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~~12b-2 of the Exchange Act.

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 ☑

As of ~~August 2,~~November 1, 2021, there were ~~35,582,107~~35,224,307 shares of common stock of Benchmark Electronics, Inc., par value $0.10 per share, outstanding.


	June 30,			December 31,			September 30,			December 31,
(in thousands, except par value)	2021			2020			2021			2020
Assets
Current assets:
Cash and cash equivalents	$	369,301		$	390,808		$	288,567		$	390,808
Restricted cash		1,142			5,182			2,630			5,182
Accounts receivable, net of allowance for doubtful accounts of $828 and $1,371, respectively		290,073			309,331			311,384			309,331
Contract assets		154,629			142,779			160,194			142,779
Inventories		415,322			327,377			478,325			327,377
Prepaid expenses and other assets		36,264			26,457			35,810			26,457
Income taxes receivable		246			417			2,099			417
Total current assets		1,266,977			1,202,351			1,279,009			1,202,351
Property, plant and equipment, net		188,318			185,272			188,858			185,272
Operating lease right-of-use assets		89,567			79,966			102,440			79,966
Goodwill		192,116			192,116			192,116			192,116
Deferred income taxes		4,941			4,924			4,248			4,924
Other assets, net		76,872			79,606			73,695			79,606
	$	1,818,791		$	1,744,235		$	1,840,366		$	1,744,235
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt	$	9,259		$	9,161		$	7,663		$	9,161
Accounts payable		380,164			282,208			401,106			282,208
Advance payments from customers		88,686			84,122			91,464			84,122
Income taxes payable		7,330			5,572			4,376			5,572
Accrued liabilities		95,970			100,073			95,560			100,073
Total current liabilities		581,409			481,136			600,169			481,136
Long-term debt, less current installments		126,639			131,051			123,510			131,051
Operating lease liabilities		80,580			72,120			94,219			72,120
Other long-term liabilities		59,024			65,552			58,130			65,552
Deferred income taxes		3,861			4,788			2,002			4,788
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 – 35,566 and 36,295, respectively		3,558			3,629
Common stock, $0.10 par value; 145,000 shares authorized; issued and outstanding – 35,209 and 36,295, respectively								3,521			3,629
Additional paid-in capital		503,386			510,405			503,062			510,405
Retained earnings		476,855			492,205			473,385			492,205
Accumulated other comprehensive loss		(16,521	)		(16,651	)		(17,632	)		(16,651	)
Total shareholders’ equity		967,278			989,588			962,336			989,588
	$	1,818,791		$	1,744,235		$	1,840,366		$	1,744,235


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2021			2020			2021			2020			2021			2020			2021			2020
Sales	$	544,662		$	490,966		$	1,050,383		$	1,005,930		$	571,882		$	525,951		$	1,622,265		$	1,531,881
Cost of sales		496,749			456,294			960,243			927,897			518,177			479,597			1,478,420			1,407,494
Gross profit		47,913			34,672			90,140			78,033			53,705			46,354			143,845			124,387
Selling, general and administrative expenses		34,034			28,516			64,582			60,091			34,387			29,724			98,969			89,815
Amortization of intangible assets		1,599			2,371			3,197			4,752			1,596			2,368			4,793			7,120
Restructuring charges and other costs		1,581			5,657			3,172			8,572			6,428			7,161			9,600			15,480
Ransomware related incident costs (recovery), net		0			0			(3,444	)		0			(500	)		(1,558	)		(3,944	)	��	(1,305	)
Income (loss) from operations		10,699			(1,872	)		22,633			4,618
Income from operations														11,794			8,659			34,427			13,277
Interest expense		(2,079	)		(2,351	)		(4,228	)		(4,053	)		(1,987	)		(2,136	)		(6,215	)		(6,189	)
Interest income		164			287			329			886			122			154			451			1,040
Other income (expense)		440			32			164			(630	)		500			439			664			(191	)
Income (loss) before income taxes		9,224			(3,904	)		18,898			821
Income tax expense (benefit)		1,855			(497	)		3,612			376
Net income (loss)	$	7,369		$	(3,407	)	$	15,286		$	445
Earnings (loss) per share:
Income before income taxes														10,429			7,116			29,327			7,937
Income tax expense														2,364			1,201			5,976			1,577
Net income													$	8,065		$	5,915		$	23,351		$	6,360
Earnings per share:
Basic	$	0.21		$	(0.09	)	$	0.42		$	0.01		$	0.23		$	0.16		$	0.65		$	0.17
Diluted	$	0.20		$	(0.09	)	$	0.42		$	0.01		$	0.23		$	0.16		$	0.64		$	0.17
Weighted-average number of shares outstanding:
Basic		35,753			36,439			36,000			36,614			35,423			36,467			35,806			36,565
Diluted		36,061			36,439			36,474			36,863			35,666			36,544			36,287			36,821


(in thousands)	Shares			Common stock			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			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			36,295		$	3,629		$	510,405		$	492,205		$	(16,651	)	$	989,588
Stock-based compensation expense		—			—			6,863			—			—			6,863			—			—			10,856			—			—			10,856
Shares repurchased and retired		(1,008	)		(99	)		(11,227	)		(18,993	)		—			(30,319	)		(1,380	)		(137	)		(15,364	)		(24,715	)		—			(40,216	)
Stock options exercised		29			3			343			—			—			346			29			3			343			—			—			346
Vesting of restricted stock units		351			35			(35	)		—			—			—			373			37			(37	)		—			—			—
Shares withheld for taxes		(101	)		(10	)		(2,963	)		—			—			(2,973	)		(108	)		(11	)		(3,141	)		—			—			(3,152	)
Dividends declared		—			—			—			(11,643	)		—			(11,643	)		—			—			—			(17,456	)		—			(17,456	)
Net income		—			—			—			15,286			—			15,286			—			—			—			23,351			—			23,351
Other comprehensive income		—			—			—			—			130			130
Other comprehensive loss																				—			—			—			—			(981	)		(981	)
Balances, September 30, 2021																				35,209		$	3,521		$	503,062		$	473,385		$	(17,632	)	$	962,336

Balances, June 30, 2021		35,566		$	3,558		$	503,386		$	476,855		$	(16,521	)	$	967,278			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			—			—			3,993			—			—			3,993
Shares repurchased and retired		(567	)		(57	)		(6,300	)		(10,910	)		—			(17,267	)		(372	)		(38	)		(4,137	)		(5,722	)		—			(9,897	)
Stock options exercised		4			—			70			—			—			70
Vesting of restricted stock units		69			7			(7	)		—			—			—			22			2			(2	)		—			—			—
Shares withheld for taxes		(2	)		—			(49	)		—			—			(49	)		(7	)		(1	)		(178	)		—			—			(179	)
Dividends declared		—			—			—			(5,871	)		—			(5,871	)		—			—			—			(5,813	)		—			(5,813	)
Net income		—			—			—			7,369			—			7,369			—			—			—			8,065			—			8,065
Other comprehensive income		—			—			—			—			1,466			1,466
Balances, June 30, 2021		35,566		$	3,558		$	503,386		$	476,855		$	(16,521	)	$	967,278
Other comprehensive loss																				—			—			—			—			(1,111	)		(1,111	)
Balances, September 30, 2021																				35,209		$	3,521		$	503,062		$	473,385		$	(17,632	)	$	962,336


(in thousands)	Shares			Common stock			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Shares			Common stock			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity
Balances, December 31, 2019		36,957		$	3,696		$	512,019		$	515,876		$	(16,759	)	$	1,014,832			36,957		$	3,696		$	512,019		$	515,876		$	(16,759	)	$	1,014,832
Stock-based compensation expense		—			—			6,044			—			—			6,044			—			—			9,464			—			—			9,464
Shares repurchased and retired		(724	)		(73	)		(8,048	)		(11,208	)		—			(19,329	)		(724	)		(72	)		(8,048	)		(11,209	)		—			(19,329	)
Stock options exercised		17			2			362			—			—			364			17			2			369			—			—			371
Vesting of restricted stock units		283			28			(28	)		—			—			—			301			30			(30	)		—			—			—
Shares withheld for taxes		(72	)		(7	)		(1,794	)		—			—			(1,801	)		(77	)		(8	)		(1,905	)		—			—			(1,913	)
Dividends declared		—			—			—			(11,662	)		—			(11,662	)		—			—			—			(17,503	)		—			(17,503	)
Net income		—			—			—			445			—			445			—			—			—			6,360			—			6,360
Other comprehensive loss		—			—			—			—			(4,533	)		(4,533	)		—			—			—			—			(1,955	)		(1,955	)
Balances, September 30, 2020																				36,474		$	3,648		$	511,869		$	493,524		$	(18,714	)	$	990,327

