Benchmark Electronics, Inc.
During the fourth quarter of 2008, the Company recorded a non-cash goodwill impairment charge of $247 million ($219 million, net of tax). The Company's annual goodwill impairment analysis indicated there was an impairment of goodwill in two of its reporting segments, the Americas and Europe, primarily due to a decline in the Company's market capitalization and recent market turmoil. The impairment charge did not result in any cash expenditures and did not affect the Company's cash position, cash flows from operating activities or availability under its credit facility.
Excluding goodwill impairment and restructuring charges, the Company would have reported net income of $17 million, or $0.27 per diluted share, in the fourth quarter of 2008. Excluding restructuring charges and integration costs, the Company would have reported net income of $24 million, or $0.33 per diluted share, in the fourth quarter of 2007.
Sales for the year ended December 31, 2008 were $2.6 billion, compared to $2.9 billion in 2007. The net loss for the year ended December 31, 2008 was $136 million, or $2.02 per diluted share. In the prior year, net income was $93 million, or $1.27 per diluted share.
Excluding goodwill impairment, restructuring charges and a discrete tax benefit related to a previously closed facility, the Company would have reported net income of $82 million, or $1.22 per diluted share, in 2008. Excluding restructuring charges, integration costs and a discrete tax benefit related to a previously closed facility, the Company would have reported net income of $94 million, or $1.29 per diluted share, in 2007.
"The deterioration in end markets which began earlier in the year accelerated in the fourth quarter," said Cary T. Fu, the Company's Chief Executive Officer. "While 2009 will present significant challenges and uncertainties, we are confident that our customer centric business model, our focus on cost controls and our strong cash position will keep us in an excellent competitive position to manage through this downturn and subsequently benefit from its recovery."
Fourth Quarter 2008 Financial Highlights
-- Operating margin, excluding goodwill impairment and restructuring
charges for the fourth quarter was 3.1%.
-- Cash flows provided by operating activities for the fourth quarter
were approximately $39 million and for the year were approximately
$164 million.
-- Cash and long-term investments totaled $408 million at December 31,
2008. Long-term investments consist of $48 million of auction rate
securities.
-- Accounts receivable was $422 million at December 31, 2008; calculated
days sales outstanding were 65 days.
-- Inventory was $343 million at December 31, 2008; inventory turns were
6.3 times.
-- Repurchases of common shares for the fourth quarter totaled $7 million
or 0.6 million shares.
First Quarter 2009 Outlook
Sales for the first quarter of 2009 are expected to range from $525 million to $570 million. Diluted earnings per share for the first quarter, excluding restructuring charges, are expected to be between $0.16 and $0.26.
Non-GAAP Financial Measures
This press release includes financial measures for earnings and earnings per share that exclude certain items and therefore are not in accordance with generally accepted accounting principles (GAAP). A detailed reconciliation between the GAAP results and results excluding special items (non-GAAP) is included at the end of this press release. By disclosing this non-GAAP information, management intends to provide investors with additional information to further analyze the company's performance and underlying trends. Management utilizes a measure of net income (loss) and earnings (loss) per share on a non-GAAP basis that excludes certain items to better assess operating performance and to help investors compare our results with our previous guidance.
The non-GAAP information included in this press release is not necessarily comparable to non-GAAP information of other companies. Non-GAAP information should not be viewed as a substitute for, or superior to, net income (loss) or other data prepared in accordance with GAAP as measures of our profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made.
Forward-Looking Statements
This news release contains certain forward-looking statements within the scope of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words "expect," "estimate," "anticipate," "predict," and similar expressions, and the negatives of such expressions, are intended to identify forward-looking statements. Our forward-looking statements may be deemed to include, among other things, the statement that "while 2009 will present significant challenges and uncertainties, we are confident that our customer centric business model, our focus on cost controls and our strong cash position will keep us in an excellent competitive position to manage through this downturn and subsequently benefit from its recovery" and our sales and diluted earnings per share, excluding restructuring charges, guidance for the first quarter of 2009, as well as other statements, express or implied, concerning: future operating results or the ability to generate sales, income or cash flow; and Benchmark's business and growth strategies, including expected internal growth and performance goals. Although Benchmark believes that these statements are based upon reasonable assumptions, such statements involve risks, uncertainties and assumptions, including but not limited to industry and economic conditions, and customer actions.
All forward-looking statements included in this release are based upon information available to Benchmark as of the date of the release, and Benchmark assumes no obligation to update any such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. Persons are advised to consult further disclosures on related subjects in Benchmark's Form 10-K for the year ended December 31, 2007, in its other filings with the Securities and Exchange Commission and in its press releases.
Additional Information
Benchmark Electronics, Inc. provides electronics manufacturing, design and engineering services to original equipment manufacturers of computers and related products for business enterprises, medical devices, industrial control equipment, testing and instrumentation products, and telecommunication equipment. Benchmark's global operations include 20 facilities in ten countries. Benchmark's Common Shares trade on the New York Stock Exchange under the symbol BHE.
