As filed with the Securities and Exchange Commission on March 18, 2002.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BENCHMARK ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Texas 74-2211011
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3000 TECHNOLOGY DRIVE, ANGLETON, TEXAS 77515
(979) 849-6550
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
GAYLA J. DELLY
BENCHMARK ELECTRONICS, INC.
3000 TECHNOLOGY DRIVE
ANGLETON, TEXAS 77515
(979) 849-6550
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
John R. Brantley
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
(713) 221-1301
Fax: (713) 221-1212
Approximate date of commencement of proposed sale to public: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
=====================================================================================================================
Proposed maximum aggregate
Title of securities to be registered(1) offering price(1)(2) Amount of registration fee
---------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.10 per
share(3)................................
Preferred Stock, par value $0.10 per
share(4)................................
Subordinated Debt Securities(5).........
Total................................... $250,000,000 $23,000
=====================================================================================================================
(1) The proposed maximum offering price per unit will be determined by
Benchmark from time to time in connection with its issuance of the
securities registered hereunder.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of all securities issued from time to time pursuant to this
Registration Statement exceed $250,000,000.
(3) An indeterminate number of shares of common stock of Benchmark as may be
sold from time to time are being registered hereunder. Also includes such
indeterminate number of shares of common stock as may be issued upon
conversion, redemption or exchange for any debt securities or preferred
stock that provide for conversion or exchange into common stock.
(4) An indeterminate number of shares of preferred stock of Benchmark as may
be sold from time to time are being registered hereunder. Also includes
such indeterminate number of shares of preferred stock as may be issued
upon conversion, redemption or exchange for any debt securities that
provide for conversion or exchange into preferred stock.
(5) An indeterminate principal amount of subordinated debt securities of
Benchmark as may be sold from time to time are being registered hereunder.
If any subordinated debt securities of Benchmark are issued at an original
issue discount, then the offering price shall be in such greater principal
amount as shall result in an aggregate initial offering price not to
exceed $250,000,000, less the dollar amount of any securities previously
issued hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
SUBJECT TO COMPLETION, DATED MARCH 18, 2002
PROSPECTUS
$250,000,000
Benchmark Electronics, Inc.
Common Stock
Preferred Stock
Subordinated Debt Securities
We may offer and sell from time to time in one or more offerings:
(1) shares of common stock;
(2) shares of preferred stock, in one or more series, which may be
convertible into or exchangeable for debt securities or common stock; or
(3) unsecured debt securities consisting of subordinated notes and
debentures and/or other unsecured evidences of indebtedness in one or more
series, which may be convertible into or exchangeable for preferred stock or
common stock.
The aggregate initial offering price of the securities that we offer will
not exceed $250,000,000. We will offer the securities in amounts, at prices and
on terms to be determined by market conditions at the time of our offerings.
We will provide the specific terms of the securities in supplements to
this prospectus. You should read this prospectus and the related prospectus
supplement carefully before you invest in any of our securities. This prospectus
may not be used to consummate sales of our securities unless it is accompanied
by a prospectus supplement.
Our common stock is listed on the New York Stock Exchange under the symbol
"BHE." On March 15, 2002, the last reported sales price for our common stock on
the New York Stock Exchange was $29.70 per share.
--------------
YOU SHOULD CAREFULLY REVIEW AND CONSIDER THE INFORMATION UNDER THE
HEADINGS "FORWARD-LOOKING STATEMENTS" BEGINNING ON PAGE 1 AND "RISK FACTORS"
BEGINNING ON PAGE 1 OF THIS PROSPECTUS.
--------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. WE MAY NOT USE
THIS PROSPECTUS TO SELL SECURITIES UNLESS WE ALSO GIVE PROSPECTIVE INVESTORS A
PROSPECTUS SUPPLEMENT.
The date of this prospectus is March 18, 2002
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using the "shelf" registration process. Under
this shelf registration process, we may sell any combination of securities
described in this prospectus in one or more offerings up to a total offering
amount of $250,000,000. This prospectus provides you with a general description
of these securities. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering and the securities offered by us in that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read this prospectus and any prospectus supplement
together with the additional information described under the heading "Where You
Can Find More Information."
UNDER NO CIRCUMSTANCES SHOULD THE DELIVERY TO YOU OF THIS PROSPECTUS OR
ANY EXCHANGE OR REDEMPTION MADE PURSUANT TO THIS PROSPECTUS CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF
ANY TIME AFTER THE DATE OF THIS PROSPECTUS. IN THIS PROSPECTUS, WHEN WE REFER TO
BENCHMARK AND USE PHRASES SUCH AS "WE" AND "US," WE ARE GENERALLY REFERRING TO
BENCHMARK ELECTRONICS, INC. AND ITS SUBSIDIARIES AS A WHOLE OR ON A DIVISION
BASIS DEPENDING ON THE CONTEXT IN WHICH THE STATEMENTS ARE MADE.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC pursuant to the Securities Exchange Act of 1934, as
amended (Exchange Act). You may read and copy any document we file at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room.
The SEC maintains a World Wide Website on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding us. You can also inspect and copy these reports,
proxy and information statements and other information at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which
our common stock is listed.
We have filed with the SEC a registration statement on Form S-3 covering
the securities offered by this prospectus. This prospectus is only a part of the
registration statement and does not contain all of the information in the
registration statement. For further information on us and the securities that
may be offered, please review the registration statement and the exhibits that
are filed with it. Statements made in this prospectus that describe documents
may not necessarily be complete. We recommend that you review the documents that
we have filed with the registration statement to obtain a more complete
understanding of those documents.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information in this prospectus or in any
prospectus supplement. This prospectus incorporates by reference the documents
set forth below that we previously filed with the SEC. These documents contain
important information about us.
The following document that we have filed with the SEC (File No. 10560)
are incorporated by reference into this prospectus:
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o Our Annual Report on Form 10-K for the year ended December 31, 2001;
and
o The description of our capital stock that is contained in our
Registration Statement on Form 8-A/A filed on June 25, 1990 and
December 11, 1998, as amended December 22, 1998.
All documents that we file pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this prospectus or after the date of the
registration statement of which this prospectus forms a part and prior to the
effectiveness of the registration statement will be deemed to be incorporated in
this prospectus by reference and will be a part of this prospectus from the date
of the filing of the document. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this prospectus will
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference in this prospectus modifies or supersedes that statement. Any
statement that is modified or superseded will not constitute a part of this
prospectus, except as modified or superseded.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus has been delivered, upon written or
oral request, a copy of any or all of the documents incorporated by reference in
this prospectus, other than the exhibits to those documents, unless the exhibits
are specifically incorporated by reference into the information that this
prospectus incorporates. You should direct a request for copies to us at:
Corporate Secretary
Benchmark Electronics, Inc.
3000 Technology Drive
Angleton, Texas 77515
(979) 849-6550
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TABLE OF CONTENTS
PAGE
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About this Prospectus............................................ i
Where You Can Find More Information.............................. i
Forward-Looking Statements....................................... 1
Risk Factors..................................................... 1
Benchmark Electronics, Inc....................................... 9
Use of Proceeds.................................................. 10
Ratio of Earnings to Fixed Charges............................... 10
Description of Equity Securities................................. 11
Description of Debt Securities................................... 14
Plan of Distribution............................................. 25
Legal Matters.................................................... 26
Experts.......................................................... 26
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FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in this prospectus by
reference include forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (Securities Act), and Section 21E of
the Exchange Act. These forward-looking statements are identified as any
statement that does not relate strictly to historical or current facts. They use
words such as "anticipate," "believe," "intend," "plan," "projection,"
"forecast," "strategy," "position," "continue," "estimate," "expect," "may,"
"will," or the negative of those terms or other variations of them or by
comparable terminology. In particular, statements, express or implied,
concerning future operating results or the ability to generate sales, income or
cash flow are forward-looking statements. Forward-looking statements are not
guarantees of performance, and you should not put undue reliance on any
forward-looking statement. They involve risks, uncertainties and assumptions.
Our actual results could differ materially from those expressed in the
forward-looking statements as a result of many factors, some of which are
described in the following "Risk Factors" section and in the accompanying
prospectus supplement and our reports to the Securities and Exchange Commission
incorporated by reference into this prospectus. Many of the factors that will
determine these results are beyond our ability to control or predict. We
undertake no obligation to update publicly the result of any revisions to any of
the forward-looking statements to reflect future events or developments.
RISK FACTORS
THE SECURITIES TO BE OFFERED BY THIS PROSPECTUS MAY INVOLVE A HIGH DEGREE
OF RISK. WHEN CONSIDERING AN INVESTMENT IN ANY OF THE SECURITIES, YOU SHOULD
CONSIDER CAREFULLY ALL OF THE RISK FACTORS DESCRIBED BELOW AND ANY RISKS THAT
MAY BE SET FORTH IN THE PROSPECTUS SUPPLEMENT RELATING TO A SPECIFIC SECURITY.
WE ARE EXPOSED TO GENERAL ECONOMIC CONDITIONS, WHICH COULD HAVE A MATERIAL
ADVERSE IMPACT ON OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION.