Balances, June 30, 2020		36,461		$	3,646		$	508,555		$	493,451		$	(21,292	)	$	984,360			36,461		$	3,647		$	508,555		$	493,450		$	(21,292	)	$	984,360

Balances, March 31, 2020		36,415		$	3,642		$	505,283		$	502,692		$	(21,995	)	$	989,622
Stock-based compensation expense		—			—			3,305			—			—			3,305			—			—			3,420			—			—			3,420
Stock options exercised		1			—			5			—			—			5			—			—			7			—			—			7
Vesting of restricted stock units		47			4			(4	)		—			—			—			18			2			(2	)		—			—			—
Shares withheld for taxes		(2	)		—			(34	)		—			—			(34	)		(5	)		(1	)		(111	)		—			—			(112	)
Dividends declared		—			—			—			(5,834	)		—			(5,834	)		—			—			—			(5,841	)		—			(5,841	)
Net income		—			—			—			(3,407	)		—			(3,407	)		—			—			—			5,915			—			5,915
Other comprehensive income		—			—			—			—			703			703			—			—			—			—			2,578			2,578
Balances, June 30, 2020		36,461		$	3,646		$	508,555		$	493,451		$	(21,292	)	$	984,360
Balances, September 30, 2020																				36,474		$	3,648		$	511,869		$	493,524		$	(18,714	)	$	990,327


	Six Months Ended June 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020
Cash flows from operating activities:
Net income	$	15,286		$	445		$	23,351		$	6,360
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		17,735			18,813			26,335			28,400
Amortization		4,259			5,718			6,628			8,539
Provision for doubtful accounts		40			2,107			40			2,160
Deferred income taxes		(944	)		(330	)		(2,110	)		(4,079	)
Asset impairments		0			1,214			4,358			6,950
(Gain) loss on the sale of property, plant and equipment		14			(139	)		164			(114	)
Stock-based compensation expense		6,863			6,044			10,856			9,464
Changes in operating assets and liabilities:
Accounts receivable		18,959			20,356			(2,342	)		16,410
Contract assets		(11,850	)		7,420			(17,415	)		(335	)
Inventories		(88,634	)		(48,668	)		(151,518	)		(37,131	)
Prepaid expenses and other assets		(8,372	)		(1,234	)		(9,470	)		1,675
Accounts payable		92,677			6,980			114,477			(18,260	)
Advance payments from customers		4,563			15,267			7,341			21,074
Accrued liabilities		(11,854	)		(12,176	)		(9,087	)		(13,498	)
Operating leases		(485	)		236			(196	)		942
Income taxes		2,016			(2,135	)		(2,720	)		(2,942	)
Net cash provided by operations		40,273			19,918
Net cash provided by (used in) operations								(1,308	)		25,615
Cash flows from investing activities:
Additions to property, plant and equipment		(16,681	)		(21,402	)		(29,497	)		(26,108	)
Proceeds from the sale of property, plant and equipment		116			307			222			314
Additions to purchased software		(1,938	)		(1,888	)		(2,940	)		(2,994	)
Cash received from business divestitures		0			2,214			0			2,214
Other		72			55			72			58
Net cash used in investing activities		(18,431	)		(20,714	)		(32,143	)		(26,516	)
Cash flows from financing activities:
Proceeds from stock options exercised		346			364			346			371
Employee taxes paid for with shares withheld		(2,973	)		(1,801	)		(3,152	)		(1,913	)
Dividends paid		(11,577	)		(11,365	)		(17,448	)		(17,205	)
Borrowings under credit agreement		0			110,000			30,000			110,000
Principal payments on credit agreement		(3,750	)		(83,750	)		(35,625	)		(100,625	)
Principal payments on finance leases		(793	)		(642	)		(833	)		(980	)
Share repurchases		(30,319	)		(19,329	)		(40,216	)		(19,329	)
Net cash used in financing activities		(49,066	)		(6,523	)		(66,928	)		(29,681	)
Effect of exchange rate changes		1,677			(218	)		(4,414	)		1,436
Net increase in cash and cash equivalents and restricted cash		(25,547	)		(7,537	)
Net decrease in cash and cash equivalents and restricted cash								(104,793	)		(29,146	)
Cash and cash equivalents and restricted cash at beginning of year		395,990			363,956			395,990			363,956
Cash and cash equivalents and restricted cash at end of period	$	370,443		$	356,419		$	291,197		$	334,810

Note 4 – Goodwill and Other Intangible Assets

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


(in thousands)	Americas		Asia		Total		Americas		Asia		Total
Goodwill as of December 31, 2020 and June 30, 2021	$	154,014	$	38,102	$	192,116
Goodwill as of December 31, 2020 and September 30, 2021							$	154,014	$	38,102	$	192,116

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~~September 30, 2021 and December 31, 2020 were as follows:


(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	100,189	$	(56,562	)	$	43,627	$	100,161	$	(58,119	)	$	42,042
Purchased software costs		48,091		(34,110	)		13,981		50,203		(34,684	)		15,519
Technology licenses		28,800		(26,847	)		1,953		26,800		(26,800	)		0
Trade names and trademarks		7,800		0			7,800		7,800		0			7,800
Other		868		(345	)		523		868		(350	)		518
Intangible assets, June 30, 2021	$	185,748	$	(117,864	)	$	67,884
Intangible assets, September 30, 2021								$	185,831	$	(119,953	)	$	65,878


(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	100,228	$	(53,429	)	$	46,799
Purchased software costs		46,183		(33,307	)		12,876
Technology licenses		28,800		(26,833	)		1,967
Trade names and trademarks		7,800		0			7,800
Other		868		(333	)		535
Intangible assets, December 31, 2020	$	183,879	$	(113,902	)	$	69,977

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 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 the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 were as follows:


	Six Months Ended June 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Amortization of intangible assets	$	3,197	$	4,752	$	4,793	$	7,120
Amortization of capitalized purchased software costs		832		736		1,490		1,074
Amortization of debt costs		230		230		345		345
	$	4,259	$	5,718	$	6,628	$	8,539

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		Amount
2021 (remaining six months)	$	3,450
2021 (remaining three months)			$	1,592
2022		6,766		6,367
2023		6,408		5,979
2024		5,277		4,817
2025		5,215		4,817

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 generally expensed as incurred and include certain index-based changes in rent, certain ~~nonlease~~non-lease 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 June 30,					Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021			2020		2021		2020		2021		2020		2021		2020
Finance lease cost:
Amortization of right-of-use assets (included in depreciation expense)	$	202		$	177	$	396	$	355	$	24	$	177	$	420	$	532
Interest on lease liabilities		83			109		175		227		9		102		184		329
Operating lease cost		3,802			3,997		7,596		8,138		4,270		3,936		11,866		12,074
Short-term lease cost		101			137		191		378		90		105		281		483
Variable lease cost		447	��		406		914		916		410		406		1,324		1,322
Total lease cost	$	4,635		$	4,826	$	9,272	$	10,014	$	4,803	$	4,726	$	14,075	$	14,740



	Six Months Ended				Nine Months Ended
(in thousands)	June 30, 2021		June 30, 2020		September 30, 2021		September 30, 2020
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for finance lease	$	194	$	244	$	203	$	354
Operating cash flows used for operating leases	$	8,372	$	7,897	$	12,870	$	11,798
Financing cash flows used for finance lease	$	793	$	642	$	833	$	980
Right-of-use assets obtained in exchange for new operating lease liabilities	$	15,819	$	4,504	$	32,398	$	16,470

The lease assets and liabilities as of ~~June~~September 30, 2021 and December 31, 2020 were as follows (in thousands):


	June 30,			December 31,			September 30,			December 31,
	2021			2020			2021			2020
Finance lease right-of-use assets (included in other assets)	$	2,052		$	2,448		$	784		$	2,448
Operating lease right-of-use assets	$	89,567		$	79,966		$	102,440		$	79,966
Finance lease liability, current (included in current installments of long-term debt)	$	1,759		$	1,661		$	163		$	1,661
Finance lease liability, noncurrent (included in long-term debt)	$	1,940		$	2,832		$	570		$	2,832
Operating lease liabilities, current (included in accrued liabilities)	$	12,172		$	11,516		$	13,377		$	11,516
Operating lease liabilities, noncurrent	$	80,580		$	72,120		$	94,219		$	72,120
Weighted average remaining lease term – finance leases	2.5 years			3.0 years			4.2 years			3.0 years
Weighted average remaining lease term – operating leases	9.9 years			10.0 years			10.1 years			10.0 years
Weighted average discount rate – finance leases		9.0	%		9.0	%		4.8	%		9.0	%
Weighted average discount rate – operating leases		4.2	%		4.4	%		4.1	%		4.4	%