A conference call hosted by Benchmark management will be held today at 10:00 am (Central time) to discuss the financial results of the Company and its future outlook. This call will be broadcast via the Internet and may be accessed by logging on to our website at www.bench.com.
Benchmark Electronics, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Results
(Amounts in Thousands, Except Per Share Data)
(UNAUDITED)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Income (loss) from
operations (GAAP) $(231,924) $21,326 $(166,480) $90,299
Goodwill impairment 247,482 - 247,482 -
Restructuring charges
and integration costs 2,527 4,580 2,780 11,581
Non-GAAP income from
operations $18,085 $25,906 $83,782 $101,880
Net income (loss)
(GAAP) $(203,738) $20,629 $(135,632) $92,356
Goodwill impairment,
net of tax 218,904 - 218,904 -
Restructuring charges
and integration costs,
net of tax 2,266 3,080 2,494 8,291
Income tax benefit - - (3,440) (6,481)
Non-GAAP net income $17,432 $23,709 $82,326 $94,166
Numerator for basic
earnings (loss) per
share - net income
(loss) (GAAP) $(203,738) $20,629 $(135,632) $92,356
Interest expense on
convertible debt,
net of tax - - - 147
Numerator for diluted
earnings (loss) per
share (GAAP) $(203,738) $20,629 $(135,632) $92,503
Diluted Earnings
(loss) per
share (GAAP) $(3.13) $0.29 $(2.02) $1.27
Numerator for basic
earnings per
share - net income
(Non-GAAP) $17,432 $23,709 $82,326 $94,166
Interest expense on
convertible debt,
net of tax - - - 147
Numerator for diluted
earnings per share
(Non-GAAP) $17,432 $23,709 $82,326 $94,313
Diluted earnings per
share (Non-GAAP) $0.27 $0.33 $1.22 $1.29
Weighted average shares
used in calculating
earnings (loss) per
share:
Diluted - GAAP 65,173 71,555 67,060 72,829
Diluted - Non-GAAP 65,406 71,555 67,528 72,829
Benchmark Electronics, Inc. and Subsidiaries
Consolidated Statements of Income (Loss)
(Amounts in Thousands, Except Per Share Data)
(UNAUDITED)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Net sales $581,770 $734,547 $2,590,167 $2,915,919
Cost of sales 540,989 683,490 2,414,231 2,717,425
Gross profit 40,781 51,057 175,936 198,494
Selling, general and
administrative expenses 22,254 24,704 90,372 94,826
Amortization of
intangibles 442 447 1,782 1,788
Goodwill impairment 247,482 - 247,482 -
Restructuring charges
and integration costs 2,527 4,580 2,780 11,581
Income (loss) from
operations (231,924) 21,326 (166,480) 90,299
Other income
(expense):
Interest income 1,766 3,662 8,675 11,217
Interest expense (353) (397) (1,455) (2,183)
Other income (expense) 224 (885) 1,772 693
Total other income, net 1,637 2,380 8,992 9,727
Income (loss) before
income taxes (230,287) 23,706 (157,488) 100,026
Income tax benefit
(expense) 26,549 (3,077) 21,856 (7,670)
Net income (loss) $(203,738) $20,629 $(135,632) $92,356
Numerator for basic
earnings (loss) per
share - net income
(loss) $(203,738) $20,629 $(135,632) $92,356
Interest expense on
convertible debt, net
of tax - - - 147
Numerator for diluted
earnings (loss) per
share $(203,738) $20,629 $(135,632) $92,503
Denominator for basic
earnings per
share - weighted
average number of
common shares outstanding
during the period 65,173 71,309 67,060 72,061
Incremental common shares
attributable to restricted
shares and the exercise of
outstanding equity
instruments - 246 - 768
Denominator for diluted
earnings (loss) per
share 65,173 71,555 67,060 72,829
Earnings (loss) per share:
Basic $(3.13) $0.29 $(2.02) $1.28
Diluted $(3.13) $0.29 $(2.02) $1.27
The results for the three months and year ended December 31, 2007, as
well as the year ended December 31, 2008, reflect an immaterial
correction of the Company's prior period financial statements related to
stock-based compensation expense.
Benchmark Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
December 31, 2008
(Amounts in Thousands)
(UNAUDITED)
Assets
Current assets:
Cash and cash-equivalents $359,694
Accounts receivable, net 422,058
Inventories, net 343,163
Other current assets 39,466
Total current assets 1,164,381
Long-term investments 48,162
Non-current deferred tax asset 21,487
Property, plant and equipment, net 142,844
Other assets, net 24,398
Goodwill, net 37,912
Total assets $1,439,184
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of capital lease obligations $256
Accounts payable 288,045
Accrued liabilities 54,219
Total current liabilities 342,520
Capital lease obligations, less current installments 11,683
Other long-term liabilities 29,252
Shareholders' equity 1,055,729
Total liabilities and shareholders' equity $1,439,184
First Call Analyst:
FCMN Contact: james.walker@bench.com
SOURCE: Benchmark Electronics, Inc.
CONTACT: Donald F. Adam, Chief Financial Officer of Benchmark
Electronics, Inc., +1-979-849-6550
Web Site: http://www.bench.com/