As a result of recent unfavorable economic conditions and a decline in
demand by the electronics industry, our sales declined 25% during 2001. We
started to see sales decline in the technology sector worldwide at the end of
the first quarter of 2001 and it continued throughout 2001. If the economic
conditions and demand for our customers' products do not improve, we may
experience a material adverse impact on our business, operating results and
financial condition.
THE LOSS OF A MAJOR CUSTOMER WOULD ADVERSELY AFFECT US.
A substantial percentage of our sales have been to a small number of
customers, and the loss of a major customer, if not replaced, would adversely
affect us. During 2001, our three largest customers accounted for approximately
44.9% of our sales, and our largest customer accounted for approximately 21.9%
of sales. Our future sales are dependent 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, or the failure of a major customer to pay for components or
services, could have an adverse effect on us.
We expect to continue to depend on the sales from our largest customers
and any material delay, cancellation or reduction of orders from these or other
significant customers would have a material adverse effect on our results of
operations. In addition, we generate significant accounts receivable in
connection with providing manufacturing services to our customers. If one or
more of our customers were to become insolvent or otherwise unable to pay for
the manufacturing services provided by us, our operating results and financial
condition would be adversely affected.
WE MAY ENCOUNTER SIGNIFICANT DELAYS OR DEFAULTS IN PAYMENTS OWED TO US BY
CUSTOMERS FOR PRODUCTS WE HAVE MANUFACTURED OR COMPONENTS THAT ARE UNIQUE TO
PARTICULAR CUSTOMERS.
We structure our agreements with customers to mitigate our risks related
to obsolete or unsold inventory. However, enforcement of these contracts may
result in material expense and delay in payment for inventory. If any of our
significant customers become unable or unwilling to purchase such inventory, our
business may be materially harmed. During 2001 and 2000, our gross profit was
adversely affected by the write down of $7.6 million and $3.7 million,
respectively, in excess and obsolete inventory that could not be put back to
vendors or customers.
WE ARE DEPENDENT ON THE SUCCESS OF INDUSTRIES WE SERVE.
We are dependent on the continued growth, viability and financial
stability of our customers. Our customers are original equipment manufacturers
of:
o telecommunication equipment;
o computers and related products for business enterprises;
o industrial control equipment;
o medical devices;
o video/audio/entertainment products; and
o testing and instrumentation products.
These industries are, to a varying extent, subject to rapid technological
change, vigorous competition and short product life cycles. When our customers
are adversely affected by these factors, we may be similarly affected. Recently,
our customers have experienced a decline in demand for their products, which has
had an adverse effect on our results of operations.
LONG-TERM CONTRACTS ARE UNUSUAL IN OUR BUSINESS AND CANCELLATIONS, REDUCTIONS OR
DELAYS IN CUSTOMER ORDERS WOULD AFFECT OUR PROFITABILITY.
We do not typically obtain firm long-term purchase orders or commitments
from our customers. Instead, we work closely with our customers to develop
forecasts for future orders, which are not binding. Customers may cancel their
orders, change production quantities from forecast volumes or delay production
for a number of reasons beyond our control. Cancellations, reductions or delays
by a significant customer or by a group of customers would have an adverse
effect on us. As many of our costs and operating expenses are relatively fixed,
a reduction in customer demand can disproportionately affect our gross margins
and operating income. Our customers' products have life cycles of varying
duration. In the ordinary course of business, production starts, increases,
declines and stops in accordance with a product's life cycle. Should we fail to
replace products reaching the end of their life cycles with new programs, or if
there should be a substantial time difference between the loss of a product and
the receipt of revenue from replacement production, our revenues could be
adversely affected.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY.
We compete against many providers of electronics manufacturing services.
Certain of our competitors have substantially greater resources and more
geographically diversified international operations than we do. Our competitors
include large independent manufacturers such as Celestica, Inc., Flextronics
International Ltd., Jabil Circuit, Inc, Sanmina-SCI Corporation and Solectron
Corporation. We also face competition from the manufacturing operations of our
current and future customers.
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During periods of recession in the electronics industry, our competitive
advantages in the areas of quick turnaround manufacturing and responsive
customer service may be of reduced importance to electronics OEMs, who may
become more price sensitive. We may also be at a competitive disadvantage with
respect to price when compared to manufacturers with lower cost structures,
particularly those with offshore facilities located where labor and other costs
are lower.
We will experience intense competition, which is expected to intensify
further as more companies enter markets in which we operate, as existing
competitors expand capacity and as the industry consolidates. To compete
effectively, we must continue to provide technologically advanced manufacturing
services, maintain strict quality standards, respond flexibly and rapidly to
customers' design and schedule changes and deliver products globally on a
reliable basis at competitive prices. Our inability to do so could have an
adverse effect on us.
WE MAY BE AFFECTED BY CONSOLIDATION IN THE ELECTRONICS INDUSTRY.
As a result of the current economic climate, consolidation in the
electronics industry may increase. Consolidation in the electronics industry
could result in an increase in excess manufacturing capacity as companies seek
to close plants or take other steps to increase efficiencies and realize
synergies of mergers. The availability of excess manufacturing capacity could
create increased pricing and competitive pressures for the electronics
manufacturing services industry as a whole and Benchmark in particular. In
addition, consolidation could also result in an increasing number of very large
electronics companies offering products in multiple sectors of the electronics
industry. The growth of these large companies, with significant purchasing power
and market power, could also result in increased pricing and competitive
pressures for us. Accordingly, industry consolidation could harm our business.
OUR INTERNATIONAL OPERATIONS MAY BE SUBJECT TO CERTAIN RISKS.
We currently operate outside the United States in Brazil, Ireland, Mexico,
Scotland, and Singapore. During 2001 and 2000, 23.3% and 28.5% of our sales were
from our international operations. These international operations may be subject
to a number of risks, including:
o difficulties in staffing and managing foreign operations;
o political and economic instability;
o unexpected changes in regulatory requirements and laws;
o longer customer payment cycles and difficulty collecting accounts
receivable;
o export duties, import controls and trade barriers (including quotas);
o governmental restrictions on the transfer of funds; o burdens of
complying with
a wide variety of foreign laws and labor practices;
o fluctuations in currency exchange rates, which could affect component
costs, local payroll, utility and other expenses; and
o inability to utilize net operating losses incurred by our foreign
operations to reduce our U.S. income taxes.
We cannot assure you that our international operations will contribute
positively to our business, financial conditions or results of operations.
-3-
SHORTAGES OR PRICE INCREASES OF COMPONENTS SPECIFIED BY OUR CUSTOMERS WOULD
DELAY SHIPMENTS AND ADVERSELY AFFECT OUR PROFITABILITY.
Substantially all of our sales are derived from electronics 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. In addition, industry-wide shortages of electronic
components, particularly of memory and logic devices, have occurred. If
shortages of these components occur or if components received are defective, we
may be forced to delay shipments, which could have an adverse effect on our
profit margins. Because of the continued increase in demand for surface mount
components, we anticipate component shortages and longer lead times for certain
components to occur from time to time. Also, we typically bear the risk of
component price increases that occur between periodic repricings during the term
of a customer contract. Accordingly, certain component price increases could
adversely affect our gross profit margins.
OUR SUCCESS WILL CONTINUE TO DEPEND TO A SIGNIFICANT EXTENT ON OUR EXECUTIVES.
We depend significantly on certain key executives, including, but not
limited to, Donald E. Nigbor, Steven A. Barton, Cary T. Fu and Gayla J.
Delly. The unexpected loss of the services of any one of these executive
officers would have an adverse effect on us.
WE NEED TO SUCCESSFULLY INTEGRATE THE OPERATIONS OF ACQUIRED COMPANIES TO
MAINTAIN PROFITABILITY.
We have completed five acquisitions since July 1996. We may pursue
additional acquisitions over time. Acquisitions involve risks, including:
o integration and management of the operations;
o retention of key personnel;
o integration of purchasing operations and information systems;
o retention of the customer base of acquired businesses;
o management of an increasingly larger and more geographically disparate
business; and
o diversion of management's attention from other ongoing business
concerns.
Our profitability will suffer if we are unable to successfully integrate
and manage any future acquisitions that we might pursue, or if we do not achieve
sufficient revenue to offset the increased expenses associated with these
acquisitions.
WE MUST MAINTAIN OUR TECHNOLOGICAL AND MANUFACTURING PROCESS EXPERTISE.
The market for our manufacturing services is characterized by rapidly
changing technology and continuing process development. We are continually
evaluating the advantages and feasibility of new manufacturing processes. We
believe that our future success will depend upon our ability to develop and
provide manufacturing services which meet our customers' changing needs. This
requires that we maintain technological leadership and successfully anticipate
or respond to technological changes in manufacturing processes on a
cost-effective and timely basis. We cannot assure you that our process
development efforts will be successful.
WE ARE SUBJECT TO A VARIETY OF ENVIRONMENTAL LAWS.
