UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~_______________~~

FORM 10-Q

~~FORM 10‑Q~~

~~_______________~~(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

X ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~September~~June 30, ~~2017~~2022

or


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

__ ~~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~~1-10560

BENCHMARK ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)


Texas	~~Texas~~	~~74‑2211011~~74-2211011
	(State or other jurisdiction		(I.R.S. Employer
	of incorporation or organization)		Identification No.)
~~4141 N. Scottsdale Road~~	~~85251~~
~~Scottsdale, Arizona~~56 South Rockford Drive	~~(Zip Code)~~	85281
Tempe, Arizona		(Zip Code)
(Address of principal executive offices)

~~(623) 300-7000~~

(~~Registrant~~’s623) 300-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	BHE	The New York Stock Exchange

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 [Ö]☑ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes [Ö] ☑ No ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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~~12b-2 of the Exchange Act.


Large accelerated filer [Ö]	☑	Accelerated filer ~~[ ]~~	☐
Non-accelerated filer ~~[ ]~~ ~~(Do not check if a smaller reporting company)~~	☐	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 is a shell company (as defined in Rule ~~12b–2~~12b-2 of the Exchange Act). Yes ~~[ ]~~☐ No [Ö] ☑

As of ~~November 7,~~ ~~2017~~August 2, 2022,there were ~~49,723,053~~35,159,562 shares of ~~Common Stock~~common stock of Benchmark Electronics, Inc., par value $0.10 per share, outstanding.

TABLE OF CONTENTS

~~PART I~~


		Page

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	~~Financial Statements (Unaudited)~~	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated ~~Statement~~Statements of Shareholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	~~Results of Operations~~
~~Item 3.~~	Quantitative and Qualitative Disclosures About Market Risk	2831
Item 4.	Controls and Procedures	~~Controls and Procedures~~	2931

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	~~Legal Proceedings~~	3033
Item 1A.	Risk Factors	~~Risk Factors~~	3033
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3033
Item 6.	Exhibits	34

~~Item 6.~~SIGNATURES		~~Exhibits~~	31

~~SIGNATURES~~		3235

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)


					September 30,		December 31,		June 30,			December 31,
(in thousands, except par value)	(in thousands, except par value)					2017		2016	2022			2021
						(unaudited)
Assets	Assets
	Current assets:
		Cash and cash equivalents			$	730,146	$	681,433
		Accounts receivable, net of allowance for doubtful accounts of $1,802
			and $2,838, respectively			411,550		440,692
		Inventories				421,858		381,334
		Prepaid expenses and other assets				42,150		28,057
		Income taxes receivable				199		146
				Total current assets		1,605,903		1,531,662
	Property, plant and equipment, net of accumulated depreciation of
				$423,520 and $406,375, respectively		178,122		166,148
	Goodwill					191,616		191,616
	Deferred income taxes					4,908		6,572
	Other, net					96,157		102,670
					$	2,076,706	$	1,998,668
Current assets:
Cash and cash equivalents									$	262,269		$	271,749
Restricted cash										1,650			0
Accounts receivable, net of allowance for doubtful accounts of $908 and $788, respectively										446,515			355,883
Contract assets										179,172			155,243
Inventories										666,742			523,240
Prepaid expenses and other assets										44,901			41,688
Income taxes receivable										23			341
Total current assets										1,601,272			1,348,144
Property, plant and equipment, net										198,497			186,666
Operating lease right-of-use assets										98,580			99,158
Goodwill										192,116			192,116
Deferred income taxes										7,876			5,972
Other assets, net										68,444			71,824
									$	2,166,785		$	1,903,880
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt									$	2,630		$	985
Accounts payable										500,886			426,555
Advance payments from customers										173,557			118,124
Income taxes payable										14,609			6,164
Accrued liabilities										93,396			102,554
Total current liabilities										785,078			654,382
Long-term debt, less current installments										262,185			129,289
Operating lease liabilities										90,936			90,878
Other long-term liabilities										42,729			55,445
Deferred income taxes										84			84
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.10 par value; 5,000 shares authorized, NaN issued										—			—
Common stock, $0.10 par value; 145,000 shares authorized; issued and outstanding – 35,140 and 35,213, respectively										3,514			3,521
Additional paid-in capital										509,172			507,447
Retained earnings										491,379			479,992
Accumulated other comprehensive loss										(18,292	)		(17,158	)
Total shareholders’ equity										985,773			973,802
	Current liabilities:								$	2,166,785		$	1,903,880
		Current installments of long-term debt and capital lease obligations			$	16,804	$	12,396
		Accounts payable				335,315		326,249
		Income taxes payable				3,629		3,534
		Accrued liabilities				90,045		70,202
				Total current liabilities		445,793		412,381
	Long-term debt and capital lease obligations, less current installments					197,766		211,252
	Other long-term liabilities					8,236		9,570
	Shareholders’ equity:
		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 – 49,822 and 49,330, respectively			4,982		4,933
		Additional paid-in capital				640,472		626,306
		Retained earnings				788,939		748,402
		Accumulated other comprehensive loss				(9,482)		(14,176)
				Total shareholders’ equity		1,424,911		1,365,465
		Commitments and contingencies
					$	2,076,706	$	1,998,668

See accompanying notes to condensed consolidated financial statements.

1

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(unaudited)

		Three Months Ended				Nine Months Ended
		September 30,				September 30,				Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)	(in thousands, except per share data)		2017		2016		2017		2016	2022			2021			2022			2021

Sales	Sales	$	603,550	$	574,341	$	1,786,955	$	1,702,908	$	728,029		$	544,662		$	1,364,112		$	1,050,383
Cost of sales	Cost of sales		545,395		521,519		1,621,153		1,546,915		669,273			496,749			1,247,754			960,243
	Gross profit		58,155		52,822		165,802		155,993
Gross profit											58,756			47,913			116,358			90,140
Selling, general and administrative expenses	Selling, general and administrative expenses		32,093		28,085		97,079		85,082		35,842			34,034			72,131			64,582
Amortization of intangible assets	Amortization of intangible assets		2,736		3,170		7,698		8,945		1,592			1,599			3,201			3,197
Restructuring charges and other costs			2,511		3,485		5,566		9,876
	Income from operations		20,815		18,082		55,459		52,090
Restructuring charges and other costs (income)											(1,110	)		1,581			3,187			3,172
Ransomware related incident costs (recovery), net											0			0			0			(3,444	)
Income from operations											22,432			10,699			37,839			22,633
Interest expense	Interest expense		(2,324)		(2,302)		(6,861)		(6,935)		(2,185	)		(2,079	)		(3,935	)		(4,228	)
Interest income	Interest income		1,334		577		3,621		1,170		261			164			391			329
Other expense			(394)		(383)		(1,305)		(535)
	Income before income taxes		19,431		15,974		50,914		45,790
Income tax expense (benefit)			1,919		(5,768)		6,539		311
	Net income	$	17,512	$	21,742	$	44,375	$	45,479

Other income											784			440			490			164
Income before income taxes											21,292			9,224			34,785			18,898
Income tax expense											4,071			1,855			6,604			3,612
Net income										$	17,221		$	7,369		$	28,181		$	15,286
Earnings per share:	Earnings per share:
	Basic	$	0.35	$	0.44	$	0.89	$	0.92
	Diluted	$	0.35	$	0.44	$	0.88	$	0.91

Basic										$	0.49		$	0.21		$	0.80		$	0.42
Diluted										$	0.49		$	0.20		$	0.79		$	0.42
Weighted-average number of shares outstanding:	Weighted-average number of shares outstanding:
	Basic		49,865		48,965		49,716		49,377
	Diluted		50,330		49,414		50,292		49,878
Basic											35,157			35,753			35,201			36,000
Diluted											35,336			36,061			35,616			36,474

See accompanying notes to condensed consolidated financial statements.

2

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

			Three Months Ended				Nine Months Ended
			September 30,				September 30,				Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	(in thousands)			2017		2016		2017		2016	2022			2021		2022			2021

Net income	Net income		$	17,512	$	21,742	$	44,375	$	45,479	$	17,221		$	7,369	$	28,181		$	15,286
Other comprehensive income (loss):	Other comprehensive income (loss):
	Foreign currency translation adjustments			1,313		299		4,434		815
	Unrealized gain on investments, net of tax			3		1		19		17
	Unrealized gain (loss) on derivative, net of tax			89		765		254		(2,134)
	Other			-		(1)		(13)		(1)
Foreign currency translation adjustments												(3,501	)		712		(4,656	)		(1,708	)
Unrealized gain on derivatives, net of tax												1,116			637		3,563			1,582
Other												(20	)		117		(41	)		256
Other comprehensive income (loss)	Other comprehensive income (loss)			1,405		1,064		4,694		(1,303)		(2,405	)		1,466		(1,134	)		130
		Comprehensive income	$	18,917	$	22,806	$	49,069	$	44,176

Comprehensive income											$	14,816		$	8,835	$	27,047		$	15,416

See accompanying notes to condensed consolidated financial statements.

3

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated ~~Statement~~Statements of Shareholders’ Equity

(unaudited)

								Accumulated
			Common Stock		Additional			Other	Total
		Shares		Par	Paid-in	Retained	Comprehensive		Shareholders’
(in thousands)	(in thousands)	Outstanding		Value	Capital	Earnings		Loss	Equity	Shares			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity

Balances, December 31, 2016			49,330	$ 4,933	$ 626,306	$ 748,402		$ (14,176)	$ 1,365,465
Balances, December 31, 2021											35,213		$	3,521		$	507,447		$	479,992		$	(17,158	)	$	973,802
Stock-based compensation expense	Stock-based compensation expense		-	-	6,819	-		-	6,819		—			—			8,487			—			—			8,487
Shares repurchased and retired	Shares repurchased and retired		(183)	(18)	(2,031)	(3,838)		-	(5,887)		(376	)		(37	)		(4,177	)		(5,177	)		—			(9,391	)
Stock options exercised	Stock options exercised		502	50	9,778	-		-	9,828		32			3			456			—			—			459
Vesting of restricted stock units	Vesting of restricted stock units		185	18	(18)	-		-	-		388			39			(39	)		—			—			—
Shares withheld for taxes	Shares withheld for taxes		(12)	(1)	(382)	-		-	(383)		(117	)		(12	)		(3,002	)		—			—			(3,014	)
Dividends declared											—			—			—			(11,617	)		—			(11,617	)
Net income	Net income		-	-	-	44,375		-	44,375		—			—			—			28,181			—			28,181
Other comprehensive income			-	-	-	-		4,694	4,694
Balances, September 30, 2017			49,822	$ 4,982	$ 640,472	$ 788,939		$ (9,482)	$ 1,424,911
Other comprehensive loss											—			—			—			—			(1,134	)		(1,134	)
Balances, June 30, 2022											35,140		$	3,514		$	509,172		$	491,379		$	(18,292	)	$	985,773

Balances, March 31, 2022											35,261		$	3,526		$	506,714		$	482,052		$	(15,887	)	$	976,405
Stock-based compensation expense											—			—			4,281			—			—			4,281
Shares repurchased and retired											(162	)		(16	)		(1,802	)		(2,091	)		—			(3,909	)
Stock options exercised											—			—			—			—			—			—
Vesting of restricted stock units											42			4			(4	)		—			—			—
Shares withheld for taxes											(1	)		—			(17	)		—			—			(17	)
Dividends declared											—			—			—			(5,803	)		—			(5,803	)
Net income											—			—			—			17,221			—			17,221
Other comprehensive loss											—			—			—			—			(2,405	)		(2,405	)
Balances, June 30, 2022											35,140		$	3,514		$	509,172		$	491,379		$	(18,292	)	$	985,773


(in thousands)	Shares			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balances, December 31, 2020		36,295		$	3,629		$	510,405		$	492,205		$	(16,651	)	$	989,588
Stock-based compensation expense		—			—			6,863			—			—			6,863
Shares repurchased and retired		(1,008	)		(99	)		(11,227	)		(18,993	)		—			(30,319	)
Stock options exercised		29			3			343			—			—			346
Vesting of restricted stock units		351			35			(35	)		—			—			—
Shares withheld for taxes		(101	)		(10	)		(2,963	)		—			—			(2,973	)
Dividends declared		—			—			—			(11,643	)		—			(11,643	)
Net income		—			—			—			15,286			—			15,286
Other comprehensive income		—			—			—			—			130			130
Balances, June 30, 2021		35,566		$	3,558		$	503,386		$	476,855		$	(16,521	)	$	967,278

Balances, March 31, 2021		36,062		$	3,608		$	505,659		$	486,267		$	(17,987	)	$	977,547
Stock-based compensation expense		—			—			4,013			—			—			4,013
Shares repurchased and retired		(567	)		(57	)		(6,300	)		(10,910	)		—			(17,267	)
Stock options exercised		4			—			70			—			—			70
Vesting of restricted stock units		69			7			(7	)		—			—			—
Shares withheld for taxes		(2	)		—			(49	)		—			—			(49	)
Dividends declared		—			—			—			(5,871	)		—			(5,871	)
Net income		—			—			—			7,369			—			7,369
Other comprehensive income		—			—			—			—			1,466			1,466
Balances, June 30, 2021		35,566		$	3,558		$	503,386		$	476,855		$	(16,521	)	$	967,278

See accompanying notes to condensed consolidated financial statements.

4

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

					Nine Months Ended
					September 30,				Six Months Ended June 30,
(in thousands)	(in thousands)					2017		2016	2022			2021

Cash flows from operating activities:	Cash flows from operating activities:
	Net income				$	44,375	$	45,479
	Adjustments to reconcile net income to net cash provided by
		operating activities:
			Depreciation			27,452		31,623
			Amortization			9,139		10,379
			Deferred income taxes			1,505		2,577
			Gain on the sale of property, plant and equipment			(194)		(119)
			Asset impairments			42		121
			Stock-based compensation expense			6,819		4,302
			Excess tax benefits from stock-based compensation			-		(299)
	Changes in operating assets and liabilities, net of effects from
		business acquisition:
			Accounts receivable			30,926		61,776
			Inventories			(38,778)		13,991
			Prepaid expenses and other assets			(12,066)		(302)
			Accounts payable			3,922		59,183
			Accrued liabilities			15,637		19
			Income taxes			1,111		(146)
				Net cash provided by operations		89,890		228,584
Net income									$	28,181		$	15,286
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation										16,506			17,735
Amortization										5,356			4,259
Provision for doubtful accounts										120			40
Deferred income taxes										(3,100	)		(944	)
Loss (gain) on the sale of property, plant and equipment										(239	)		14
Gain on assets held for sale										(393	)		0
Stock-based compensation expense										8,487			6,863
Changes in operating assets and liabilities:
Accounts receivable										(91,200	)		18,959
Contract assets										(23,929	)		(11,850	)
Inventories										(146,178	)		(88,634	)
Prepaid expenses and other assets										(8,794	)		(8,372	)
Accounts payable										69,943			92,677
Advance payments from customers										55,433			4,563
Accrued liabilities										(12,177	)		(11,854	)
Operating leases										(470	)		(485	)
Income taxes										8,944			2,016
Net cash (used in) provided by operations										(93,510	)		40,273
Cash flows from investing activities:	Cash flows from investing activities:
	Proceeds from sales of investments at par					250		200
	Additions to property, plant and equipment					(35,033)		(24,126)
	Proceeds from the sale of property, plant and equipment					270		237
	Additions to purchased software					(2,703)		(1,272)
	Business acquisition, net of cash acquired					-		10,750
	Other					(156)		(224)
				Net cash used in investing activities		(37,372)		(14,435)
Additions to property, plant and equipment										(23,201	)		(16,681	)
Proceeds from the sale of property, plant and equipment										280			116
Proceeds from the sale of assets held for sale										5,372			0
Additions to purchased software										(1,770	)		(1,938	)
Other										5			72
Net cash used in investing activities										(19,314	)		(18,431	)
Cash flows from financing activities:	Cash flows from financing activities:
	Proceeds from stock options exercised					9,828		5,544
	Employee taxes paid for shares withheld					(383)		(554)
	Excess tax benefits from stock-based compensation					-		299
	Principal payments on long-term debt and capital lease obligations					(9,288)		(9,224)
	Share repurchases					(5,887)		(40,862)
	Debt issuance costs					(433)		-
				Net cash used in financing activities		(6,163)		(44,797)
Debt issuance costs										(555	)		0
Proceeds from stock options exercised										459			346
Employee taxes paid for with shares withheld										(3,014	)		(2,973	)
Dividends paid										(11,628	)		(11,577	)
Borrowings under credit agreement										398,000			0
Principal payments on credit agreement										(263,000	)		(3,750	)
Principal payments on finance leases										(82	)		(793	)
Share repurchases										(9,391	)		(30,319	)
Net cash provided by (used in) financing activities										110,789			(49,066	)
Effect of exchange rate changes	Effect of exchange rate changes					2,358		336		(5,795	)		1,677
Net increase in cash and cash equivalents						48,713		169,688
	Cash and cash equivalents at beginning of year					681,433		465,995
	Cash and cash equivalents at end of period				$	730,146	$	635,683
Net decrease in cash and cash equivalents and restricted cash										(7,830	)		(25,547	)
Cash and cash equivalents and restricted cash at beginning of year										271,749			395,990
Cash and cash equivalents and restricted cash at end of period									$	263,919		$	370,443

See accompanying notes to condensed consolidated financial statements.

