0000863436-20-000015.txt : 20200508 0000863436-20-000015.hdr.sgml : 20200508 20200508152818 ACCESSION NUMBER: 0000863436-20-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 91 CONFORMED PERIOD OF REPORT: 20200331 FILED AS OF DATE: 20200508 DATE AS OF CHANGE: 20200508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BENCHMARK ELECTRONICS INC CENTRAL INDEX KEY: 0000863436 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 742211011 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10560 FILM NUMBER: 20860266 BUSINESS ADDRESS: STREET 1: 56 SOUTH ROCKFORD DRIVE CITY: TEMPE STATE: AZ ZIP: 85281 BUSINESS PHONE: 623-300-7000 MAIL ADDRESS: STREET 1: 56 SOUTH ROCKFORD DRIVE CITY: TEMPE STATE: AZ ZIP: 85281 10-Q 1 bhe-20200331.htm FORM 10-Q
0.15000145000369570.1154014381021921163641519211632.2Q10000863436falseP4YP3YP4YP1YLarge Accelerated Filer15401438102100us-gaap:OtherAssetsNoncurrentus-gaap:LongTermDebtAndCapitalLeaseObligationsCurrentus-gaap:LongTermDebtAndCapitalLeaseObligationsus-gaap:OtherLiabilitiesCurrent--12-3110.110.14.74.73.33.59.910.2 0000863436 us-gaap:CommonStockMember 2019-12-31 0000863436 us-gaap:RetainedEarningsMember 2019-12-31 0000863436 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000863436 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000863436 2019-12-31 0000863436 us-gaap:RestrictedStockUnitsRSUMember 2019-12-31 0000863436 country:US 2019-12-31 0000863436 bhe:OtherRegionsMember 2019-12-31 0000863436 srt:AsiaMember 2019-12-31 0000863436 srt:EuropeMember 2019-12-31 0000863436 us-gaap:PerformanceSharesMember 2019-12-31 0000863436 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0000863436 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0000863436 srt:AmericasMember 2019-12-31 0000863436 srt:AsiaMember 2019-12-31 0000863436 srt:EuropeMember 2019-12-31 0000863436 us-gaap:CorporateAndOtherMember 2019-12-31 0000863436 us-gaap:CustomerRelationshipsMember 2019-12-31 0000863436 us-gaap:PatentedTechnologyMember 2019-12-31 0000863436 us-gaap:OtherIntangibleAssetsMember 2019-12-31 0000863436 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2019-12-31 0000863436 us-gaap:ComputerSoftwareIntangibleAssetMember 2019-12-31 0000863436 us-gaap:TrademarksAndTradeNamesMember 2019-12-31 0000863436 2020-01-01 2020-03-31 0000863436 2020-03-31 0000863436 us-gaap:CommonStockMember 2020-03-31 0000863436 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-12-31 0000863436 us-gaap:RevolvingCreditFacilityMember 2020-01-01 2020-03-31 0000863436 bhe:TermLoanFacilityMember 2020-01-01 2020-03-31 0000863436 bhe:CreditAgreementMember 2020-01-01 2020-03-31 0000863436 bhe:CreditAgreementMember 2020-03-31 0000863436 us-gaap:RevolvingCreditFacilityMember 2020-03-31 0000863436 bhe:TermLoanFacilityMember 2020-03-31 0000863436 bhe:TwoThousandAndTwentyMember 2019-12-31 0000863436 bhe:TwoThousandAndTwentyMember us-gaap:EmployeeSeveranceMember 2019-12-31 0000863436 us-gaap:InterestRateSwapMember 2019-12-31 0000863436 bhe:TermLoanFacilityMember us-gaap:InterestRateSwapMember 2020-03-31 0000863436 2019-01-01 2019-03-31 0000863436 country:US 2020-03-31 0000863436 bhe:OtherRegionsMember 2020-03-31 0000863436 srt:AsiaMember 2020-03-31 0000863436 srt:EuropeMember 2020-03-31 0000863436 2018-03-06 0000863436 bhe:TwoThousandAndNineteenMember 2020-03-31 0000863436 bhe:TwoThousandAndNineteenMember us-gaap:EmployeeSeveranceMember 2020-03-31 0000863436 srt:AmericasMember 2020-03-31 0000863436 srt:AsiaMember 2020-03-31 0000863436 srt:EuropeMember 2020-03-31 0000863436 us-gaap:CorporateAndOtherMember 2020-03-31 0000863436 srt:EuropeMember us-gaap:OperatingSegmentsMember bhe:IndustrialsSectorMember 2020-01-01 2020-03-31 0000863436 srt:EuropeMember us-gaap:OperatingSegmentsMember bhe:AerospaceAndDefenseSectorMember 2020-01-01 2020-03-31 0000863436 srt:EuropeMember us-gaap:OperatingSegmentsMember us-gaap:HealthcareSectorMember 2020-01-01 2020-03-31 0000863436 srt:EuropeMember us-gaap:OperatingSegmentsMember bhe:Semi-CapSectorMember 2020-01-01 2020-03-31 0000863436 srt:EuropeMember us-gaap:OperatingSegmentsMember bhe:ComputingSectorMember 2020-01-01 2020-03-31 0000863436 srt:EuropeMember us-gaap:OperatingSegmentsMember