We are subject to a variety of federal, state, local and foreign
environmental laws and regulations relating to environmental, waste management,
and health and safety concerns, including the handling,
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storage, discharge and disposal of hazardous materials used in or derived from
our manufacturing processes. If we or companies we acquire have failed or fail
in the future to comply with such laws and regulations, then we could incur
liabilities and fines and our operations could be suspended. Such laws and
regulations could also restrict our ability to modify or expand our facilities,
could require us to acquire costly equipment, or could impose other significant
expenditures. In addition, our operations may give rise to claims of property
contamination or human exposure to hazardous chemicals or conditions.
OUR ACQUISITIONS HAVE SIGNIFICANTLY INCREASED OUR LEVERAGE.
Our acquisitions in 1999 have significantly increased our leverage ratio
and decreased our interest coverage ratio. At December 31, 2001, our debt to
total capitalization ratio was 30%, as compared to 39% at December 31, 2000, 44%
at December 31, 1999 and 11% at June 30, 1999, the last fiscal quarter end prior
to the AVEX acquisition. The level of our indebtedness, among other things,
could:
o make it difficult for us to obtain any necessary financing in the
future for other acquisitions, working capital, capital expenditures,
debt service requirements or other purposes;
o limit our flexibility in planning for, or reacting to changes in, our
business; and
o make us more vulnerable in the event of a downturn in our business.
There can be no assurance that we will be able to meet our debt service
obligations.
PROVISIONS IN OUR CHARTER DOCUMENTS AND STATE LAW MAY MAKE IT HARDER FOR OTHERS
TO OBTAIN CONTROL OF BENCHMARK EVEN THOUGH SOME SHAREHOLDERS MIGHT CONSIDER SUCH
A DEVELOPMENT TO BE FAVORABLE.
Our shareholder rights plan, provisions of our amended and restated
articles of incorporation and the Texas Business Corporation Act may delay,
inhibit or prevent someone from gaining control of Benchmark through a tender
offer, business combination, proxy contest or some other method. These
provisions include:
o a "poison pill" shareholder rights plan;
o a statutory restriction on the ability of shareholders to take action
by less than unanimous written consent; and
o a statutory restriction on business combinations with some types of
interested shareholders.
OUR BOARD OF DIRECTORS HAS THE POWER TO ISSUE PREFERRED STOCK AND TO DESIGNATE
THE RIGHTS AND PREFERENCES OF THAT SERIES OF PREFERRED STOCK THAT COULD
ADVERSELY AFFECT THE VOTING POWER, DIVIDEND, LIQUIDATION AND OTHER RIGHTS OF
HOLDERS OF OUR COMMON STOCK.
Under our articles of incorporation, our board of directors has the power
to issue preferred stock and to designate the rights and preferences of that
series of preferred stock. In connection with this power, our board of directors
may designate to the new series any rights, preferences and privileges that the
board of directors deems appropriate, including special dividend, liquidation
and voting rights. The creation and designation of a new series of preferred
stock could adversely affect the voting power, dividend, liquidation and other
rights of holders of our common stock and, possibly, any other class or series
of stock that is then in existence.
WE MAY EXPERIENCE FLUCTUATIONS IN QUARTERLY RESULTS.
Our quarterly results may vary significantly depending on various factors,
many of which are beyond our control. These factors include:
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o the volume of customer orders relative to our capacity;
o customer introduction and market acceptance of new products;
o changes in demand for customer products;
o the timing of our expenditures in anticipation of future orders;
o our effectiveness in managing manufacturing processes;
o changes in cost and availability of labor and components;
o changes in our product mix;
o changes in economic conditions; and
o local factors and events that may affect our production volume, such
as local holidays.
Additionally, as is the case with many high technology companies, a
significant portion of our shipments typically occurs in the last few weeks of a
quarter. As a result, our sales may shift from one quarter to the next, having a
significant effect on reported results.
OUR STOCK PRICE IS VOLATILE.
Our common stock has experienced significant price volatility, and such
volatility may continue in the future. The price of our common stock could
fluctuate widely in response to a range of factors, including variations in our
reported financial results and changing conditions in the economy in general or
in our industry in particular. In addition, stock markets generally experience
significant price and volume volatility from time to time which may affect the
market price of our common stock for reasons unrelated to our performance.WE ARE
EXPOSED TO INTEREST RATE FLUCTUATIONS.
We have exposure to interest rate risk under our variable rate revolving
credit and term loan facilities. These facilities are based on the spread over
the bank's Eurodollar rate or its prime rate. We currently have an interest rate
swap transaction agreement for a notional amount of $31.5 million under which we
pay a fixed rate of interest of 6.63%, plus 1.25% to 3.00% based upon our debt
ratio as specified in the debt agreement, hedging against the variable interest
rates charged by the term loan. The receive rate under the swap is based on
LIBOR. The interest rate swap expires in the year 2003.
WE ARE INVOLVED IN LEGAL PROCEEDINGS RELATED TO CLASS ACTION LAWSUITS, THE AVEX
ACQUISITION AND A PATENT INFRINGEMENT LAWSUIT. AN UNFAVORABLE DECISION IN ANY OF
THESE PROCEEDINGS COULD HAVE A MATERIAL ADVERSE EFFECT ON US.
On October 18, 1999, we announced that our third quarter 1999 earnings
announcement would be delayed and subsequently, on October 22, we announced our
earnings for the third quarter 1999 were below the level of the same periods
during 1998 and were below expectations. Several class action lawsuits were
filed in November 1999 in federal district court in Houston, Texas against
Benchmark and two of its officers and directors alleging violations of the
federal securities laws. These lawsuits were consolidated in February 2000. The
lawsuits seek to recover unspecified damages. We deny the allegations in the
lawsuits, however, and further deny that such allegations provide a basis for
recovery of damages as we believe that we have made all required disclosures on
a timely basis. Management is vigorously defending against these actions.
Benchmark filed suit against J. M. Huber Corporation (Seller) in the
United States District Court for the Southern District of Texas for breach of
contract, fraud and negligent misrepresentation on December 14, 1999 and is
seeking an unspecified amount of damages in connection with the contract between
Benchmark and Seller pursuant to which Benchmark acquired all of the stock of
AVEX and
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Kilbride Holdings B.V. On January 5, 2000, Seller filed suit in the United
States District Court for the Southern District of New York alleging that
Benchmark failed to comply with certain obligations under the contract requiring
Benchmark to register shares of its common stock issued to Seller as partial
consideration for the acquisition. Seller's suit has been consolidated with
Benchmark's suit in the United States District Court for the Southern District
of Texas. Benchmark intends to vigorously pursue its claims against Seller and
defend against Seller's allegations.
On April 14, 2000, Benchmark, along with numerous other companies, was
named as a defendant in a lawsuit filed in the United States District Court for
the District of Arizona by the Lemelson Medical, Education & Research Foundation
(the Foundation). The lawsuit alleges that Benchmark has infringed certain of
the Foundation's patents relating to machine vision and bar code technology
utilized in machines Benchmark has purchased. On November 2, 2000, Benchmark
filed an Answer, Affirmative Defenses, and a Motion to Stay based upon
Declaratory Judgement Actions filed by Cognex and Symbol, manufacturers of the
equipment at issue. On March 29, 2001, the Court granted the defendants' Motion
to Stay and ordered that the lawsuit be stayed pending the entry of a final
non-appealable judgment in the cases filed by Cognex and Symbol. We continue to
explore any indemnity or similar rights Benchmark may have against manufacturers
of the machines or other third parties. Management intends to vigorously defend
against such claim and pursue all rights it has against third parties.
EXCEPT FOR OUR COMMON STOCK, THERE IS NO PUBLIC MARKET FOR THE SECURITIES
COVERED BY THIS PROSPECTUS.
Except for our common stock, no public market exists for the securities
covered by this prospectus, and we cannot assure the liquidity of any market
that may develop, the ability of the holders of the securities to sell their
securities or the price at which the securities may be sold. We do not intend to
apply for listing of the securities on any securities exchange or for quotation
through the NASD Automated Quotation System. Future trading prices of the
securities will depend on many factors including, among others, prevailing
interest rates, our operating results and the market for similar securities.
ANY DEBT SECURITIES THAT WE MAY ISSUE COULD CONTAIN COVENANTS THAT MAY RESTRICT
OUR ABILITY TO OBTAIN FINANCING, AND OUR NONCOMPLIANCE WITH ONE OF THESE
RESTRICTIVE COVENANTS COULD LEAD TO A DEFAULT WITH RESPECT TO THOSE DEBT
SECURITIES AND ANY OTHER INDEBTEDNESS.
If we issue debt securities covered by this prospectus or any future
indebtedness, the securities or future indebtedness may be subject to
restrictive covenants, some of which may limit the way in which we can operate
our business and significantly restrict our ability to incur additional
indebtedness or to issue preferred stock. Noncompliance with any covenants under
this indebtedness, unless cured, modified or waived, could lead to a default not
only with respect to that indebtedness, but also under any other indebtedness
that we may incur. If this were to happen, we might not be able to repay or
refinance all of our debt and, in particular, might not be able to repay any
subordinated debt securities, since their repayment would be subordinated to the
prior repayment of all senior debt outstanding at the time.