5

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(amounts in thousands,except per share data, unless otherwise noted)

(unaudited)

Note 1 – Basis of Presentation

Benchmark Electronics, Inc. (the Company) is a Texas corporation that provides ~~worldwide integrated electronic~~advanced manufacturing services, ~~(EMS),~~which includes design and engineering ~~and design~~ services and ~~precision machining services. The~~technology solutions. From initial product concept to volume production, including direct order fulfillment and aftermarket services, the Company ~~provides~~has been providing integrated services and solutions to original equipment manufacturers (OEMs) insince 1979. The Company serves the following industries: ~~industrial controls,~~ aerospace and defense (A&D), medical technologies, complex industrials, semiconductor capital equipment (Semi-Cap), next-generation telecommunications ~~computers~~ and ~~related products for business enterprises, medical devices, and test and instrumentation.~~advanced computing. The Company has manufacturing operations located in the United States and Mexico (the Americas), Asia and Europe.

The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). The condensed consolidated financial statements reflect all normal and recurring adjustments necessary in the opinion of management for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s ~~annual report~~Annual Report on Form 10‑K for the year ended December 31, ~~2016~~2021 (the ~~2016~~2021 10-K).

Management 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 condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (U.S. GAAP)~~. Actual~~ with consideration given to the potential impacts of the coronavirus disease (COVID) pandemic. However, actual results could differ materially from ~~those~~these estimates and ~~assumptions.~~be significantly affected by the severity and duration of the pandemic, the extent of actions to contain or treat COVID, 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.

Note 2 – New Accounting Pronouncements

~~Effective January 1, 2017,~~In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). The pronouncement provides temporary optional expedients and exceptions for applying U.S. GAAP to transactions affected by reference rate (e.g., London Interbank Offered Rate (LIBOR)) reform if certain criteria are met to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This update is effective as of March 12, 2020 through December 31, 2022. On May 20, 2022, the Company ~~adopted~~entered into an amendment to the Amended and Restated Credit Agreement (as defined in Note 5), which triggered a ~~new~~transition from LIBOR to the Bloomberg Short-Term Bank Yield Index Rate (BSBY). This transition and the adoption of ASU No. 2020-04 did not have a material impact on our consolidated financial statements.

The Company has determined that other recently issued accounting ~~standard update that simplifies several aspects~~standards will either not have a material impact on its consolidated financial position, results of operations or cash flows, or will not apply to its operations.

Note 3 – Inventories

Inventory costs are summarized as follows:


	June 30,		December 31,
(in thousands)	2022		2021
Raw materials	$	649,264	$	504,307
Work in process		15,117		15,338
Finished goods		2,361		3,595
	$	666,742	$	523,240

Note 4 – Goodwill and Other Intangible Assets

Goodwill allocated to the Company’s reportable segments were as follows:


(in thousands)	Americas		Asia		Total
Goodwill as of June 30, 2022 and December 31, 2021	$	154,014	$	38,102	$	192,116

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Other assets, net consist primarily of acquired identifiable intangible assets and capitalized purchased software costs. Acquired identifiable intangible assets and purchased software as of June 30, 2022 and December 31, 2021 were as follows:


(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	100,047	$	(62,762	)	$	37,285
Purchased software costs		49,890		(34,623	)		15,267
Technology licenses		26,800		(26,800	)		0
Trade names and trademarks		7,800		0			7,800
Other		868		(368	)		500
Intangible assets, June 30, 2022	$	185,405	$	(124,553	)	$	60,852


(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	100,136	$	(59,680	)	$	40,456
Purchased software costs		49,788		(34,325	)		15,463
Technology licenses		26,800		(26,800	)		0
Trade names and trademarks		7,800		0			7,800
Other		868		(356	)		512
Intangible assets, December 31, 2021	$	185,392	$	(121,161	)	$	64,231

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 ~~accounting~~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. The Company’s acquired trade names and trademarks have been determined to have an indefinite life. Amortization on the statements of cash flow for ~~employee share-based payment transactions, including accounting~~the six months ended June 30, 2022 and 2021 were as follows:


	Six Months Ended June 30,
(in thousands)	2022		2021
Amortization of intangible assets	$	3,201	$	3,197
Amortization of capitalized purchased software costs		1,977		832
Amortization of debt costs		178		230
	$	5,356	$	4,259

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


Year ending December 31,	Amount
2022 (remaining six months)	$	3,183
2023	$	5,979
2024	$	4,817
2025	$	4,817
2026	$	4,817

Note 5 – Borrowing Facilities

Long-term debt outstanding as of June 30, 2022 and ~~statutory withholding requirements,~~December 31, 2021 consists of the following:


	June 30,			December 31,
(in thousands)	2022			2021
Revolving credit facility	$	135,000		$	—
Term loan		131,250			131,250
Less unamortized debt issuance costs		(2,047	)		(1,670	)
Long-term debt	$	264,203		$	129,580

On July 20, 2018, the Company entered into a $650 million credit agreement (the Prior Credit Agreement) by and among the Company, certain of its subsidiaries, the lenders party thereto and Bank of America, N.A., as ~~well as classification~~Administrative Agent, Swingline Lender

7

and a L/C Issuer. The Prior Credit Agreement was comprised of a five-year $500 million revolving credit facility and a five-year $151 million term loan facility, both which had 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 Prior Credit Agreement.

On December 21, 2021, the Company amended and restated the Prior Credit Agreement by entering into a $381 million amended and restated credit agreement (the Amended and Restated Credit Agreement). The Amended and Restated Credit Agreement was comprised of a five-year $250 million revolving credit facility (the Revolving Credit Facility) and a five-year $131.3 million term loan facility (the Term Loan Facility), which extended the original revolving credit facility and term loan facility maturity dates from July 20, 2023 to December 21, 2026.

On May 20, 2022, the Company entered into Amendment No. 1 (the Amendment) to the Amended and Restated Credit Agreement (as amended, the Credit Agreement). The Amendment increased the Revolving Credit Facility commitments from $250 million to $450 million. The Amendment also established that the interest on outstanding borrowings starting on the next reset date and any new borrowings under the Amendment (other than swingline loans) will accrue, at the Company’s option, at (a) BSBY plus the Applicable Rate (as defined in the ~~Condensed Consolidated Statements~~Credit Agreement, approximately 1.00% to 2.00% per annum depending on various factors) or (b) for U.S. Dollar denominated loans, the base rate (which is the highest of ~~Cash Flows. As required by this standard, excess tax benefits recognized on stock-based compensation expense are reflected~~(i) the federal funds rate plus 0.50%, (ii) the Bank of America, N.A. prime rate, (iii) the one month BSBY adjusted daily plus 1.00% and (iv) 1.00%).

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 loans and/or increase commitments under the Revolving Credit Facility in an aggregate amount of $100 million or a higher amount, subject to the ~~accompanying Condensed Consolidated Income Statement as a component~~satisfaction of certain conditions and exceptions.

The Term Loan Facility is subject to quarterly principal installments equal to 0.625% of the ~~provision for income taxes on~~initial aggregate term loan advances to be paid commencing December 31, 2022 through September 30, 2024 and 1.25% of the initial aggregate term loan advances from December 31, 2024 until the maturity date.

As of June 30, 2022, a ~~prospective basis (See Note 8). As~~portion of the $131.3 million of the outstanding debt under the Credit Agreement is effectively at a fixed interest rate of 2.928% as a result of ~~including~~a $125.6 million notional interest rate swap contract discussed in Note 10. A commitment fee of 0.20% to 0.30% per annum (based on the ~~income tax effects from excess tax benefits in income tax expense,~~debt to EBITDA ratio) on the ~~effects~~unused portion of the ~~excess tax benefits~~Revolving Credit Facility 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 June 30, 2022, the Company had $131.3 million in borrowings outstanding under the Term Loan Facility, $135.0 million in borrowings outstanding under the Revolving Credit Facility, and $3.9 million in letters of credit outstanding under the Revolving Credit Facility. The Company had $311.1 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.

Note 6 – 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 ~~no longer~~generally expensed as incurred and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the ~~calculation~~lease.

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The components of ~~diluted shares outstanding, resulting~~lease expense were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Finance lease cost:
Amortization of right-of-use assets (included in depreciation expense)	$	24	$	202	$	48	$	396
Interest on lease liabilities		7		83		15		175
Operating lease cost		4,425		3,802		8,699		7,596
Short-term lease cost		64		101		144		191
Variable lease cost		473		447		942		914
Total lease cost	$	4,993	$	4,635	$	9,848	$	9,272


	Six Months Ended
(in thousands)	June 30, 2022		June 30, 2021
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for finance lease	$	15	$	194
Operating cash flows used for operating leases	$	9,328	$	8,372
Financing cash flows used for finance lease	$	82	$	793
Right-of-use assets obtained in exchange for new operating lease liabilities	$	10,683	$	15,819

The lease assets and liabilities as of June 30, 2022 and December 31, 2021 were as follows (in thousands):


	June 30,			December 31,
	2022			2021
Finance lease right-of-use assets (included in other assets)	$	712		$	760
Operating lease right-of-use assets	$	98,580		$	99,158
Finance lease liability, current (included in current installments of long-term debt)	$	169		$	165
Finance lease liability, noncurrent (included in long-term debt)	$	443		$	529
Operating lease liabilities, current (included in accrued liabilities)	$	12,359		$	13,465
Operating lease liabilities, noncurrent	$	90,936		$	90,878
Weighted average remaining lease term – finance leases	3.4 years			3.9 years
Weighted average remaining lease term – operating leases	10.1 years			10.0 years
Weighted average discount rate – finance leases		4.8	%		4.8	%
Weighted average discount rate – operating leases		4.1	%		4.1	%

Future annual minimum lease payments and finance lease commitments as of June 30, 2022 were as follows (in thousands):


Year ending December 31,	Operating Leases			Finance Leases
2022 (remaining six months)		7,607			97
2023		14,639			194
2024		13,280			194
2025		12,756			178
2026		11,393			0
2027 and thereafter		67,718			0
Total minimum lease payments	$	127,393		$	663
Less: imputed interest		(24,098	)		(51	)
Present value of lease liabilities	$	103,295		$	612

As of June 30, 2022, the Company’s future operating leases that have not yet commenced include a new facility lease in an ~~increase~~existing location in the ~~number~~Americas which expires 2032 and contains renewal options. The aggregate initial annual minimum lease payments of ~~diluted shares outstanding.~~ this lease is approximately $2.4 million.

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Note 7 – Common Stock and Stock-Based Awards Plans

Dividends

The Company ~~adopted this change~~began declaring and paying quarterly dividends during the first quarter of 2018. For the three and six months ended June 30, 2022, cash dividends paid totaled $5.8 million and $11.6 million, respectively. For the three and six months ended June 30, 2021, cash dividends paid totaled $5.9 million and $11.6 million, respectively. On March 15, 2021, the Company declared a quarterly cash dividend of $0.16 per share of the Company’s common stock to shareholders of record as of March 31, 2021. On June 15, 2021, September 15, 2021, December 15, 2021, March 15, 2022 and June 15, 2022, the Company declared a quarterly cash dividend of $0.165 per share of the Company’s common stock to shareholders of record as of June 30, 2021, September 30, 2021, December 31, 2021, March 31, 2022, and June 30, 2022, respectively. The dividends for the first, second, third, and fourth quarters of 2021 and the first and second quarters of 2022 were paid on April 15, 2021, July 14, 2021, October 14, 2021, December 31, 2021, April 14, 2022, and July 14, 2022, respectively. The Company’s future dividend policy is subject to the Company’s compliance with applicable law, and depends on, among other things, the Company’s results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in the ~~method~~Company’s debt agreements, and other factors that the Board of ~~calculating diluted shares outstanding on~~Directors may deem relevant, including the impact of the COVID pandemic. Dividend payments are not mandatory or guaranteed; there can be no assurance that the Company will continue to pay a ~~prospective basis. Additionally, excess tax benefits or deficiencies recognized on stock-based compensation expense are classified as an operating activity~~dividend in the ~~accompanying Condensed Consolidated Statements~~future.

Share Repurchase Authorization

On February 19, 2020 and October 26, 2018, the Board of ~~Cash Flows. The Company has applied this provision prospectively. Additionally,~~Directors authorized the repurchase of $150 million and $100 million, respectively, of the Company’s common stock in addition to the $250 million previously approved on March 6, 2018. During the three and six months ended June 30, 2022, the Company ~~is now required to present the cost~~repurchased a total of 0.2 million and 0.4 million common shares, ~~withheld from the employee to satisfy the employees’ income tax liability as a financing activity on the statement~~respectively, for an aggregate of ~~cash flows rather than as~~$3.9 million and $9.4 million, respectively, at an ~~operating cash flow. The Company adopted this change retrospectively.~~average price of $24.11 per share and $24.96 per share, respectively. As ~~a result, for the nine months ended September~~of June 30, 2016, net cash provided by operations increased by $0.6 million with a corresponding offset to net cash used in financing activities. The standard also allows for the option to account for forfeitures as they occur when determining the amount of compensation cost to be recognized, rather than estimating expected forfeitures over the course of a vesting period. The Company elected to account for forfeitures as they occur. The net cumulative effect to2022, the Company ~~from the adoption of this accounting standard update was~~had an ~~increase to paid-in capital of $0.2~~aggregate $154.6 million ~~and a reduction to retained earnings of $0.2 million as of January 1, 2017.~~remaining under its stock repurchase program.

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~~Note 2 –~~ Stock-Based Compensation

The Company’s ~~2010~~2019 Omnibus Incentive Compensation Plan ~~(the 2010~~(as amended, the 2019 Plan) authorizes the Company, upon approval of the Human Capital and 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 ~~shares~~stock on the date of grant, generally vest over a four-year period from the date of grant and have a term of ~~ten years.~~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 ~~unit awards~~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 ~~2010~~2019 Plan to non-employee directors have been in the form of restricted stock units, which generally vest ~~in equal quarterly installments over a one-year period, starting on~~one year from the grant ~~date~~.date.

On May 25, 2022, the Company's shareholders approved an amendment to the 2019 Plan to increase the total number of authorized common shares available for grant thereunder by 1.4 million shares.

As of ~~September~~June 30, ~~2017~~2022, ~~3.1~~ ~~million additional~~2.9million common shares were available for issuance under the ~~Company’s 2010~~2019 Plan.

All share-based payments to employees, including grants of employee stock options, are recognized in the condensed consolidated financial statements based on their grant date fair values. The total compensation cost recognized for stock-based awards was ~~$2.3~~ $4.3 million and ~~$6.8~~$8.5 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, respectively, and ~~$0.3~~$4.0 million and ~~$4.3~~$6.9 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2021, respectively. The ~~total income~~future tax benefit ~~recognized in the condensed income statements for~~of these stock-based awards as of the grant date was ~~$0.8~~$1.0 million and ~~$2.5~~$2.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, respectively, and ~~$0.1~~$0.9 million and ~~$1.5~~$1.6 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2021, respectively. Awards of ~~restricted shares,~~ restricted stock units and performance-based restricted stock units are valued at the closing market price of the Company’s common ~~shares~~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.