bhe:TelecommunicationsSectorMember 2020-01-01 2020-03-31 0000863436 srt:AsiaMember us-gaap:OperatingSegmentsMember bhe:IndustrialsSectorMember 2020-01-01 2020-03-31 0000863436 srt:AsiaMember us-gaap:OperatingSegmentsMember bhe:AerospaceAndDefenseSectorMember 2020-01-01 2020-03-31 0000863436 srt:AsiaMember us-gaap:OperatingSegmentsMember us-gaap:HealthcareSectorMember 2020-01-01 2020-03-31 0000863436 srt:AsiaMember us-gaap:OperatingSegmentsMember bhe:Semi-CapSectorMember 2020-01-01 2020-03-31 0000863436 srt:AsiaMember us-gaap:OperatingSegmentsMember bhe:ComputingSectorMember 2020-01-01 2020-03-31 0000863436 srt:AsiaMember us-gaap:OperatingSegmentsMember bhe:TelecommunicationsSectorMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember us-gaap:OperatingSegmentsMember bhe:IndustrialsSectorMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember us-gaap:OperatingSegmentsMember bhe:AerospaceAndDefenseSectorMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember us-gaap:OperatingSegmentsMember us-gaap:HealthcareSectorMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember us-gaap:OperatingSegmentsMember bhe:Semi-CapSectorMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember us-gaap:OperatingSegmentsMember bhe:ComputingSectorMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember us-gaap:OperatingSegmentsMember bhe:TelecommunicationsSectorMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember bhe:IndustrialsSectorMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember bhe:AerospaceAndDefenseSectorMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember us-gaap:HealthcareSectorMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember bhe:Semi-CapSectorMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember bhe:ComputingSectorMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember bhe:TelecommunicationsSectorMember 2020-01-01 2020-03-31 0000863436 bhe:IndustrialsSectorMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:AerospaceAndDefenseSectorMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 us-gaap:OperatingSegmentsMember us-gaap:HealthcareSectorMember 2019-01-01 2019-03-31 0000863436 bhe:Semi-CapSectorMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:ComputingSectorMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:TelecommunicationsSectorMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:IndustrialsSectorMember srt:AmericasMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:AerospaceAndDefenseSectorMember srt:AmericasMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 srt:AmericasMember us-gaap:OperatingSegmentsMember us-gaap:HealthcareSectorMember 2019-01-01 2019-03-31 0000863436 bhe:Semi-CapSectorMember srt:AmericasMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:ComputingSectorMember srt:AmericasMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:IndustrialsSectorMember srt:AsiaMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:AerospaceAndDefenseSectorMember srt:AsiaMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 srt:AsiaMember us-gaap:OperatingSegmentsMember us-gaap:HealthcareSectorMember 2019-01-01 2019-03-31 0000863436 bhe:Semi-CapSectorMember srt:AsiaMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:ComputingSectorMember srt:AsiaMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:TelecommunicationsSectorMember srt:AsiaMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:IndustrialsSectorMember srt:EuropeMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:AerospaceAndDefenseSectorMember srt:EuropeMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 srt:EuropeMember us-gaap:OperatingSegmentsMember us-gaap:HealthcareSectorMember 2019-01-01 2019-03-31 0000863436 bhe:Semi-CapSectorMember srt:EuropeMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:ComputingSectorMember srt:EuropeMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:TelecommunicationsSectorMember srt:EuropeMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:TelecommunicationsSectorMember srt:AmericasMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 bhe:TwoThousandAndNineteenMember 2019-12-31 0000863436 