ALL PAYMENTS ON ANY SUBORDINATED DEBT THAT WE MAY ISSUE WILL BE SUBORDINATED TO
THE PRIOR PAYMENT OF ANY AMOUNTS DUE ON ANY SENIOR INDEBTEDNESS THAT WE MAY HAVE
ISSUED.
If we make a distribution to a creditor, the right of holders of any
subordinated debt securities to receive payment of any amounts due to
them--whether interest or principal--will be subordinated to the right of all
holders of any senior indebtedness, as defined in the subordinated debt
indenture, to receive prior payment of all amounts due to them. Similarly, if an
event of default on any senior indebtedness
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occurs, until it has been cured, we may not be able to make any payments on
account of any subordinated debt securities.
IF WE ISSUE A LARGE AMOUNT OF DEBT, IT MAY BE HARDER FOR US TO OBTAIN FINANCING,
WILL INCREASE THE COST OF OUR DEBT AND MAY MAGNIFY THE RESULTS OF ANY DEFAULT
UNDER ANY OF OUR OUTSTANDING INDEBTEDNESS.
The issuance of debt securities could increase our debt-to-equity ratio or
leverage, which may in turn make it harder for us to obtain future financing. In
addition, the issuance of any debt securities will increase the cost of paying
interest on our debt, except to the extent that the proceeds from the sales are
used to repay other outstanding indebtedness. Finally, our level of
indebtedness, and in particular any significant increase in it, may make us more
vulnerable if there is a downturn in our business or the economy.
-8-
BENCHMARK ELECTRONICS, INC.
We are in the business of manufacturing electronics and provide our
services to original equipment manufacturers of telecommunication equipment,
computers and related products for business enterprises,
video/audio/entertainment products, industrial control equipment, testing and
instrumentation products and medical devices. The services that we provide are
commonly referred to as electronics manufacturing services. We offer our
customers comprehensive and integrated design and manufacturing services, from
initial product design to volume production and direct order fulfillment. We
provide specialized engineering services, including product design, printed
circuit board layout, prototyping and test development. We believe that we have
developed strengths in the manufacturing process for large, complex,
high-density printed circuit boards as well as the ability to manufacture high
and low volume products in lower cost regions such as Latin America and
Southeast Asia. As our customers expand internationally, they increasingly
require their electronics manufacturing services partners to have strategic
regional locations and global procurement capabilities. We believe that our
global manufacturing presence of 14 facilities in six countries increases our
ability to be responsive to our customers' needs by providing accelerated
time-to-market and time-to-volume production of high quality products. These
capabilities should enable us to build stronger strategic relationships with our
customers and to become a more integral part of their operations.
Substantially all of our manufacturing services are provided on a turnkey
basis, whereby we purchase customer-specified components from our suppliers,
assemble the components on finished printed circuit boards, perform
post-production testing and provide our customers with production process and
testing documentation. We offer our customers flexible, "just-in-time" delivery
programs allowing product shipments to be closely coordinated with our
customers' inventory requirements. Additionally, we complete the assembly of our
customers' products at our facilities by integrating printed circuit board
assemblies into other elements of our customers' products. We also provide
manufacturing services on a consignment basis, whereby we utilize components
supplied by the customer to provide assembly and post-production testing
services. We currently operate, on approximately 1.6 million square feet, a
total of 44 surface mount production lines at our domestic facilities in
Alabama, Minnesota, New Hampshire, Oregon, Texas and Virginia; and 27 surface
mount production lines at our international facilities in Brazil, Ireland,
Mexico, Scotland, and Singapore. Surface mount production lines are assembly
lines where electrical components are soldered directly onto printed circuit
boards.
Since July 1996, we have completed five acquisitions that have broadened
our service offerings, diversified our customer base with leading original
equipment manufacturers and expanded our geographic presence. Our October 2000
acquisition of the assets of the MSI Division of Outreach Technologies, Inc.
provided us with additional manufacturing capacity in the northeastern United
States. Our August 1999 acquisition of AVEX Electronics, Inc. and Kilbride
Holdings B.V. provided us with a global presence and enabled us to increase our
scale of operations and expand our customer base significantly. We have also
acquired EMD Technologies, Inc., Lockheed Commercial Electronics Company, and
certain assets from Stratus Computer Ireland, which improved our engineering
capabilities, increased our manufacturing capacity and expanded our
international presence. In addition to these acquisitions, the opening of new
systems integration facilities in Huntsville, Alabama in 2000 and Singapore in
2001 expanded our systems integration capabilities.
We believe our primary competitive advantages are our design,
manufacturing, testing and supply chain management capabilities. We offer our
customers complete and flexible manufacturing solutions that provide accelerated
time-to-market, time-to-volume production, and reduced production costs. As a
result of working closely with our customers and responding promptly to their
needs, we have become an integral part of their operations. In addition, our
workforce is led by a management team that founded the Company and has an
average of 20 years of industry experience.
-9-
USE OF PROCEEDS
Unless we otherwise indicate in an applicable prospectus supplement, we
currently expect to use the proceeds from the sale of any securities for working
capital and other general corporate purposes, including:
o to finance our growth;
o for capital expenditures made in the ordinary course of business; and
o for acquisitions of businesses, products and technologies that
complement or expand our business.
We may set forth additional information on the use of net proceeds from
the sale of securities we offer under this prospectus supplement relating to the
specific offering. Pending any specific application, we may initially invest
funds in short-term marketable securities or apply them to the reduction of
short-term indebtedness.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed charges on
a consolidated basis for the period shown. You should read these ratios of
earnings to fixed charges in connection with our consolidated financial
statements, including the notes to those statements, incorporated by reference
in this prospectus.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ----------- ----------- ---------
(DOLLARS IN THOUSANDS)
Earnings to fixed charges ratio -- 2.00x 2.74x 6.03x 9.03x
Deficiency $58,293 N/A N/A N/A N/A
We have computed the ratios of earnings to fixed charges shown above by dividing
income before income taxes, extraordinary item and fixed charges by fixed
charges. The term "fixed charges" means the sum of the following: (a) interest
expensed and capitalized; (b) amortized premiums, discounts and capitalized
expenses related to indebtedness; and (c) an estimate of the interest within
rental expense.
-10-
DESCRIPTION OF EQUITY SECURITIES
As of the date of this prospectus, we are authorized to issue up to
30,000,000 shares of common stock, par value $0.10 per share, and up to
5,000,000 shares of preferred stock, par value $0.10 per share. We have
established and designated a series of our preferred stock known as Series A
Cumulative Junior Participating Preferred Stock, par value $0.10 per share,
consisting of an aggregate of 30,000 shares. As of March 15, 2002, we had
19,783,012 shares of common stock and no shares of preferred stock
outstanding. As of that date, we also had approximately 3,387,991 shares of
common stock reserved for issuance in connection with options or other awards
outstanding under various employee or director incentive, compensation and
option plans, and for issuance pursuant to conversions of our 6% Convertible
Subordinated Notes due 2006.
The following is a summary of the key terms and provisions of our equity
securities. You should refer to the applicable provisions of our amended and
restated articles of incorporation, our amended and restated bylaws, the Texas
Business Corporation Act and the documents we have incorporated by reference for
a complete statement of the terms and rights of our capital stock.
COMMON STOCK
Subject to the rights of the holders of any outstanding shares of our
preferred stock that may be outstanding from time to time and to those rights
provided by law:
o dividends maybe declared and paid or set apart for payment upon our
common stock out of any of our assets or funds legally available for
the payment of dividends and may be payable in cash, stock or
otherwise;
o the holders of our common stock currently have the exclusive right to
vote for the election of directors and, except as provided below, on
all other matters requiring stockholder action generally, with each
share being entitled to one vote; and
o upon our voluntary or involuntary liquidation, dissolution or winding
up, our net assets will be distributed pro rata to the holders of our
common stock in accordance with their respective rights and interests
after payments are made to our creditors and to holders of any
outstanding shares of our preferred stock.
Although the holders of our common stock are generally entitled to vote
for the approval of amendments to our certificate of incorporation, an amendment
to our certificate of incorporation that would solely modify or change the
relative powers, preferences and rights and the qualifications or restrictions
of any issued shares of any series of our preferred stock then outstanding
generally would not require a vote by our common stockholders.
Holders of our common stock do not have any cumulative voting, redemption
or conversion rights and have no preemptive rights to subscribe for, purchase or
receive any class of our shares or our other securities. Holders of our common
stock have no fixed dividend rights. Dividends may be declared by our board of
directors at its discretion depending on various factors, although we have never
paid, and do not anticipate that we will pay in the foreseeable future, cash
dividends on our common stock. In addition, the agreement relating to our credit
facility with Chase Bank of Texas, National Association restricts the amount of
cash dividends that we may pay on common stock. The outstanding shares of common
stock, including the shares of common stock offered hereby, are fully paid and
non-assessable.
-11-
Our common stock is traded on The New York Stock Exchange under the
symbol "BHE." The transfer agent and registrar for the common stock is
Computershare Trust Company, P.O. Box 1596, Denver, Colorado. 80201-1596.