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As of ~~September~~June 30, ~~2017,~~2022, the unrecognized compensation cost and remaining weighted-average amortization period related to stock-based awards were as follows:

Performance-

based

Restricted

Restricted

Stock

Stock

Stock
(in thousands)

Options

Units

Units⁽¹⁾
Unrecognized compensation cost

$ 938

$ 13,111

$ 5,328
Remaining weighted-average

amortization period
0.9 years

2.4 years

1.8 years

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

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(in thousands)	Restricted Stock Units		Performance- based Restricted Stock Units (1)
Unrecognized compensation cost	$	27,887	$	8,434
Remaining weighted-average amortization period	2.7 years		1.9 years

~~The fair value of each option grant is estimated~~

(1) Based on the ~~date~~probable achievement of ~~grant using~~ the ~~Black-Scholes option pricing model. No options were granted during the nine months ended September 30, 2017 and 2016.~~performance goals identified in each award.

The total cash received by the Company as a result of stock option exercises for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 was ~~approximately $9.8~~approximately $0.5 million and ~~$5.5~~$0.3 million, respectively. The actual tax benefit realized as a result of stock option exercises and the vesting of other share-based awards during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 was ~~$4.4~~ $2.4million and ~~$2.6~~$2.5 million, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, the total intrinsic value of stock options exercised was ~~$6.5~~$0.4 million and ~~$2.2~~$0.5 million, respectively.

The Company awarded performance-based restricted stock units to employees during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021. The number of performance-based restricted stock units that ~~may~~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 ~~audited~~ 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, ~~growth,~~ operating income margin, ~~expansion,~~ 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~~re-issuance under the ~~2010~~Company’s 2019 Plan.

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

Weighted-

Weighted-

Average

Average

Remaining

Aggregate

Number of

Exercise

Contractual

Intrinsic
(in thousands, except per share data)

Options

Price

Term (Years)

Value
Outstanding as of December 31, 2016

1,197

$19.51

Exercised

(502)

19.56

Forfeited or expired

(14)

20.51

Outstanding as of September 30, 2017

681

$19.45

5.31

$ 10,015
Exercisable as of September 30, 2017

527

$18.39

3.54

$ 8,304


(in thousands, except per share data)	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2021		132		$	20.06
Exercised		(39	)		16.33
Forfeited or expired		(2	)		16.13
Outstanding and exercisable as of June 30, 2022		91		$	21.76		1.75	$	107

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 the period ended ~~September~~June 30, ~~2017~~2022 for options that had exercise prices that were below the closing price.

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


(in thousands, except per share data)	Number of Units			Weighted- Average Grant Date Fair Value
Non-vested awards outstanding as of December 31, 2021		1,057		$	28.02
Granted		591			25.79
Vested		(388	)		28.21
Forfeited		(55	)		27.49
Non-vested awards outstanding as of June 30, 2022		1,205		$	26.89

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Weighted-

Average

Number of

Grant Date
(in thousands, except per share data)

Units

Fair Value
Non-vested awards outstanding as of December 31, 2016

525

$22.57
Granted

302

31.64
Vested

(185)

21.43
Forfeited

(34)

23.96
Non-vested awards outstanding as of September 30, 2017

608

$27.34

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

Weighted-

Average

Number of

Grant Date
(in thousands, except per share data)

Units

Fair Value
Non-vested units outstanding as of December 31, 2016

227

$21.43
Granted ⁽¹⁾

172

31.60
Forfeited or expired

(51)

18.69
Non-vested units outstanding as of September 30, 2017

348

$26.84


				Weighted-
				Average
	Number of			Grant Date
(in thousands, except per share data)	Units			Fair Value
Non-vested units outstanding as of December 31, 2021		542		$	28.06
Granted(1)		177			25.97
Forfeited		(174	)		27.29
Non-vested units outstanding as of June 30, 2022		545		$	27.62

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

Note 8 – Income Taxes

Income tax expense consists of the following:


	Six Months Ended June 30,
(in thousands)	2022			2021
Current:
U.S. Federal	$	67		$	(365	)
State and local		458			354
Foreign		9,177			5,098
Deferred:		(3,098	)		(1,475	)
	$	6,604		$	3,612

~~Note 3 – Earnings Per Share~~

~~Basic~~Income tax expense differs from the amount computed by applying the U.S. federal statutory income tax rate to income before income taxes primarily due to the mix of taxable income by taxing jurisdiction, the impact of tax incentives and tax holidays in foreign locations, state income taxes (net of federal benefit) and the U.S. tax under the global intangible low-taxed income (GILTI) provisions. GILTI requires the Company to include in its U.S. income tax return foreign subsidiary earnings ~~per share is computed using~~in excess of an allowable return on the ~~weighted-average number of shares outstanding. Diluted~~foreign subsidiaries tangible fixed assets. The taxable earnings ~~per share is computed using the weighted-average number of shares outstanding adjusted~~can be offset by a limited deemed paid foreign tax credit with no carrybacks or carryforwards available. The Company accounts for the ~~incremental shares attributed~~GILTI as a period cost and does not include it as a factor in the determination of deferred taxes.

As of December 31, 2021, the Company had approximately $365.2 million in cumulative undistributed foreign earnings of its foreign subsidiaries. These earnings would not be subject to ~~outstanding stock equivalents. Stock equivalents include common shares issuable upon~~U.S. income tax, if distributed to the ~~exercise~~Company. During 2018, the Company changed its assertion on its foreign subsidiaries earnings that are permanently reinvested. A certain amount of ~~stock options~~earnings from specific foreign subsidiaries are permanently reinvested, and certain foreign earnings from other ~~equity instruments,~~specific foreign subsidiaries are considered to be non-permanently reinvested and are ~~computed using~~available for immediate distribution to the ~~treasury stock method. Under~~Company. Income taxes have been accrued on the ~~treasury stock method,~~non-permanently reinvested foreign earnings including any applicable local withholding taxes.

On March 27, 2020, the ~~exercise price~~Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in the United States in response to the COVID pandemic. The CARES Act among other things, permits net operating loss carryovers and carrybacks to offset 100% of ~~a share,~~taxable income for taxable years beginning before 2021, and contains modifications on the limitation of business interest. The Company has evaluated the impact of these provisions and has determined these provisions did not have any impact on the six months ended June 30, 2022. In addition, the CARES Act allowed for employee retention tax credits to be taken in U.S. payroll tax filings, and allowed for the deferral of the employer portion of social security taxes during the calendar year 2020 with 50% to be paid at the end of calendar years 2021 and 2022, respectively. The Company 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. During December 2021, the Company paid approximately 50% of the social security taxes previously deferred. The Company has also determined it was entitled to employee retention credits and filed for the credits in the second quarter 2020 payroll tax reports pursuant to the guidance provided by the Internal Revenue Service. The amount for the credits has been recorded in operating expenses for the year ended December 31, 2020. The Company was not eligible for employee retention tax credits as of ~~compensation cost, if any,~~December 31, 2021. The Company has not received the retention credits from the Internal Revenue Service that it applied for ~~future service~~during second quarter of 2020. The Internal Revenue Service has had some delays in processing the filings for the tax refunds.

The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in China and Thailand that will expire at various dates, unless extended or otherwise renegotiated, through 2023 in China and 2030 in Thailand, and are subject to

12

certain conditions with which the Company expects to comply. The Malaysia tax incentive expired as of March 31, 2021, but the Company has ~~not yet recognized are assumed~~applied for an extension of the Malaysia tax holiday which would extend the tax holiday for another five years until 2026. There is no guarantee that we will be granted the extension of the Malaysia tax holiday. The net impact of these tax incentives was to ~~be used to repurchase shares~~lower foreign income tax expense for the six months ended June 30, 2022 and 2021 by approximately $1.7 million (approximately $0.05 per diluted share), and $2.2 million (approximately $0.06 per diluted share), as follows:


	Six Months Ended June 30,
(in thousands)	2022		2021
China	$	215	$	0
Malaysia		0		877
Thailand		1,467		1,295
	$	1,683	$	2,172

As of June 30, 2022, the total amount of the reserve for uncertain tax benefits including interest and penalties was $9.6 million. The reserve is classified as a current or long-term liability in the condensed 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 ~~period.~~income tax expense.

The Company and its subsidiaries in Brazil, China, Ireland, Malaysia, Mexico, the 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 2016 to 2021. During 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 9 – Revenue

The Company’s revenues are generated primarily from its manufacturing services, which entails 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. The Company applies the optional exemption 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. 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, which is generally when goods are shipped. Revenue from design, development and engineering services is recognized over time as the services are performed. As a general matter, 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.

13

Disaggregation of revenue

In the following ~~table sets forth~~tables, revenue is disaggregated by market sector. The tables also include a reconciliation of the ~~calculation~~disaggregated revenue with the reportable operating segments. Elimination of ~~basic~~intersegment sales includes intersegment sales between reportable operating segments.


	Reportable Operating Segments
	Three Months Ended June 30, 2022
(in thousands)	Americas		Asia		Europe		Total
Market Sector:
Industrials	$	22,941	$	100,495	$	35,400	$	158,836
A&D		77,803		8,667		3,427		89,897
Medical		86,879		69,459		9,896		166,234
Semi-Cap		68,706		85,978		20,215		174,899
Computing		57,045		11,591		0		68,636
Telecommunications		37,551		31,976		0		69,527
External revenue		350,925		308,166		68,938		728,029
Elimination of intersegment sales		9,350		12,296		912		22,558
Segment revenue	$	360,275	$	320,462	$	69,850	$	750,587


	Six Months Ended June 30, 2022
(in thousands)	Americas		Asia		Europe		Total
Market Sector:
Industrials	$	41,667	$	184,953	$	69,362	$	295,982
A&D		146,504		15,682		8,898		171,084
Medical		154,858		108,452		19,797		283,107
Semi-Cap		135,029		182,796		40,511		358,336
Computing		101,671		22,021		0		123,692
Telecommunications		65,065		66,741		105		131,911
External revenue		644,794		580,645		138,673		1,364,112
Elimination of intersegment sales		21,061		27,063		1,518		49,642
Segment revenue	$	665,855	$	607,708	$	140,191	$	1,413,754


	Three Months Ended June 30, 2021
(in thousands)	Americas		Asia		Europe		Total
Market Sector:
Industrials	$	20,358	$	61,115	$	18,433	$	99,906
A&D		91,427		73		5,180		96,680
Medical		47,920		50,386		10,599		108,905
Semi-Cap		55,492		66,781		16,931		139,204
Computing		32,766		6,832		—		39,598
Telecommunications		32,007		28,222		140		60,369
External revenue		279,970		213,409		51,283		544,662
Elimination of intersegment sales		12,300		9,130		337		21,767
Segment revenue	$	292,270	$	222,539	$	51,620	$	566,429


	Six Months Ended June 30, 2021
(in thousands)	Americas		Asia		Europe		Total
Market Sector:
Industrials	$	41,354	$	116,525	$	37,479	$	195,358
A&D		174,914		73		11,074		186,061
Medical		95,344		91,170		30,581		217,095
Semi-Cap		104,358		115,542		32,414		252,314
Computing		68,104		15,180		—		83,284
Telecommunications		61,965		53,941		365		116,271
External revenue		546,039		392,431		111,913		1,050,383
Elimination of intersegment sales		23,069		18,412		587		42,068
Segment revenue	$	569,108	$	410,843	$	112,500	$	1,092,451

14

During the six months ended June 30, 2022 and ~~diluted earnings per share:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,
(in thousands, except per share data)

2017

2016

2017

2016
Net income

$
17,512

$
21,742

$
44,375

$
45,479

Denominator for basic earnings per share -

weighted-average number of common

shares outstanding during the period

49,865

48,965

49,716

49,377
Incremental common shares attributable to

exercise of dilutive options

268

323

319

304
Incremental common shares attributable

to outstanding restricted stock units

197

126

257

197
Denominator for diluted earnings per share

50,330

49,414

50,292

49,878

Basic earnings per share

$
0.35

$
0.44

$
0.89

$
0.92
Diluted earnings per share

$
0.35

$
0.44

$
0.88

$
0.91

2021, 90.2% and 90.0%, respectfully, of the Company’s revenue was recognized as products and services that were transferred over time.

~~Options to purchase 0.6~~The timing of revenue recognition, billings and cash collections result in billed accounts receivable, contract assets and advance payments from customers.

As of June 30, 2022 and December 31, 2021, the Company had $179.2 million and ~~1.0~~$155.2 million, ~~common shares for both the three- and nine-month periods ended September 30, 2016,~~ respectively, ~~were not included~~ in ~~the computation of diluted earnings per share because their effect would have been anti-dilutive.~~

9

~~Note 4 – Goodwill and Other Intangible Assets~~

~~Goodwill allocated~~contract assets from contracts with customers. The contract assets primarily relate to the Company’s ~~reportable segments was~~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.

Significant changes in the contract asset balance during the period are as follows:


							Six Months Ended June 30,
(in thousands)		Americas		Asia		Total	2022			2021
Goodwill as of December 31, 2016 and September 30, 2017	$	153,514	$	38,102	$	191,616

Beginning balance as of December 31							$	155,243		$	142,779
Revenue recognized								1,233,229			944,052
Amounts collected or invoiced								(1,209,300	)		(932,202	)
Ending balance as of June 30							$	179,172		$	154,629

~~Other assets consist primarily~~As of ~~acquired identifiable intangible assets and capitalized purchased software costs.~~ ~~Intangible assets as of September~~June 30, ~~2017~~2022 and December 31, ~~2016 were as follows:~~

As of September 30, 2017

Gross

Net

Carrying

Accumulated

Carrying
(in thousands)

Amount

Amortization

Amount
Customer relationships
$
100,183

$
(32,770)

$
67,413
Purchased software costs

34,307

(29,327)

4,980
Technology licenses

26,800

(17,112)

9,688
Trade names and trademarks

7,800

-

7,800
Other

868

(255)

613
Total
$
169,958

$
(79,464)

$
90,494

As of December 31, 2016

Gross

Net

Carrying

Accumulated

Carrying
(in thousands)

Amount

Amortization

Amount
Customer relationships
$
100,053

$
(27,883)

$
72,170
Purchased software costs

31,582

(28,508)

3,074
Technology licenses

26,800

(14,189)

12,611
Trade names and trademarks

7,800

-

7,800
Other

868

(237)

631
Total
$
167,103

$
(70,817)

$
96,286

Customer relationships are being amortized on a straight-line basis over a period of 10 to 14 years. Capitalized purchased software costs are being amortized on a straight-line basis over the estimated useful life of the related software, which ranges from 2 to 10 years. Technology licenses are being amortized over their estimated useful lives in proportion to the economic benefits consumed. The Company’s acquired trade names and trademarks have been determined to have an indefinite life. ~~Amortization for the nine months ended September 30, 2017 and 2016 was as follows:~~

Nine Months Ended

September 30,
(in thousands)

2017

2016
Amortization of intangible assets
$
7,698

$
8,945
Amortization of capitalized purchased software costs

798

867
Amortization of debt costs

643

567

$
9,139

$
10,379

10

~~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,

Amount
2017 (remaining three months)
$
2,624
2018

10,252
2019

10,091
2020

9,319
2021

6,389

11

~~Note 5 – Borrowing Facilities~~

~~The Company has a $430 million Credit Agreement (the Credit Agreement) with~~ ~~JPMorgan Chase Bank, N.A. as administrative agent and collateral agent (the Administrative Agent), and the financial institutions acting as lenders thereunder from time to time.~~ ~~This Credit Agreement provides for a five-year $200 million revolving credit facility and~~ ~~a five-year $230 million term loan facility (the Term Loan), both with a maturity date of November 12, 2020.~~The revolving credit facility is available for general corporate purposes, may be drawn in foreign currencies up to an amount equivalent to $20 million, and may be used for letters of credit up to $20 million. The Credit Agreement includes an accordion feature, pursuant to which total commitments under the facility may be increased by an additional $150 million, subject to the satisfaction of certain conditions.

The Term Loan is payable in minimum quarterly principal installments of $2.9 million in 2017, $4.3 million in 2018, $5.8 million in 2019, and $8.6 million in 2020, with the balance payable on the maturity date.