bhe:TwoThousandAndNineteenMember us-gaap:EmployeeSeveranceMember 2019-12-31 0000863436 bhe:TwoThousandAndNineteenMember bhe:OtherexitcostsMember 2019-12-31 0000863436 2018-10-26 0000863436 bhe:TwoThousandAndTwentyMember 2020-01-01 2020-03-31 0000863436 bhe:TwoThousandAndTwentyMember us-gaap:EmployeeSeveranceMember 2020-01-01 2020-03-31 0000863436 bhe:TwoThousandAndNineteenMember 2020-01-01 2020-03-31 0000863436 bhe:TwoThousandAndNineteenMember us-gaap:EmployeeSeveranceMember 2020-01-01 2020-03-31 0000863436 bhe:TwoThousandAndTwentyMember 2020-03-31 0000863436 bhe:TwoThousandAndTwentyMember us-gaap:EmployeeSeveranceMember 2020-03-31 0000863436 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0000863436 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0000863436 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0000863436 us-gaap:RetainedEarningsMember 2020-03-31 0000863436 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0000863436 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0000863436 srt:AmericasMember 2019-01-01 2019-03-31 0000863436 srt:AsiaMember 2019-01-01 2019-03-31 0000863436 srt:EuropeMember 2019-01-01 2019-03-31 0000863436 srt:EuropeMember us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000863436 srt:AsiaMember us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000863436 srt:AmericasMember us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000863436 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000863436 us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 srt:AmericasMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 srt:AsiaMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 srt:EuropeMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000863436 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0000863436 country:MY 2020-01-01 2020-03-31 0000863436 country:TH 2020-01-01 2020-03-31 0000863436 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-03-31 0000863436 us-gaap:PerformanceSharesMember 2020-01-01 2020-03-31 0000863436 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2020-01-01 2020-03-31 0000863436 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-03-31 0000863436 us-gaap:InterestRateSwapMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember 2019-01-01 2019-03-31 0000863436 srt:AsiaMember 2019-01-01 2019-03-31 0000863436 srt:EuropeMember 2019-01-01 2019-03-31 0000863436 us-gaap:CorporateMember 2019-01-01 2019-03-31 0000863436 country:US 2019-01-01 2019-03-31 0000863436 bhe:OtherRegionsMember 2019-01-01 2019-03-31 0000863436 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0000863436 bhe:RestrictedSharesAndRestrictedStockUnitsMember 2019-01-01 2019-03-31 0000863436 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-03-31 0000863436 us-gaap:CommonStockMember 2018-12-31 0000863436 2018-12-31 0000863436 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000863436 us-gaap:RetainedEarningsMember 2018-12-31 0000863436 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000863436 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000863436 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000863436 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000863436 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000863436 us-gaap:AccumulatedTranslationAdjustmentMember 2020-03-31 0000863436 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2020-03-31 0000863436 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-03-31 0000863436 us-gaap:CustomerRelationshipsMember 2020-03-31 0000863436 us-gaap:PatentedTechnologyMember 2020-03-31 0000863436 us-gaap:OtherIntangibleAssetsMember 2020-03-31 0000863436 us-gaap:ComputerSoftwareIntangibleAssetMember 2020-03-31 0000863436 us-gaap:TrademarksAndTradeNamesMember 2020-03-31 0000863436 us-gaap:PerformanceSharesMember 2020-03-31 0000863436 us-gaap:RestrictedStockUnitsRSUMember 2020-03-31 0000863436 bhe:CreditAgreementMember bhe:BankOfAmericaCreditAgreementMember 2020-01-01 2020-03-31 0000863436 bhe:TwoThousandAndNineteenMember bhe:OtherexitcostsMember 2020-01-01 2020-03-31 0000863436 bhe:TwoThousandAndNineteenMember bhe:OtherexitcostsMember 2020-03-31 0000863436 us-gaap:InterestRateSwapMember 