equipment manufacturers ("OEMs")
in select industries, including medical devices, communications equipment,
industrial and business computers, testing instrumentation and industrial
controls. The Company specializes in manufacturing high quality, technologically
complex printed circuit board assemblies with computer-automated equipment using
surface mount and pin-through-hole interconnection technologies for customers
requiring low to medium volume production runs. The Company frequently works
with customers from product design and prototype stages through ongoing
production and, in some cases, final assembly of the customers' products and
provides manufacturing services for successive product generations. As a result,
the Company believes that it is often an integral part of its customers'
operations.
Substantially all of the Company's manufacturing services are provided on
a turnkey basis, whereby the Company purchases customer-specified components
from its extensive network of suppliers, assembles the components on finished
printed circuit boards, performs post-production testing and provides the
customer with production process and testing documentation. The Company offers
its customers flexible, "just-in-time" delivery programs allowing product
shipments to be closely coordinated with the customers' inventory requirements.
In certain instances, the Company completes the assembly of its customers'
products at the Company's facilities by integrating printed circuit board
assemblies into other elements of the customers' products. The Company also
provides manufacturing services on a consignment basis, whereby the Company,
utilizing components provided by the customer, provides only assembly and
post-production testing services. The Company operates a total of 39 surface
mount production lines at its facilities in Angleton, Texas, Beaverton, Oregon,
Hudson, New Hampshire, Winona, Minnesota, and Dublin, Ireland.
The Company, formerly named Electronics, Inc., began operations in 1979
and was incorporated under Texas law in 1981 as a wholly owned subsidiary of
Intermedics, Inc. ("Intermedics"), a medical implant manufacturer based in
Angleton, Texas. In 1986, Intermedics sold 90% of the outstanding shares of
common stock of the Company to Electronic Investors Corp. ("EIC"), a corporation
formed by Donald E. Nigbor, Steven A. Barton and Cary T. Fu, the Company's three
executive officers. In 1988, EIC was merged into the Company, and in 1990 the
Company completed the initial public offering of its common stock.
RECENT ACQUISITIONS
In July 1996, the Company acquired all of the outstanding common stock of
EMD Technologies, Inc. ("EMD"), an independent provider of contract
manufacturing and product design services for OEMs in industries comparable to
those targeted by the Company. EMD's manufacturing services focus on
manufacturing complex printed circuit board assemblies, operating 15 surface
mount production lines at its Winona, Minnesota facilities. EMD's product design
services include the complete design and development of electronics products and
mechanical packages, from conceptual design of circuit boards to configuring
subsystems and enclosures.
In February 1998, the Company acquired all of the outstanding stock of
Lockheed Commercial Electronics Company ("LCEC"), one of New England's largest
electronics manufacturing services companies, providing a broad range of
services including printed circuit board assembly and test, system assembly and
test, prototyping, depot repair, materials procurement, and engineering support
services.
On March 1, 1999, the Company acquired certain assets from Stratus Computer
Ireland (Stratus), a wholly-owned subsidiary of Ascend Communications, Inc.
(Ascend) for approximately $48 million, subject to adjustment. In connection
with the transaction, the Company entered into a three-year supply agreement to
provide system integration services to Ascend and Stratus Holding Limited and
the Company hired 260 employees. In conjunction with the purchase of the Stratus
assets, the Company increased its revolving line of credit to $65 million and
borrowed $25 million. See "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" for a description of the revolving line of
credit. Under Stratus, the plant operated as a systems integration facility for
large and very sophisticated fault-tolerant mainframe computers. The Company
will continue to operate this new Benchmark Division from the Company's Dublin,
Ireland facility with the bulk of its present staff and with additional
personnel transferred there, under a multi-year exclusive service contract with
Stratus, as a key supplier to Ascend.
1
THE CONTRACT ELECTRONICS MANUFACTURING INDUSTRY
The basis for the development of the contract manufacturing industry in
recent years has been the increasing reliance by OEMs on contract manufacturing
specialists such as the Company for the manufacture of printed circuit board
assemblies. As a result of outsourcing manufacturing services, the contract
manufacturing industry in the United States grew at a compound annual rate of
21% from 1994 through 1998, according to the Institute for Interconnecting and
Packaging Electronic Circuits ("IPC"). The IPC estimated the size of the United
States contract manufacturing industry for 1998 in terms of sales to be $22.5
billion. The Company expects the trend toward outsourcing to continue and to
result in continued growth in the contract manufacturing industry. A 1997 IPC
study forecast that the contract manufacturing industry would grow at an
approximate compound annual rate of 20% through 2000 as OEMs continue to
outsource their manufacturing requirements and look to contract manufacturers to
provide additional services. Some of the advantages OEMs receive as a result of
outsourcing are:
ACCELERATION OF TIME TO MARKET. Rapid technological advances in the
Company's targeted industries require OEMs to make their products
available to their customers quickly to remain competitive. Delays in
bringing a new product to market can result in obsolescence of the product
before it becomes available. Contract manufacturers who specialize in
printed circuit board assembly are often able to provide manufacturing
services in a more timely manner than OEMs, thus allowing OEMs to reduce
the time to market for their products.
REDUCTION OF PRODUCTION COSTS. Contract manufacturers generally are
able to manufacture printed circuit board assemblies at a lower cost than
OEMs because of the efficiencies associated with specialization and
greater production volumes. Additionally, the purchasing power of contract
manufacturers allows OEMs to save on costs of procurement of components.