Interest on outstanding borrowings under the Credit Agreement accrues, at our option, at (a) the adjusted London interbank offered rate (LIBOR) plus 1.25% to 2.25%, or (b) the alternative base rate plus 0.25% to 1.25%, and is payable quarterly in arrears. The alternative base rate is equal to the highest of (i) the Administrative Agent’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) the adjusted LIBOR rate plus 1.00%. The margin on the interest rates fluctuates based upon the ratio of the Company’s debt to its consolidated EBITDA. As of September 30, 2017, $157.4 million of the outstanding debt under the Credit Agreement was effectively at a fixed interest rate as a result of a $157.4 million notional interest rate swap contract discussed in Note 14. A commitment fee of 0.30% to 0.40% 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) any indebtedness owed to Benchmark and its subsidiaries and (c) all or substantially all other personal property of Benchmark and its domestic subsidiaries (including, accounts receivable, inventory and fixed assets of Benchmark and its domestic subsidiaries), in each case, subject to customary exceptions and limitations. The Credit Agreement contains financial covenants as to debt leverage and interest coverage, 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 may 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 September 30, 2017 and December 31, 2016, the Company was in compliance with all of these covenants and restrictions.~~

~~As of September 30, 2017,~~2021, the Company had ~~$209.9~~$173.6 million and $118.1 million, respectively, in ~~borrowings outstanding~~advance payments from customers. Of those amounts, $144.9 million and $79.9 million, respectively, were customer deposits and prepayments of inventory and $28.7 million and $38.2 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 10 – Accounts Receivable Sale Programs

As of June 30, 2022, in connection with trade accounts receivable sale programs with unaffiliated financial institutions, the ~~Term Loan facility~~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 three months ended June 30, 2022 and ~~$2.6~~2021, the Company sold $119.4 million and $87.0 million, respectively, of accounts receivable under these programs, and in ~~letters~~exchange, the Company received cash proceeds of ~~credit outstanding~~$118.9 million and $86.8 million, respectively, net of the discount. During the six months ended June 30, 2022 and 2021, the Company sold $226.6 million and $166.3 million, respectively, of accounts receivable under these programs, and in exchange, the ~~revolving credit facility.~~ Company received cash proceeds of $226.0 million and $166.0 million, respectively, net of the discount. The sale discount was recorded to other expense within the condensed consolidated statements of income.

Note 11 – Contingencies

The Company ~~has $197.4 million available for future borrowings under~~is involved in various legal actions arising in the ~~revolving credit facility.~~

~~The Company’s Thailand subsidiary has~~ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a multi-purpose credit facility with Kasikornbank Public Company Limited (the Thai Credit Facility) that provides for 350 million Thai baht working capital availability. The Thai Credit Facility is secured by land and buildings in Thailand owned bymaterial adverse effect on the Company’s ~~Thailand subsidiary. Availability~~consolidated financial position or results of funds under the Thai Credit Facility is reviewed annually and is currently accessible through October 2018. As of both September 30, 2017 and 2016, there were no working capital borrowings outstanding under the facility.operations.

12

Note 6 – Inventories
Inventory costs are summarized as follows:

September 30,
December 31,
(in thousands)

2017

2016
Raw materials
$
269,847

$
233,111
Work in process

115,054

113,496
Finished goods

36,957

34,727

$
421,858

$
381,334

Note 12 – Restructuring Charges

~~Note 7 – Accounts Receivable Sale Program~~

In connection with a trade accounts receivable sale program with an unaffiliated financial institution, the Company may elect to sell, at a discount, on an ongoing basis, up to a maximum of $40.0 million, of specific accounts receivable at any one time. The program was executed on March 29, 2017, is an uncommitted facility and is scheduled to expire in one year with options to automatically extend the agreement, although any party may elect to terminate the agreement upon 60 days prior notice.

During the three months ended September 30, 2017, the Company sold $40.0 million of accounts receivable under this program, and in exchange, the Company received cash proceeds of $39.9 million, net of the discount. During the nine months ended September 30, 2017, the Company sold $105.0 million of accounts receivable under this program, and in exchange, the Company received cash proceeds of $104.8 million, net of the discount. The loss on the sale resulting from the discount during the three and nine months ended September 30, 2017 was $0.1 million and $0.2 million, respectively, and was recorded to other expense within the Condensed Consolidated Statements of Income.

13

Note 8 – Income Taxes
Income tax expense consists of the following:

Nine Months Ended

September 30,
(in thousands)

2017

2016
Federal – current
$
(1,280)

$
(164)
Foreign – current

6,039

(2,340)
State – current

275

238
Deferred

1,505

2,577

$
6,539

$
311

Income tax expense differs from the amount computed by applying the U.S. federal statutory income tax rate to income before income tax primarily due to the mix of taxable income by taxing jurisdiction, the impact of tax incentives and tax holidays in foreign locations, and state income taxes (net of federal benefit). The increase in income tax expense during 2017 is primarily the result of an $8.3 million decrease in the reserve for uncertain tax benefits in 2016. Excluding this item from 2016, the decrease in income tax expense during 2017 is primarily the result of a tax incentive in China and the recognition of excess tax benefits in the U.S. attributable to the adoption of an accounting standard effective January 1, 2017. See Note 1. Under this standard, the excess tax benefits or deficiencies resulting from the exercise or vesting of awards are included in income tax expense in the reporting period in which they occur. Therefore, the tax effect of stock option exercises and RSU vesting is not spread over the entire year through the use of the annual effective tax rate, but instead is recorded entirely in the period in which the tax deduction arises. Accordingly, the Company recorded the income tax benefit as a discrete item for the nine months ended September 30, 2017. The Company’s effective tax rate could fluctuate significantly on a quarterly basis due to the tax effects of stock-based compensation.

The Company considers earnings from foreign subsidiaries to be indefinitely reinvested and, accordingly, no provision for U.S. federal and state income taxes has been made for these earnings. Upon distribution of foreign subsidiary earnings in the form of dividends or otherwise, such distributed earnings would be subject to U.S. income taxes and foreign withholding taxes, reduced by any applicable foreign tax credits. Determination of the amount of any unrecognized deferred tax liability on these undistributed earnings is not practicable.

The Company has ~~been granted certain tax incentives, including tax holidays, for~~undertaken initiatives to restructure its ~~subsidiaries in China, Malaysia~~business operations to improve utilization and ~~Thailand that will expire at various dates, unless extended or otherwise renegotiated, through 2018 in China, 2021 in Malaysia~~realize cost savings. These initiatives have included changing the number and ~~2028 in Thailand,~~location of production facilities, largely to align capacity and ~~are subject to certain conditions~~infrastructure with ~~which the Company expects to comply.~~ ~~The net impact of these tax incentives was~~current and anticipated customer demand. This alignment includes transferring programs from higher cost geographies to lower ~~income tax expense for~~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 $3.6 million of restructuring charges during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 primarily related to the previously announced closures of our sites in San Jose, California, Angleton, Texas, and ~~2016 by approximately $7.3 million (approximately 0.15 per diluted share)~~Moorpark, California in the Americas, and ~~$3.5 million (approximately $0.07 per diluted share), respectively,~~other smaller activities involving capacity reductions and reductions in workforce in certain facilities across various regions. San Jose, California operations have ceased and all restructuring activity was complete as ~~follows:~~

Nine Months Ended

September 30,
(in thousands)

2017

2016
China
$
888

$
-
Malaysia

3,151

1,594
Thailand

3,294

1,953

$
7,333

$
3,547

14

As of ~~September~~March 31, 2022. Angleton, Texas operations have ceased and all restructuring activity is now complete as of June 30, ~~2017,~~2022 upon the ~~total amount~~disposition of the ~~reserve for uncertain tax benefits including interest was $0.5 million.~~ facility. Moorpark, California operations are expected to cease at the end of 2022 with restructuring activity estimated to be complete shortly thereafter.

15

The ~~reserve~~following table summarizes the 2022 activity in accrued restructuring, which is ~~classified as a current or long-term liability~~included in accrued liabilities in the condensed consolidated balance sheets, ~~based on~~related to various restructuring activities initiated prior to June 30, 2022:


	Balance as of										Foreign		Balance as of
	December 31,		Restructuring		Cash			Non-Cash			Exchange		June 30,
(in thousands)	2021		Charges		Payment			Activity			Adjustments		2022
Restructuring:
Severance	$	3,257	$	1,713	$	(1,129	)	$	(205	)	$	—	$	3,636
Lease facility costs		17		1,256		(1,257	)		0			—		16
Other exit costs		237		611		(665	)		(183	)		—		0
Total	$	3,511	$	3,580	$	(3,051	)	$	(388	)	$	—	$	3,652

The components of the ~~Company’s expectation~~restructuring charges during 2022 were as follows:


(in thousands)	Americas		Asia		Europe		Total
Severance costs	$	1,583	$	130	$	0	$	1,713
Lease facility costs		1,256		0		0		1,256
Other exit costs		611		0		0		611
	$	3,450	$	130	$	0	$	3,580

Additionally, during the third quarter of ~~when~~2021, the ~~items will be settled.~~Company made the decision to no longer continue certain manufacturing capabilities in the Americas. In connection with that decision, the Company assessed the facility and equipment assets used in those manufacturing capabilities using valuation information from third parties and recorded $4.4 million of impairment charges as a result of that assessment. The ~~amount of accrued potential interest on unrecognized tax benefits~~asset impairment charges are included in the ~~reserve~~restructuring charges and other costs line item on the consolidated statements of income as of September 30, ~~2017, was $17.0 thousand. There was no reserve for potential penalties.~~

2021. During the ~~nine months ended September 30, 2017,~~first half of 2022, the Company ~~released $0.9~~completed the sale of the equipment for $1.3 million and recorded a loss on assets held for sale of ~~uncertain tax benefits related to~~$2.0 million included in the ~~liquidation~~restructuring charges and other costs line item on the consolidated statements of income. Additionally, during the first half of 2022, the Company completed the sale of a ~~foreign subsidiary company. Also during 2017,~~building in Angleton, Texas for $4.3 million and recorded a gain on assets held for sale of $2.4 million included in the restructuring charges and other costs line item on the consolidated statements of income.

~~Note 9 – Segment~~operations in Mexico and ~~Geographic Information~~Europe.

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~~an interest rate swap agreement, with a notional amount of $125.6 million and ~~Europe. Information about operating segments~~$129.4 million as of June 30, 2022 and December 31, 2021, 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 ~~as follows:~~

Three Months Ended
Nine Months Ended

September 30,
September 30,
(in thousands)

2017

2016

2017

2016
Net sales:

Americas
$
378,129
$
387,827
$
1,158,290
$
1,135,995

Asia

202,149

169,215

568,247

505,410

Europe

43,793

37,113

127,617

119,633

Elimination of intersegment sales

(20,521)

(19,814)

(67,199)

(58,130)

$
603,550
$
574,341
$
1,786,955
$
1,702,908

Depreciation and amortization:

Americas
$
5,679
$
6,031
$
16,599
$
17,639

Asia

2,882

4,055

9,021

12,304

Europe

705

702

2,041

2,098

Corporate

3,008

3,314

8,930

9,961

$
12,274
$
14,102
$
36,591
$
42,002

Income from operations:

Americas
$
15,463
$
21,481
$
49,270
$
60,960

Asia

20,963

12,337

53,328

34,894

Europe

2,560

2,390

7,512

7,878

Corporate and intersegment eliminations

(18,171)

(18,126)

(54,651)

(51,642)

$
20,815
$
18,082
$
55,459
$
52,090

Capital expenditures:

Americas
$
8,548
$
7,102
$
17,584
$
16,698

Asia

1,696

1,372

12,820

5,945

Europe

638

532

4,018

1,204

Corporate

475

189

3,314

1,551

$
11,357
$
9,195
$
37,736
$
25,398

September 30,
December 31,

2017

2016
Total assets:

Americas

$
832,024
$
864,388

Asia

689,571

634,838

Europe

452,015

393,443

Corporate and other

103,096

105,999

$
2,076,706
$
1,998,668

16

~~Geographic net sales information reflects the destination~~2.928%. The effect of this swap is to convert a portion of the ~~product shipped. Long-lived assets information is based upon~~floating rate interest expense to fixed interest rate expense. Based on the ~~physical location~~terms of the ~~asset.~~

Three Months Ended
Nine Months Ended

September 30,
September 30,
(in thousands)

2017

2016

2017

2016
Geographic net sales:

United States
$
398,363
$
403,561
$
1,186,330
$
1,200,752

Singapore

59,594

48,057

179,158

134,635

Other Asia

53,327

37,770

144,620

104,911

Europe

70,852

57,835

218,314

180,362

Other Foreign

21,414

27,118

58,533

82,248

$
603,550
$
574,341
$
1,786,955
$
1,702,908

September 30,
December 31,

2017

2016
Long-lived assets:

United States

$
163,325
$
167,367

Asia

73,418

67,998

Europe

10,967

8,415

Other

26,052

24,290

$
273,762
$
268,070

Note 10 – Supplemental Cash Flow and Non-Cash Information
The following information concerns supplemental disclosures of cash payments.

Three Months Ended

Nine Months Ended

September 30,

September 30,
(in thousands)

2017

2016

2017

2016
Income taxes paid, net
$
2,524

$
1,674

$
5,049

$
6,494
Interest paid

2,089

2,114

6,385

6,296

Non-cash investing activity:

Additions to property, plant and equipment

in accounts payable

$
6,024

$
1,004

~~Note 11 – Contingencies~~

~~The Company is involved in various legal actions arising~~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 ~~ordinary course~~fair value of ~~business. In~~ the ~~opinion of management, the ultimate disposition of these matters will not have a material adverse effect~~interest rate swap are recorded in other comprehensive income on the ~~Company’s~~accompanying condensed consolidated ~~financial position or results of operations.~~

~~Note 12 – Impact of Recently Enacted Accounting Standards~~

~~In May 2017,~~balance sheets until earnings are affected by the Financial Accounting Standards Board (FASB) issued a new accounting standards update that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This update is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company is evaluating the impact of the adoption of this guidance on its consolidated financial

17

~~statements and related disclosures but does not expect it to have a material impact. The Company plans to adopt the new guidance effective January 1, 2018.~~

In August 2016, the FASB issued a new accounting standards update, which seeks to reduce the existing diversity in how certain cash receipts and cash payments are presented and classified in the statementvariability of cash flows. ~~This update is effective for fiscal years~~During the three and ~~interim periods beginning after December 15, 2017, with early adoption permitted. The~~six months ended June 30, 2022, the Company ~~is currently evaluating the impact that the adoption~~recorded an unrealized gain of ~~this update will have on its consolidated financial statements.~~

~~In June 2016, the FASB issued a new accounting standards update, which replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses~~$1.6 million ($1.2 million net of tax) and ~~requires consideration~~$4.3 million ($3.2 million net 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 does not expect the implementation of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

~~In February 2016, the FASB issued a new accounting standards update changing the accounting for leases and including a requirement to record all leases~~tax), respectively, on the ~~consolidated balance sheets as assets~~swap in other comprehensive income. During the three and ~~liabilities. This update is effective~~six months ended June 30, 2021, the Company recorded an unrealized gain of $0.8 million ($0.7 million net of tax) and $2.1 million ($1.6 million net of tax), respectively, on the swap in other comprehensive income (loss). See Note 16.

17

As of June 30, 2022, the fair value estimate for ~~fiscal years beginning after December 15, 2018. The Company will adopt this update effective January 1, 2019, which will impact its consolidated balance sheet. The Company is currently evaluating~~ the ~~impact this standard will have~~Company's interest rate swap agreement were based on ~~its consolidated financial statements.~~

~~In May 2014, the FASB issued a new standard that will supersede most~~Level 2 inputs of the ~~existing revenue recognition requirements~~fair value hierarchy, as we obtained the valuation from a third party active in ~~current U.S. GAAP.~~relevant markets. The new standard will require companies to recognize revenue in an amount reflecting the consideration to which they expect to be entitled in exchange for transferring goods or services to a customer. It will also require significantly expanded disclosures, and will be effective for the Company January 1, 2018. The new standard will permit the use of either the retrospective or cumulative effect transition method. Under the new standard, the Company anticipates that a majority of its sales from manufacturing activities will change to an over-time model; currently the Company accounts for these under a point-in-time recognition model. Based on its analysis to date, the Company expects to adopt the new guidance under the retrospective approach. The Company has reviewed its significant customer contracts and is in the process of quantifying the potential effects the new standard will have on its consolidated financial statements and is working on the design and implementationvaluation of the ~~related internal controls.~~ swap is primarily measured through various pricing models or discounted cash flow analysis that incorporate observable market parameters, such as interest rate yield curves and volatility.