2020-03-31 0000863436 us-gaap:InterestRateSwapMember 2017-12-31 0000863436 us-gaap:InterestRateSwapMember 2018-01-01 2018-12-31 0000863436 us-gaap:TransferredOverTimeMember 2020-01-01 2020-03-31 0000863436 us-gaap:EmployeeStockOptionMember bhe:EmployeeAwardsMember 2020-01-01 2020-03-31 0000863436 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0000863436 bhe:EmployeeAwardsMember us-gaap:PerformanceSharesMember 2020-01-01 2020-03-31 0000863436 bhe:EmployeeAwardsMember us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0000863436 us-gaap:RestrictedStockUnitsRSUMember bhe:NonEmployeeAwardsMember 2020-01-01 2020-03-31 0000863436 us-gaap:CustomerRelationshipsMember srt:MinimumMember 2020-01-01 2020-03-31 0000863436 us-gaap:CustomerRelationshipsMember srt:MaximumMember 2020-01-01 2020-03-31 0000863436 srt:MinimumMember us-gaap:ComputerSoftwareIntangibleAssetMember 2020-01-01 2020-03-31 0000863436 srt:MaximumMember us-gaap:ComputerSoftwareIntangibleAssetMember 2020-01-01 2020-03-31 0000863436 bhe:TermLoanFacilityMember 2018-07-20 0000863436 bhe:BankOfAmericaCreditAgreementMember bhe:TermLoanFacilityMember 2020-01-01 2020-03-31 0000863436 srt:MinimumMember bhe:CreditAgreementMember 2020-01-01 2020-03-31 0000863436 srt:MaximumMember bhe:CreditAgreementMember 2020-01-01 2020-03-31 0000863436 srt:MinimumMember bhe:CreditAgreementMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0000863436 srt:MaximumMember bhe:CreditAgreementMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0000863436 srt:MinimumMember bhe:CreditAgreementMember us-gaap:BaseRateMember 2020-01-01 2020-03-31 0000863436 srt:MaximumMember bhe:CreditAgreementMember us-gaap:BaseRateMember 2020-01-01 2020-03-31 0000863436 bhe:OtherRegionsMember 2020-01-01 2020-03-31 0000863436 us-gaap:CorporateNonSegmentMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember 2020-01-01 2020-03-31 0000863436 srt:AsiaMember 2020-01-01 2020-03-31 0000863436 srt:EuropeMember 2020-01-01 2020-03-31 0000863436 us-gaap:CorporateMember 2020-01-01 2020-03-31 0000863436 country:US 2020-01-01 2020-03-31 0000863436 srt:EuropeMember 2020-01-01 2020-03-31 0000863436 us-gaap:IntersegmentEliminationMember 2020-01-01 2020-03-31 0000863436 bhe:RestrictedSharesAndRestrictedStockUnitsMember 2020-01-01 2020-03-31 0000863436 us-gaap:SubsequentEventMember 2020-04-14 2020-04-14 0000863436 us-gaap:OperatingSegmentsMember 2020-01-01 2020-03-31 0000863436 srt:AmericasMember 2020-01-01 2020-03-31 0000863436 srt:AsiaMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember srt:AmericasMember 2020-01-01 2020-03-31 0000863436 us-gaap:IntersegmentEliminationMember srt:AmericasMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember srt:AsiaMember 2020-01-01 2020-03-31 0000863436 us-gaap:IntersegmentEliminationMember srt:AsiaMember 2020-01-01 2020-03-31 0000863436 us-gaap:OperatingSegmentsMember srt:EuropeMember 2020-01-01 2020-03-31 0000863436 us-gaap:IntersegmentEliminationMember srt:EuropeMember 2020-01-01 2020-03-31 0000863436 us-gaap:RevolvingCreditFacilityMember 2018-07-20 0000863436 2019-01-01 2019-12-31 0000863436 2019-03-31 0000863436 us-gaap:RevolvingCreditFacilityMember 2019-12-31 0000863436 bhe:TermLoanFacilityMember 2019-12-31 0000863436 us-gaap:CommonStockMember 2019-03-31 0000863436 us-gaap:RetainedEarningsMember 2019-03-31 0000863436 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000863436 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000863436 2020-02-19 0000863436 country:MY 2019-01-01 2019-03-31 0000863436 country:TH 2019-01-01 2019-03-31 0000863436 us-gaap:TransferredOverTimeMember 2019-01-01 2019-03-31 0000863436 us-gaap:FacilityClosingMember bhe:TwoThousandAndNineteenMember 2019-12-31 0000863436 us-gaap:FacilityClosingMember bhe:TwoThousandAndNineteenMember 2020-01-01 2020-03-31 0000863436 us-gaap:FacilityClosingMember bhe:TwoThousandAndNineteenMember 2020-03-31 0000863436 country:SG 2020-01-01 2020-03-31 0000863436 country:SG 2019-01-01 2019-03-31 0000863436 bhe:OtherasiaMember 2020-01-01 2020-03-31 0000863436 bhe:OtherasiaMember 2019-01-01 2019-03-31 0000863436 2020-05-07 iso4217:USD xbrli:shares xbrli:pure xbrli:shares iso4217:USD

