BENCHMARK ELECTRONICS
MANAGEMENT PRESENTATION
CREDIT SUISSE FIRST BOSTON
Annual Technology Conference
November 29, 2000
FORWARD LOOKING STATEMENTS
This document 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. In addition, from time to time, Benchmark
Electronics, Inc. ("the Company") or its representatives have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but are not limited to, various filings made by
the Company with the Securities and Exchange Commission, press releases or oral
statements made with the approval of an authorized executive officer of the
Company. Actual results could differ materially from those projected or
suggested in any forward-looking statements as a result of a wide variety of
factors and conditions. These factors and conditions have been described in the
section of the Company's Prospectus, dated August 2, 2000, entitled "Risk
Factors," and in other documents the Company files from time to time, with the
Securities and Exchange Commission, including annual reports on Forms 10-K,
quarterly reports on Form 10-Q and current reports on Forms 8-K.
CLEAR VISION FOR THE FUTURE
"Our goal is to be the EMS provider of choice to leading high technology OEMs"
by
- - Maintaining and developing close long-term customer relationships
- - Focusing on high-end products in high growth sectors
- - Delivering complete high and low volume manufacturing solutions globally
- - Leveraging advanced technological capabilities
- - Continuing to strengthen our global footprint through external and internal
growth
resulting in
"Direct communications and closer business relationships with our customers."
THE EMS MARKET IS GROWING RAPIDLY
Factors Driving Growth:
o Continued outsourcing of manufacturing needs from OEMS, as manufacturing
capacity becomes increasingly more expensive and complex
o Growth in the use and need for expanded services offerings by EMS, providing
incremental revenue, margin and earnings growth
o More rapid time-to-market with new or next-generation product
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
$115 BILLION MARKET WITH 27% + GROWTH PROSPECTS
1994 1995 1996 1997 1998 1999 2000E 2001E 2002E 2003E
------ ------ ------ ----- ------ ------ ------- ----- ----- -----
Total CM Sales $ 35 $ 46 $ 59 $ 73 $ 92 $ 115 $ 145 $ 185 $ 235 $ 300
% of Electronic
OEM Industry COGS 9% 11% 12% 14% 17% 19% 22% 27% 31% 36%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
Electronics Industry 6-8% (Most EMS)
Existing Customers 9-10% (Most EMS)
OEM Asset Acquisitions 10-15% (Tier One)
Worldwide CM Industry 25-33% (Tier One)
Note: EMS sales are as a percentage of OEMs COGS; the cost savings of
which generate the EMS industry's revenues.
Assumptions: World OEM market sales grow 6-8% per year, with gross margins
in the 20% range.
Source: Technology Forecasters and Credit Suisse First Boston
Technology Group estimates.
INDUSTRY EVOLUTION
[CHART]
COMPANY OVERVIEW
REVENUE MIX SERVICE OFFERINGS
Telecom (39%) Design
Video/Audio (6%) Prototype
Personal Computer (6%) Test Development
Industrial Control (9%) High & Low Volume Production
Medical (6%) Systems Integration
Test Instrumentation (4%) Logistics
High-End Computer (30%) Depot Repair
Note: Revenue Mix as of FY 1999
GLOBAL PRESENCE
[MAP]
FACILITIES
o 14 manufacturing facilities
o 1,571,500 square feet
o U.S., Mexico, South America, Europe and Asia-Pacific
CLEAR STRATEGIC ACQUISITION OBJECTIVES
o Complement Service and Product Offering
-- targeting high growth industries
-- expanding advanced technology capabilities
-- extending global presence
o Acquire New Customers
o Develop Strategic Relationships
o Add Strong Operational Management
Deeper and Closer Customer Relationship
ACQUISITIONS - BUILDING BLOCKS FOR A COMPLETE SERVICE OFFERING
August 1999 AVEX
(9 Facilities with 930,500 sqf)
March 1999 Ascend operations
(1 Facility with 90,000 sqf)
February 1998 Lockheed Martin CE