OEMs also benefit from the inventory management services provided by
contract manufacturers in connection with turnkey manufacturing services.
ACCESS TO ADVANCED TECHNOLOGY. Using contract manufacturers affords
OEMs access to advanced technology in printed circuit board assembly
equipment and techniques that OEMs may consider too costly for in-house
investment. The increasing use of surface mount interconnection
technology, which requires significant investments in computer-automated
equipment and the expertise to operate such equipment, is an example. Many
OEMs have been unwilling to make such investments, relying instead on
contract manufacturers for surface mount assembly. More recent
technological advancements that contract manufacturers are now able to
offer to OEMs include ball grid array and chip on board assembly
processes.
IMPROVED MANUFACTURING QUALITY. Because it is the focus of their
operations, contract manufacturers are consistently able to provide
contract manufacturing services of a higher quality than OEMs can provide
in-house. Printed circuit board assembly and other services provided by
contract manufacturers are typically a small part of the broader
operations of the OEMs.
OPPORTUNITY TO FOCUS RESOURCES. By outsourcing printed circuit board
assembly and other manufacturing services, OEMs are able to focus their
resources on their primary activities, such as research and development of
new products and marketing.
Other factors in the contract manufacturing industry may have a positive
impact on established contract manufacturers such as the Company. The increasing
cost of automated equipment used in the industry, the working capital
requirements relating to inventory and the additional services that contract
manufacturers are providing make it more difficult for smaller manufacturers and
start-up companies to compete with the services that are provided by larger,
well-capitalized companies. Furthermore, the Company believes that these factors
are driving consolidation in the industry and may provide opportunities for
growth through acquisition.
BUSINESS STRATEGY
The Company's business strategy is to provide high quality contract
electronics manufacturing services to OEMs in targeted industries. The Company
seeks to provide services that reduce OEM costs and time to market and increase
OEM product quality. The Company's strategy to achieve these objectives includes
the following key elements:
ESTABLISH AND MAINTAIN LONG-TERM RELATIONSHIPS. The Company pursues
opportunities to provide turnkey manufacturing services whereby the
Company becomes an integral part of its customers' manufacturing
operations. The Company seeks to work closely with its customers in all
phases of design and production. By aggressively marketing its services to
its targeted customers and involving design, marketing and senior
management personnel in the pursuit and maintenance of customer
relationships, the Company attempts to establish itself as the sole or
primary source for its customers' manufacturing requirements. The Company
believes that working to develop close, long-term relationships builds
customer loyalty that is difficult for competitors to overcome.
2
TARGET AND MAINTAIN BALANCE AMONG SELECT OEM INDUSTRIES AND
CUSTOMERS. The Company targets industries and customers that have strict
quality control standards for their products and that have
service-intensive manufacturing requirements. The Company focuses on
complex assemblies in low to medium volumes for commercial and industrial
customers. The Company has not been, and does not intend to become, a
manufacturer of high volume printed circuit board assemblies for personal
computers or consumer-oriented products, which typically have relatively
low margins. The Company targets customers in the medical devices,
communications equipment, industrial and business computers, testing
instrumentation and industrial controls industries and seeks to maintain a
balance of customers among these industries and within each industry. By
balancing its operations among industries and customers, the Company seeks
to avoid becoming dependent on any one industry or customer. In addition,
the Company believes that the industries and customers that it targets
produce products that generally have longer life cycles, more stable
demand and less price pressure as compared to consumer-oriented products.
PROVIDE COMPREHENSIVE DESIGN AND MANUFACTURING SERVICES. The Company
believes that OEMs increasingly expect a broad range of services from
contract manufacturers and that attracting and retaining customers depends
on the Company's ability to provide such services. The Company provides
its customers with services ranging from initial product design and
development and prototype production to the manufacture of printed circuit
board assemblies, post-production testing and final assembly of customers'
products.
PURSUE OPPORTUNITIES FOR GROWTH. The Company is committed to
pursuing opportunities to grow its operations through acquiring additional
facilities or businesses and achieving additional operating efficiencies
in the Company's existing operations.
MAINTAIN FLEXIBILITY. The Company believes that many of its
customers are leaders in their respective industries, and, as a result,
routinely re-engineer their products to incorporate new and more
competitive product features. Accordingly, the Company has organized its
manufacturing operations into flexible work centers, as opposed to
dedicated production lines, which allow the Company to incorporate complex
design specifications and to respond rapidly to design changes.
SERVICES PROVIDED BY THE COMPANY
The Company provides turnkey manufacturing services, including the
purchase of customer-specified components from its extensive network of
component suppliers, assembly of the components onto printed circuit boards and
performance of post-production testing. In certain instances, the Company
completes the assembly of its customers' products at the Company's facilities by
integrating printed circuit boards into other elements of the customers'
products.
The Company provides design-for-manufacturability engineering services for
products it manufactures. With respect to product design, the Company provides
the complete design and development of new electronic products and mechanical
packages, as well as the redesign, surface mount conversion and printed circuit
board layout of existing products. The Company also provides test process design
capabilities that include the design and development of test fixtures and
procedures and software for both in-circuit tests and functional tests of
circuit boards, components and products.