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

 

FORM 10-Q

_______________

(Mark One)

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

For the quarterly period ended March 31, 2020

or

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

For the transition period from _________________ to________________

 

Commission File Number: 1-10560

 

BENCHMARK ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)

 

Texas

74-2211011

(State or other jurisdiction

(I.R.S. Employer

of incorporation or organization)

 

Identification No.)

56 South Rockford Drive

85281

Tempe, Arizona

(Zip Code)

(Address of principal executive offices)

 

(623) 300-7000

(Registrants 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

New York Stock Exchange, Inc.

 

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 No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes No

 

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

 

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

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 of the Act). Yes No

 

As of May 7, 2020, there were 36,415,712 shares of common stock of Benchmark Electronics, Inc., par value $0.10 per share, outstanding.

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

 

 

 

PART I—FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Income

2

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

3

 

Condensed Consolidated 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

22

 

Results of Operations

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

32

 

 

 

PART II—OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 6.

Exhibits

36

 

 

SIGNATURES

37

 

 


 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

 

 

 

 

 

 

 

 

March 31,

 

 

December 31,

(in thousands, except par value)

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

411,786

 

$

347,558

 

 

Restricted cash

 

 

 

16,398

 

 

Accounts receivable, net of allowance for doubtful accounts of $10,085

 

 

 

 

 

 

 

 

and $10,085, respectively

 

317,862

 

 

324,424

 

 

Contract assets

 

159,962

 

 

161,061

 

 

Inventories

 

338,437

 

 

314,956

 

 

Prepaid expenses and other current assets

 

35,863

 

 

29,566

 

 

Income taxes receivable

 

1,092

 

 

1,119

 

 

 

 

Total current assets

 

1,265,002

 

 

1,195,082

 

Property, plant and equipment, net of accumulated depreciation of

 

 

 

 

 

 

 

 

 

$478,616 and $460,708, respectively

 

201,580

 

 

205,819

 

Operating lease right-of-use assets

 

77,033

 

 

76,859

 

Goodwill

 

192,116

 

 

192,116

 

Deferred income taxes

 

5,274

 

 

5,274

 

Other assets, net

 

82,377

 

 

84,724

 

 

 

 

 

$

1,823,382

 

$

1,759,874

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current installments of long-term debt

$

8,868

 

$

8,825

 

 

Accounts payable

 

315,729

 

 

302,994

 

 

Income taxes payable

 

7,537

 

 

7,895

 

 

Accrued liabilities

 

127,205

 

 

139,531

 

 

 

 

Total current liabilities

 

459,339

 

 

459,245

 

Long-term debt, less current installments

 

231,798

 

 

138,912

 

Operating lease liabilities

 

67,009

 

 

67,898

 

Other long-term liabilities

 

64,367

 

 

65,483

 

Deferred income taxes

 

11,247

 

 

13,504

 

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 – 36,415 and 36,957, respectively

 

3,642

 

 

3,696

 

 

Additional paid-in capital

 

505,283

 

 

512,019

 

 

Retained earnings

 

502,692

 

 

515,876

 

 

Accumulated other comprehensive loss

 

(21,995)

 

 

(16,759)

 

 

 

 

Total shareholders’ equity

 

989,622

 

 

1,014,832

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

$

1,823,382

 

$

1,759,874

See accompanying notes to condensed consolidated financial statements.

1


 

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(unaudited)

 

 

 

Three Months Ended

 

 

March 31,

(in thousands, except per share data)

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

$

514,964

 

$

602,820

Cost of sales

 

471,603

 

 

552,783

 

Gross profit

 

43,361

 

 

50,037

Selling, general and administrative expenses

 

31,575

 

 

30,007

Amortization of intangible assets

 

2,381

 

 

2,367

Restructuring charges and other costs

 

2,915

 

 

1,576

 

Income from operations

 

6,490

 

 

16,087

Interest expense

 

(1,702)

 

 

(1,609)

Interest income

 

599

 

 

1,297

Other income (expense), net

 

(662)

 

 

1,604

 

Income before income taxes

 

4,725

 

 

17,379

Income tax expense

 

873

 

 

3,606

 

Net income

$

3,852

 

$

13,773

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

Basic

$

0.10

 

$

0.34

 

Diluted

$

0.10

 

$

0.34

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

Basic

 

36,790

 

 

40,630

 

Diluted

 

37,071

 

 

40,853

See accompanying notes to condensed consolidated financial statements.

2


 

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 31,

(in thousands)

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

3,852

 

$

13,773

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation adjustments

 

(1,257)

 

 

(833)

 

Unrealized loss on derivative, net of tax

 

(4,094)

 

 

(1,285)

 

Other

 

115

 

 

(15)

Other comprehensive loss:

 

(5,236)

 

 

(2,133)

 

 

 

Comprehensive income (loss)

$

(1,384)

 

$

11,640

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

3


 

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Common Stock

 

Additional

 

 

 

 

Other

 

 

Total

 

 

 

Shares

 

Par

 

Paid-in

 

Retained

 

Comprehensive

 

Shareholders’

(in thousands)

 

Outstanding

 

Value

 

Capital

 

Earnings

 

 

Loss

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, December 31, 2019

36,957

 

 

$ 3,696

 

$ 512,019

 

$ 515,876

 

 

$ (16,759)

 

 

$ 1,014,832

Stock-based compensation expense

 

 

 

 

 

2,739

 

 

 

 

 

2,739

Shares repurchased and retired

 

 

(724)

 

 

(73)

 

(8,048)

 

(11,208)

 

 

 

 

(19,329)

Stock options exercised

 

 

16

 

 

2

 

357

 

 

 