PREFERRED STOCK
This section summarizes the general terms and provisions of the preferred
stock that may be offered by this prospectus. The prospectus supplement will
describe the specific terms of any series of preferred stock offered under that
prospectus supplement and any general terms outlined in this section that will
not apply to that series of preferred stock.
Because this is only a summary, it does not contain all of the details
found in the full text of the certificate of designation containing the rights
and preferences of the preferred stock. The certificate of designation will be
filed or incorporated by reference as an exhibit to the registration statement
to which this prospectus relates. For additional information, please read the
full text of the certificate of designation. You should also read the discussion
under "Description of Equity Securities--Shareholder Rights Plan" below, which
applies to our preferred stock.
Our board of directors can, without approval of our stockholders, issue
one or more additional series of preferred stock and determine the number of
shares of each series and the rights, preferences and limitations of each series
by appropriate board resolutions. The following description of the terms of the
preferred stock sets forth some of the general terms and provisions of our
authorized preferred stock. If we offer preferred stock, the terms may include
the following:
o the series, the number of shares offered and the liquidation value of
the preferred stock;
o the price at which the preferred stock will be issued;
o the dividend rate, if any, the dates on which the dividends will be
payable and other terms relating to the payment of dividends on the
preferred stock;
o the liquidation preference of the preferred stock;
o the voting rights of the preferred stock;
o whether the preferred stock is convertible into, or exchangeable for,
any other securities, and the terms of any conversion; and
o any additional rights, preferences, qualifications, limitations and
restrictions of the preferred stock.
This description of the terms of the preferred stock is not complete and
will be subject to and qualified by the certificate of designation relating to
any applicable series of preferred stock.
SHAREHOLDER RIGHTS PLAN
On December 11, 1998, the board of directors adopted a shareholder rights
plan. Under this plan, a dividend of one preferred share purchase right, called
a "Right," was declared for each outstanding share of common stock.
The Rights may cause substantial dilution to a person or group that
attempts to acquire us without conditioning the offer on the acquisition of a
substantial number of Rights. Accordingly, the existence of the Rights may deter
acquirers from making takeover proposals or tender offers. However, the Rights
are not intended to prevent a takeover, but rather are designed to enhance the
ability of our board of directors to negotiate with an acquirer on behalf of all
the shareholders. In addition, the Rights should not interfere with a proxy
contest.
-12-
Each Right entitles shareholders to buy one one-thousandth of a share of
Series A Cumulative Junior Participating Preferred Stock at an exercise price of
$155, subject to adjustment in the event a person acquires, or makes a tender or
exchange offer for, 15% or more of the outstanding common stock. In such event,
each Right entitles the holder, other than the person acquiring 15% or more of
the outstanding common stock, to purchase shares of common stock with a market
value of twice the Right's exercise price. In addition, if we are acquired in a
merger or other business combination, or if we sell more than 50% of our
consolidated assets or earning power, our shareholders are entitled (other than
the acquirer) to purchase, for the exercise price, shares of the common stock of
the acquiring entity or its parent having a market value of two times the
exercise price. At any time prior to such event, the board of directors may
redeem the Rights at one cent per Right. The Rights can be transferred only with
common stock and expire ten years after the date the shareholder rights plan was
adopted. The shares of common stock to be issued in this offering will be
entitled to a Right on the same basis as the common stock currently outstanding.
CONVERTIBLE SUBORDINATED NOTES
We have $80.2 million in aggregate principal amount of our 6.00%
Convertible Subordinated Notes due 2006 outstanding. The notes are convertible
into common stock at an initial conversion price of $40.20. If all of the notes
were converted into shares of common stock at the initial conversion price,
1,995,025 shares of common stock would be issued. The notes were issued pursuant
to an Indenture dated August 13, 1999. The notes are unsecured obligations and
are subordinated in right of payment to all our existing and future senior debt
to the extent set forth in the Indenture.
STATUTORY BUSINESS COMBINATION PROVISIONS
Our company is subject to Article 13 of the Texas Business Corporation Act
(Article 13) which, with some exceptions, prohibits a Texas corporation from
engaging in a "business combination," as defined in Article 13, with any
shareholder who is a beneficial owner of 20% or more of our outstanding stock
for a period of three years after such shareholder acquires the 20% ownership
position, unless:
o our board of directors approves the transaction or the shareholder's
acquisition of shares prior to the acquisition; or
o two-thirds of the unaffiliated shareholders of our company approve the
transaction at a shareholders' meeting.
Shares that are issuable, but have not yet been issued, pursuant to options,
conversion or exchange rights or other agreements are not considered outstanding
for purposes of Article 13.
-13-
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities that may be offered by this prospectus. A prospectus supplement will
describe the specific terms of the series of debt securities offered under that
prospectus supplement and general terms outlined in this section that will not
apply to those debt securities. This prospectus provides only a summary
description of the debt securities and the related indenture. The amount of debt
securities offered by this prospectus will be limited to the amount of
securities described on the cover of this prospectus that we have not already
issued or reserved for issuance. The indenture will not limit the total
principal amount of debt securities that we may issue under the indenture.
GENERAL
We may issue debt securities. The debt securities will be issued under
a subordinated indenture, which will be between us and the trustee named in
the prospectus supplement. This indenture will be qualified under the Trust
Indenture Act. The form of subordinated indenture will be filed as an exhibit
to the registration statement of which this prospectus is a part. The debt
securities may be issued either separately, together with, upon conversion of
or in exchange for other securities. The debt securities will be unsecured,
and the applicable prospectus supplement will indicate the ranking of the
debt securities relative to our other unsecured, subordinated indebtedness.
Unless the applicable prospectus supplement indicates otherwise, the debt
securities will be issued only in registered form, without coupons, in
denominations of $1,000 each or multiples of $1,000. Debt securities may be
issued in the form of one or more global securities, as described below under
"--Global Securities."
Because this is only a summary, it does not contain all of the details
found in the full text of the subordinated indenture. If you would like
additional information you should read the form of subordinated indenture.
There will be no service charge for any registration of transfer or
exchange of the debt securities, but we may require you to pay any tax or other
governmental charge payable in connection with a transfer or exchange of the
debt securities.
Debt securities may be issued as original issue discount securities to be
sold at a substantial discount below their principal amount. If a debt security
is an original issue discount security, that means that an amount less than the
principal amount of the debt security will be due and payable upon a declaration
of acceleration of the maturity of the debt security pursuant to the
subordinated indenture. The applicable prospectus supplement will describe the
federal income tax consequences and other special factors which should be
considered prior to purchasing any original issue discount securities.
We will designate a place of payment where you can receive payment of the
principal of and any premium and interest on the debt securities or transfer the
debt securities. Unless the applicable prospectus supplement states otherwise,
we will pay interest on the debt securities to the person listed as the owner of
the debt securities in the security register at the close of business on the
regular record date for the applicable interest payment date. Defaulted
interest, however, may be paid to holders as of special record dates established
in the manner set forth in the subordinated indenture.
A prospectus supplement relating to a series of debt securities being
offered will describe specific terms relating to the offering. These terms will
include some or all of the following:
o the title and type of the debt securities;
-14-
o any limit on the total principal amount of the debt securities;
o the person to whom any interest on the debt securities will be
payable, if other than the person in whose name they are registered on
the regular record date for the interest;
o the date or dates on which the principal of and premium, if any, on
the debt securities will be payable;
o the interest rate on the debt securities; the date from which interest
will accrue; the record and interest payment dates on the debt
securities; any circumstances under which we may defer interest
payments; and the basis for calculating interest if other than a
360-day year of twelve 30-day months;
o the place or places where the principal of and premium, if any, and
interest on the debt securities will be payable and the debt
securities may be surrendered for registration of transfer or
exchange;
o any applicable redemption provisions that would permit us to elect
redemption of the debt securities prior to their final maturity;
o whether a sinking fund will be established, which means that monies
will be deposited on a regular basis in a separate custodial account
that would be used by us to redeem the debt securities prior to their
final maturity;
o whether the debt securities will be convertible into or exchangeable
for shares of common stock, and if so, the terms and conditions upon
which the debt securities will be convertible or exchangeable;
o the identity of each security registrar and paying agent, if other
than or in addition to the trustee;
o if the amount of principal of or any premium or interest on the debt
securities may be determined by reference to an index or pursuant to a
formula, the manner in which those amounts shall be determined;
o the denominations in which the debt securities will be issued;
o any changes to or additional events of default under the subordinated
indenture or covenants, and any change in the right of the trustee or
the holders to declare the principal of or any premium or interest on
the debt securities due and payable;
o any change in the terms of the subordination provisions of the
subordinated indenture;
o if less than the principal amount, the portion of the principal
payable upon acceleration of the debt securities following an event of
default;
o whether the debt securities are to be issued in whole or in part in
the form of one or more global securities;
o whether the provisions described under the heading "--Defeasance
Provisions" on page 19 of this prospectus apply to the debt
securities;
o the name and address of the trustee with respect to the debt
securities; and
o any other terms of the debt securities.
REDEMPTION
The prospectus supplement will describe the provisions, if any, for
redemption of the debt
-15-
securities at our option.
