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.
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.
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
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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/