The Company's component procurement services for turnkey projects consist
of planning, purchasing, expediting, inspecting, warehousing and financing the
components required to manufacture printed circuit board assemblies. OEMs
increasingly have required manufacturers to purchase all or some components
directly from component manufacturers or distributors and to warehouse and
finance the components. See "-- Suppliers."
In its manufacturing services, the Company offers both surface mount and
pin-through-hole interconnection technologies. Surface mount technology is a
computer-automated process that allows the placement of a higher density of
components directly on both sides of a printed circuit board. The surface mount
process is a more recent
3
advancement over the mature pin-through-hole technology, which normally permits
electronic components to be attached to only one side of a printed circuit board
by inserting the components into holes drilled through the board. The surface
mount process allows OEMs to use advanced circuitry while permitting the
placement of a greater number of components on a printed circuit board without
having to increase the size of the board. By allowing increasingly complex
circuits to be packaged with the components placed in closer proximity to each
other, surface mount technology greatly enhances circuit processing speed and
thus board and system performance. The surface mount process allows a reduction
in the number of printed circuit boards required per system and allows the use
of more fully automated production processes. The Company performs
pin-through-hole assembly both manually and with computer-automated component
insertion and soldering equipment. Although surface mount technology is the
leading interconnection technology, the Company intends to continue providing
pin-through-hole assembly services for its customers. Pin-through-hole
technology is of continuing viability because most printed circuit boards
assembled using surface mount technology require some pin-through-hole assembly.
In addition, the Company believes that by continuing to provide pin-through-hole
assembly services, the Company appeals to current and prospective customers that
have not shifted, or do not wish to change, their manufacturing process to
utilize surface mount technology.
Because the Company may be the sole source or a major source of printed
circuit board assemblies for a customer, frequent communication between the
Company and the customer is necessary to ensure that the Company's manufacturing
services meet the customer's specifications. Accordingly, the Company maintains
a customer service department whose personnel work closely with the customer
throughout the manufacturing process. The Company's engineering and
manufacturing personnel coordinate the implementation of new and reengineered
products with the customer, thereby providing the customer with feedback on such
issues as the overall ease of manufacture of the printed circuit board assembly
and anticipated production lead times.
Component procurement begins after component specifications are verified
and approved sources are confirmed with the customer. Concurrently, the
Company's technical personnel establish complete documentation files on
components and the appropriate set-up, assembly and testing procedures. The
Company's personnel monitor all stages of the manufacturing process in order to
provide flexible and rapid responses to the customer's requirements, including
changes in design, order size and delivery schedules. In addition, the Company
utilizes an automated materials planning system which allows the customer to
monitor the status of an order on a real-time basis.
The Company also provides testing services for completed printed circuit
board assemblies in connection with the manufacturing process. In-circuit tests
verify that the components have been inserted properly and meet certain
functional standards and that the electrical circuits have been completed
properly. These tests are performed on industry standard testing equipment using
proprietary software developed either by the customer or test consultants on a
contractual basis. In-circuit tests normally are performed on all printed
circuit board assemblies for turnkey projects. In addition, using specialized
testing equipment designed and provided by the customer, the Company performs
customized functional tests designed to ensure that the printed circuit board
assembly will perform its intended functions. Because defective components
normally fail after a relatively short period of use, customers occasionally
request that certain printed circuit board assemblies be subjected by the
Company to controlled environmental stresses, typically thermal or electrical
stresses. These procedures accelerate the effects of operational use without
affecting the useful life of the component.
The Company also offers its customers flexible, just-in-time delivery
programs allowing product shipments to be closely coordinated with the
customers' inventory requirements. Several of the Company's larger customers
utilize a just-in-time inventory management system. The Company believes that
the attractiveness of just-in-time inventory management will lead other
customers to implement such systems and, accordingly, anticipates that a greater
percentage of the Company's business will be performed on this basis in the
future.
In establishing a turnkey relationship with a manufacturer, OEMs must
incur expense in qualifying the contract manufacturer and in some cases its
sources of component supply, refining product design and manufacturing
processes, and developing mutually compatible information and reporting systems.
The Company believes that once this relationship is established, OEMs typically
experience significant difficulty in expeditiously reassigning turnkey projects
to another manufacturer and, as a result, seek sources of turnkey manufacturing
services that they perceive will be able to meet their production requirements
over a long period of time and successive product generations. Accordingly, the
Company believes that its increasing turnkey business has resulted in greater
stability in its customer base.
4
MARKETING AND CUSTOMERS
To better implement its service-intensive business strategy, the Company
markets its services to existing and potential customers through its direct
sales force, independent marketing representatives and its executive officers.
The Company's sales force consists of nine in-house salesmen and two independent
marketing representatives, through which the Company continues to aggressively
market the enhanced service capabilities of the Benchmark Design Center located
in Winona, Minnesota. Four of the nine in-house salesmen are based at the
Winona, Minnesota facility, three at the Hudson, New Hampshire facility and one
each at the Angleton, Texas and Beaverton, Oregon facilities.
A substantial percentage of the Company's sales have been to a small
number of customers, and the loss of a major customer, if not replaced, would
adversely affect the Company. During 1998, the Company's three largest customers
accounted for approximately 28%, 14% and 11%, respectively, of the Company's
sales. See Note 9 of Notes to Consolidated Financial Statements.
The Company targets customers in five industries and seeks to maintain a
balance in its sales to those industries. The following table sets forth the
percentages of the Company's sales to each of the five industries for 1996, 1997
and 1998.