Unless otherwise described in the prospectus supplement, we are not
required to make mandatory redemption or sinking fund payments. The prospectus
supplement will describe the provisions, if any, regarding sinking fund
provisions.
The subordinated indenture provides that we may:
o deliver outstanding debt securities, with similar terms, of a series
(other than any previously called for redemption); and
o apply as a credit debt securities, with similar terms, of a series
which have been redeemed either (i) at our election pursuant to the
terms of those debt securities, or (ii) through the application of
permitted optional sinking fund payments pursuant to the terms of
those debt securities, in each case, in satisfaction of all or any
part of any required sinking fund payment with respect to the debt
securities, with similar terms, of the same series.
The subordinated indenture provides that, if less than all of the debt
securities of any series are to be redeemed at any time, selection of the debt
securities for redemption will be made by the trustee on:
o a pro rata basis (and in a manner that complies with applicable legal
and stock exchange requirements, if any); or
o by any other method as the trustee shall deem fair and appropriate.
Portions of the debt securities selected for redemption shall be in
amounts of $1,000 or in multiples of $1,000, except that if all of the debt
securities of a holder are to be redeemed, the entire outstanding amount shall
be redeemed.
Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each holder of debt
securities to be redeemed at its registered address. If any debt security is to
be redeemed in part only, the notice of redemption that relates to the debt
security shall state the portion of the principal amount of the debt security to
be redeemed. A new debt security, with similar terms and of the same series, in
principal amount equal to the unredeemed portion of the original debt security,
if any, will be issued in the name of the holder of the new debt security upon
cancellation of the original debt security.
On and after the redemption date, interest will no longer accrue on debt
securities or any part of the debt securities called for redemption unless we
default in the payment of the redemption price and accrued interest.
REPURCHASE AT THE OPTION OF HOLDERS
The subordinated indenture does not contain provisions that require us to
repurchase debt securities at the option of the holders of the debt securities.
The subordinated indenture provides that:
o if repurchase rights are provided for, and if the amounts deposited in
connection with the repurchase rights are insufficient to pay the
repurchase price of all debt securities of the
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applicable series having repurchase rights,
then, the trustee shall select debt securities to be repurchased on a pro rata
basis from the holders who have repurchase rights and who elect to exercise the
repurchase rights (and in a manner that complies with any applicable legal and
stock exchange requirements).
CONVERSION AND EXCHANGE
Unless otherwise described in the prospectus supplement, the debt
securities are not convertible or exchangeable for our common stock.
CERTAIN COVENANTS
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The subordinated indenture provides that we may not merge with another
company or sell or lease all of our property to another company unless:
o We are the continuing corporation, or the successor corporation is a
domestic corporation and expressly assumes the payment of principal
and interest on the debt securities and the performance and observance
of all the covenants and conditions of the subordinated indenture
binding on us; and
o immediately after such transaction, we, or the successor corporation,
is not in default in the performance of a covenant or condition in the
subordinated indenture.
REPORTS
The subordinated indenture provides that as long as any debt securities
are outstanding, we will file with the trustee and furnish to the holders of
debt securities all reports on Forms 8-K, 10-Q and 10-K and all proxy statements
that we file with the SEC. If we are no longer subject to Section 13 or 15(d) of
the Exchange Act, we will not be obligated to provide these reports to the
trustee and holders.
ABSENCE OF CERTAIN COVENANTS
The prospectus supplement will specify any additional restrictive
covenants applicable to the debt securities. The subordinated indenture does not
contain provisions permitting the holders of debt securities to require us to
repurchase or redeem the debt securities in the event of a takeover,
recapitalization or similar restructuring, highly leveraged transaction, or
downgrading of our debt ratings.
EVENTS OF DEFAULT; REMEDIES
The subordinated indenture provides that each of the following constitutes
an event of default:
o failure to pay interest on any debt security of that series for 30
days after the payment is due;
o failure to pay the principal of or premium, if any, on any debt
security of that series when due;
-17-
o failure to deposit any mandatory sinking fund payment, when due on
debt securities of that series;
o failure to comply with the provisions described above under the
heading "Description of Debt Securities--Certain Covenants--Merger,
Consolidation, or Sale of Assets";
o failure by us to comply with any of our other agreements in the
subordinated indenture or the debt securities for 60 days after notice
from the trustee or holders of at least 25% of the principal amount of
the outstanding debt securities of that series;
o certain events of bankruptcy or insolvency with respect to us or any
of our subsidiaries; and
o any other event of default that may be specified for the debt
securities of that series when that series is created.
If an event of default under the subordinated indenture occurs on outstanding
debt securities of a particular series and continues, the trustee or holders of
at least 25% of that series of debt securities may declare the principal amount
of all debt securities in that series to be due and payable immediately. Under
certain circumstances, holders of a majority of the debt securities in a series
may rescind a declaration.
Notwithstanding the foregoing, in the case of an event of default arising
from certain events of bankruptcy or insolvency with respect to us or any of our
subsidiaries, all principal, premium, if any, and interest on outstanding debt
securities will become due and payable without further action or notice.
Except in the case of a default in payment, the trustee may withhold
notice if it determines that withholding notice is in best interest of the
holders of the debt securities.
If an event of default occurs under the subordinated indenture which event
of default:
o occurs as a result of our or our subsidiaries willful action (or
inaction); and
o results in the avoidance of the payment of any premium that we would
have had to pay upon redemption of debt securities;
then, an equivalent premium shall also become immediately due and
payable if the debt securities are repaid.
The holders of a majority in principal amount of the outstanding debt
securities of any series may waive the rights of all holders with respect to
circumstances that constitute an event of default or will constitute an event of
default with notice and the passage of time. The holders must waive the rights
in a written notice to the trustee. Holders of a majority of the securities
cannot, however, waive the rights of all holders relating to these events if
they involve a default in payment obligations. Any waivers that are given will
not apply to any subsequent default or unrelated default and will not impair any
future rights if those types of defaults occur.
Holders of a majority in principal amount of the outstanding debt
securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to, or exercising any trust or power
conferred on, the trustee with respect to the series. However, the trustee may
refuse to follow any direction that conflicts with law or the subordinated
indenture. The trustee may take any other
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action which it deems proper which is not inconsistent with any direction given.
A holder of any debt security of any series will have the right to
institute any proceeding with respect to the subordinated indenture or for any
remedy only if:
o the holder gives written notice to the trustee of a continuing event
of default under the subordinated indenture with respect to that
series;
o the holders of at least 25% in principal amount of the outstanding
debt securities of the series make a written request to the trustee to
pursue the remedy;
o the holder or holders offer and, if requested, provide the trustee
indemnity satisfactory to the trustee against any loss, liability or
expense;
o the trustee does not comply with the request within 60 days after
receiving the request and the offer and, if requested, the provision
of indemnity; and
o the trustee has not received directions inconsistent with the request
from the holders of a majority in principal amount of the outstanding
debt securities of the series during the 60-day period.
The subordinated indenture also provides that a holder may not use the
subordinated indenture to prejudice the rights of another holder or to obtain a
preference or priority over another holder.
We are required to deliver to the trustee an annual certificate, signed by
an officer, about any default by us under any provisions of the subordinated
indenture.
CERTAIN PROVISIONS APPLICABLE TO TRUSTEE
The subordinated indenture provides that prior to an event of default
under the subordinated indenture, the trustee is required to perform only the
specific duties stated in the subordinated indenture. Upon an event of default
under the subordinated indenture, the trustee must exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. The trustee may in good faith conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed in any certificates or
opinions furnished to the trustee which conform to the requirements of the
subordinated indenture. However, the trustee is required to examine such
certificates and opinions to determine whether or not they conform to the
requirements of the subordinated indenture.
The subordinated indenture provides that the trustee may resign at any
time or may be removed by us or by the holders of a majority in principal amount
of the outstanding debt securities of a series by notice delivered to us and the
trustee. The subordinated indenture also provides that the trustee must resign
if it ceases to meet certain qualifications set forth in the subordinated
indenture. In the event of a trustee's resignation or removal, we or, if we fail
to act, the holders of a majority in principal amount of the outstanding debt
securities of the applicable series, may appoint a successor trustee.
DEFEASANCE PROVISIONS
The subordinated indenture includes provisions allowing defeasance of the
debt securities, which means that we may discharge its entire indebtedness under
an agreement, in this case the subordinated indenture, if specific acts are
performed. Specifically, the subordinated indenture provides that:
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o We shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding debt securities of a series, and to
have satisfied all its other obligations under the debt securities of
that series and the subordinated indenture as it relates to that
series ("legal defeasance");
o We may omit to comply with certain restrictive covenants under the
subordinated indenture and shall have no liability in respect of any
term, condition or limitation set forth in any such restrictive
covenant, and such omission to comply shall not constitute a default
or an event of default with respect to a series of debt securities
under the subordinated indenture ("covenant defeasance");
provided that the following conditions shall have been satisfied:
o We deposit with the trustee, in trust, sufficient money or government
obligations to pay the principal, interest, any premium and any other
sums due on a series of debt securities on the dates that the payments
are due under the subordinated indenture and the terms of the debt
securities of the series;
o No event of default or default under the subordinated indenture shall
have occurred and be continuing on the date of the deposit;
o We shall have delivered to the trustee an opinion of counsel which
states that (i) holders of debt securities will not recognize income,
gain or loss for federal income tax purposes as a result of such
defeasance and (ii) after the 91st day following the deposit, the
deposited funds will not be subject to the effect of any applicable
bankruptcy law;
o The defeasance shall not result in a breach or violation of, or
constitute a default under the subordinated indenture or any other
material agreement or instrument to which we are a party or by which
we are bound;
o We shall have delivered an officers' certificate that states that (i)
the deposit was not made with the intent of preferring the holders of
the debt securities of the series to be defeased over our other
creditors and (ii) all conditions precedent applicable to the legal
defeasance or the covenant defeasance, as the case may be, have been
complied with.