Future annual minimum lease payments and finance lease commitments as of ~~June~~September 30, 2021 were as follows (in thousands):


Year ending December 31,	Operating Leases			Finance Leases			Operating Leases			Finance Leases
2021 (remaining six months)	$	7,409		$	1,009
2021 (remaining three months)							$	3,809		$	48
2022		14,494			2,046			16,297			194
2023		13,259			659			15,032			194
2024		11,936			194			13,566			194
2025		10,937			178			12,619			178
2026 and thereafter		56,853			0			70,876			0
Total minimum lease payments	$	114,888		$	4,086		$	132,199		$	807
Less: imputed interest		(22,136	)		(387	)		(24,603	)		(74	)
Present value of lease liabilities	$	92,752		$	3,699		$	107,596		$	733

As of ~~June~~September 30, 2021, the Company’s future operating leases that have not yet commenced are immaterial.

Note 7 – Common Stock and Stock-Based Awards Plans

Dividends

The Company began declaring and paying quarterly dividends during the first quarter of 2018. For the three and ~~six~~nine months ended ~~June~~September 30, 2021, cash dividends paid totaled $5.9 million and $~~11.6~~17.4 million, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2020, cash dividends paid totaled $5.8 million and $~~11.4~~17.2 million, respectively. On March ~~15, 2021 and June~~ 15, 2021, the Company declared a quarterly cash dividend of $0.16 per share ~~and $0.165~~ ~~per share, respectively,~~ of the Company’s common stock to shareholders of record as of March 31, 2021. On both June 15, 2021 and September 15, 2021, 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 and September 30, 2021, respectively. The dividends for the first, second and ~~second~~third quarters of 2021 were paid on April 15, 2021, ~~and~~ July 14, 2021 and October 14, 20201, respectively.On ~~both~~ March 16, 2020, ~~and~~ June 15, 2020 and September 11, 2020, 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, 2020, June 30, 2020 and ~~June~~September 30, 2020, respectively. The dividends for the first, second and ~~second~~third quarters of 2020 were paid on April 14, 2020, ~~and~~ July 14, 2020 and October 14, 2020, 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 Company’s debt agreements, and other factors that the Board of Directors may deem relevant, including the impact of the COVID-19 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.

Share Repurchase Authorization

On February 19, 2020 and October 26, 2018, the Board of Directors authorized the repurchase of $150 million and $100 million, respectively, of the ~~Company’s~~Company’s common stock in addition to the $250 million previously approved on March 6, 2018. During the three and ~~six~~nine months ended ~~June~~September 30, 2021, the Company repurchased a total of ~~0.6~~0.4 million and ~~1.0~~1.4 million common shares, respectively, for an aggregate of $~~17.3~~9.9 million and $~~30.3~~40.2 million, respectively, at an average price of $~~30.48~~26.53 per share and $~~30.06~~29.11 per share, respectively. As of ~~June~~September 30, 2021, the Company had an aggregate $~~173.9~~164.0 million remaining under its stock repurchase program.

Stock-Based Compensation

The Company’s 2019 Omnibus Incentive Compensation Plan (the 2019 Plan) authorizes the Company, upon approval of the 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 stock on the date of grant, generally vest over a four-year period from the date of grant and have a term of 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 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 2019 Plan to non-employee directors have been in the form of restricted stock units, which generally vest one year from the grant date.

As of ~~June~~September 30, 2021, 2.2 ~~million~~million common shares were available for issuance under the Company’s 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 $4.0 million and $~~6.9~~10.9 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, and $~~3.3~~3.4 million and $~~6.0~~9.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. The future tax benefit of these stock-based awards as of the grant date was $0.9 million and $~~1.6~~2.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, and $0.8 million and $~~1.4~~2.3 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. Awards of restricted stock units and performance-based restricted stock units are valued at the closing market price of the Company’s common 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.

As of ~~June~~September 30, 2021, the unrecognized compensation cost and remaining weighted-average amortization period related to stock-based awards were as follows:


(in thousands)	Restricted Stock Units		Performance- based Restricted Stock Units (1)		Restricted Stock Units		Performance- based Restricted Stock Units (1)
Unrecognized compensation cost	$	26,305	$	8,411	$	23,436	$	7,362
Remaining weighted-average amortization period	2.7 years		2.2 years		2.6 years		1.9 years

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

The total cash received by the Company as a result of stock option exercises for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~approximately~~approximately $0.3 million and $0.4 million, respectively. The actual tax benefit realized as a result of stock option exercises and the vesting of other share-based awards during the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was $~~2.5~~2.6 million and $~~1.7~~1.8 million, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, the total intrinsic value of stock options exercised was $0.5 million and $0.1 million, respectively.

The Company awarded performance-based restricted stock units to employees during the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020. The number of performance-based restricted stock units that 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 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, operating income margin, 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 re-issuance under the Company’s 2019 Plan.

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


(in thousands, except per share data)	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value		Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2020		188		$	19.98						188		$	19.98
Exercised		(54	)		19.77						(54	)		19.77
Forfeited or expired		(2	)		20.16						(2	)		20.16
Outstanding and exercisable as of June 30, 2021		132		$	20.06		1.74	$	1,108
Outstanding and exercisable as of September 30, 2021											132		$	20.06		1.74	$	877

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 ~~June~~September 30, 2021 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		Number of Units			Weighted- Average Grant Date Fair Value
Non-vested awards outstanding as of December 31, 2020		1,026		$	27.35		1,026		$	27.35
Granted		486			28.62		499			28.54
Vested		(351	)		26.71		(373	)		26.76
Forfeited		(74	)		28.50		(84	)		28.45
Non-vested awards outstanding as of June 30, 2021		1,087		$	28.05
Non-vested awards outstanding as of September 30, 2021							1,068		$	28.03

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


				Weighted-					Weighted-
				Average					Average
	Number of			Grant Date		Number of			Grant Date
(in thousands, except per share data)	Units			Fair Value		Units			Fair Value
Non-vested units outstanding as of December 31, 2020		368		$	27.93		368		$	27.93
Granted(1)		234			28.60		234			28.60
Forfeited		(60	)		29.38		(60	)		29.38
Non-vested units outstanding as of June 30, 2021		542		$	28.06
Non-vested units outstanding as of September 30, 2021							542		$	28.06

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

Note 8 – Income Taxes

Income tax expense ~~(benefit)~~ consists of the following:


	Six Months Ended June 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020
Federal - current	$	(365	)	$	237		$	(426	)	$	1,288
Foreign - current		5,098			426			8,734			3,865
State - current		354			43			528			503
Deferred		(1,475	)		(330	)		(2,860	)		(4,079	)
	$	3,612		$	376		$	5,976		$	1,577

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 in excess of an allowable return on the foreign subsidiaries tangible fixed assets. The taxable earnings can be offset by a limited deemed paid foreign tax credit with no carrybacks or carryforwards available. The Company accounts for the GILTI as a period cost and does not include it as a factor in the determination of deferred taxes.

As of December 31, 2020, the Company had approximately $333.6 million in cumulative undistributed foreign earnings of its foreign subsidiaries. These earnings would not be subject to U.S. income tax, if distributed to the Company. During 2018, the Company changed its assertion on its foreign subsidiaries earnings that are permanently reinvested. A certain amount of earnings from specific foreign subsidiaries are permanently reinvested, and certain foreign earnings from other specific foreign subsidiaries are considered to be non-permanently reinvested and are available for immediate distribution to the Company. Income taxes have been accrued on the non-permanently reinvested foreign earnings including any applicable local withholding taxes.During the ~~three months ended June 30,~~second quarter of 2021, the Company recorded an income tax benefit of $7.3 million for foreign withholding taxes paid in prior years and has offset this benefit with a corresponding reserve for uncertain tax benefits of the same amount.