The ~~Company believes it is likely to have a material impact on~~following table presents the ~~timing~~fair value of ~~revenue recognition and on~~ the ~~Company’s balance sheet, primarily related to a reduction in finished goods and work in process inventories and a corresponding increase in contract assets for unbilled receivables.~~Company's derivative instruments:

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.


	Fair Values of Derivative Instruments
	Asset Derivatives					Liability Derivatives
	Balance Sheet	June 30,		December 31,		Balance Sheet	June 30,		December 31,
(in thousands)	Location	2022		2021		Location	2022		2021
Derivatives designated as hedging instruments:
Forward currency exchange contracts	Other current assets	$	254	$	0	Accrued liabilities	$	0	$	178
Interest rate swap	Other current assets	$	0	$	0	Accrued liabilities	$	5	$	4,332

~~The Company recognized restructuring charges during~~ ~~2017 and 2016~~ ~~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~~ ~~2017~~ ~~activity in the accrued restructuring balances related to the restructuring activities initiated prior to September 30, 2017:~~

Balance as of

Foreign

Balance as of

December 31,

Restructuring

Cash

Non-Cash

Exchange

September 30,
(in thousands)

2016

Charges

Payment

Activity

Adjustments

2017
2017 Restructuring:

Severance

$
-

$
1,903

$
(1,561)

$
(125)

$
-

$
217

Leased facilities and equipment

-

105

(105)

-

-

-

Other exit costs

-

334

(149)

-

9

194

-

2,342

(1,815)

(125)

9

411

2016 Restructuring:

Severance

738

(44)

(626)

-

-

68

Leased facilities and equipment

-

58

(58)

-

-

-

Other exit costs

545

1,616

(2,061)

(42)

2

60

1,283

1,630

(2,745)

(42)

2

128

Total

$
1,283

$
3,972

$
(4,560)

$
(167)

$
11

$
539

~~Note 14 – Fair Value~~

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.

·~~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 capital lease obligations. The Company believes that the carrying values of these instruments approximate fair value. As of September 30, 2017, the Company’s long-term investments and 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 derivatives for speculative purposes.

The forward currency exchange contracts in place as of September 30, 2017 have not been designated as accounting hedges and, therefore, changes in fair value are recorded within the Condensed Consolidated Statements of Income.

19

The Company has an interest rate swap agreement, which had a notional amount of $157.4 million and $163.9 million as of September 30, 2017 and December 31, 2016, 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 1.4935%. The effect of this swap is to convert a portion 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 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 Condensed Consolidated Balance Sheets until earnings are affected by the variability of cash flows. The fair value of the interest rate swap was a $0.9 million asset as of September 30, 2017 and a $0.5 million asset as of December 31, 2016.~~During the nine months ended September 30, 2017, the Company recorded unrealized gain of $0.4 million ($0.3 million net of tax) on the swap in other comprehensive income. See Note 15.~~

~~Note 15~~ – Accumulated Other Comprehensive Loss

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


												For the Three Months Ended June 30,
												2022												2021
			Foreign			Unrealized						Foreign												Foreign
			currency		Derivative	gain (loss) on						Currency			Derivative									Currency			Derivative
			translation		instruments,	investments,						Translation			Instruments,									Translation			Instruments,
(in thousands)	(in thousands)		adjustments		net of tax		net of tax		Other		Total	Adjustments			Net of Tax			Other			Total			Adjustments			Net of Tax			Other			Total
Balances, December 31, 2016		$	(14,544)	$	286	$	(74)	$	156	$	(14,176)
	Other comprehensive gain (loss)
	before reclassifications		4,434		254		19		(13)		4,694
Beginning balance												$	(13,884	)	$	(925	)	$	(1,078	)	$	(15,887	)	$	(10,795	)	$	(5,797	)	$	(1,395	)	$	(17,987	)
Other comprehensive gain (loss) before reclassifications													(3,501	)		1,268			(20	)		(2,253	)		712			637			117			1,466
Amounts reclassified from accumulated other comprehensive loss													—			(152	)		—			(152	)		—			—			—			—
Net current period other comprehensive gain (loss)	Net current period other comprehensive gain (loss)		4,434		254		19		(13)		4,694		(3,501	)		1,116			(20	)		(2,405	)		712			637			117			1,466
Balances, September 30, 2017		$	(10,110)	$	540	$	(55)	$	143	$	(9,482)
Ending balance												$	(17,385	)	$	191		$	(1,098	)	$	(18,292	)	$	(10,083	)	$	(5,160	)	$	(1,278	)	$	(16,521	)


	For the Six Months Ended June 30,
	2022												2021
	Foreign												Foreign
	Currency			Derivative									Currency			Derivative
	Translation			Instruments,									Translation			Instruments,
(in thousands)	Adjustments			Net of Tax			Other			Total			Adjustments			Net of Tax			Other			Total
Beginning balance	$	(12,729	)	$	(3,372	)	$	(1,057	)	$	(17,158	)	$	(8,375	)	$	(6,742	)	$	(1,534	)	$	(16,651	)
Other comprehensive gain (loss) before reclassifications		(4,656	)		3,632			(41	)		(1,065	)		(1,708	)		1,582			256			130
Amounts reclassified from accumulated other comprehensive loss		—			(69	)		—			(69	)		—			—			—			—
Net current period other comprehensive gain (loss)		(4,656	)		3,563			(41	)		(1,134	)		(1,708	)		1,582			256			130
Ending balance	$	(17,385	)	$	191		$	(1,098	)	$	(18,292	)	$	(10,083	)	$	(5,160	)	$	(1,278	)	$	(16,521	)

Unrealized gains and losses relating to derivative instruments, reclassified from accumulated other comprehensive loss for the three and six months ended June 30, 2022 and 2021, were recognized as a component of cost of sales in the condensed consolidated statements of income, which relate to the Company's foreign currency contracts accounted for as cash flow hedges. See Note 1415 for further explanation of the change in derivative instruments that is recorded to ~~Accumulated Other Comprehensive Loss.~~accumulated other comprehensive loss.

18

20Note 17 – 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. Corporate and intersegment eliminations includes (1) corporate expenses not allocated to the Company’s three reporting segments, which are primarily general and administrative expenses such as corporate employee payroll and benefit costs and corporate facility costs, and (2) income from operations on intersegment sales between reporting segments. Corporate functions include legal, finance, tax, treasury, information technology, risk management, human resources, business development and other administrative functions. 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:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2022			2021			2022			2021
Net sales:
Americas	$	360,275		$	292,270		$	665,855		$	569,108
Asia		320,462			222,539			607,708			410,843
Europe		69,850			51,620			140,191			112,500
Elimination of intersegment sales		(22,558	)		(21,767	)		(49,642	)		(42,068	)
	$	728,029		$	544,662		$	1,364,112		$	1,050,383
Depreciation and amortization:
Americas	$	4,772		$	5,252		$	9,627		$	10,547
Asia		2,551			2,657			5,098			5,343
Europe		814			692			1,618			1,404
Corporate		2,828			2,338			5,519			4,700
	$	10,965		$	10,939		$	21,862		$	21,994
Income from operations:
Americas	$	16,121		$	11,995		$	26,486		$	20,229
Asia		29,852			25,467			57,658			42,819
Europe		1,008			1,702			5,646			6,940
Corporate and intersegment eliminations		(24,549	)		(28,465	)		(51,951	)		(47,355	)
		22,432			10,699			37,839			22,633
Interest expense		(2,185	)		(2,079	)		(3,935	)		(4,228	)
Interest income		261			164			391			329
Other expense		784			440			490			164
Income before income taxes	$	21,292		$	9,224		$	34,785		$	18,898
Capital expenditures:
Americas	$	2,576		$	6,923		$	15,092		$	11,842
Asia		2,119			2,129			6,047			2,334
Europe		1,452			2,433			3,249			2,719
Corporate		849			712			583			1,724
	$	6,996		$	12,197		$	24,971		$	18,619



							June 30,			December 31,
(in thousands)							2022			2021
Total assets:
Americas							$	993,027		$	885,574
Asia								792,772			663,881
Europe								198,334			178,263
Corporate								182,652			176,162
							$	2,166,785		$	1,903,880

19

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.


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Geographic net sales:
United States	$	401,842	$	321,605	$	730,952	$	618,648
Singapore		116,284		78,598		221,956		141,755
Other Asia		85,805		46,258		160,715		85,103
Europe		96,705		66,965		195,970		142,291
Other		27,393		31,236		54,519		62,586
	$	728,029	$	544,662	$	1,364,112	$	1,050,383


					June 30,		December 31,
(in thousands)					2022		2021
Long-lived assets:
United States					$	251,049	$	240,430
Asia						65,025		65,327
Europe						29,444		29,588
Other						20,003		22,303
					$	365,521	$	357,648

Note 18 –Supplemental Cash Flow and Non-Cash Information

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Income taxes paid, net	$	9,373	$	7,768	$	12,851	$	9,373
Interest paid	$	1,981	$	1,992	$	3,543	$	4,082
Non-cash investing activity:
Additions to property, plant and equipment in accounts payable					$	14,364	$	8,902

20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report (this 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 ~~(the Exchange~~(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,” ~~“projection,~~“project,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” “could,” “predict,” and similar expressions or the negative or other variations thereof. In particular, statements, ~~whether~~ express or implied, concerning the estimated financial impact of the COVID-19 (COVID) pandemic, the company’s outlook and guidance for third quarter 2022 results, the company’s belief that it is well positioned for continued momentum through the second half of 2022 based on current demand indicators, the company’s expectations regarding the strength of the Semi-Cap sector in 2023, the company’s anticipated plans and responses to the COVID pandemic, the company's expectation relating to current supply chain and labor constraints, future operating results or margins, the ability to generate sales and income or cash flow, expected revenue mix, the company’s business strategy and strategic initiatives, the company’s repurchases of shares of its common stock, the company’s expectations regarding restructuring initiatives, and the company’s intentions concerning the payment of dividends, among others, are forward-looking statements. ~~Undue reliance should not be placed on any forward-looking statements. Forward-looking~~Although the company believes these statements are ~~not guarantees of performance. They~~based on and derived from reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond ~~our~~the company’s ability to control or predict, relating to operations, markets and the business environment generally, including those discussed inunder Part I, Item 1A of the ~~2016~~company's Annual Report on Form 10-K for the year ended December 31, 2021 (2021 10-K)and in any ~~added under~~~~Part II, Item 1A~~ of ~~this Report.~~the company’s subsequent reports filed with the Securities and Exchange Commission. In particular, these statements also depend on the duration, severity and evolution of the COVID pandemic and related risks, including the emergence and severity of its variants, the availability of vaccines and potential hesitancy to utilize them, government and other third-party responses to the crisis and the consequences for the global economy, the company’s business and the businesses of its suppliers and customers. Events relating to or resulting from the COVID pandemic, including the possibility of customer demand fluctuations, supply chain constraints, inflationary pressures, the effects of foreign currency fluctuations, or the ability to utilize the company’s manufacturing facilities at sufficient levels to cover its fixed operating costs, may have resulting impacts on the company’s business, financial condition, results of operations, and the company’s ability (or inability) to execute on its plans to respond to the COVID 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. The following discussion should be read in conjunction with the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and accompanying notes, and the ~~2016~~2021 10-K. All forward-looking statements included in this document are based upon information available to the company as of the date of this document, and the company assumes no obligation to update them.

OVERVIEW

We are a worldwide provider of ~~integrated electronics~~advanced manufacturing services (both electronic manufacturing services (EMS) and precision technology services), ~~engineering~~which includes design and ~~design~~engineering services and ~~precision machining services. We provide our services~~technology solutions. In this Report, references to ~~original equipment manufacturers (OEMs) in~~Benchmark, the ~~following industries: industrial controls, aerospace~~Company or use of the words “we”, “our” and ~~defense (A&D), telecommunications, computers and related products for business enterprises, medical devices, and test and instrumentation. Our services~~“us” include ~~comprehensive and integrated design and manufacturing services and solutions—from~~Benchmark’s subsidiaries unless otherwise noted.

From initial product concept to volume production, including direct order fulfillment and aftermarket ~~services. In this Report, references~~services, Benchmark has been providing integrated services and solutions to original equipment manufacturers (OEMs) since 1979. Today, Benchmark orproudly serves the ~~Company or use of the words “we”~~following industries: aerospace and defense (A&D), ~~“our”~~medical technologies, complex industrials, semiconductor capital equipment (Semi-Cap), next-generation telecommunications and ~~“us” include the subsidiaries of Benchmark unless otherwise noted.~~advanced computing.

Our primary goal is to drive revenue growth at the right balance of mix and profitability as we continue transitioning our portfolio to the higher-value markets of A&D, Industrials, Medical, and Test & Instrumentation. These higher-value markets offer greater outsourcing opportunities, longer lifecycle products and extended manufacturing contracts with customers who have greater outsourcing needs and require higher value-added and engineering-led solutions than customers in our traditional markets. We remain focusedcustomer engagement focuses on key initiatives critical to our success, including the optimization of our global network; the implementation of our market-sector sales organization; and the expansion of our engineering solutions capabilities.

~~Our operations comprise~~ three principal areas:

·

•

Manufacturing ~~and assembly operations~~Services, which ~~includes~~include printed circuit board assemblies (PCBAs) using both traditional surface mount technologies (SMT) and microelectronics, subsystem assembly, ~~box~~system build and ~~systems~~ integration. ~~Systems~~System builds and integration is 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~~end-customer across all the industries we serve.

·~~Precision~~ Manufacturing services also includes precision technology ~~manufacturing~~~~, which complements our electronic manufacturing expertise by providing further vertical integration~~services comprised of ~~critical mechanical components. These capabilities include~~ precision machining, advanced metal joining, assembly and functional testing primarily for ~~customers in~~ the ~~test & instrumentation~~Semi-Cap market ~~(which includes~~(serving semiconductor capital ~~equipment) as well as the medical~~equipment customers) and ~~aerospace markets.~~A&D market.

·~~Specialized~~

•

Design &Engineering Services, which include design for manufacturability, design optimization for our factory processes and supply chain, and test development, concurrent and sustaining engineering, turnkey product design and regulatory services. Our engineering services ~~and solutions, which includes new product concept development, design~~may be for systems, sub-systems, ~~and components,~~ printed circuit ~~board layout, prototyping,~~

21

~~automation~~boards and ~~test development.~~assemblies, and components. We have the flexibility and capability to engage anywhere in the customers design process flow. We provide

21

these services across all the industries we serve, but ~~lead with engineering to manufacturing solutions~~focus primarily in regulated industries such as medical, complex industrials, ~~aerospace~~A&D, and ~~defense.~~Semi-Cap.

•

Technology Solutions, which involve developing a library of building blocks or reference designs primarily in defense solutions, surveillance systems, millimeter wave (mmWave) radio frequency (RF) subsystems, and front-end managed connected data collection systems. We often partner with our customers to merge these solutions utilizing our engineering services to provide turnkey product development from requirements through the launch to volume production into our factories. Our building blocks can be utilized across a variety of industries but we have significant focus and capabilities in the A&D and the complex industrials markets. We have also developed differentiated capabilities in 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.

Our core strength lies in our ability to partner with our customers to provide concept-to-production solutions in support of our ~~customers. Our~~customers through a tightly integrated and seamless set of design, test, manufacturing, supply chain and support services. The integration of these services along with 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.~~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 ~~operations.~~business.

We believe our primary competitive advantage is our ability to engage with our customers at any point in their concept to production process by providing 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 and microelectronics), 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 customers often face challenges in designing supply chains, demand planning, ~~demand,~~ 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 ~~seek to~~ employ enterprise resource planning (ERP) systems and lean manufacturing principles to manage ~~the~~ 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. WeBecause we are a significant purchaser of electronic components and other raw materials, ~~and can~~we are generally 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~~Utilizing our agility and expertise in supply chain management and our relationships with suppliers across the supply chain, we strive to help ~~enable us to~~ reduce our customers’ cost of goods sold and inventory exposure. However, due to the COVID pandemic, as well as global labor and supply disruptions, we continue to see component supply chain constraints across all commodity categories that are constraining our ability to produce the full demand forecasts we are receiving from customers.