1996 1997 1998
-----------------------
Medical Devices ..................... 18% 17% 11%
Telecommunications .................. 26 21 31
Computer Systems .................... 25 39 44
Tests and Instrumentation ........... 15 11 5
Industrial Controls ................. 16 12 9
SUPPLIERS
The Company maintains an extensive network of suppliers of components and
other materials used in assembling printed circuit boards. The Company procures
components only when a purchase order or forecast is received from a customer
and occasionally utilizes components or other materials for which a supplier is
the single source of supply. Although the Company experiences component
shortages and longer lead times of various components from time to time, the
Company has generally been able to reduce the impact of the component shortages
by working with customers to reschedule deliveries, by working with suppliers to
provide the needed components using just-in-time inventory programs, or by
purchasing components at somewhat higher prices from distributors, rather than
directly from manufacturers. These procedures reduce, but do not eliminate, the
Company's inventory risk. In addition, by developing long-term relationships
with suppliers, the Company has been better able to minimize the effects of
component shortages than manufacturers without such relationships. Because of
the continued increase in demand for surface mount components, the Company
anticipates continued component shortages with respect to certain components and
longer lead times for various components from time to time.
BACKLOG
The Company's backlog was approximately $317 million at December 31, 1998,
compared to $302 million at December 31, 1997 and $230 million at December 31,
1996. Backlog consists of customer orders that are expected to be filled within
twelve months. Because orders generally may be rescheduled or cancelled by the
payment of cancellation charges and because the Company's customers update their
orders at different intervals and provide orders to be filled over different
periods, the Company's backlog does not necessarily provide an accurate measure
of the timing or amount of future sales.
COMPETITION
The contract manufacturing services provided by the Company are available
from many independent sources as well as in-house manufacturing capabilities of
current and potential customers. The Company's competitors include Solectron
Corporation, SCI Systems, Inc., The DII Group, Inc., Avex Electronics, Inc.,
Jabil Circuit, Inc. and Plexus Corp., some of which are more established in the
industry and have substantially greater financial, manufacturing or marketing
resources than the Company. The Company believes that the principal competitive
factors in its targeted markets are product quality, flexibility and timeliness
in responding to design and schedule changes, reliability in meeting product
delivery schedules, pricing, technological sophistication and geographic
location. The Company believes that it competes effectively with respect to
these factors.
5
GOVERNMENTAL REGULATION
The Company's operations, and the operations of businesses that the
Company acquires, are subject to certain federal, state and local regulatory
requirements relating to environmental, waste management, and health and safety
matters. There can be no assurance that material costs and liabilities will not
be incurred or that past or future operations will not result in exposure to
injury or claims of injury by employees or the public. Although some risk of
costs and liabilities related to these matters is inherent in the Company's
business, as with many similar businesses, the Company believes that its
business is operated in substantial compliance with applicable regulations.
However, new, modified or more stringent requirements or enforcement policies
could be adopted, which could adversely affect the Company.
The Company periodically generates and temporarily handles limited amounts
of materials that are considered hazardous waste under applicable law. The
Company contracts for the off-site disposal of these materials and has
implemented a waste management program to address related regulatory issues.
EMPLOYEES
As of December 31, 1998, the Company had 2,280 employees, of whom 1,701 were
engaged in manufacturing and operations, 316 in materials control and
procurement, 84 in design and development, 40 in marketing and sales, and 139 in
administration. None of the Company's employees is subject to a collective
bargaining agreement. Management believes that the Company's relationship with
its employees is satisfactory.
EXPORT SALES
In 1998, the Company had export sales of approximately $87 million to Europe, $2
million to Canada, $92,000 to Asia, and $8,000 to Australia from the Company's
United States operations. In 1997 and 1996, the Company had export sales of
approximately $86 million and $29 million, respectively, to Europe from the
Company's United States operations.
YEAR 2000 ISSUES
The Company recognizes that it must ensure that its products and operations will
not be adversely impacted by Year 2000 software failures which can arise in
date-sensitive software applications which utilize a field of two digits rather
than four to define a specific year. Absent corrective actions, date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failures or miscalculations causing
disruptions to various activities and operations.
Many of the Company's business and operating systems are currently Year 2000
compliant, and the Company initiated a review of those systems during 1997 to
address those systems that are not currently Year 2000 compliant. Areas
addressed included major third-party suppliers of components of the Company's
products as well as full reviews of the Company's manufacturing equipment,
telephone and voice mail systems, security systems and other office support
systems. The Company has also initiated formal communications with significant
suppliers and customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
issues. Based on its inquiries to date, the Company believes satisfactory
progress is being made by its significant suppliers and customers on Year 2000
issues. No significant information technology initiatives have been deferred by
the Company as a result of its Year 2000 project.
In addition, the Company has selected Baan U.S.A., Inc. to provide an Enterprise
Resource Planning System, which will be Year 2000 compliant, to improve
processes and to increase efficiencies. The new Enterprise Resource Planning
System implementation is scheduled for completion at all locations by November
1999. All necessary Year 2000 upgrades of major systems, including those
supplied by vendors, have been identified and conversion strategies developed
and are under deployment.