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-19 pandemic. The CARES Act among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021, and contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The Company has evaluated the impact of these provisions and has determined these provisions did not have any impact on the year ended December 31, 2020 or the ~~six~~nine months ended ~~June~~September 30, 2021. 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 has deferred the payment of the employer portion of social security taxes for the year ended December 31, 2020 with 50% of payments to be paid at the end of 2021 and 2022, respectively. The Company has also determined it was entitled to employee retention credits and filed for the credits in the second quarter of 2020 pursuant to the guidance provided by the Internal Revenue Service. The Company has determined that it is not eligible for employee retention tax credits ~~as of June~~for the nine months ended September 30, 2021, and the deferral of the employer portion of social security taxes is not available for 2021.

The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in Malaysia and Thailand that will expire or expired at various dates, unless extended or otherwise renegotiated, through March 31,2021 in Malaysia and 2028 in Thailand, and are subject to certain conditions with which the Company expects to comply. The net impact of these tax incentives was

to lower foreign income tax expense for both the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 by approximately $~~2.2~~3.4 million (approximately $~~0.06~~ ~~per diluted share) and $2.3~~ ~~million (approximately $0.06~~0.09 per diluted share), ~~respectively,~~ as follows:


	Six Months Ended June 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Malaysia	$	877	$	1,293	$	1,259	$	2,164
Thailand		1,295		966		2,121		1,209
	$	2,172	$	2,259	$	3,380	$	3,373

As of April 1, 2021, the tax holiday for Malaysia has expired. We ~~are currently in the process of applying~~have applied for a new tax holiday for our operations in Malaysia. There is no guarantee that we will be granted the tax holiday in Malaysia.

As of ~~June~~September 30, 2021, the total amount of the reserve for uncertain tax benefits including interest and penalties was $8.0 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 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 2012 to 2020. 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 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. Revenue from design, development and engineering services is recognized over time as the services are performed. 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.

Disaggregation of revenue

In the following tables, revenue is disaggregated by market sector. The tables also include a reconciliation of the disaggregated revenue with the reportable operating segments.


	Reportable Operating Segments								Reportable Operating Segments
	Three Months Ended June 30, 2021								Three Months Ended September 30, 2021
(in thousands)	Americas		Asia		Europe		Total		Americas		Asia		Europe		Total
Market Sector:
Industrials	$	20,358	$	61,115	$	18,433	$	99,906	$	19,907	$	69,436	$	18,849	$	108,192
A&D		91,427		73		5,180		96,680		95,940		827		4,071		100,838
Medical		47,920		50,386		10,599		108,905		64,357		43,480		9,956		117,793
Semi-Cap		55,492		66,781		16,931		139,204		53,732		63,733		16,111		133,576
Computing		32,766		6,832		0		39,598		46,804		9,742		11		56,557
Telecommunications		32,007		28,222		140		60,369		28,456		26,019		451		54,926
External revenue		279,970		213,409		51,283		544,662		309,196		213,237		49,449		571,882
Elimination of intersegment sales		12,300		9,130		337		21,767		9,920		11,194		535		21,649
Segment revenue	$	292,270	$	222,539	$	51,620	$	566,429	$	319,116	$	224,431	$	49,984	$	593,531


	Six Months Ended June 30, 2021								Nine Months Ended September 30, 2021
(in thousands)	Americas		Asia		Europe		Total		Americas		Asia		Europe		Total
Market Sector:
Industrials	$	41,354	$	116,525	$	37,479	$	195,358	$	61,261	$	185,961	$	56,328	$	303,550
A&D		174,914		73		11,074		186,061		270,854		900		15,145		286,899
Medical		95,344		91,170		30,581		217,095		159,701		134,650		40,537		334,888
Semi-Cap		104,358		115,542		32,414		252,314		158,090		179,275		48,525		385,890
Computing		68,104		15,180		0		83,284		114,908		24,922		11		139,841
Telecommunications		61,965		53,941		365		116,271		90,421		79,960		816		171,197
External revenue		546,039		392,431		111,913		1,050,383		855,235		605,668		161,362		1,622,265
Elimination of intersegment sales		23,069		18,412		587		42,068		32,989		29,606		1,122		63,717
Segment revenue	$	569,108	$	410,843	$	112,500	$	1,092,451	$	888,224	$	635,274	$	162,484	$	1,685,982


	Reportable Operating Segments								Reportable Operating Segments
	Three Months Ended June 30, 2020								Three Months Ended September 30, 2020
(in thousands)	Americas		Asia		Europe		Total		Americas		Asia		Europe		Total
Market Sector:
Industrials	$	24,298	$	49,379	$	13,453	$	87,130	$	24,303	$	47,281	$	14,600	$	86,184
A&D		80,939		0		7,585		88,524		100,941		0		3,958		104,899
Medical		72,434		55,890		6,427		134,751		65,389		61,322		7,431		134,142
Semi-Cap		37,321		37,151		12,379		86,851		47,021		38,546		13,154		98,721
Computing		35,487		8,366		0		43,853		35,788		8,551		0		44,339
Telecommunications		21,020		28,789		48		49,857		22,023		35,507		136		57,666
External revenue		271,499		179,575		39,892		490,966		295,465		191,207		39,279		525,951
Elimination of intersegment sales		17,301		8,804		332		26,437		10,171		6,300		264		16,735
Segment revenue	$	288,800	$	188,379	$	40,224	$	517,403	$	305,636	$	197,507	$	39,543	$	542,686


	Six Months Ended June 30, 2020								Nine Months Ended September 30, 2020
(in thousands)	Americas		Asia		Europe		Total		Americas		Asia		Europe		Total
Market Sector:
Industrials	$	58,243	$	97,604	$	34,109	$	189,956	$	82,546	$	144,885	$	48,709	$	276,140
A&D		193,951		0		13,773		207,724		294,892		0		17,731		312,623
Medical		141,813		100,093		10,821		252,727		207,202		161,415		18,252		386,869
Semi-Cap		67,770		74,443		27,358		169,571		114,791		112,989		40,512		268,292
Computing		65,561		14,893		0		80,454		101,349		23,444		0		124,793
Telecommunications		47,669		57,448		381		105,498		69,692		92,955		517		163,164
External revenue		575,007		344,481		86,442		1,005,930		870,472		535,688		125,721		1,531,881
Elimination of intersegment sales		28,189		15,507		782		44,478		38,360		21,807		1,046		61,213
Segment revenue	$	603,196	$	359,988	$	87,224	$	1,050,408	$	908,832	$	557,495	$	126,767	$	1,593,094

During both the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, 90% of the Company’s revenue was recognized as products and services that were transferred over time.

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

As of ~~June~~September 30, 2021 and December 31, 2020, the Company had $~~154.6~~160.2 million and $142.8 million, respectively, in contract assets from contracts with customers. The contract assets primarily relate to the Company’s 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,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020
Beginning balance as of December 31	$	142,779		$	161,061		$	142,779		$	161,061
Revenue recognized		944,052			915,600			1,463,872			1,382,582
Amounts collected or invoiced		(932,202	)		(923,020	)		(1,446,457	)		(1,382,247	)
Ending balance as of June 30	$	154,629		$	153,641
Ending balance as of September 30							$	160,194		$	161,396

As of ~~June~~September 30, 2021 and December 31, 2020, the Company had $~~88.7~~91.5 million and $84.1 million, respectively, in advance payments from customers. Of those amounts, $~~55.6~~63.0 million and $54.9 million, respectively, were customer deposits and prepayments of inventory and $~~33.1~~28.5 million and $29.2 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 Program

As of ~~June~~September 30, 2021, in connection with trade accounts receivable sale programs with unaffiliated financial institutions, the 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~~September 30, 2021 and 2020, the Company sold $~~87.0~~109.1 million and $~~77.9~~71.5 million, respectively, of accounts receivable under this program, and in exchange, the Company received cash proceeds of $~~86.8~~108.8 million and $~~77.7~~71.4 million, respectively, net of the discount. During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, the Company sold $~~166.3~~275.4 million and $~~154.3~~225.8 million, respectively, of accounts receivable under this program, and in exchange, the Company received cash proceeds of $~~166.0~~274.8 million and $~~154.0~~225.4 million, respectively, net of the discount. The loss on the sale resulting from the discount was recorded to other expense within the condensed consolidated statements of ~~income (loss).~~income.