We recognize manufacturing services revenue ~~from~~as the ~~sale~~customer takes control of the manufactured products built to customer ~~specifications~~specifications. We also generate revenue from our design, development and ~~excess inventory when title and risk of ownership have passed, the price~~engineering services, in addition to the ~~buyer~~sale of other inventory.

Revenue is ~~fixed or determinable and recoverability~~measured based on the consideration specified in a contract with a customer. Under the majority of our 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 ~~reasonably assured,~~completed. Under these contracts, we recognize revenue upon transfer of control of the product to the customer, which is generally is when the goods are shipped. Revenue from design, development and engineering services is recognized ~~when~~over time as the services are ~~performed and collectibility is reasonably certain. Such services provided under fixed price contracts are generally accounted for using the percentage-of-completion method. We generally~~performed. As a general matter, we assume no significant obligations after shipment as we typically warrant workmanship ~~only; accordingly, our~~only. Therefore, the warranty provisions are generally not significant.

22

~~2017~~

COVID Pandemic Update

In late 2019, there was an outbreak of a new strain of coronavirus (COVID) first identified in Wuhan, Hubei Province, China, which has since spread globally. On March 11, 2020, the World Health Organization declared COVID a pandemic. Further, the COVID outbreak has resulted in government authorities around the world implementing numerous measures to try to reduce the spread of COVID, such as travel bans and restrictions, quarantines, “shelter-in-place,” “stay-at-home,” and total lock-down orders, business limitations or shutdowns and similar orders. As a result, the COVID 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 took, and at times continue to take, proactive action to adopt social distancing policies at our locations globally. These measures include, but are not limited to, 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. More recently, more contagious variants of COVID, such as the Omicron variant and its subvariants, have emerged and spread globally, which initially caused many governments and businesses to reimplement various measures, or impose new restrictions, in an effort to lessen the spread of COVID and its variants. While many of these restrictions have been lifted, uncertainty remains as to whether additional restrictions may be initiated or again reimplemented in response to surges in COVID cases. The lingering impact of the COVID pandemic continues to create significant volatility throughout the global economy, including supply chain constraints, labor supply issues and higher inflation. Accordingly, it is unclear at this point the full impact COVID and its variants will have on the global economy and on our Company.

As a result of the COVID pandemic, our revenue during 2021 and the first six months of 2022 has been 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 pandemic negatively impacted our operating results due to increased direct costs associated with labor expenses and personal protective equipment for our employees.

Benchmark provides critical infrastructure products and essential services in each of our locations, which has allowed us to continue to operate. The COVID pandemic continues to affect the Company’s operations into 2022. End market demand continues to grow as more customers recover from the pandemic. However, we continue to see component supply chain constraints across all commodity categories which are constraining our ability to produce the full demand forecasts we are receiving from customers. See "Second Quarter 2022 Highlights" below for additional information.

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 pandemic. The CARES Act among other things, permits net operating loss carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021, and contains modifications on the limitation of business interest. The Company evaluated the impact of these provisions and determined these provisions did not have any impact on the six months ended June 30, 2022. 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 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. During December 2021, the Company paid approximately 50% of the social security taxes previously deferred. The Company has also determined it was entitled to employee retention credits and filed for the credits in the second quarter 2020 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. The Company was not eligible for employee retention tax credits as of December 31, 2021. The Company has not received the retention credits from the Internal Revenue Service that it applied for during the second quarter of 2020. The Internal Revenue Service has had some delays in processing the filings for the tax refunds.

We continue to monitor the 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 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 pandemic and its severity; the emergence and severity of its variants, including the Omicron variant; the actions to contain the virus or treat its impact, including the availability and efficacy of vaccinations (particularly with respect to emerging strains of the virus) and the rate of inoculations; general economic factors, such as increased inflation; global supply chain constraints and shortages; labor supply issues; 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 our 2021 10-K for additional risks we face due to the COVID pandemic.

23

Second Quarter 2022 Highlights

Sales for the three months ended ~~September~~June 30, ~~2017 increased 5% to $603.6~~2022 were $728.0 million, ~~compared to $574.3~~a 34% increase from sales of $544.7 million ~~for 2016.~~during the three months ended June 30, 2021. During the ~~third~~second quarter of ~~2017,~~2022, sales to customers in our various industry sectors fluctuated from the ~~comparable 2016 period~~second quarter of 2021 as follows:

·Higher-Value Markets

 Industrials increased by 59%,

 A&D decreased by ~~12%~~7%,

·~~A&D increased by 16%,~~

· Medical increased by ~~17%~~53%, and

·~~Test & Instrumentation~~ Semi-Cap increased by ~~34%,~~26%.

·

Traditional Markets

 Computing increased by ~~16%~~73%, and

· Telecommunications ~~decreased~~increased by ~~23%~~15%.

The overall revenue increase was ~~driven by strong Test & Instrumentation growth~~due primarily to higher overall demand from both our Higher-value and Traditional markets (as discussed below). Higher-value market revenues were up 33% year-over-year from strength in ~~our precision machining serving~~ the ~~semi-capital equipment~~Semi-Cap, Medical and Industrials sectors. Traditional market ~~Medical growth~~revenues were up 38% year-over-year from ~~higher demand~~strength in both Computing and ~~program ramps from new and existing customers, A&D growth primarily from defense programs, and Computing strength from existing storage customers and new security customers.~~Telecommunications sectors.

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, the availability of electronic component supply, or the failure of a major customer to pay for components or services, ~~can~~

22

including in each case as a result of the COVID pandemic, have adversely ~~affect~~affected us. A substantial percentage of our sales isare made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us. Sales to our 10ten largest customers represented ~~44%~~53% and 46% of our total sales ~~in both~~during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~. 2021, respectively. Due to the COVID pandemic, as well as global labor and supply disruptions, we continue to see component supply chain constraints across all commodity categories that are constraining our ability to produce the full demand forecasts we are receiving from customers. Lead times continue to extend, and more components are being placed on allocation by suppliers. Additionally, there continues to be an increase in pushouts of previously committed component orders and tighter allocation and timing restrictions across the component suppliers. Though we have recently started to see the easing of certain material constraints, these last-minute allocations created inefficiencies in our operations and contributed to the sequential increase in inventory, as well as increased costs to us and our customers.

During the three months ended March 31, 2017, we incurred a $5.1 million charge for the write-down of inventory and a provision to accounts receivable associated with the insolvency of a customer. In subsequent quarters, we recorded partial recoveries of inventory charges totaling $2.2 million. During the nine months ended September 30, 2017, these net charges increased cost of sales by $1.2 million and SG&A by $1.7 million.

We experience fluctuations in gross profit from period to period. Different programs contribute different gross profits depending on ~~factors such as~~ 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 and higher-volume programs remain subject to competitive constraints that can exert downward pressure on our margins.~~ During periods of low production volume, we generally have ~~idle capacity~~unabsorbed manufacturing overhead costs and reduced gross profit. Gross profit can also be impacted by higher costs associated with other situations, such as COVID and supply chain constraints. This includes supply chain premiums for excess component costs paid to secure available supply resulting in revenue with cost recovery only with no margin. In addition, a number of our new program ramps require incremental investment during the launch and ramp phase which can exert downward pressure on our gross profit.

We have undertaken initiatives to restructure our business operations with the intention of improving utilization and reducing costs. During the first ~~nine~~six months of ~~2017,~~2022, we recognized ~~$4.0~~$3.6 million of restructuring ~~charges, primarily related~~and other costs due to ~~reductions in workforce in certain facilities across~~expenses associated with various ~~regions. In addition, we incurred $1.6~~site closures and restructuring activities, as well as a $2.0 million ~~in costs~~loss on assets held for sale related to the ~~relocation~~Company's 2021 decision to no longer continue certain manufacturing capabilities in the Americas and a gain on assets held for sale of $2.4 million related to the sale of our ~~corporate headquarters to Arizona.~~Angleton, Texas facility.

RESULTS OF OPERATIONS

The following table presents the percentage relationship that certain items in our ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Income~~income bear toon sales for the periods indicated. The financial information and the discussion below should be read in conjunction with the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and Notes thereto in Part I, Item 1 of this Report.

Three Months Ended
Nine Months Ended

September 30,
September 30,

2017

2016

2017

2016

Sales

100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales

90.4

90.8

90.7

90.8

Gross profit

9.6

9.2

9.3

9.2

Selling, general and administrative expenses

5.3

4.9

5.4

5.0

Amortization of intangible assets

0.5

0.6

0.4

0.5

Restructuring charges and other costs

0.4

0.6

0.3

0.6

Income from operations

3.4

3.1

3.1

3.1

Other expenses, net

(0.2)

(0.4)

(0.3)

(0.4)

Income before income taxes

3.2

2.8

2.8

2.7

Income tax expense (benefit)

0.3

(1.0)

0.4

-

Net income

2.9
%
3.8
%
2.5
%
2.7
%

2324

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

Sales

100.0
%

100.0
%

100.0
%

100.0
%
Cost of sales

91.9

91.2

91.5

91.4

Gross profit

8.1

8.8

8.5

8.6

Selling, general and administrative expenses

4.9

6.2

5.3

6.1

Amortization of intangible assets

0.2

0.3

0.2

0.3

Restructuring charges and other costs (income)

(0.2
)

0.3

0.2

0.3

Ransomware related incident costs (recovery), net

—

—

—

(0.3
)
Income from operations

3.2

2.0

2.8

2.2

Other expense, net

(0.2
)

(0.3
)

(0.2
)

(0.4
)
Income before income taxes

3.0

1.7

2.6

1.8

Income tax expense

0.6

0.3

0.5

0.3

Net income

2.4
%

1.4
%

2.1
%

1.5
%

Sales

~~Sales~~As noted above, sales for the ~~third~~second quarter of ~~2017~~ ~~were $603.6 million, a 5% increase~~2022 increased 34% from ~~sales of $574.3 million for~~ the same quarter in ~~2016~~. 2021.

Sales ~~for the first nine months of~~ ~~2017~~ ~~were $1.8 billion, a 5% increase from sales of $1.7 billion for the same period in~~ ~~2016. The following table sets forth, for the periods indicated, the percentages of our sales~~are analyzed by management by industry ~~sector.~~sector and by geographic segment, which reflects our reportable segments. Our global business development strategy is based on our targeted industry sectors. Management measures operational performance and allocates resources on a geographic segment basis.

Sales by industry sector were as follows:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,					Three Months Ended June 30,				Six Months Ended June 30,
			2017		2016		2017		2016
	Higher-Value Markets
(in thousands)											2022		2021		2022		2021
Higher-Value Markets
Industrials	Industrials		20	%	25	%	20	%	24	%	$	158,836	$	99,906	$	295,982	$	195,358
A&D	A&D		16		14		17		15			89,897		96,680		171,084		186,061
Medical	Medical		17		15		15		15			166,234		108,905		283,107		217,095
Test & Instrumentation			15		11		14		11
Semi-Cap												174,899		139,204		358,336		252,314
			68		65		66		65			589,866		444,695		1,108,509		850,828
	Traditional Markets
Traditional Markets
Computing	Computing		20		19		21		19			68,636		39,598		123,692		83,284
Telecommunications	Telecommunications		12		16		13		16			69,527		60,369		131,911		116,271
			32		35		34		35			138,163		99,967		255,603		199,555
	Total		100	%	100	%	100	%	100	%

Total											$	728,029	$	544,662	$	1,364,112	$	1,050,383

Industrials.~~Third~~ Second quarter 2022 sales ~~decreased 12%~~increased 59% to ~~$124.0~~$158.8 million from ~~$141.1~~$99.9 million in ~~2016, and decreased 10% to $366.1 million~~the second quarter of 2021. Sales during the first ~~nine~~six months of ~~2017~~2022 increased 52% to $296.0 million from ~~$406.1~~$195.4 million in the same period of ~~2016~~2021. The increases were primarily ~~as a result~~due to continued demand improvements from energy-related products, building infrastructure, and the ramp of ~~softness across several of our top customers.~~new programs supporting light detection and ranging (LiDAR) applications.

Aerospace and Defense. ~~Third~~ Second quarter 2022 sales ~~increased 16%~~decreased 7% to ~~$95.9~~$89.9 million from ~~$82.6~~$96.7 million in ~~2016, and increased 16% to $300.0 million~~the second quarter of 2021. Sales during the first ~~nine~~six months of ~~2017 primarily due~~2022 decreased 8% to ~~increased demand from our defense customers~~.

~~Medical.~~ ~~Third quarter sales increased 17% to $100.4~~$171.1 million from ~~$85.9 million in~~ ~~2016, and~~ ~~increased 15% to $272.8 million during the first nine months of 2017 from $260.3~~$186.1 million in the same period of ~~2016 from higher demand and program ramps from new and existing~~ 2021. The decreases were primarily due to supply chain constraints across our defense customers.

~~Test & Instrumentation.~~ ~~Third~~Medical. Second quarter 2022 sales increased ~~34%~~53% to ~~$87.9~~$166.2 million from ~~$65.6~~$108.9 million in ~~2016 and~~ ~~increased 41% to $252.4 million~~the second quarter of 2021. Sales during the first ~~nine~~six months of ~~2017~~2022 increased 30% to $283.1 million from ~~$179.0~~$217.1 million in the same period of ~~2016~~.2021. The ~~increase reflected strong~~increases were primarily due to end market growth ~~in our precision machining serving the semi-capital equipment market.~~and improving demand with existing customers.

~~Computing.~~ ~~Third~~Semiconductor Capital Equipment. Second quarter 2022 sales increased ~~16%~~26% to ~~$124.4~~$174.9 million from ~~$107.4~~$139.2 million in ~~2016, and~~ ~~increased 13% to $367.2 million~~the second quarter of 2021. Sales during the first ~~nine~~six months of ~~2017~~2022 increased 42% to $358.3 million from ~~$326.1~~$252.3 million in the same period of~~2016.~~

25

2021. The ~~increase is~~increases were primarily due to higher demand across our customer base in the front-end wafer processing space where we provide differentiated engineering design services, precision machining capabilities, and complex system assembly.

Computing. Second quarter 2022 sales increased ~~strength from our existing storage customers and new security customers.~~

~~Telecommunications.~~ ~~Third quarter sales decreased 23%~~73% to ~~$71.0~~$68.6 million from ~~$91.7~~$39.6 million in ~~2016, and~~ ~~decreased 16% to $228.5 million~~the second quarter of 2021. Sales during the first ~~nine~~six months of ~~2017~~2022 increased 49% to $123.7 million from ~~$271.9~~$83.3 million in the same period of ~~2016.~~ 2021. The ~~decrease is~~increases were primarily due to material constraints easing and the planned ramp of high-performance computing programs.

Telecommunications. Second quarter 2022 sales increased 15% to $69.5 million from $60.4 million in the second quarter of 2021. Sales during the first six months of 2022 increased 13% to $131.9 million from $116.3 million in the same period of 2021. The increases were primarily due to demand improvement for satellite programs and new ~~programs not offsetting lower demand from our existing customer base.~~next generation broadband ramps.

24

Our international operations are subject to the risks of doing business abroad. See Part I, Item 1A of our ~~2016~~2021 10-K for factors pertaining to our international sales, ~~and~~ fluctuations in ~~the~~foreign currency exchange rates ~~of foreign currency~~ and ~~for further~~a discussion of potential adverse effects in operating results associated with the risks of doing business abroad. During the ~~first nine months~~second quarter of ~~2017~~2022 and ~~2016, 47%~~2021, 60% and ~~48%~~56%, respectively, of our sales were from ~~our~~ international operations.