The estimated total cost to address the Company's Year 2000 issues, including
the cost associated with the new Enterprise Resource Planning System, is
approximately $13.5 million. Costs incurred and expected to be incurred consist
primarily of the cost of Company personnel involved in updating applications and
operating systems and the costs of software updates and patches (many of which
are provided free of charge from the vendors). The estimated total cost
associated with the purchase and implementation of the new Enterprise Resource
Planning System is approximately $13 million. The costs of this software will be
capitalized and amortized over the estimated useful life
6
of the software, and costs associated with the preliminary project stage and
post-implementation stage has been and will be expensed as incurred. The year
2000 component of this system can not be readily segregated from the total cost
of the company-wide Enterprise Resource Planning System implementation. The
total amount expended on Year 2000 issues and the new Enterprise Resource
Planning System through December 31, 1998, is approximately $9 million, of which
$8.8 million related to the new Enterprise Resource Planning System
implementation and approximately $200,000 related to the cost of identifying and
communicating with third parties and installing software patches. The costs of
the Year 2000 process and the timetable on which the Company believes it will
complete any Year 2000 modifications are based on management's best estimates,
which are derived utilizing a number of assumptions of future events, including
the availability of certain resources and other factors. However, there can be
no guarantee that these estimates will be achieved and actual results could
differ materially from those anticipated. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct all
relevant computer codes and similar uncertainties. In addition, there can be no
assurance that the systems of other companies on which the Company's systems
rely will be converted on a timely basis or that such failure by another company
to convert would not have an adverse effect on the Company's systems.
There is considerable uncertainty inherent in assessing the Company's
vulnerability to Year 2000 problems, arising in part from the uncertainty of the
Year 2000 readiness of the Company's suppliers and customers. It is possible
that the failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business operations, and that
such failures could materially and adversely affect the Company's results of
operations, liquidity and financial condition. Based on the information
available to it, and subject to the effect of the general uncertainty on the
Company's ability to make a definitive determination, the Company does not
believe it has any material exposure to significant business interruption as a
result of the Year 2000 problem, or that the cost of remedial actions will have
a material adverse effect on its business, financial condition or result of
operations.
The steps taken by the Company to address the Year 2000 issues are expected to
reduce significantly the Company's level of uncertainty about the Year 2000
problem and, in particular, about the Year 2000 compliance and readiness of its
material third party suppliers and customers. The Company believes that, with
the implementation of the Enterprise Resource Planning System and completion of
identifying and communicating with third parties as scheduled, the possibility
of significant interruptions of normal operations should be reduced.
Accordingly, and as the program is on schedule to be completed during the fall
of 1999, the Company has not formulated a worse case scenario in the event its
Year 2000 project is not completed in a timely manner. The Company has a
contingency plan in place in the event all scheduled implementations are not
completed by the end of 1999. All necessary Year 2000 upgrades of major systems
and software patches, including those supplied by vendors, have been identified
and conversion strategies are under deployment.
ITEM 2. PROPERTIES
The Company's executive offices and one of its manufacturing facilities
are located in an approximately 109,000 square foot facility on 18.9 acres of
land owned by the Company in Angleton, Texas, where the Company has six surface
mount manufacturing lines. The Company leases its approximately 52,000 square
foot facility in Beaverton, Oregon, where the Company has four surface mount
production lines, under a lease expiring in June 2002. The Company's facilities
in Winona, Minnesota comprise five leased buildings with total square footage of
approximately 137,000 and a 64,000 square foot building that the Company owns.
For the primary leased facilities in Winona, the Company has leases through July
2006, each with purchase options that expire in June 1999. The Winona facilities
include manufacturing facilities with 15 surface mount production lines and
warehouse facilities. The Company leases its approximately 200,000 square feet
facility in Hudson, New Hampshire, which contains 14 surface mount production
lines, under leases expiring in June 2000, with options to extend the leases for
an additional four years. The Company's approximate 44,000 square foot facility
in Dublin, Ireland, where the Company will consolidate the assets purchased in
March 1999 from Stratus Computer Ireland, is leased through September 2003. The
Company's Angleton, Beaverton and Hudson facilities are certified under
ISO-9002, and the Winona facilities are certified under ISO-9001. The Company
believes that its properties are and will be sufficient to conduct the Company's
operations for the foreseeable future.
7
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently a party to any material litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1998.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information on page 30 of the Company's Annual Report to Stockholders
for the fiscal year ended December 31, 1998 (the "1998 Annual Report") is
incorporated herein by reference in response to this item.
ITEM 6. SELECTED FINANCIAL DATA
The information on page 31 of the 1998 Annual Report is incorporated
herein by reference in response to this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information on pages 9 through 14 of the 1998 Annual Report is
incorporated herein by reference in response to this item.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not hold or issue derivative financial instruments in the
normal course of business. However, the Company, as a result of its
international operating activities, is exposed to market risks, including
changes in foreign currency exchange rates and interest rates, which may
adversely affect its results of operations and financial position. In seeking to
minimize the risks and/or costs associated with such activities, the Company
manages exposure to changes in interest rates by balancing the amount of its
borrowings between fixed rate and variable interest rates. The Company manages
its exposure to foreign currency exchange rates by requiring customers to pay in
U.S. dollars.
Certain financial instruments used to obtain capital are subject to market
risks from fluctuations in interest rates. As of March 31, 1999, the Company has
$30 million of fixed rate financial instruments and $47 million of variable rate
financial instruments.