 

 

359

Vesting of restricted stock units

 

 

236

 

 

24

 

(24)

 

 

 

 

 

Shares withheld for taxes

 

 

(70)

 

 

(7)

 

(1,760)

 

 

 

 

 

(1,767)

Dividends declared

 

 

 

 

 

 

(5,828)

 

 

 

 

(5,828)

Net income

 

 

 

 

 

 

3,852

 

 

 

 

3,852

Other comprehensive loss

 

 

 

 

 

 

 

 

(5,236)

 

 

(5,236)

Balances, March 31, 2020

 

 

36,415

 

 

$ 3,642

 

$ 505,283

 

$ 502,692

 

 

$ (21,995)

 

 

$ 989,622

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, December 31, 2018

41,357

 

 

$ 4,136

 

$ 554,939

 

$ 584,274

 

 

$ (11,124)

 

 

$ 1,132,225

Stock-based compensation expense

 

 

 

 

 

2,772

 

 

 

 

 

2,772

Shares repurchased and retired

 

 

(2,383)

 

 

(239)

 

(26,473)

 

(34,368)

 

 

 

 

(61,080)

Stock options exercised

 

 

13

 

 

1

 

278

 

 

 

 

 

279

Vesting of restricted stock units

 

 

227

 

 

23

 

(23)

 

 

 

 

 

Shares withheld for taxes

 

 

(45)

 

 

(4)

 

(1,232)

 

 

 

 

 

(1,236)

Dividends declared

 

 

 

 

 

 

(5,875)

 

 

 

 

(5,875)

Net income

 

 

 

 

 

 

13,773

 

 

 

 

13,773

Other comprehensive loss

 

 

 

 

 

 

 

 

(2,133)

 

 

(2,133)

Balances, March 31, 2019

 

 

39,169

 

 

$ 3,917

 

$ 530,261

 

$ 557,804

 

 

$ (13,257)

 

 

$ 1,078,725

 

See accompanying notes to condensed consolidated financial statements.

4


 

BENCHMARK ELECTRONICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 31,

(in thousands)

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

$

3,852

 

$

13,773

 

Adjustments to reconcile net income (loss) to net cash provided by

 

 

 

 

 

 

 

operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

9,301

 

 

9,319

 

 

 

Amortization

 

2,891

 

 

2,853

 

 

 

Provision for doubtful accounts

 

 

 

(1,661)

 

 

 

Deferred income taxes

 

(885)

 

 

685

 

 

 

(Gain) loss on the sale of property, plant and equipment

 

(31)

 

 

2

 

 

 

Asset impairments

 

1,007

 

 

 

 

 

Stock-based compensation expense

 

2,739

 

 

2,772

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

6,414

 

 

64,176

 

 

 

Contract assets

 

1,099

 

 

(16,943)

 

 

 

Inventories

 

(23,769)

 

 

(5,862)

 

 

 

Prepaid expenses and other assets

 

(3,110)

 

 

3,056

 

 

 

Accounts payable

 

14,882

 

 

(45,914)

 

 

 

Accrued liabilities

 

(17,166)

 

 

(11,044)

 

 

 

Operating leases

 

(83)

 

 

543

 

 

 

Income taxes

 

(250)

 

 

659

 

 

 

 

Net cash provided by (used in) operations

 

(3,109)

 

 

16,414

Cash flows from investing activities:

 

 

 

 

 

 

Additions to property, plant and equipment

 

(11,856)

 

 

(9,326)

 

Proceeds from the sale of property, plant and equipment

 

7

 

 

1

 

Additions to purchased software

 

(1,040)

 

 

(748)

 

Cash received from business divestitures

 

1,341

 

 

 

Other

 

57

 

 

(98)

 

 

 

 

Net cash used in investing activities

 

(11,491)

 

 

(10,171)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from stock options exercised

 

359

 

 

279

 

Employee taxes paid for shares withheld

 

(1,767)

 

 

(1,236)

 

Dividends paid

 

(5,538)

 

 

(6,203)

 

Borrowings under credit agreement

 

110,000

 

 

 

Principal payments on long-term debt

 

(17,187)

 

 

(274)

 

Share repurchases

 

(19,329)

 

 

(61,080)

 

 

 

 

Net cash provided by (used in) financing activities

 

66,538

 

 

(68,514)

Effect of exchange rate changes

 

(4,108)

 

 

(515)

Net increase (decrease) in cash and cash equivalents and restricted cash

 

47,830

 

 

(62,786)

 

Cash and cash equivalents and restricted cash at beginning of year

 

363,956

 

 

458,102

 

Cash and cash equivalents and restricted cash at end of period

$

411,786

 

$

395,316

 