MODIFICATION AND AMENDMENT OF SUBORDINATED INDENTURE
Under the subordinated indenture, all rights and obligations and the
rights of the holders of debt securities may be changed. Certain changes require
the consent of the holders of not less than a majority in aggregate principal
amount of the outstanding debt securities of each series of debt securities
affected by the modification or amendment. The following changes, however, may
not be made without the consent of each holder of the outstanding debt
securities:
o changes to the stated maturity date of the principal or any interest
installment;
o reductions in the principal amount or interest due;
o changes to the place of payment or form of currency regarding payment
of principal;
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o impairment of the right to institute suit for the enforcement of
payment;
o reduction of the stated percentage of holders necessary to modify the
subordinated indenture; or
o modifications to any of these requirements, or modifications to reduce
the percentage of outstanding debt securities necessary to waive
compliance with certain provisions of the subordinated indenture or to
waive certain defaults.
SUBORDINATION
The debt securities we issue will be subordinate and subject in right of
payment, in the manner and to the extent set forth in the subordinated
indenture, to the prior payment in full of all Senior Debt (as defined below and
in the indenture).
If we make a distribution to our creditors as a result of:
o a liquidation;
o a dissolution;
o winding up;
o a reorganization;
o an assignment for the benefit of creditors;
o marshalling of assets and liabilities;
o any bankruptcy, insolvency or similar proceeding involving us;
then, the holders of Senior Debt will first be entitled to receive payment in
full in cash of all obligations due on or to become due on or in respect of all
Senior Debt, before the holders of debt securities are entitled to receive any
payment or distribution ("Securities Payments").
Until the Senior Debt is paid in full, any Securities Payment to which the
holders of debt securities would be entitled will be paid or delivered by us or
any other person making the payment or distribution, directly to the holders of
Senior Debt for application to all of the Senior Debt then due.
We may not make any payments on the account of the debt securities, or on
account of the purchase or redemption or other acquisition of the debt
securities, if there has occurred and is continuing a default in the payment of
the principal of (or premium, if any) or interest on any Senior Debt.
In the event that the trustee receives any Securities Payments prohibited
by the subordinated provisions or the subordinated indenture, the payment will
be held by the trustee in trust for the benefit of, and will immediately be paid
over upon written request to, the holders of Senior Debt or their representative
or representatives, or the trustee or trustees under any applicable indenture
for application to the payment of Senior Debt. The subordination will not
prevent the occurrence of any event of default in respect of the debt
securities.
For purposes of the foregoing, "Securities Payments" will be deemed not to
include:
o a payment or distribution of our stock or securities provided for by a
plan or reorganization or readjustment authorized by an order or
decree of a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or
readjustment which stock or securities are
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subordinated in right of payment to all then outstanding Senior Debt
to the same extent as, or to a greater extent than, the debt
securities are so subordinated as provided in the subordinated
indenture; or
o payments of assets from any defeasance trust which have been on
deposit for 90 consecutive days without the occurrence of blockage of
payment on any series of debt securities as described above.
By reason of the subordination of the debt securities, in the event of our
insolvency, holders of Senior Debt may receive more, ratably, and holders of the
debt securities having a claim pursuant to such securities may receive less,
ratably, than our other creditors. There may also be interruption of scheduled
interest and principal payments resulting from events of default on Senior Debt.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the subordinated
indenture. Please refer to the subordinated indenture for a full definition of
all such terms.
"Junior Subordinated Debt" means any indebtedness for money that we
have borrowed, created or evidenced by an instrument which expressly provides
that the indebtedness for money borrowed is subordinated in right of payment
to the debt securities.
"Senior Debt" means all indebtedness for money that we have borrowed,
whether before or after the date of this prospectus, unless the instrument
creating the debt expressly provides that it is not senior to, or that it ranks
equally with, the debt securities.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include:
o any indebtedness for money that we have borrowed from any of our
subsidiaries or certain other affiliates;
o any amounts owed for compensation to employees, or any
indebtedness for money borrowed incurred for the purchase of goods
or materials or for services obtained in the ordinary course of
business (other than with the proceeds of revolving credit
borrowings permitted by the subordinated indenture); and
o any liability for taxes owed by us.
GLOBAL SECURITIES
This section summarizes the terms and provisions of series of debt
securities issued, in whole or in part, in the form of global securities
deposited with, or on behalf of, The Depository Trust Company, referred to in
this prospectus as "DTC." DTC is a limited-purpose trust company organized under
the New York Banking Law that is a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC holds securities that its participants deposit with DTC and to
facilitate the settlement among participants of transactions in deposited
securities through electronic computerized book-entry changes in participants'
accounts. This computerized process eliminates the need for physical movement of
securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and other organizations.
These entities are considered to be "direct participants" of DTC. DTC is owned
by a number of its direct participants and by the New York Stock
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Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the DTC system also is available to
others, known as "indirect participants," such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with direct participants, either directly or indirectly. The rules
applicable to DTC and its participants are on file with the SEC.
DTC may act as securities depositary for the debt securities offered under
this prospectus. Each debt security represented by a global security is referred
to as a book-entry security. Upon initial issuance, all book-entry securities of
the same series, bearing interest, if any, at the same rate or pursuant to the
same formula, and having the same date of issuance, redemption provisions,
repayment provisions, stated maturity and other terms, will be represented by
one or more global securities. Each global security representing book-entry
securities will be deposited with or on behalf of DTC and will be registered in
the name of DTC or a nominee of DTC. Unless otherwise specified in the
applicable prospectus supplement, all book-entry securities will be denominated
in U.S. dollars.
Purchases of debt securities within the DTC system must be made by or
through direct participants, which will receive a credit for the debt securities
on DTC's records. The ownership interest of each actual purchaser, whom we refer
to as a "beneficial owner," is in turn recorded on the direct and indirect
participants' records. DTC has no knowledge of the identity of the actual
beneficial owners of the debt securities; its records reflect only the identity
of the direct participants to whose accounts the debt securities are credited,
which may or may not be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Beneficial owners will not receive certificates representing their ownership
interests in book-entry securities, unless use of the book-entry system is
discontinued for the relevant securities. Beneficial owners will not receive
written confirmation from DTC of their purchases, but are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect participants through
which the beneficial owners purchased the debt securities. Transfers of
ownership interests in the debt securities will be accompanied by entries on the
books of participants acting on behalf of beneficial owners.
Payments of principal, any premium and interest on book-entry securities
will be made directly to DTC or its nominee, as the case may be, as the sole
registered holder of the book-entry securities. We understand that DTC's
practice is to credit direct participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records, unless DTC
has reason to believe that it will not receive payments on the payment date.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices. Neither we nor the trustee or any paying
or other agent of either of us will be responsible or liable for:
o any aspect of DTC's records relating to, or payments made on
account of, its participants;
o maintaining, supervising or reviewing any of DTC's records
relating to the interests of its participants; or
o any other aspect of the relationship between DTC and its
participants, or the relationship between DTC's participants and
the beneficial owners.
Beneficial owners will not be considered the registered holders of the
debt securities for any purpose under the applicable indenture. Accordingly,
each beneficial owner must rely on the procedures of DTC or, if the beneficial
owner is not a participant, on the procedures of the participant through which
the beneficial owner owns its interest, to exercise any rights of a registered
holder under the applicable indenture. The laws of some jurisdictions require
that some purchasers of securities take physical
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delivery of the securities in certificated form. These limits and laws may
impair the ability to transfer beneficial interests in a global security.
As the registered holder of each global security, DTC may appoint agents
and otherwise authorize participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action that a
registered holder is entitled to give or take under the applicable indenture. It
is our understanding that under existing industry practices, if we request that
the registered holders take any action, or if a beneficial owner desires to give
or take any action that a registered holder is entitled to give or take, then
DTC would authorize the participants holding the relevant beneficial interests
to give or take such action and the participants would authorize beneficial
owners owning through them to give or take the action or would otherwise act
upon the instructions of the beneficial owners.
No global security representing book-entry securities may be exchanged or
transferred, except as a whole by a nominee of DTC to DTC or another of its
nominees, or by DTC or its nominees to a successor of DTC or a nominee of the
successor.