The Company has a subsidiary located in the Republic of Ireland. The
Company predominantly conducts its foreign sales and purchase transactions in
U.S. dollars. Other currency exchange risks are primarily limited to current
liabilities payable in Irish pounds. Such amounts relate to foreign plant wages,
taxes and facility operating costs. Accordingly, the Company does not expect
that the effects of changes in currency exchange rates upon such non-U.S. dollar
transactions would be material. The Company does not currently hedge against
foreign currency translation risks and believes that foreign currency exchange
risk is not significant to its operations.
The information contained in this Item 7A contains forward looking
statements regarding the future financial condition and results of operations
and the Company's business operations. The word "expect" and similar expressions
are intended to identify such statements. Such statements involve risks,
uncertainties and assumptions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in Item 7 of this Form
10-K for a discussion of important factors which could cause actual results to
differ materially from the conclusions expressed in the forward-looking
statements set forth in this Item 7A, and further discussion of the Company's
exposure to market risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information on pages 15 through 29 of the 1998 Annual Report is
incorporated herein by reference in response to this item.
8
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information under the captions "Election of Directors," "Executive
Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the
Company's Proxy Statement for the 1999 Annual Meeting of Shareholders (the "1999
Proxy Statement"), to be filed not later than 120 days after the close of the
Company's fiscal year, is incorporated herein by reference in response to this
item.
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Executive Compensation and Other
Matters" in the 1999 Proxy Statement, to be filed not later than 120 days after
the close of the Company's fiscal year, is incorporated herein by reference in
response to this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Common Stock Ownership of Certain
Beneficial Owners and Management" in the 1999 Proxy Statement, to be filed not
later than 120 days after the close of the Company's fiscal year, is
incorporated herein by reference in response to this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Certain Transactions" in the 1999 Proxy
Statement, to be filed not later than 120 days after the close of the Company's
fiscal year, is incorporated herein by reference in response to this item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules, and Exhibits
1. FINANCIAL STATEMENTS OF THE COMPANY
Reference is made to the Financial Statements, the reports thereon, the
notes thereto and supplementary data commencing at page 15 of the 1998 Annual
Report, which financial statements, reports, notes and data are incorporated
herein by reference in response to this item. Set forth below is a list of such
Financial Statements:
Consolidated Financial Statements of the Company
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Income for the years ended December 31, 1998,
1997 and 1996
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in Regulation S-X of the
Securities and Exchange Commission are not required under the related
instructions or are inapplicable and, therefore, have been omitted.
9
3. EXHIBITS
Each exhibit marked with an asterisk is filed with this Annual Report on
Form 10-K.
EXHIBIT
NUMBER DESCRIPTION
2.1 -- Purchase Agreement dated as of January 22, 1998 by and between
the Company and Lockheed Martin Corporation (incorporated herein
by reference to Exhibit 2 to the Company's Current Report on Form
8-K dated February 23, 1998).
2.2 -- Agreement and Plan of Merger dated as of March 27, 1996 by and
among the Company, Electronics Acquisition, Inc., EMD
Technologies, Inc., David H. Arnold and Daniel M. Rukavina
(incorporated herein by reference to Exhibit 2 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995).
2.3 -- Amendment No. 1 to Agreement and Plan of Merger dated as of
April 5, 1996 by and among the Company, Electronics Acquisition,
Inc., EMD Technologies, Inc., David H. Arnold and Daniel M.
Rukavina (incorporated herein by reference to Exhibit 2.2 to the
Company's Registration Statement on Form S-4 (Registration No.
333-4230)).
2.4 -- Purchase and Sale Agreement by and among Stratus Computer
Ireland, Ascend Communications Inc., BEI Electronics Ireland
Limited and Benchmark Electronics, Inc. dated January 22, 1999
(incorporated by reference herein to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated January 22, 1999).
3.1 -- Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1 (Registration No. 33-46316)
(the "Registration Statement")).
3.2* -- Amended and Restated Bylaws of the Company.
3.3* -- Amendment to Amended and Restated Articles of Incorporation of
the Company adopted by the shareholders of the Company on May 20,
1997.
3.4 -- Statement of Resolution Establishing Series A Cumulative
Junior Participating Preferred Stock of Benchmark Electronics,
Inc. (incorporated by reference to Exhibit B of the Rights
Agreement dated December 11, 1998 between the Company and Harris
Trust Savings Bank, as Rights Agent, included as Exhibit 1 to the
Company's Form 8A12B filed December 11, 1998).
4.1 -- Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the
Registration Statement).
4.2 -- Amended and Restated Bylaws of the Company (incorporated
herein by reference to Exhibit 3.2 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998).
4.3 -- Amendment to the Restated Articles of Incorporation of the
Company adopted by the shareholders of the Company on May 20,
1997 (incorporated herein by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998).
4.4 -- Specimen form of certificate evidencing the Common Stock
(incorporated herein by reference to Exhibit 4.3 to the
Registration Statement).
4.5 -- Rights Agreement dated December 11, 1998 between the Company
and Harris Trust Savings Bank, as Rights Agent, together with the
following exhibits thereto: Exhibit A - Form of Statement of
Resolution Establishing Series A Cumulative Junior Participating
Preferred Stock of Benchmark Electronics, Inc.; Exhibit B - Form
of Right Certificate; and Exhibit C - Summary of Rights to
Purchase Preferred Stock of Benchmark Electronics, Inc.