Sales by geographic segment were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2022			2021			2022			2021
Net sales:
Americas	$	360,275		$	292,270		$	665,855		$	569,108
Asia		320,462			222,539			607,708			410,843
Europe		69,850			51,620			140,191			112,500
Elimination of intersegment sales:		(22,558	)		(21,767	)		(49,642	)		(42,068	)
Total net sales	$	728,029		$	544,662		$	1,364,112		$	1,050,383

~~Gross Profit~~

~~Gross profit~~Americas. Second quarter 2022 sales increased ~~10%~~23% to ~~$58.2~~$360.3 million ~~for the three months ended September 30, 2017~~ from ~~$52.8~~$292.3 million in the ~~same~~second quarter of ~~2016, and~~2021. Sales during the first six months of 2022 increased 6%17% to ~~$165.8~~$665.9 million ~~for the nine months ended September 30, 2017~~ from ~~$156.0~~$569.1 million in the same period of ~~2016. For~~2021. The increases were primarily due to increasing demand with existing customers and new program ramps with existing and new customers.

Asia. Second quarter 2022 sales increased 44% to $320.5 million from $222.5 million in the ~~nine~~second quarter of 2021. Sales during the first six months ~~ended September 30, 2017, we incurred a $1.2~~of 2022 increased 48% to $607.7 million ~~net charge~~from $410.8 million in the same period of 2021. The increases were primarily due to increasing demand with existing customers, production ramps of new programs for existing customers and new customer program ramps.

Europe. Second quarter 2022 sales increased 35% to $69.9 million from $51.6 million in the ~~write-down~~second quarter of ~~inventory associated~~2021. Sales during the first six months of 2022 increased 25% to $140.2 million from $112.5 million in the same period of 2021. The increases were primarily due to increasing demand with existing customers and new customer program ramps.

Gross Profit

Gross profit increased 23% to $58.8 million in the ~~insolvency~~second quarter of ~~a customer. Including~~2022 from $47.9 million in the ~~inventory charge~~second quarter of 2021. Gross profit increased 29.2% to $116.4 million in the first six months of 2022 from $90.1 million in the same period of 2021. Gross margin decreased primarily due to the mix of our revenue, operational inefficiencies caused by the continued supply chain challenges and COVID disruptions, and the dilutive impact of revenue from supply chain premiums with no margin.

Operating Income

Second quarter ~~and partial recoveries~~2022 operating income increased 110% to $22.4 million from $10.7 million in the second ~~and third quarters, gross profit as a percentage~~quarter of ~~sales was 9.6% and 9.3%, respectively for the three and nine~~2021. Operating income increased 67% to $37.8 million first six months ~~ended September 30, 2017. Excluding these items, gross profit as a percentage~~ of ~~sales increased to 9.4% and 9.3%, respectively, for the three and nine months ended September 30, 2017~~2022 from ~~9.2% and 9.2%, respectively,~~$22.6 million in the same ~~periods~~period of ~~2016~~2021. The increases were primarily due to an increase in revenue and respective gross profit partially offset by an increase in selling, general and administrative (SG&A) expenses.

26

Operating income by reportable segment was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2022			2021			2022			2021
Operating income:
Americas	$	16,121		$	11,995		$	26,486		$	20,229
Asia		29,852			25,467			57,658			42,819
Europe		1,008			1,702			5,646			6,940
Corporate and other costs		(24,549	)		(28,465	)		(51,951	)		(47,355	)
Total operating income	$	22,432		$	10,699		$	37,839		$	22,633

Americas. Second quarter 2022 operating income increased 34% to $16.1 million from $12.0 million in the second quarter of 2021. Operating income during the first six months of 2022 increased 31% to $26.5 million from $20.2 million in the same period of 2021. The increases were primarily due to higher revenue.

Asia. Second quarter 2022 operating income increased 17% to $29.9 million from $25.5 million in the second quarter of 2021. Operating income during the first six months of 2022 increased 35% to $57.7 million from $42.8 million in the same period of 2021. The increases were primarily due to higher revenue and improved productivity in labor.

Europe. Second quarter 2022 operating income decreased 41% to $1.0 million from $1.7 million in the second quarter of 2021. Operating income during the first six months of 2022 decreased 19% to $5.6 million from $6.9 million in the same period of 2021. The decreases were primarily due to changes in sales ~~and a better mix of higher-value sales.~~mix.

Selling, General and Administrative Expenses

SG&A increased ~~by 14%~~ to ~~$32.1~~$35.8 million in the ~~third~~second quarter of ~~2017 compared to $28.1~~2022 from $34.0 million in ~~2016, and~~the second quarter of 2021. SG&A increased ~~by 14%~~ to ~~$97.1~~$72.1 million in the first ~~nine~~six months of ~~2017 compared to $85.1~~2022 from $64.6 million in ~~2016.~~the same period of 2021. The increase was primarily a result of increased variable compensation, investments in our sales and marketing organization and a $1.7 million charge for a provision to accounts receivable associated with the insolvency of a customer. Including this provision to accounts receivable, SG&A, as a percentage of sales, increased to 5.3% for the third quarter of 2017 from 4.9% in 2016. SG&A, as a percentage of sales, increased to 5.4% for the first nine months of 2017 from 5.0% in 2016. Excluding this provision to accounts receivable, SG&A, as a percentage of sales, increased to 5.3% for the third quarter of 2017 from 4.9% in 2016. SG&A, as a percentage of sales, increased to 5.3% for the first nine months of 2017 from 5.0% in 2016increases were primarily due to ~~increased~~the increase in variable compensation, medical claim expenses, and ~~the investment in our sales and marketing organization.~~expenses related to continued IT infrastructure investments.

Amortization of Intangible Assets

Amortization of intangible assets ~~decreased to $7.7~~was $1.6 million in ~~2017 from $8.9~~both the second quarter of 2022 and 2021. Amortization of intangibles was $3.2 million in ~~2016 due primarily to certain customer relationship intangible assets that became fully amortized as~~both the second half of ~~December 31, 2016.~~2022 and 2021.

Restructuring Charges and Other Costs

During ~~2017,~~the first six months of 2022, we recognized ~~$5.6~~$3.6 million of restructuring charges and other costs primarily ~~related~~due to expenses associated with announced site closures or exits, reductions in ~~workforce in certain facilities across various regions~~force and ~~costs associated with the move of our corporate headquarters. We expect costs of additional efforts to align capacity~~other restructuring activities primarily in the Americas, in addition to ~~approximate $1.5~~a $2.0 million loss on assets held for sale related to certain manufacturing capabilities in the ~~fourth quarter~~Americas that the Company made the decision in 2021 to no longer continue and a gain on assets held for sale of ~~2017. In 2016,~~$2.4 million related to the sale of the Angleton, Texas facility. During the first six months of 2021, we recognized ~~$9.9~~$3.2 million of restructuring ~~charges~~ and other costs primarily ~~related~~due to ~~reductions in workforce in certain facilities across various regions, costs~~expenses associated with ~~a proxy contest relating to our 2016 annual meeting of shareholders~~announced site closures or exits, reduction in force and ~~costs associated with~~other restructuring activities primarily in the ~~separation of our former Chief Executive Officer.~~Americas. See Note 1312 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements in Part I, Item 1 of this ~~Report.~~Report for additional information on our restructuring charges.

Ransomware Incident Related Costs, Net

No insurance recoveries were made in the second quarter of 2022 or 2021. During the first six months of 2021, we collected $3.4 million of insurance recoveries. As of June 30, 2022, no further insurance recoveries are expected.

Interest Expense

Interest expense increased to $2.2 million in the second quarter of 2022 from $2.1 million in the second quarter of 2021. The increase was primarily due to increased borrowings under our revolving credit facility to support investment in working capital. Interest expense decreased to $3.9 million in the first six months of 2022 from $4.2 million in the same period of 2021. The decrease was primarily due to lower interest rates after our credit facility was amended in December 2021.

27

Interest Income

Interest income increased to ~~$3.6~~$0.3 million in ~~2017~~the second quarter of 2022 from ~~$1.2~~$0.2 million in ~~2016~~the second quarter of 2021. Interest income increased to $0.4 million in the first six months of 2022 from $0.3 million in the same period of 2021. The increases were primarily due to ~~investment of higher levels of available cash in interest bearing cash equivalents at~~slightly higher interest rates.

25

Income Tax Expense

Income tax expense of ~~$6.5~~$4.1 million represented a 19.1% effective tax rate for the second quarter of 2022, compared with $1.9 million in the second quarter of 2021 representing an effective tax rate of ~~12.8%~~19.1%. Income tax expense of $6.6 million represented a 19.0% effective tax rate for ~~2017,~~the first six months of 2022, compared with ~~$0.3~~$3.6 million for ~~2016, which represented~~the same period of 2021 representing an effective tax rate of ~~0.7%~~20.1%. The 0.7% effective tax rate in 2016 stemmed primarily from the reversal of uncertain tax benefits of $8.3 million relating to the expiration of the statute of limitations for a liquidated subsidiary that reduced the income tax expense. Without the reversal, the effective tax rate in 2016 would have been 18.7%. The decrease in the effective rate for 2017 is primarily a result of a $1.4 million discrete tax benefit for stock based compensation in 2017. Excluding this tax item, the effective tax rate would have been 15.6%. The decrease in the effective tax rate results primarily from a tax incentive in China and taxable income in geographies with lower tax rates.

We have been granted certain tax incentives, including tax holidays, for our subsidiaries in China ~~Malaysia~~ and Thailand that will expire at various dates, unless extended or otherwise renegotiated, through ~~2018~~2023 in China ~~2021 in Malaysia,~~ and ~~2028~~2030 in Thailand. See Note 8 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements in Part I, Item 1 of this ~~report.~~Report.

Net Income

We reported a net income of ~~$44.4~~$17.2 million, or $0.49 per diluted ~~earnings~~share, for the second quarter of 2022, compared with a net income of $7.4 million, or $0.20 per diluted share, for the second quarter of ~~$0.88~~2021. We reported a net income of $28.2 million, or $0.79 per diluted share, for the first ~~nine~~six months of ~~2017,~~2022, compared with a net income of ~~$45.5~~$15.3 million, or $0.42 per diluted ~~earnings per~~ share, for the same period in 2021. The increases were primarily the result of ~~$0.91 for 2016. The net decrease of $1.1 million from 2016 was due to the factors~~items discussed above.

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LIQUIDITY AND CAPITAL RESOURCES

We have historically financed our organic growth and operations through funds generated from ~~operations. In connection with the Secure Acquisition in 2015, we borrowed $230.0 million~~operations and borrowings under ~~the Term Loan facility to finance the purchase price of the acquisition.~~our Credit Agreement (as defined below). Cash and cash equivalents and restricted cash totaled ~~$730.1~~$263.9 million at ~~September~~June 30, ~~2017~~2022 and ~~$681.4~~$271.7 million at December 31, ~~2016,~~2021, of which ~~$75.0~~$184.7 million and ~~$55.2~~$194.7 million, respectively, were available in the U.S. at September 30, 2017 and December 31, 2016, respectively. Substantially all of the amounts held outside of the U.S. are intended to be permanently reinvested in foreign operations. Under current tax laws and regulations, if cash and cash equivalents held outside the U.S. ~~were to be distributed to the U.S.~~ in ~~the form of dividends or otherwise, we would be subject to additional U.S. income taxes and~~various foreign ~~withholding taxes, reduced by any applicable foreign tax credits.~~subsidiaries.

Cash ~~provided by~~used in operating activities was $93.5 million during the first ~~nine~~six months ~~was $89.9 million for 2017 and~~of 2022. The cash used in operations during 2022 consisted primarily of ~~$44.4~~a$146.2 million increase in inventories,a $23.9 million increase in contract assets, a $8.8 million increase in prepaids and other assets, a $91.2 million increase in accounts receivable, and a $12.2 decrease in accrued liabilities, partially offset by $28.2 million of net income, ~~adjusted for $36.6~~$21.9 million of depreciation and amortization, a ~~$30.9 million decrease in accounts receivable, a $38.8 million increase in inventories and a $3.9~~$69.9 million increase in accounts payable ~~over 2016. The decrease~~and a $55.4 million increase in ~~accounts receivable was primarily driven by the sale of $40.0 million of accounts receivable under an accounts receivable sales program implemented on March 29, 2017.~~advance payments from customers. Working capital was ~~$1.2~~$0.8 billion at ~~September~~June 30, ~~2017~~2022 and ~~$1.1~~$0.7 billion at December 31, ~~2016.~~2021. The growth in working capital is a result of the proactive investment in inventory to support our revenue growth.

We primarily 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. IfWhen shortages of these components and other material supplies used in operations ~~occur,~~have occurred, vendors ~~may not~~have at times been unable to ship the quantities we need for production, ~~and we may be forced~~forcing us to delay shipments, which can increase backorders and impact cash flows. Vendors also may increase the costs of components based on the market conditions including these shortages. In certain instances, we request and receive advance payments from customers as prepayments of inventory to meet working capital demands of a contract, offset inventory risks such as inventory purchased in advance of current needs and protect the Company from the failure of other parties to fulfill obligations under a contract. For example, as discussed above under “COVID Pandemic Update,” we have been impacted by supply chain constraints, including shortages, longer lead times and increased transit times.

Cash used in investing activities was ~~$37.4~~$19.3 million ~~for 2017,~~during the first six months of 2022 primarily due to purchases of additional property, plant and equipment totaling ~~$35.0~~$23.2 million, partially offset by proceeds from the sale of assets held for sale of $5.4 million. The purchases of property, plant and equipment were primarily for machinery and equipment in the Americas and Asia.

26

Cash ~~used in~~provided by financing activities was ~~$6.2~~$110.8 million ~~for 2017. Share~~during the first six months of 2022. Borrowings under the Credit Agreement were $398.0 million and proceeds from stock option exercises were $0.5 million. Principal payments under the Credit Agreement totaled $263.0 million, share repurchases totaled ~~$5.9~~$9.4 million, ~~principal payments on long-term debt~~dividends paid totaled ~~$9.3~~$11.6 million and ~~we received $9.8~~debt issuance costs totaled $0.6 million.

On December 21, 2021, the Company amended and restated the Company's prior $650 million ~~from the exercise of stock options.~~

credit agreement by entering into a $381 million amended and restated credit agreement (the Amended and Restated Credit Agreement). Under the terms of ~~our $430.0 million~~the Amended and Restated Credit Agreement, in addition to the $131.3 million Term Loan facility, we have a ~~$200.0~~$250.0 million five-year revolving credit facility to be used for general corporate purposes, both with a maturity date of ~~November 12, 2020.~~December 21, 2026. On May 20, 2022, the Company entered into Amendment No. 1 (the Amendment) to the Amended and Restated Credit Agreement (as amended, the Credit Agreement). The Amendment, among other things, increased the revolving credit facility commitments from $250 million to $450 million. The Credit Agreement includes an accordion feature pursuant to which ~~total~~the Company is permitted to add one or more incremental term loans and/or increase commitments under the revolving credit facility ~~may be increased by~~in an ~~additional $150.0~~aggregate amount of $100 million or a higher amount, subject to the satisfaction of certain ~~conditions.~~conditions and exceptions. As of ~~September~~June 30, ~~2017~~,2022, we had ~~$209.9~~$131.3 million in borrowings outstanding under the ~~Term Loan~~term loan facility, $135.0 million in borrowings outstanding under the revolving credit facility, and ~~$2.6~~$3.9 million in letters of credit outstanding under our revolving credit facility. Under the revolving credit ~~facility. $197.4~~facility, $311.1 million remains 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. See Note 5 to the ~~Condensed Consolidated Financial Statements included~~condensed consolidated financial statements in Part I, Item 1 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 June 30, 2022, we were in compliance with all of these covenants and restrictions.

29

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 ~~September~~June 30, ~~2017,~~2022, we had cash and cash equivalents, including restricted cash, totaling ~~$730.1~~$263.9 million and ~~had $197.4~~$311.1 million available for borrowings under the Credit ~~Agreement.~~ Agreement, subject to compliance with financial covenants as to interest coverage and debt leverage, in addition to other debt covenant restrictions.

During the next 12 months, we believe our capital expenditures will approximate $50 million to ~~$55~~$60 million, principally for machinery and equipment ~~as well as expansion investments~~to help increase our production capacity to support anticipated revenue growth and our ongoing business around the globe.