Note 11 – Contingencies

The Company is involved in various legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Note 12 – Restructuring Charges

The Company has undertaken initiatives to restructure its business operations to improve utilization and realize cost savings. These initiatives have included changing the number and location of production facilities, largely to align capacity and infrastructure with current and anticipated customer demand. This alignment includes transferring programs from higher cost geographies to lower 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 restructuring charges during 2021 and 2020 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 2021 activity in accrued restructuring, which is included in accrued liabilities in the condensed consolidated balance sheets, related to various restructuring activities initiated prior to ~~June~~September 30, 2021:

Balance as of

Balance as of

December 31,

Restructuring

Cash

Non-Cash

June 30,

(in thousands)

2020

Charges

Payment

Activity

2021

Restructuring:

Severance

$
3,996

$
589

$
(3,174
)

$
(28
)

$
1,383

Lease facility costs

50

951

(980
)

(13
)

8

Other exit costs

408

1,632

(1,569
)

0

471

Total

$
4,454

$
3,172

$
(5,723
)

$
(41
)

$
1,862


	Balance as of										Balance as of
	December 31,		Restructuring		Cash			Non-Cash			September 30,
(in thousands)	2020		Charges		Payment			Activity			2021
Restructuring:
Severance	$	3,996	$	994	$	(4,350	)	$	(184	)	$	456
Lease facility costs		50		1,994		(1,868	)		(160	)		16
Other exit costs		408		2,254		(2,074	)		(351	)		237
Total	$	4,454	$	5,242	$	(8,292	)	$	(695	)	$	709

In addition, during the nine months ended September 30, 2021, we incurred $4.4 million in costs related to asset impairments in the Americas. During the nine months ended September 30, 2020, we incurred $5.7 million and $1.0 million in costs related to asset impairments in the Americas and Asia, respectively.

Note 16 – Accumulated Other Comprehensive Loss

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

Foreign

currency

Derivative

translation

instruments,

(in thousands)

adjustments

net of tax

Other

Total

Balances, December 31, 2020

$
(8,375
)

$
(6,742
)

$
(1,534
)

$
(16,651
)
Other comprehensive gain (loss) before
reclassifications

(1,708
)

1,582

256

130

Amounts reclassified from accumulated
other comprehensive loss

—

—

—

—

Net current period other comprehensive gain (loss)

(1,708
)

1,582

256

130

Balances, June 30, 2021

$
(10,083
)

$
(5,160
)

$
(1,278
)

$
(16,521
)


	Three months ended September 30,
	2021												2020
	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	$	(10,083	)	$	(5,160	)	$	(1,278	)	$	(16,521	)	$	(12,816	)	$	(7,958	)	$	(518	)	$	(21,292	)
Other comprehensive gain (loss) before reclassifications		(1,438	)		154			113			(1,171	)		2,045			757			86			2,888
Amounts reclassified from accumulated other comprehensive loss		—			60			—			60			—			(310	)		—			(310	)
Net current period other comprehensive gain (loss)		(1,438	)		214			113			(1,111	)		2,045			447			86			2,578
Ending balance	$	(11,521	)	$	(4,946	)	$	(1,165	)	$	(17,632	)	$	(10,771	)	$	(7,511	)	$	(432	)	$	(18,714	)


	Nine months ended September 30,
	2021												2020
	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	$	(8,375	)	$	(6,742	)	$	(1,534	)	$	(16,651	)	$	(12,425	)	$	(3,600	)	$	(734	)	$	(16,759	)
Other comprehensive gain (loss) before reclassifications		(3,146	)		1,736			369			(1,041	)		1,654			(2,929	)		302			(973	)
Amounts reclassified from accumulated other comprehensive loss		—			60			—			60			—			(982	)					(982	)
Net current period other comprehensive gain (loss)		(3,146	)		1,796			369			(981	)		1,654			(3,911	)		302			(1,955	)
Ending balance	$	(11,521	)	$	(4,946	)	$	(1,165	)	$	(17,632	)	$	(10,771	)	$	(7,511	)	$	(432	)	$	(18,714	)

Unrealized gains and losses relating to derivative instruments, reclassified from accumulated other comprehensive loss for the three and nine months ended September 30, 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 15 for further explanation of the change in derivative instruments that is recorded to accumulated other comprehensive loss.

Note 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. 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,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2021			2020			2021			2020			2021			2020
Net sales:
Americas	$	292,270		$	288,800		$	569,108		$	603,196		$	319,116		$	305,636		$	888,224		$	908,832
Asia		222,539			188,379			410,843			359,988			224,431			197,507			635,274			557,495
Europe		51,620			40,224			112,500			87,224			49,984			39,543			162,484			126,767
Elimination of intersegment sales		(21,767	)		(26,437	)		(42,068	)		(44,478	)		(21,649	)		(16,735	)		(63,717	)		(61,213	)
	$	544,662		$	490,966		$	1,050,383		$	1,005,930		$	571,882		$	525,951		$	1,622,265		$	1,531,881
Depreciation and amortization:
Americas	$	5,252		$	5,762		$	10,547		$	11,347		$	4,914		$	5,844		$	15,461		$	17,191
Asia		2,657			2,732			5,343			5,446			2,708			2,801			8,051			8,247
Europe		692			700			1,404			1,425			736			706			2,140			2,131
Corporate		2,338			3,145			4,700			6,313			2,611			3,057			7,311			9,370
	$	10,939		$	12,339		$	21,994		$	24,531		$	10,969		$	12,408		$	32,963		$	36,939
Income (loss) from operations:
Income from operations:
Americas	$	11,995		$	(787	)	$	20,229		$	11,638		$	11,053		$	10,062		$	31,282		$	21,700
Asia		25,467			17,024			42,819			28,022			21,391			17,865			64,210			45,887
Europe		1,702			686			6,940			2,875			978			1,395			7,918			4,270
Corporate and intersegment eliminations		(28,465	)		(18,795	)		(47,355	)		(37,917	)		(21,628	)		(20,663	)		(68,983	)		(58,580	)
		10,699			(1,872	)		22,633			4,618			11,794			8,659			34,427			13,277
Interest expense		(2,079	)		(2,351	)		(4,228	)		(4,053	)		(1,987	)		(2,136	)		(6,215	)		(6,189	)
Interest income		164			287			329			886			122			154			451			1,040
Other income (expense)		440			32			164			(630	)		500			439			664			(191	)
Income (loss) before income taxes	$	9,224		$	(3,904	)	$	18,898		$	821
Income before income taxes													$	10,429		$	7,116		$	29,327		$	7,937
Capital expenditures:
Americas	$	6,923		$	6,598		$	11,842		$	15,858		$	11,787		$	2,134		$	23,629		$	17,992
Asia		2,129			791			2,334			3,316			274			1,330			2,608			4,646
Europe		2,433			196			2,719			1,042			691			252			3,410			1,294
Corporate		712			2,809			1,724			3,074			1,066			2,096			2,790			5,170
	$	12,197		$	10,394		$	18,619		$	23,290		$	13,818		$	5,812		$	32,437		$	29,102


	June 30,		December 31,		September 30,		December 31,
(in thousands)	2021		2020		2021		2020
Total assets:
Americas	$	811,692	$	777,658	$	844,484	$	777,658
Asia		609,269		532,793		616,535		532,793
Europe		169,411		146,277		174,876		146,277
Corporate		228,419		287,507		204,471		287,507
	$	1,818,791	$	1,744,235	$	1,840,366	$	1,744,235

1819

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,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2021		2020		2021		2020
Geographic net sales:
United States	$	321,605	$	318,509	$	618,648	$	654,876	$	342,674	$	346,849	$	961,322	$	1,001,725
Singapore		78,598		55,917		141,755	$	110,538		84,902		51,267		226,657	$	161,805
Other Asia		46,258		40,207		85,103		78,526		55,124		48,337		140,227		126,863
Europe		66,965		55,756		142,291		122,279		64,775		55,372		207,066		177,651
Other		31,236		20,577		62,586		39,711		24,407		24,126		86,993		63,837
	$	544,662	$	490,966	$	1,050,383	$	1,005,930	$	571,882	$	525,951	$	1,622,265	$	1,531,881

					June 30,		December 31,						September 30,		December 31,
(in thousands)					2021		2020						2021		2020
Long-lived assets:
United States					$	235,650	$	235,193					$	247,995	$	235,193
Asia						66,800		69,669						64,581		69,669
Europe						29,691		18,002						30,288		18,002
Other						22,616		21,980						22,129		21,980
					$	354,757	$	344,844					$	364,993	$	344,844

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 (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,” “project,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” or the negative or other variations thereof. In particular, statements, express or implied, concerning future operating results, including guidance for ~~third~~fourth quarter 2021 results and beyond, our ability to generate sales, income or cash flow, the anticipated impact of the COVID-19 pandemic, our anticipated plans and responses to the COVID-19 pandemic, our expectations relating to current supply chain constraints, our expected revenue mix, our business strategy and strategic initiatives, our repurchases of shares of our common stock and our intentions concerning the payment of dividends, among others, are forward-looking statements. Although we believe these statements are based upon reasonable assumptions, they involve risks, uncertainties and assumptions that are beyond our ability to control or predict, relating to operations, markets and the business environment generally, including those discussed in Part I, Item 1A of the 2020 10-K, Part II, Item 1A of this Report and in any of our subsequent reports filed with the SEC. In particular, these statements also depend on the duration, severity and evolution of the COVID-19 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 it and the consequences for the global economy, our business and the businesses of our suppliers and customers, as well as our ability (or inability) to execute on our plans to respond to the COVID-19 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 and accompanying notes, and the 2020 10-K. All forward-looking statements included in this document are based upon information available to us as of the date of this document, and we assume no obligation to update them.