(incorporated by reference to Exhibit 1 to the Company's Form
8A12B filed December 11, 1998).
4.6 -- Summary of Rights to Purchase Preferred Stock of Benchmark
Electronics, Inc. (incorporated by reference to Exhibit 3 to the
Company's Form 8A12B/A filed December 22, 1998).
10
10.1 -- Form of Indemnity Agreement between the Company and each of
its directors and officers (incorporated herein by reference to
Exhibit 10.11 to the Registration Statement).
10.2 -- Benchmark Electronics, Inc. Stock Option Plan dated May 11,
1990 (incorporated herein by reference to Exhibit 10.12 to the
Registration Statement).
10.3 -- Form of Benchmark Electronics, Inc. Incentive Stock Option
Agreement between the Company and the optionee (incorporated
herein by reference to Exhibit 10.13 to the Registration
Statement).
10.4 -- Form of Benchmark Electronics, Inc. Nonqualified Stock Option
Agreement between the Company and the optionee (incorporated
herein by reference to Exhibit 10.14 to the Registration
Statement).
10.5* -- Lease Agreement dated February 1, 1997 between Tektronix, Inc.
and the Company.
10.6 -- Registration Rights Agreement dated March 30, 1992 between
Mason & Hanger Corporation and the Company (incorporated herein
by reference to Exhibit 10.17 to the Registration Statement).
10.7* -- Benchmark Electronics, Inc. 1992 Incentive Bonus Plan.
10.8 -- Benchmark Electronics, Inc. 1994 Stock Option Plan for
Non-Employee Directors (incorporated herein by reference to
Exhibit 10.21 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994).
10.9 -- Amended and Restated Credit Agreement dated as of February 6,
1999 by and between the Company and Chase Bank of Texas, N.A.
(incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated March 1, 1999).
10.10 -- Lease Agreement dated July 30, 1996 by and among David H.
Arnold, Muriel M. Arnold, Daniel M. Rukavina, Patricia A.
Rukavina and EMD Associates, Inc., as amended by Amendment to
Lease dated July 30, 1996 (incorporated herein by reference to
Exhibit 10.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996).
10.11 -- Lease Agreement dated December 15, 1992 by and among David H.
Arnold, Muriel M. Arnold, Daniel M. Rukavina, Patricia A.
Rukavina and EMD Associates, Inc., as amended by Amendment to
Lease dated January 1, 1994, Amendment to Lease dated December
15, 1995, and Amendment to Lease dated July 30, 1996
(incorporated herein by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
10.12 -- Note Purchase Agreement dated as of July 30, 1996 by and
between the Company and Northwestern Mutual Life Insurance
Company (incorporated by reference to Exhibit 99.1 to the
Company's Current Report on Form 8-K dated July 30, 1996).
10.14* -- Guarantee dated September 10, 1998 by the Company in favor of
Kilmore Developments Limited.
13* -- Benchmark Electronics, Inc. Annual Report to Shareholders for
the fiscal year ended December 31, 1998.
21* -- Subsidiaries of Benchmark Electronics, Inc.
23* -- Consent of Independent Auditors concerning incorporation by
reference in the Company's Registration Statement on Form S-8
(Registration No. 33-61660, No. 333-26805, No. 333-28997 and No.
333-66889).
11
27.1* -- Financial Data Schedule.
(b) Reports on Form 8-K
On December 11, 1998, the Company filed a Current Report on Form 8-K under item
5 thereof to report the adoption of a Shareholder Rights Plan.
12
SIGNATURES
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.
BENCHMARK ELECTRONICS, INC.
By: /s/ DONALD E. NIGBOR
Donald E. Nigbor
PRESIDENT
Date: March 31, 1999
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 and in the capacities indicated and on the dates indicated.
NAME POSITION DATE
-------- -------------- ---------
Chairman of the
/s/ John C. Custer Board of Directors March 31, 1999
- ---------------------- -------------------
John C. Custer
Director and President
/s/ Donald E. Nigbor (principal executive officer) March 31, 1999
- ---------------------- -------------------
Donald E. Nigbor
Director and Executive
- ---------------------- Vice President -------------------
Stephen A. Barton
Director and Executive
Vice President (principal
/s/ Cary T. Fu financial and accounting officer) March 31, 1999
- ---------------------- -------------------
Cary T. Fu
Director
- ---------------------- -------------------
Peter G. Dorflinger
/s/ Gerald W. Bodzy Director March 31, 1999
- ---------------------- -------------------
Gerald W. Bodzy
Director
- ---------------------- -------------------
David H. Arnold
13
EXHIBIT INDEX
Each exhibit marked with an asterisk is filed with this Annual Report on
Form 10-K.
EXHIBIT
NUMBER DESCRIPTION
2.1 -- Purchase Agreement dated as of January 22, 1998 by and between
the Company and Lockheed Martin Corporation (incorporated herein
by reference to Exhibit 2 to the Company's Current Report on Form
8-K dated February 23, 1998).
2.2 -- Agreement and Plan of Merger dated as of March 27, 1996 by and
among the Company, Electronics Acquisition, Inc., EMD
Technologies, Inc., David H. Arnold and Daniel M. Rukavina
(incorporated herein by reference to Exhibit 2 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995).
2.3 -- Amendment No. 1 to Agreement and Plan of Merger dated as of
April 5, 1996 by and among the Company, Electronics Acquisition,
Inc., EMD Technologies, Inc., David H. Arnold and Daniel M.