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 innovative product design, engineering services, technology solutions and advanced manufacturing services. From initial product concept to volume production, including direct order fulfillment and aftermarket services, the Company has been providing integrated services and solutions to original equipment manufacturers (OEMs) since 1979. The Company serves the following industries: aerospace and defense (A&D), medical technologies, complex industrials, semiconductor capital equipment (Semi-Cap), next-generation telecommunications and 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 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 on Form 10-K for the year ended December 31, 2019 (the 2019 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 financial statements in accordance with generally accepted accounting principles in the United States (U.S. GAAP) with consideration given to the potential impacts of the coronavirus disease 2019 (COVID-19) pandemic. However, actual results could differ materially from these estimates and be significantly affected by the severity and duration of the pandemic, the extent of actions to contain or treat COVID-19, 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.

 

For comparative purposes and based on ongoing evaluation of personnel roles involved in the production process, prior year expenses associated with certain personnel have been reclassified from selling, general and administrative expenses to cost of goods sold to conform to the current year presentation.

 

Note 2 – New Accounting Pronouncements

Adopted in 2020

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration 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 adopted this update effective January 1, 2020 and the implementation of this update did not have a material impact on its consolidated financial position, results of operations or cash flows.

 

Not Yet Adopted

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.

6


 

 

 

 

Note 3 – Contract Assets

As of March 31, 2020 and December 31, 2019, the Company had $160.0 million and $161.1 million, respectively, in contract receivables from contracts with customers. The contract receivables primarily relate to the Company’s right to consideration for work completed but not billed at the reporting date. The contract receivables are transferred to accounts receivable when the rights become unconditional.

 

 

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

 

Three Months Ended

 

March 31,

(in thousands)

 

2020

 

 

2019

Beginning balance as of December 31,

$

161,061

 

$

140,082

Revenue recognized

 

464,727

 

 

564,889

Amounts collected or invoiced

 

(465,826)

 

 

(547,946)

Ending balance as of March 31,

$

159,962

 

$

157,025

 

Note 4 – Inventories

Inventory costs are summarized as follows:

 

March 31,

December 31,

(in thousands)

 

2020

 

 

2019

 

 

 

 

 

Raw materials

$

326,924

 

$

304,069

Work in process

 

7,941

 

 

8,282

Finished goods

 

3,572

 

 

2,605

 

$

338,437

 

$

314,956

 

Note 5 – Goodwill and Other Intangible AssetsGoodwill allocated to the Company’s reportable segments was as follows:

 

(in thousands)

 

Americas

 

Asia

 

Total

Goodwill as of December 31, 2019 and March 31, 2020

$

154,014

$

38,102

$

192,116

 

Other assets, net consist primarily of acquired identifiable intangible assets and capitalized purchased software costs. Intangible assets as of March 31, 2020 and December 31, 2019 were as follows:

 

 

As of March 31, 2020

 

 

Gross

 

 

 

 

 

Net

 

 

Carrying

 

Accumulated

 

Carrying

(in thousands)

 

Amount

 

Amortization

 

Amount

Customer relationships

$

100,102

 

$

(48,545)

 

$

51,557

Purchased software costs

 

42,569

 

 

(32,348)

 

 

10,221

Technology licenses

 

28,800

 

 

(24,890)

 

 

3,910

Trade names and trademarks

 

7,800

 

 

 

 

7,800

Other

 

868

 

 

(315)

 

 

553

Total

$

180,139

 

$

(106,098)

 

$

74,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2019

 

 

Gross

 

 

 

 

 

Net

 

 

Carrying

 

Accumulated

 

Carrying

(in thousands)

 

Amount

 

Amortization

 

Amount

Customer relationships

$

100,123

 

$

(46,981)

 

$

53,142

Purchased software costs

 

41,604

 

 

(32,012)

 

 

9,592

Technology licenses

 

28,800

 

 

(24,100)

 

 

4,700

Trade names and trademarks

 

7,800

 

 

 

 

7,800

Other

 

868

 

 

(309)

 

 

559

Total

$

179,195

 

$

(103,402)

 

$

75,793

 

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 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 on the statements of cash flow for the three months ended March 31, 2020 and 2019 was as follows:

 

Three Months Ended

 

March 31,

(in thousands)

 

2020

 

 

2019

Amortization of intangible assets

$

2,381

 

$

2,367

Amortization of capitalized purchased software costs

 

395

 

 

371

Amortization of debt costs

 

115

 

 

115

 

$

2,891

 

$

2,853

 

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

2020 (remaining nine months)

$

7,906

2021

 

8,091

2022

 

7,949

2023

 

6,719

2024

 

5,555

 

Note 6—Borrowing FacilitiesLong-term debt outstanding as of March 31, 2020 and December 31, 2019 consists of the following:

 

 

 

 

March 31,

 

December 31,

(in thousands)

 

2020

 

 

2019

 

Revolving credit facility, due 2023

$

95,000

 

$

 

Term loan, due 2023

 

142,500

 

 

144,375

 

Less unamortized debt issuance costs

 

(1,502)

 

 

(1,616)

 

Long-term debt

$

235,998

 

$

142,759

8


 

 

On July 20, 2018, the Company entered into a $650 million credit agreement (the Credit Agreement) by and among the Company, certain of its subsidiaries, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swingline Lender and a L/C Issuer. The Credit Agreement is comprised of a 5-year $500 million revolving credit facility (the Revolving Credit Facility) and a 5-year $150 million term loan facility (the Term Loan Facility), both with 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 Credit Agreement.

 

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 loan and/or increase commitments under the Revolving Credit Facility in an aggregate amount not exceeding $275 million, subject to the satisfaction of certain conditions.

 

The Term Loan Facility is payable in quarterly principal installments of $1.9 million with the balance payable on July 20, 2023.

 

Interest on outstanding borrowings under the Credit Agreement (other than swingline loans) accrues, at the Company’s option, at (a) the London Interbank Offered Rate (LIBOR) plus 1.0% to 2.0% or (b) the base rate plus 0.0% to 1.0%.

 

As of March 31, 2020, $142.5 million of the outstanding debt under the Credit Agreement is effectively at a fixed interest rate of 2.928% (plus the applicable margin) as a result of a $142.5 million notional interest rate swap contract discussed in Note 16. A commitment fee of 0.20% to 0.30% 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) 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 as 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 March 31, 2020, the Company had $142.5 million in borrowings outstanding under the Term Loan Facility and $95.0 million in borrowings and $3.7 million in letters of credit outstanding under the Revolving Credit Facility, respectively. The Company had $401.3 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.

9


 

Note 7 – 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 generally expensed as incurred and include certain index-based changes in rent, certain nonlease components, such as maintenance and other services provided by the lessor, and other charges included in the lease.

 

The components of lease expense were as follows:

 

 

 

Three Months Ended

(in thousands)

 

March 31, 2020

 

March 31, 2019

Finance lease cost:

 

 

 

 

 

 

 

 

 

 

Amortization of right-to-use assets (included in depreciation expense)

$

178

 

 

$

178

 

Interest on lease liabilities

 

 

 

 

118

 

 

 

146

Operating lease cost

 

 

 

 

4,141

 

 

 

4,448

Short-term lease cost

 

 

 

 

241

 

 

 

200

Variable lease cost

 

 

 

 

510

 

 

 

366

 

Total lease cost

 

 

 

$

5,188

 

 

$

5,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2020

 

March 31, 2019

Other information:

 

 

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

 

Operating cash flows used for finance lease

 

 

 

$

127

 

 

$

157

 

Operating cash flows used for operating leases

 

 

 

$

3,988

 

 

$

3,835

 

Financing cash flows used for finance lease

 

 

 

$

312

 

 

$

273

 

Right-to-use assets obtained in exchange for new operating lease liabilities

 

$

4,183

 

 

$

660

 

The lease assets and liabilities were as follows (in thousands):

 

 

 

 

 

March 31,

December 31,

 

 

 

 

 

 

2020

 

 

 

2019

Finance lease right-of-assets (included in other assets)

 

 

 

$

2,133

 

 

$

2,311

Operating lease right-of-use assets

 

 

 

$

77,033

 

 

$

76,859

Finance liability, current (included in current installments of long-term debt)

 

 

 

$

1,368

 

 

$

1,325

Finance lease liability, noncurrent (included in long-term debt)

 

 

 

$

3,300

 

 

$

3,654

Operating lease liabilities, current (included in accrued liabilities)

 

 

 

$

12,023

 

 

$

11,043

Operating lease liabilities, noncurrent

 

 

 

$

67,009

 

 

$

67,898

Weighted average remaining lease term – finance leases

 

 

 

3.3 years

 

 

3.5 years

Weighted average remaining lease term – operating leases

 

 

 

9.9 years

 

 

10.2 years

Weighted average discount rate – finance leases

 

 

 

 

10.1%

 

 

 

10.1%

Weighted average discount rate – operating leases

 

 

 

 

4.7%

 

 

 

4.7%

10


 

Future annual minimum lease payments and finance lease commitments as of March 31, 2020 were as follows (in thousands):

 

 

Operating

 

Finance

Year ending December 31,

 

Leases

 

 

Leases

 

2020 (remaining nine months)

$

15,374

 

$

1,342

 

2021

 

12,658

 

 

1,816

 

2022

 

10,655

 

 

1,853

 

2023

 

9,590