We are a worldwide provider of innovative product design services, engineering services, technology solutions and advanced manufacturing services (both electronic manufacturing services (EMS) and precision technology services). In this Report, references to Benchmark, the Company or use of the words “we”, “our” and “us” include Benchmark’s subsidiaries unless otherwise noted.

From initial product concept to volume production, including direct order fulfillment and aftermarket services, Benchmark has been providing integrated services and solutions to original equipment manufacturers (OEMs) since 1979. Today, Benchmark proudly serves the following industries: aerospace and defense (A&D), medical technologies, complex industrials, semiconductor capital equipment (semi-cap), next-generation telecommunications and advanced computing.

Our core strength lies in our ability to provide concept-to-production solutions in support of our customers. 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 with higher reliability requirements. These capabilities enable us to build strong strategic relationships with our customers and to become an integral part of their business.

We believe our primary competitive advantages are 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, microelectronics, and miniaturization), 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, 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 employ enterprise resource planning (ERP) systems and lean manufacturing principles to manage 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. Because we are a significant purchaser of electronic components and other raw materials, 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 ~~enable us~~we strive to help reduce our customers’ cost of goods sold and inventory exposure. However, due to the COVID-19 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 revenue as the customer takes control of the manufactured products built to customer specifications. We also generate revenue from our 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. Under the majority of our manufacturing contracts with customers, the customer controls all the work-in-progress as products are being built. Revenues under these contracts are recognized ~~over time~~progressively based on the cost-to-cost method. ~~Under~~For other manufacturing contracts, the customer does not take control of the product until it is completed. Under these contracts, we recognize revenue upon transfer of control of product to the customer, which is generally when the goods are shipped. Revenue from design, development and engineering services ~~that include design and development elements also continues to be~~is recognized over time as the services are performed. As a general matter, we assume no significant obligations after shipment as we typically warrant workmanship only. Therefore, the warranty provisions are generally not significant.

In late 2019, there was an outbreak of a new strain of coronavirus (COVID-19) first identified in Wuhan, Hubei Province, China, which has since spread globally. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. Further, the COVID-19 outbreak has resulted in government authorities around the world implementing numerous measures to try to reduce the spread of COVID-19, 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-19 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 also took proactive action to adopt social distancing policies at our locations globally, including 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, a ~~new,~~ more contagious variant of COVID-19 (the Delta Variant) has spread globally, which has caused some governments

to reimplement various measures to reduce the spread. It is unclear at this point the full impact the Delta Variant will have on the global economy and on our Company.

As a result of the COVID-19 pandemic, our revenue during 2020 was 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-19 pandemic negatively impacted our 2020 results due to increased direct costs associated with labor expenses and personal protective equipment for our employees, as well as under absorption of fixed costs.

Benchmark provides critical infrastructure products and essential services in each of our locations, which has allowed us to continue to operate. The COVID-19 pandemic continues to affect the Company’s operations into 2021. 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. In~~categories which are constraining our ability to produce the second quarter of 2021, the supply chain environment was also adversely impacted due to rising COVID-19 cases in Malaysia. As a result of the increasing cases, the Malaysian government mandated reduced staffing at our Penang, Malaysia operation through most of the second quarter. Government restrictions have recently eased now allowing increased workforce capacity andfull demand forecasts we are ~~managing through reduced staffing~~receiving from customers. See "Third Quarter 2021 Highlights" below and ~~intermittent work stoppages to keep~~"Risk Factors-Shortages or price increases of components specified by our ~~employees healthy~~customers have resulted in delayed shipments and ~~maximize production.~~could adversely affect our profitability" in Part II, Item 1A of this Report 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-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021, and contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The Company evaluated the impact of these provisions and determined these provisions did not have any impact on the year ended December 31, 2020 or the ~~six~~nine months ended ~~June~~September 30, 2021. 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 has 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. 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 has determined that it is not eligible for employee retention tax credits as of ~~June~~September 30, 2021, and the deferral of the employer portion of social security taxes is not available for 2021.

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-19 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-19 pandemic and its severity; the emergence and severity of its variants, including the Delta 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,~~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 2020 10-K and in Part II, Item 1A of this Report for additional risks we face due to the COVID-19 pandemic.

Sales for the three months ended ~~June~~September 30, 2021 were ~~$544.7~~$571.9 million, ~~an 11%~~a 9% increase from sales of ~~$491.0~~$526.0 million during the three months ended ~~June~~September 30, 2020. During the ~~second~~third quarter of 2021, sales to customers in our various industry sectors fluctuated from the ~~second~~third quarter of 2020 as follows:

Higher-value market revenues were up ~~12%~~9% year-over-year from strength in ~~A&D,~~ Industrials and Semi-cap, partially offset by ~~a decrease~~decreases in A&D and Medical. Traditional market revenues were up 7%9% year-over-year from strength in the ~~Telecommunications~~Computing market.

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, including in each case as a result of the COVID-19 pandemic, ~~can~~have adversely ~~affect~~affected us. A substantial percentage of our sales are made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us. Sales to our ten largest customers represented ~~46%~~47% and ~~43%~~42% of our sales during the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively.

For the three and ~~six~~nine months ended ~~June~~September 30, 2021, lead times continue to extend, and more components are being placed on allocation by suppliers. ~~Several commodities were impacted, yet semiconductors remain~~During the ~~most constrained. We are maintaining close alignment with our suppliers and distributors to minimize disruptions to existing~~three months ended September 30, 2021, there was an increase in pushouts of previously committed component orders and tighter allocation and timing restrictions across the component suppliers. These last-minute allocations created inefficiencies in our operations and contributed to ~~secure supply~~the sequential increase in support of customer demand increases. In some cases, we are actively working with customers to replan mix and redesign some products to enable alternate component sourcing. In general, our ability to fulfill upside demand is challenging due to component constraints. inventory days for the quarter.

We experience fluctuations in gross profit from period to period. Different programs contribute different gross profits depending on 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 program ramps remain subject to competitive constraints that can exert downward pressure on our margins. During periods of low production volume, we generally have idle capacity and reduced gross profit.

We have undertaken initiatives to restructure our business operations with the intention of improving utilization and reducing costs. During the first ~~six~~nine months of 2021, we recognized ~~$3.2~~$5.2 million of restructuring and other costs due in part to expenses associated with various site closures and restructuring activities.

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

As noted above, sales for the ~~second~~third quarter of 2021 increased ~~11%~~9% from the same quarter in 2020. Sales for the first nine months of 2021 increased 6% from the same period in 2020. Sales by industry sector were as follows:

Industrials. ~~Second~~Third quarter 2021 sales increased ~~15%~~26% to ~~$99.9~~$108.2 million from ~~$87.1~~$86.2 million in the ~~second~~third quarter of 2020. Sales during the first ~~six~~nine months of 2021 increased 3%10% to ~~$195.4~~$303.6 million from ~~$190.0~~$276.1 million in the same period of 2020. The ~~increase was~~increases were primarily due to continued demand improvements from oil & gas, commercial and building infrastructure ~~and commercial construction programs.~~programs as well as a new program ramp for LiDAR applications.

Aerospace and Defense. ~~Second~~Third quarter 2021 sales ~~increased 9%~~decreased 4% to ~~$96.7~~$100.8 million from ~~$88.5~~$104.9 million in the ~~second~~third quarter of 2020. ~~The increase was primarily due to strong demand in our defense programs for surveillance vehicles, secure communications and computing, and military satellite programs~~. Sales during the first ~~six~~nine months of 2021 decreased ~~10%~~8% to ~~$186.1~~$286.9 million from ~~$207.7~~$312.6 million in the same period of 2020. The ~~decrease was~~decreases were primarily due to a decline in customer demand in the commercial aerospace sector year over year.