~~In December 2015,~~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 stockin addition to the $100 million approved on December 7, 2015. On February 19, 2020 and October 26, 2021, the Board of Directors authorized the repurchase of ~~up to $100.0~~an additional $150 million and $100 million, respectively, of ~~our outstanding~~the Company's common ~~shares.~~stock. During the six months ended June 30, 2022, we repurchased a total of 0.4 million common shares for an aggregate of $9.4 million at an average price of $24.96 per share. As of ~~September~~June 30, ~~2017,~~2022, we had ~~$86.9~~$154.6 million remaining under the share repurchase ~~program~~authorization to purchase additional shares. We are under no commitment or obligation to repurchase any particular amount of common ~~shares.~~ 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. In May 2021, the Board of Directors approved another quarterly dividend increase, raising the quarterly dividend from $0.16 to $0.165 per common share. During both the first six months of 2022 and 2021, cash dividends paid totaled $11.6 million. On March 15, 2022, the Company declared a quarterly cash dividend of $0.165 per share of the Company’s common stock to shareholders of record as of June 30, 2022. The dividend of $5.8 millionwas paid on July14, 2022. 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 depends 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 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, and borrowing availability under our revolving credit facility 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.

CONTRACTUAL OBLIGATIONS

We have certain contractual obligations for operating and capital leases that were summarized in ~~a table of~~ Contractual Obligations in our ~~2016 10-K. There~~2021 10-K. Other than items discussed in Note 6 to the condensed consolidated financial statements in Part I, Item 1 of this Report, there have been no material changes to our contractual obligations, outside of the ordinary course of our business, since December 31, ~~2016.~~2021.

27

~~OFF-BALANCE SHEET ARRANGEMENTS~~

30

~~As of September 30, 2017, we did not have any significant off-balance sheet arrangements. See Note 14 to the Condensed Consolidated Financial Statements.~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES AND RECENTLY ENACTED ACCOUNTING PRINCIPLES

Management’s discussion and analysis is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. ~~Our~~See Note 2 to the condensed consolidated financial statements in Part I, Item 1 of this Report for a discussion of recently enacted accounting principles. Also, our significant accounting policies are summarized in Note 1 to the Consolidated Financial Statements included in our ~~2016 10-K. See Note~~ 12 2021 10-K. There have been no changes to the ~~Condensed Consolidated~~items disclosed as critical accounting estimates in “Management’s Discussion and Analysis of Financial ~~Statements for a discussion~~Condition and Results of ~~recently enacted accounting principles.~~Operations” in Part II, Item 7 of our 2021 10-K.

Item ~~3 –~~3. 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:

•

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, and lease liabilities 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~~Certain forward currency exchange contracts in place as of ~~September~~June 30, ~~2017~~2022 have not been designated as accounting hedges and, therefore, changes in fair value are recorded within our ~~Consolidated Statements~~condensed consolidated statements of ~~Income.~~income.

On July 30, 2021, the Company entered into forward currency exchange contracts designated as cash flow hedges of forecasted foreign currency expenses. Changes in the fair value of the derivatives are recorded in accumulated other comprehensive loss in the condensed consolidated balance sheets until earnings are affected by the variability of the cash flows.

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 ~~September~~June 30, ~~2017~~,2022, we had ~~$209.9~~$131.3 million outstanding on the floating rate ~~Term Loan~~term loan facility, and we have an interest rate swap agreement with a notional amount of ~~$157.4~~$125.6 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 a portion of our floating rate interest expense to fixed interest rate expense. The interest rate swap is designated as a cash flow ~~hedge~~.hedge.

28

For additional information regarding our forward currency exchange contracts and interest rate swap agreement, see Note 15 to the condensed consolidated financial statements in Part I, Item 4 – 1 of this Report.

Item 4. Controls and Procedures

As of the end of the period covered by this Report, the Company’s management (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO)) conducted an evaluation pursuant to Rule 13a-15 under the Exchange Act, of the effectiveness of the design and operation of the Company’s disclosure controls and ~~procedures.~~procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act). Based on this evaluation, the CEO and CFO concluded that as of the end of the period covered by this Report, such disclosure controls and procedures were effective ~~to provide~~at a reasonable assurance level to ensure 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

31

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~~information is accumulated and communicated to ~~our~~the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in ~~our~~the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the last fiscal quarter covered by this Report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

We are currently upgrading our enterprise resource planning (ERP) system, which is expected to occur in phases over the next several years. We have completed the implementation of the upgrades at certain of the Company’s locations, and have revised and updated the related controls. These changes did not materially affect our internal control over financial reporting. As we implement the upgrades of this ERP system at the remaining locations over the next several years, we will continue to assess the impact on our internal control over financial reporting.

~~Our management, including our CEO and CFO, 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 a 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 errors or mistakes. Additionally, controls can be circumvented by individuals’ acts, by collusion of two or more people, or by management overriding 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.

2932

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various legal actions arising in the ordinary course of business. InThere have been no material changes to the legal proceedings previously reported under Part I, Item 3 of our 2021 10-K, and, 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 1A. Risk Factors

There ~~are~~have been no material changes to the risk factors ~~set forth~~previously disclosed in Part I, Item 1A of our ~~2016 10-K~~. 2021 10-K.

~~Item~~Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table provides information for the quarter ended ~~September~~June 30, ~~2017~~2022 about the Company’s repurchases of its equity securities registered pursuant to Section 12 of the Exchange ~~Act, at a total cost of $3.9 million:~~

ISSUER PURCHASES OF EQUITY SECURITIES

(d) Maximum

(c) Total

Number (or

Number of

Approximate

Shares

Dollar Value)

(or Units)

of Shares

Purchased as

(or Units) that

(a) Total

Part of

May Yet Be

Number of

Publicly

Purchased

Shares (or

(b) Average

Announced

Under the

Units)

Price Paid per Share

Plans or

Plans or
Period

Purchased⁽¹⁾

(or Unit)⁽²⁾

Programs

Programs⁽³⁾
August 1 to 31, 2017

100,794

$31.64

100,794

$87.6 million
September 1 to 30, 2017

21,819

$31.88

21,819

$86.9 million
Total

122,613

$31.68

122,613

Act:

(d)

Maximum

Number (or

(c)

Approximate

Total Number of

Dollar Value)

Shares (or Units)

of Shares (or

(a)

Purchased as

Units) that

Total Number
of

(b)

Part of
Publicly

May Yet Be
Purchased

Shares (or

Average Price

Announced

Under the

Units)

Paid per Share

Plans or

Period

Purchased

(or Unit)

Programs

Programs(1)

April 1 to 30, 2022

147,000

$

24.14

147,000

$155.0 million

May 1 to 31, 2022

15,000

24.14

15,000

$154.6 million

June 1 to 30, 2022

—

$154.6 million

Total

162,000

$

24.11

162,000

(1) ~~All share repurchases were made on~~On October 30, 2018, the ~~open market.~~

⁽²⁾~~Average price paid per share is calculated on a settlement basis and excludes commission.~~

⁽³⁾~~In December 2015,~~Company announced that the Board of Directors ~~approved~~authorized the repurchase of ~~up to~~ $100 million of the Company’s common stock in addition to the $250 million previously announced on March 7, 2018. On February 24, 2020, the Company announced that the Board of Directors authorized the repurchase of an additional $150 million of the Company’s common stock. Net of shares repurchased through June 30, 2022, the total remaining authorization outstanding ~~common shares. Share~~as of June 30, 2022 is $154.6 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.

3033

Item 6. Exhibits


Exhibit Number
Exhibit Number	~~Number~~	Description of Exhibit
~~3.1~~
3.1		Restated Certificate of Formation ~~of the Company~~ dated May 17, 2016 (incorporated by reference to Exhibit 3.1 to the ~~Company's report~~Company’s Current Report on Form 8-K ~~filed with the SEC on~~dated May 17, 2016) (the 8-K) (Commission file number 1-10560)
~~3.2~~
3.2		Amended and Restated Bylaws of the Company dated ~~May 11, 2016~~December 2, 2020 (incorporated by reference to Exhibit 3.2 to the ~~8-K)~~Company’s Current Report on Form 8-K dated December 7, 2020 (Commission file number 1-10560))
~~4.1~~
4.1		Specimen form of certificate evidencing the Common Shares (incorporated by reference to Exhibit 4.1 to the ~~Company's quarterly report~~Company’s Quarterly Report on Form 10-Q ~~filed with~~for the ~~SEC on November 7,~~quarter ended March 31, 2014) (Commission file number 1-10560)
31.1*
10.1		First Amendment to the Benchmark Electronics, Inc. 2019 Omnibus Incentive Compensation Plan (incorporated herein by reference to Annex A to the Registrant's Revised Definitive Proxy Statement on Schedule 14A filed on April 15, 2022 (Commission file number 1-10560))

10.2*		Amendment No. 1 to Amended and Restated Credit Agreement, dated May 20, 2022, by and among Benchmark Electronics, Inc., certain of its subsidiaries, the lenders party thereto and Bank of America, N.A. as Administrative Agent, Swingline Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company's Current Report of Form 8-dated May 24, 2022 (Commission file number 1-10560))

31.1 (1)		Section 302 Certification of Chief Executive Officer
31.2*
31.2 (1)		Section 302 Certification of Chief Financial Officer
32.1*
32.1 (2)		Section 1350 Certification of Chief Executive Officer
32.2*
32.2 (2)		Section 1350 Certification of Chief Financial Officer
~~101.INS~~⁽¹⁾	~~XBRL Instance Document~~
~~101.SCH~~^{101.INS (1)}		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 (1)		Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~⁽¹⁾
101.CAL (1)		Inline XBRL Taxonomy Extension Calculation Linkbase Document
~~101.LAB~~⁽¹⁾
101.DEF (1)		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB (1)		Inline XBRL Taxonomy Extension Label Linkbase Document
~~101.PRE~~⁽¹⁾
101.PRE (1)		Inline XBRL Taxonomy Extension Presentation Linkbase Document
~~101.DEF~~⁽¹⁾
104 (1)		Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL ~~Taxonomy Extension Definition Linkbase Document~~tags are embedded within the Inline XBRL document (included in Exhibit 101)

*(1) Filed herewith.

⁽¹⁾ ~~XBRL (Extensible Business Reporting Language) information is furnished~~(2) Furnished herewith

* Certain exhibits and ~~not filed~~schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish supplementally to the SEC a copy of any omitted exhibits or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is not deemed filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.schedules upon request.

34

31

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements 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 on ~~November 8,~~ ~~2017~~. August 4, 2022.


BENCHMARK ELECTRONICS, INC.
~~(Registrant)~~
~~By:~~ ~~/s/ Paul J. Tufano~~(Registrant)
~~Paul J. Tufano~~
By:		/s/ Jeffrey W. Benck
		Jeffrey W. Benck
		President and Chief Executive Officer
		(Principal Executive Officer)

By:		/s/ Roop K. Lakkaraju
~~By:~~ ~~/s/ Donald F. Adam~~		Roop K. Lakkaraju
~~Donald F. Adam~~		Chief Financial Officer
~~Chief Financial Officer~~
	(Principal Financial and Accounting Officer)

32

~~EXHIBIT INDEX~~

35

~~Exhibit~~
~~Number~~	~~Description of Exhibit~~

~~3.1~~	Restated Certificate of Formation of the Company dated May 17, 2016 (incorporated by reference to Exhibit 3.1 to the Company's report on Form 8-K filed with the SEC on May 17, 2016) (the 8-K) (Commission file number 1-10560)
~~3.2~~	~~Amended and Restated Bylaws of the Company dated May 11, 2016 (incorporated by reference to Exhibit 3.2 to the 8-K)~~
~~4.1~~	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 filed with the SEC on November 7, 2014) (Commission file number 1-10560)
31.1*	~~Section 302 Certification of Chief Executive Officer~~
31.2*	~~Section 302 Certification of Chief Financial Officer~~
32.1*	~~Section 1350 Certification of Chief Executive Officer~~
32.2*	~~Section 1350 Certification of Chief Financial Officer~~
~~101.INS(1)~~	~~XBRL Instance Document~~
~~101.SCH(1)~~	~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL(1)~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.LAB(1)~~	~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE(1)~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~
~~101.DEF(1)~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

* Filed herewith.

⁽¹⁾ XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is not deemed filed for purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

33

					Performance-
					based
			Restricted		Restricted
		Stock	Stock		Stock
(in thousands)		Options	Units		Units⁽¹⁾
Unrecognized compensation cost		$ 938		$ 13,111		$ 5,328
Remaining weighted-average
amortization period	0.9 years			2.4 years		1.8 years

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

			Weighted-
		Weighted-	Average
		Average	Remaining	Aggregate
	Number of	Exercise	Contractual	Intrinsic
(in thousands, except per share data)	Options	Price	Term (Years)	Value
Outstanding as of December 31, 2016	1,197	$19.51
Exercised	(502)	19.56
Forfeited or expired	(14)	20.51
Outstanding as of September 30, 2017	681	$19.45	5.31	$ 10,015
Exercisable as of September 30, 2017	527	$18.39	3.54	$ 8,304

		As of September 30, 2017
		Gross				Net
		Carrying	Accumulated			Carrying
(in thousands)		Amount	Amortization			Amount
Customer relationships	$	100,183	$	(32,770)	$	67,413
Purchased software costs		34,307		(29,327)		4,980
Technology licenses		26,800		(17,112)		9,688
Trade names and trademarks		7,800		-		7,800
Other		868		(255)		613
Total	$	169,958	$	(79,464)	$	90,494

		As of December 31, 2016
		Gross				Net
		Carrying	Accumulated			Carrying
(in thousands)		Amount	Amortization			Amount
Customer relationships	$	100,053	$	(27,883)	$	72,170
Purchased software costs		31,582		(28,508)		3,074
Technology licenses		26,800		(14,189)		12,611
Trade names and trademarks		7,800		-		7,800
Other		868		(237)		631
Total	$	167,103	$	(70,817)	$	96,286

Year ending December 31,		Amount
2017 (remaining three months)	$	2,624
2018		10,252
2019		10,091
2020		9,319
2021		6,389

Note 6 – Inventories
Inventory costs are summarized as follows:
	September 30,		December 31,
(in thousands)		2017		2016
Raw materials	$	269,847	$	233,111
Work in process		115,054		113,496
Finished goods		36,957		34,727
	$	421,858	$	381,334

Note 8 – Income Taxes
Income tax expense consists of the following:
	Nine Months Ended
	September 30,
(in thousands)		2017		2016
Federal – current	$	(1,280)	$	(164)
Foreign – current		6,039		(2,340)
State – current		275		238
Deferred		1,505		2,577
	$	6,539	$	311

Note 10 – Supplemental Cash Flow and Non-Cash Information
The following information concerns supplemental disclosures of cash payments.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)		2017		2016		2017		2016
Income taxes paid, net	$	2,524	$	1,674	$	5,049	$	6,494
Interest paid		2,089		2,114		6,385		6,296

Non-cash investing activity:
Additions to property, plant and equipment
in accounts payable					$	6,024	$	1,004

		Balance as of								Foreign			Balance as of
		December 31,		Restructuring			Cash		Non-Cash	Exchange			September 30,
(in thousands)			2016		Charges		Payment		Activity	Adjustments			2017
2017 Restructuring:
	Severance	$	-	$	1,903	$	(1,561)	$	(125)	$	-	$	217
	Leased facilities and equipment		-		105		(105)		-		-		-
	Other exit costs		-		334		(149)		-		9		194
			-		2,342		(1,815)		(125)		9		411

2016 Restructuring:
	Severance		738		(44)		(626)		-		-		68
	Leased facilities and equipment		-		58		(58)		-		-		-
	Other exit costs		545		1,616		(2,061)		(42)		2		60
			1,283		1,630		(2,745)		(42)		2		128

Total		$	1,283	$	3,972	$	(4,560)	$	(167)	$	11	$	539

ISSUER PURCHASES OF EQUITY SECURITIES
				(d) Maximum
			(c) Total	Number (or
			Number of	Approximate
			Shares	Dollar Value)
			(or Units)	of Shares
			Purchased as	(or Units) that
	(a) Total		Part of	May Yet Be
	Number of		Publicly	Purchased
	Shares (or	(b) Average	Announced	Under the
	Units)	Price Paid per Share	Plans or	Plans or
Period	Purchased⁽¹⁾	(or Unit)⁽²⁾	Programs	Programs⁽³⁾
August 1 to 31, 2017	100,794	$31.64	100,794	$87.6 million
September 1 to 30, 2017	21,819	$31.88	21,819	$86.9 million
Total	122,613	$31.68	122,613