(1 Facility with 250,000 sqf)
July 1996 EMD Associates
(1 Facility with 201,000 sqf)
August 1986 spin-off of Intermedics
HIGH-VOLUME ASSEMBLY GLOBAL
-------------------------------------------------------------------------
EUROPE
BENCHMARK
ELECTRONICS ----------------
SYSTEMS INTEGRATION
& TESTING NORTHEAST-US
-------------------------- ----------------
DESIGN MIDWEST-US
-------------------------------------------------------------------------
LOW-VOLUME COMPLEX ASSEMBLY SOUTHWEST-US
-------------------------------------------------------------------------
SERVICE OFFERING GEOGRAPHIC COVERAGE
BENCHMARK GROWTH DRIVERS
o Expand strategic partnerships in high growth end markets
INTERNAL o Global platform in place to increase market share
o Expanding capacity can support approximately $2.5B in revenues
o $400 MM successfully invested in 4 acquisitions, "acquiring"
$1.1B in revenues
EXTERNAL
o OEM divestitures
STRONG HISTORICAL REVENUE GROWTH
Fiscal Year Ended December 31
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
(US$ in millions)
1995 1996 1997 1998 1999 2000E 2001E
------ ------ ------ ------ ------ ------- -------
$97.4 $201.3 $325.2 $524.1 $877.0 $1,700.0 $2,300.0
CAGR = 99%
ANALYST ESTIMATES
STRONG QUARTERLY REVENUE MOMENTUM WITH EPS REBOUND
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
(US$ in millions)
Q1 99 Q2 99 Q3 99* Q4 99 Q1 00 Q2 00 Q3 00
------- ------- ------- ------- ------- -------- -------
147 163 230 339 349 407 460
(Earnings Per Share)
Q1 99 Q2 99 Q3 99* Q4 99 Q1 00 Q2 00 Q3 00
------- ------- ------- ------- ------- -------- -------
0.40 0.41 0.08 0.08 0.12 0.21 0.32
* excluding item extraordinary
GROSS MARGIN REBOUND
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
(US$ in millions)
Q1 99 Q2 99 Q3 99* Q4 99 Q1 00 Q2 00 Q3 00
------- ------- ------- ------- ------- -------- -------
147 163 230 339 349 407 460
(Gross Margin %)
Q1 99 Q2 99 Q3 99* Q4 99 Q1 00 Q2 00 Q3 00
------- ------- ------- ------- ------- -------- -------
10.0 10.4 6.0 6.6 6.8 7.3 7.4
STRONG BALANCE SHEET SUPPORTING FUTURE GROWTH
SEPTEMBER 30, 2000 DECEMBER 31,1999
-----------------------------------------
Cash 23,740 9,437
Accounts Receivable 257,378 197,239
Inventory 317,298 214,554
$175MM Revolving Credit Facility 56,500 41,500
Term Loan 85,000 97,000
Convertible Subordinated Notes 80,200 80,200
Shareholders' Equity 403,261 281,935
Days Sales Outstanding 50.3 52.1
Inventory turns 5.37 5.89
Book Value $ 20.38 $ 16.77
INVENTORY RESERVES
o Industry Practices
-- EMS firms generally procure inventory to customer forecasts
-- Reserves are provided for specific identification of E & O inventories
without customer coverage
o Examples include - minimum buys, reel sizes, design changes, etc.
o Benchmark Reserves
-- Pre-acquisition reserves were nominal
-- Acquisition reserves arise from non-contractual coverage and former
customers
o Disposals
-- Disposition of obsolete inventories previously reserved for reduce both
the asset and the reserve balances
-- The majority of Benchmark's reduction to the Q3 reserve resulted from
the sale of the Sweden assets at approximately book value which removed
both the asset and reserve.
-- No gain or loss was recognized on the sale of the Sweden assets
YEAR 2000 HIGHLIGHTS
o Record revenue and record backlog and for 3 consecutive quarters
o Record Income - Q3 2000
o Completion of successful secondary stock offering
o Significant new program bookings
o Enhancement of geographic suitability to match customer requirements
o Expansion of infrastructure while retaining flexibility
BASIS FOR FUTURE GROWTH
o Strong long-term industry fundamentals
o Top Tier EMS Provider
o Global presence and full range of services
0 Excellent and long-standing customer base in high-end, high-growth sectors
o Improving financial performance
o Broad and experienced management team
YOUR GLOBAL OUTSOURCING SOLUTION