Medical. ~~Second~~Third quarter 2021 sales decreased ~~19%~~12% to ~~$108.9~~$117.8 million from ~~$134.8~~$134.1 million in the ~~second~~third quarter of 2020. Sales during the first ~~six~~nine months of 2021 decreased ~~14%~~13% to ~~$217.1~~$334.9 million from ~~$252.7~~$386.9 million in the same period of 2020. The ~~decrease was~~decreases were due to the reduction of demand in COVID specific programs and ~~lack of end market~~supply chain constraints impacting demand recovery for certain ~~customers~~.customers.

Semiconductor Capital Equipment. ~~Second~~Third quarter 2021 sales increased ~~60%~~35% to ~~$139.2~~$133.6 million from ~~$86.9~~$98.7 million in the ~~second~~third quarter of 2020. Sales during the first ~~six~~nine months of 2021 increased ~~49%~~44% to ~~$252.3~~$385.9 million from ~~$169.6~~$268.3 million in the same period of 2020. The ~~increase was~~increases were primarily due to ~~higher~~high demand ~~from~~levels and our ~~front-end wafer fabrication equipment customers. Our revenue in this sector is primarily~~future backlog increasing for our precision machining and large electro-mechanical assembly services, which ~~were less impacted from global component shortages.~~are primarily related to front-end wafer fab equipment.

Computing. ~~Second~~Third quarter 2021 sales increased 28% to $56.6 million from $44.3 million in the third quarter of 2020. Sales during the first nine months of 2021 increased 12% to $139.8 million from $124.8 million in the same period of 2020. The increases were primarily due to a planned ramp of a high performance computing program that will continue into 2022.

Telecommunications. Third quarter 2021 sales decreased ~~10%~~5% to ~~$39.6~~$54.9 million from ~~$43.9~~$57.7 million in the ~~second~~third quarter of 2020. The decrease was primarily due to ~~a high performance computing~~delays in new program ~~that was expected~~ramps tied to ~~ramp in the second quarter of 2021 but was delayed to the second half of 2021.~~component shortages. Sales during the first ~~six~~nine months of 2021 increased 4%5% to ~~$83.3~~$171.2 million from ~~$80.5 million in the same period of 2020. The increase was primarily due to higher demand with existing customers.~~

~~Telecommunications.~~ ~~Second quarter 2021 sales increased 21% to $60.4 million from $49.9 million in the second quarter of 2020. Sales during the first six months of 2021 increased 10% to $116.3 million from $105.5~~$163.2 million in the same period of 2020. The increase was primarily due to strong demand from new and existing programs in commercial ~~broadband and commercial satellites.~~broadband.

Our international operations are subject to the risks of doing business abroad. See Part I, Item 1A of our 2020 10-K for factors pertaining to our international sales, fluctuations in foreign currency exchange rates and a discussion of potential adverse effects in operating results associated with the risks of doing business abroad. During the ~~second~~third quarter of 2021 and 2020, ~~56%~~54% and ~~50%~~51%, respectively, of our sales were from international operations.

Gross profit increased ~~38.0%~~15.7% to ~~$47.9~~$53.7 million in the ~~second~~third quarter of 2021 from ~~$34.7~~$46.4 million in the ~~second~~third quarter of ~~2020. Gross profit~~2020, and increased ~~15.5%~~15.6% to ~~$90.1~~$143.8 million for the first ~~six~~nine months of 2021 from ~~$78.0~~$124.4 million for the same period in 2020. Gross margin increased primarily due to higher revenues.

SG&A increased to ~~$34.0~~$34.4 million in the ~~second~~third quarter of 2021 from ~~$28.5~~$29.7 million in the ~~second~~third quarter of 2020, and increased to ~~$64.6~~$99.0 for the first ~~six~~nine months of 2021 from ~~$60.1~~$89.8 for the same period of 2020. The ~~increase was~~increases were primarily ~~due to~~ due to higher variable compensation costs and U.S. medical expenses.

Amortization of intangible assets was $1.6 million in the ~~second~~third quarter of 2021 and $2.4 million in the ~~second~~third quarter of 2020, and ~~$3.2~~$4.8 million for the first ~~six~~nine months of 2021 ~~and $4.8~~compared to $7.1 million for the same period in 2020. The ~~decrease was~~decreases were primarily due to aan intangible asset becoming fully amortized ~~intangible asset as of December 31,~~in 2020.

During the first ~~six~~nine months of 2021, we recognized ~~$3.2~~$5.2 million of restructuring and other costs primarily due to expenses associated with announced site closures or exits, reduction in force and other restructuring activities primarily in the Americas. During the first ~~six~~nine months of 2020, we recognized ~~$7.3~~$8.7 million of restructuring charges, primarily related to site closures and restructuring activities in certain facilities in the Americas and Asia. In addition, during the first ~~six~~nine months of 2021, we incurred $4.4 million in costs related to asset impairments in the Americas. During the first nine months of 2020, we incurred $5.7 million and $1.0 million in costs related to an asset ~~impairment~~impairments in ~~Asia.~~the Americas and Asia, respectively. See Note 12 to the condensed consolidated financial statements in Part I, Item 1 of this Report for additional information on our restructuring charges.

During the fourth quarter ended December 31, 2019, ransomware incident related costs incurred totaled $12.7 million or $7.7 million, net of estimated insurance recoveries of $5.0 million. These costs were primarily comprised of certain employee related expenses and various third party consulting services, including forensic experts, legal counsel and other IT professional expenses. During the year ended December 31, 2020, we collected $6.6 million of insurance recoveries which include the $5.0 million of estimated insurance recoveries recorded in 2019 and an additional $1.6 million recorded in 2020. During the first ~~six~~nine months of 2021, we collected an additional ~~$3.4~~$3.9 million of insurance recoveries. As of ~~June~~September 30, 2021, the Company has collected insurance recoveries totaling ~~$10.0~~$10.5 million. ~~Further~~No further insurance recoveries ~~will be recorded when realized or realizable.~~are expected.

Interest expense ~~increased to $4.2~~was $6.2 million during both the first ~~six~~nine months of 2021 ~~from $4.1 million during the same period of~~and 2020.

Interest income decreased to ~~$0.3~~$0.5 million in the first ~~six~~nine months of 2021 from ~~$0.9~~$1.0 million in the same period of 2020 due to lower invested cash equivalents and lower interest rates.

Income tax expense of ~~$3.6~~$6.0 million represented an ~~19.1%~~20.4% effective tax rate for the first ~~six~~nine months of 2021, compared with ~~$0.4~~$1.6 million for the same period of 2020 representing an effective tax rate of ~~45.8%~~19.9%. The slightly higher effective tax rate in ~~2020~~2021 is the result of lower profits in 2020 and the ~~overall loss before income taxes during~~effect of the ~~first six months~~expired Malaysia tax holiday as of ~~2020 compared to the overall profit before income taxes during the first six months of~~April 1, 2021.

We have been granted certain tax incentives, including tax holidays, for our subsidiaries in Malaysia and Thailand that will expire or expired at various dates, unless extended or otherwise renegotiated, through March 31, 2021 in Malaysia and 2028 in Thailand. See Note 8 to the condensed consolidated financial statements in Part I, Item 1 of this Report.

We reported a net income of ~~$15.3~~$23.4 million, or ~~$0.42~~$0.64 per diluted share, for the first ~~six~~nine months of 2021, compared with a net income of ~~$0.4~~$6.4 million, or ~~$0.01~~$0.17 per diluted share, for the same period in 2020. The net increase of ~~$14.9~~$17 million in 2021 is primarily the result of items discussed above.

We have historically financed our organic growth and operations through funds generated from operations and occasional borrowings under our ~~revolving credit facility.~~Credit Agreement (as defined below). Cash and cash equivalents and restricted cash totaled ~~$370.4~~$291.2 million at ~~June~~September 30, ~~2021 and $396.0~~

2021 and $396.0 million at December 31, 2020, of which ~~$235.4~~$185.2 million and $207.3 million, respectively, were held outside the U.S. in various foreign subsidiaries.