Rukavina (incorporated herein by reference to Exhibit 2.2 to the
Company's Registration Statement on Form S-4 (Registration No.
333-4230)).
2.4 -- Purchase and Sale Agreement by and among Stratus Computer
Ireland, Ascend Communications Inc., BEI Electronics Ireland
Limited and Benchmark Electronics, Inc. dated January 22, 1999
(incorporated by reference herein to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated January 22, 1999).
3.1 -- Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1 (Registration No. 33-46316)
(the "Registration Statement")).
3.2* -- Amended and Restated Bylaws of the Company.
3.3* -- Amendment to Amended and Restated Articles of Incorporation of
the Company adopted by the shareholders of the Company on May 20,
1997.
3.4 -- Statement of Resolution Establishing Series A Cumulative
Junior Participating Preferred Stock of Benchmark Electronics,
Inc. (incorporated by reference to Exhibit B of the Rights
Agreement dated December 11, 1998 between the Company and Harris
Trust Savings Bank, as Rights Agent, included as Exhibit 1 to the
Company's Form 8A12B filed December 11, 1998).
4.1 -- Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the
Registration Statement).
4.2 -- Amended and Restated Bylaws of the Company (incorporated
herein by reference to Exhibit 3.2 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998).
4.3 -- Amendment to the Restated Articles of Incorporation of the
Company adopted by the shareholders of the Company on May 20,
1997 (incorporated herein by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998).
4.4 -- Specimen form of certificate evidencing the Common Stock
(incorporated herein by reference to Exhibit 4.3 to the
Registration Statement).
4.5 -- Rights Agreement dated December 11, 1998 between the Company
and Harris Trust Savings Bank, as Rights Agent, together with the
following exhibits thereto: Exhibit A - Form of Statement of
Resolution Establishing Series A Cumulative Junior Participating
Preferred Stock of Benchmark Electronics, Inc.; Exhibit B - Form
of Right Certificate; and Exhibit C - Summary of Rights to
Purchase Preferred Stock of Benchmark Electronics, Inc.
(incorporated by reference to Exhibit 1 to the Company's Form
8A12B filed December 11, 1998).
14
4.6 -- Summary of Rights to Purchase Preferred Stock of Benchmark
Electronics, Inc. (incorporated by reference to Exhibit 3 to the
Company's Form 8A12B/A filed December 22, 1998).
10.1 -- Form of Indemnity Agreement between the Company and each of
its directors and officers (incorporated herein by reference to
Exhibit 10.11 to the Registration Statement).
10.2 -- Benchmark Electronics, Inc. Stock Option Plan dated May 11,
1990 (incorporated herein by reference to Exhibit 10.12 to the
Registration Statement).
10.3 -- Form of Benchmark Electronics, Inc. Incentive Stock Option
Agreement between the Company and the optionee (incorporated
herein by reference to Exhibit 10.13 to the Registration
Statement).
10.4 -- Form of Benchmark Electronics, Inc. Nonqualified Stock Option
Agreement between the Company and the optionee (incorporated
herein by reference to Exhibit 10.14 to the Registration
Statement).
10.5* -- Lease Agreement dated February 1, 1997 between Tektronix, Inc.
and the Company.
10.6 -- Registration Rights Agreement dated March 30, 1992 between
Mason & Hanger Corporation and the Company (incorporated herein
by reference to Exhibit 10.17 to the Registration Statement).
10.7* -- Benchmark Electronics, Inc. 1992 Incentive Bonus Plan.
10.8 -- Benchmark Electronics, Inc. 1994 Stock Option Plan for
Non-Employee Directors (incorporated herein by reference to
Exhibit 10.21 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994).
10.9 -- Amended and Restated Credit Agreement dated as of February 6,
1999 by and between the Company and Chase Bank of Texas N.A.
(incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated March 1, 1999).
10.10 -- Lease Agreement dated July 30, 1996 by and among David H.
Arnold, Muriel M. Arnold, Daniel M. Rukavina, Patricia A.
Rukavina and EMD Associates, Inc., as amended by Amendment to
Lease dated July 30, 1996 (incorporated herein by reference to
Exhibit 10.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996).
10.11 -- Lease Agreement dated December 15, 1992 by and among David H.
Arnold, Muriel M. Arnold, Daniel M. Rukavina, Patricia A.
Rukavina and EMD Associates, Inc., as amended by Amendment to
Lease dated January 1, 1994, Amendment to Lease dated December
15, 1995, and Amendment to Lease dated July 30, 1996
(incorporated herein by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
10.12 -- Note Purchase Agreement dated as of July 30, 1996 by and
between the Company and Northwestern Mutual Life Insurance
Company (incorporated by reference to Exhibit 99.1 to the
Company's Current Report on Form 8-K dated July 30, 1996).
10.14* -- Guarantee dated September 10, 1998 by the Company in favor of
Kilmore Developments Limited.
13* -- Benchmark Electronics, Inc. Annual Report to Shareholders for
the fiscal year ended December 31, 1998.
21* -- Subsidiaries of Benchmark Electronics, Inc.
23* -- Consent of Independent Auditors concerning incorporation by
reference in the Company's Registration Statement on Form S-8
(Registration No. 33-61660, No. 333-26805, No. 333-28997 and No.
333-66889).
27.1* -- Financial Data Schedule.
15