Cash ~~provided~~used by operating activities was ~~$40.3~~$1.3 million during the first ~~six~~nine months of 2021. The cash ~~provided~~used by operations during 2021 consisted primarily of ~~$15.3 million of net income, adjusted for $22.0 million of depreciation and amortization, a $92.7~~an$151.5 million increase in ~~accounts payable,~~ inventories,a ~~$19.0 million decrease in accounts receivable, and a $4.6 million increase in advance payments from customers, partially offset by an $88.6 million increase in inventories, an $11.9~~$17.4 million increase in contract assets, ~~an $8.3~~a $9.1 million decrease in accrued liabilities, a $9.5 million increase in prepaids and other assets and a ~~$11.9~~$2.3 million ~~decrease~~increase in ~~accrued liabilities.~~accounts receivable, partially offset by $23.4 million of net income, $33.0 million of depreciation and amortization, a $114.5 million increase in accounts payable,and a $7.3 million increase in advance payments from customers. Working capital was $0.7 billion at both ~~June~~September 30, 2021 and December 31, 2020.

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. 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-19 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 ~~$18.4~~$32.1 million during the first ~~six~~nine months of 2021 primarily due to purchases of additional property, plant and equipment totaling ~~$16.7~~$29.5 million. The purchases of property, plant and equipment were primarily for machinery and equipment in the Americas.

Cash used in financing activities was ~~$49.1~~$66.9 million during the first ~~six~~nine months of 2021. ~~Principal payments on~~Borrowings under the Credit Agreement ~~(as defined below)~~were $30.0 million. Principal payments under the Credit Agreement and finance lease obligations totaled ~~$3.8~~$35.6 million and $0.8 million, respectively, share repurchases totaled ~~$30.3~~$40.2 million, dividends paid totaled ~~$11.6~~$17.4 million, and we received $0.3 million from the exercise of stock options.

Under the terms of our $650.0 million credit agreement (Credit Agreement), in addition to ~~the~~a $150.0 million ~~Term Loan~~term loan facility, we have a $500.0 million five-year revolving credit facility to be used for general corporate purposes, both with a maturity date of July 20, 2023. The Credit Agreement includes an accordion feature pursuant to which total commitments under the facility may be increased by an additional $275.0 million, subject to satisfaction of certain conditions. As of ~~June~~September 30, 2021, we had ~~$133.1~~$131.3 million in borrowings outstanding under the ~~Term Loan~~term loan facility, $3.9 million in letters of credit outstanding under our revolving credit facility, and $496.1 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 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~~September 30, 2021, we were in compliance with all of these covenants and restrictions.

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 ~~June~~September 30, 2021, we had cash and cash equivalents, including restricted cash, totaling ~~$370.4~~$291.2 million and $496.1 million available for borrowings under the Credit 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 $60 million, principally for machinery and equipment to help increase our production capacity to support anticipated revenue growth and our ongoing business around the globe.

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, 2018 ~~the Board of~~

~~Directors authorized an additional $100 million shares for repurchase above our existing program. On February 19, 2020,~~, the Board of Directors authorized the repurchase of an additional $150 million and $100 million, respectively, of the ~~Company’s~~Company's common stock. During the ~~six~~nine months ended ~~June~~September 30, 2021, we repurchased a total of ~~1.0~~1.4 million common shares for an aggregate of ~~$30.3~~$40.2 million at an average price of ~~$30.06~~$26.53 per share. As of ~~June~~September 30, 2021, we had ~~$173.9~~$164.0 million remaining under the share repurchase authorization to purchase additional shares. We are under no commitment or obligation to repurchase any particular amount of common 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 aanother quarterly dividend increase, raising the quarterly dividend from $0.16 to $0.165 per common share. During the first ~~six~~nine months of 2021 and 2020, cash dividends paid totaled ~~$11.6~~$17.4 million and ~~$11.4~~$17.2 million, respectively. On ~~June~~September 15, 2021, 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~~September 30, 2021. The dividend of ~~$5.9~~$5.8 millionwas paid on ~~July~~ October14, 2021. 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-19 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 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.

We have certain contractual obligations for operating and capital leases that were summarized in a table of Contractual Obligations in our 2020 10-K. There have been no material changes to our contractual obligations, outside of the ordinary course of our business, since December 31, 2020.

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. See Note 2 to the condensed consolidated financial statements in Part 1, 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 2020 10-K.

Our international sales comprise a significant portion of our net sales. We are exposed to risks associated with operating internationally, including:

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 ~~June~~September 30, 2021 have not been designated as accounting hedges and, therefore, changes in fair value are recorded within our condensed consolidated statements of ~~income (loss).~~income.

On July 30, 2021, the Company entered into forward currency exchange contracts designated as cash flow hedges of forecasted foreign currency expenses with a notional amount of $10.5 million as of September 30, 2021. 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. During the nine months ended September 30, 2021, the Company recorded an unrealized loss of $0.4 million on the forward currency exchange contracts in other comprehensive income.

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 ~~June~~September 30, 2021, we had ~~$133.1~~$131.3 million outstanding on the floating rate term loan facility, and we have an interest rate swap agreement with a notional amount of ~~$133.1~~$131.3 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 our floating rate interest expense to fixed interest rate expense. The interest rate swap is designated as a cash flow hedge.

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 1 of this Report.

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 (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 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 within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting (as defined in Rule13a-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.

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.

We are involved in various legal actions arising in the ordinary course of business. There have been no material changes to the legal proceedings previously reported under Part I, Item 3 of our 2020 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.

Except as set forth, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A of our 2020 10-K.

Shortages or price increases of components specified by our customers ~~would delay~~have resulted in delayed shipments and could adversely affect our profitability.

Substantially all of our sales are derived from manufacturing services in which we purchase components specified by our customers. In the past, supply shortages have substantially curtailed production of all assemblies using a particular component and industry-wide shortages of electronic components, particularly of memory and logic devices, have occurred. For example, in 2011, we experienced disruptions to our global supply chain due to the earthquake and tsunami in Japan, as well as floods in Thailand. More recently, the COVID-19 pandemic, as well as labor and supply disruptions, ~~has resulted in~~are causing global electronic component shortages andsupply chain constraints. In some instances, such component shortages have ~~resulted in~~caused delayed shipments, planning disruptions, extended lead times, and parts placed on allocation, limiting our ability to meet customer demand. Because of the continued increase in demand for surface mount components, we anticipate component shortages and longer lead times for certain components may continue. Also, we may bear the risk of component price increases that occur between periodic re-pricings of products during the term of a customer contract. Accordingly, certain component price increases could adversely affect our gross profit margins.

(c) The following table provides information for the quarter ended ~~June~~September 30, 2021 about the Company’s repurchases of its equity securities registered pursuant to Section 12 of the Exchange Act:

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

(3) On October 30, 2018, the Company announced that the Board of Directors authorized the repurchase of $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 to date, the total remaining authorization outstanding as of ~~June~~September 30, 2021 is ~~$173.9~~$164.0 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.

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 ~~August~~November 4, 2021.


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)


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~~, Inc.~~


		Page

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income ~~(Loss)~~	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 Results of Operations	2021
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2728
Item 4.	Controls and Procedures	2829

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	2930
Item 1A.	Risk Factors	2930
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2930
Item 6.	Exhibits	3031

SIGNATURES		3132


	Fair Values of Derivative Instruments
		Liability Derivatives
		September 30,		December 31,
(in thousands)		2021		2020
Derivatives designated as hedging instruments
Forward currency exchange contracts		$	441	$	0
Interest rate swap		$	6,023	$	9,011


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2021		2020		2021		2020
Income taxes paid, net	$	7,768	$	932	$	9,373	$	2,967	$	8,396	$	11,629	$	17,769	$	14,596
Interest paid	$	1,992	$	2,488	$	4,082	$	4,427	$	2,254	$	2,364	$	6,336	$	6,791
Non-cash investing activity:
Additions to property, plant and equipment in accounts payable					$	8,902	$	3,677					$	7,980	$	6,531


☑	QUARTERLY 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


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


Exhibit Number
Exhibit Number		Description of Exhibit

3.1		Restated Certificate of Formation dated May 17, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated May 17, 2016) (the 8-K) (Commission file number 1-10560)

3.2		Amended and Restated Bylaws of the Company dated December 2, 2020 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated December 7, 2020 (Commission file number 1-10560))

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 for the quarter ended March 31, 2014) (Commission file number 1-10560)

31.1 (1)		Section 302 Certification of Chief Executive Officer

31.2 (1)		Section 302 Certification of Chief Financial Officer

32.1 (2)		Section 1350 Certification of Chief Executive Officer

32.2 (2)		Section 1350 Certification of Chief Financial Officer

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)		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF (1)		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB (1)		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE (1)		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 (1)		Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101)


	BENCHMARK ELECTRONICS, INC.

	(Registrant)

	By:		/s/ Jeffrey W. Benck
			Jeffrey W. Benck
			President and Chief Executive Officer
			(Principal Executive Officer)

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