We may, at our option, decide to discontinue use of the system of
book-entry transfers. DTC may discontinue providing its services as securities
depositary with respect to ay of the debt securities at any time by giving
reasonable notice to us and the relevant trustee. After an event of default, the
system of book-entry transfers may be terminated. In each case, if a successor
securities depositary is not obtained, certificates representing the debt
securities will be printed and delivered as DTC's participants direct.
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PLAN OF DISTRIBUTION
We may distribute the securities being offered hereby in one or more of
the following ways from time to time:
o through agents to the public or to one or more specific purchasers;
o through underwriters or dealers for resale to the public or to one or
more specific purchasers;
o directly by us to specific purchasers; or
o through a combination of any such methods.
We may distribute the securities from time to time in one or more
transactions either (i) at a fixed price or prices, which may be changed, (ii)
at market prices prevailing at the time of sale, (iii) at prices related to the
prevailing market prices, or (iv) at negotiated prices.
If securities are sold through agents designated by us, the agents will
agree to use their reasonable best efforts to solicit purchases for the period
of their appointment. If securities are sold through underwriters, the
underwriters will acquire the securities for their own account and may resell
the securities in one or more transactions. If securities are sold directly by
us without any underwriter or agent, we may use electronic media (including the
Internet) to sell the securities. Any initial public offering price and any
discounts or concessions allowed or re-allowed or paid to dealers may be changed
from time to time.
We will set forth in a prospectus supplement the terms of the offering of
securities, including:
o the name or names of any agents or underwriters;
o the purchase price of the securities being offered and the proceeds we
will receive from the sale;
o any over-allotment options under which underwriters may purchase
additional securities from us or the selling stockholders;
o any agency fees or underwriting discounts and other items constituting
agents' or underwriters' compensation;
o any public offering price;
o any discounts or concessions allowed or reallowed or paid to dealers;
and
o any securities exchanges on which the securities may be listed.
We may authorize underwriters, dealers and agents to solicit offers from
specified institutions to purchase the securities from us at the public offering
price listed in the applicable prospectus supplement. These sales may be made
under "delayed delivery contracts" that provide for payment and delivery on a
specified future date. Any contracts like this will be subject to the conditions
listed in the prospectus supplement. The prospectus supplement also will state
the commission to be paid to underwriters, dealers and agents who solicit these
contracts.
Any underwriter, dealer or agent who participates in the distribution of
an offering of securities may be considered by the SEC to be an underwriter
under the Securities Act. Any discounts or commissions received by an
underwriter, dealer or agent on the sale or resale of securities may be
considered by the SEC to be underwriting discounts and commissions under the
Securities Act. Under agreements with us, underwriters, dealers and agents may
be entitled to indemnification by us against some civil liabilities, including
liabilities under the Securities Act. Underwriters, dealers and agents also may
be entitled to contributions for any payments the underwriters, dealers or
agents are required to make with respect to some civil liabilities, including
liabilities under the Securities Act. Underwriters and
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agents and their affiliates are permitted to be customers of, engage in
transactions with, or perform services for us and our affiliates in the ordinary
course of business.
Unless otherwise indicated in the applicable prospectus supplement, the
obligations of the underwriters to purchase any offered securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all of the offered securities if any are purchased.
Unless otherwise indicated in the applicable prospectus supplement, all
securities offered by this prospectus, other than the common stock, which is
traded on the New York Stock Exchange under the symbol "BHE", when first issued
will be new issues of securities with no established trading market. Any
underwriters to whom we sell securities for public offering and sale may make a
market in the securities. However, these underwriters will not be obligated to
make a market in the securities and may discontinue any market-making at any
time without notice. We cannot assure you that the trading market for any of the
securities will be or remain liquid at any time.
LEGAL MATTERS
The validity of the securities will be passed upon by Bracewell &
Patterson, L.L.P., Houston, Texas. If the securities are being distributed in an
underwritten offering, the validity of the securities will be passed upon for
the underwriters by counsel identified in the related prospectus supplement.
EXPERTS
Our consolidated financial statements and schedule as of December 31,
2001 and 2000, and for each of the years in the three-year period ended
December 31, 2001, have been incorporated by reference herein in reliance on
the reports of KPMG LLP, independent accountants, incorporated by reference
herein, and upon authority of said firm as experts in accounting and
auditing. The audit report covering the December 31, 2001 financial
statements refers to a change in the method of accounting for derivative
instruments and hedging activities in 2001.
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PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses to be incurred by Benchmark
Electronics, Inc., other than the underwriting discounts and commissions payable
by us in connection with the sale of the securities being registered. All fees
and expenses other than the SEC registration fee are estimated and subject to
future contingencies.
SEC registration fee............................ $ 23,000
Accounting fees and expenses.................... 50,000
Legal fees and expenses......................... 50,000
Printing expenses............................... 10,000
Transfer agent, trustee and registrar fees...... 5,000
Miscellaneous expenses.......................... 12,000
--------
Total expenses............................... $150,000
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
TEXAS BUSINESS CORPORATION ACT
Article 2.02-1.B of the Texas Business Corporation Act, as amended (TBCA),
grants to a corporation the power to indemnify a person who was, is or is
threatened to be made a named defendant or respondent in a proceeding because
the person is or was a director of the corporation against judgments, penalties
(including excise and similar taxes), fines, settlements and reasonable expenses
actually incurred in connection therewith, only if it is determined that the
person (1) conducted himself in good faith; (2) reasonably believed that (a) in
the case of conduct in his official capacity as a director of the corporation,
his conduct was in the corporation's best interests, and (b) in all other cases,
his conduct was at least not opposed to the corporation's best interests; and
(3) in the case of any criminal proceeding, he had no reasonable cause to
believe that his conduct was unlawful. Article 2.02-1.C limits the allowable
indemnification by providing that, except to the extent permitted by Article
2.02-1.E, a director may not be indemnified in respect of a proceeding in which
the person was found liable (1) on the basis that he improperly received a
personal benefit, whether or not the benefit resulted from an action taken in
his official capacity, or (2) to the corporation. Article 2.02-1.E provides that
if a director is found liable to the corporation or is found liable on the basis
that he received a personal benefit, the permissible indemnification (1) is
limited to reasonable expenses actually incurred by the person in connection
with the proceeding, and (2) shall not be made in respect of any proceeding in
which the person shall have been found liable for willful or intentional
misconduct in the performance of his duty to the corporation. Finally, Article
2.02-1.H provides that a corporation shall indemnify a director against
reasonable expenses incurred by him in connection with a proceeding in which he
is a named defendant or respondent because he is or was a director if he has
been wholly successful, on the merits or otherwise, in defense of the
proceeding.
With respect to the officers of a corporation, Article 2.02-1.O of the TBCA
provides that a corporation may indemnify and advance expenses to an officer of
the corporation to the same extent that it may indemnify and advance expenses to
directors under Article 2.02-1. Further, Article 2.02-1.O provides that an
officer of a corporation shall be indemnified as, and to the same extent,
provided by Article 2.02-1.H for a director.
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AMENDED AND RESTATED BYLAWS
The Amended and Restated Bylaws of the Company make mandatory the
indemnification of and advancement of expenses to its directors who become
involved in indemnifiable legal proceedings, subject to their compliance with
certain requirements imposed by Texas law.
INDEMNITY AGREEMENTS
The Company has entered into Indemnity Agreements with its directors and
officers pursuant to which the Company generally is obligated to indemnify its
directors and officers to the full extent permitted by Texas law.
UNDERWRITING AGREEMENT
The Underwriting Agreement, under certain circumstances, will provide for
indemnification for the underwriters and the directors, officers, and
controlling persons of the Company.
The Company has purchased liability insurance policies covering the directors
and officers of the Company to provide protection where the Company cannot
legally indemnify a director or officer and where a claim arises under the
Employee Retirement Income Security Act of 1974 against a director or an officer
based on an alleged breach of fiduciary duty or other wrongful act.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1.1** -- Form of Equity Underwriting Agreement.
1.2** -- Form of Debt Underwriting Agreement.
4.1 -- Amended and Restated Articles of Incorporation of the
Company (incorporated herein by reference to Exhibit 3.1 to
the Company's Registration Statement on Form S-1 (Registration
No. 33-46316) (the "Registration Statement")).
4.2 -- Amended and Restated Bylaws of the Company (incorporated
herein by reference to Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1998).
4.3 -- Amendment to the Amended and Restated Articles of
Incorporation of the Company adopted by the shareholders of
the Company on May 20, 1997 (incorporated herein by reference
to Exhibit 3.3 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998).
4.4 -- Specimen form of certificate evidencing the Common Stock
(incorporated herein by reference to Exhibit 4.3 to the
Registration Statement).
4.5 -- Rights Agreement dated December 11, 1998 between the
Company and Harris Trust Savings Bank, as Rights Agent,
together with the following exhibits thereto: Exhibit A --
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Form of Statement of Resolution Establishing Series A
Cumulative Junior Participating Preferred Stock of Benchmark
Electronics, Inc.; Exhibit B -- Form of Right Certificate; and
Exhibit C -- Summary of Rights to Purchase Preferred Stock of
Benchmark Electronics, Inc. (incorporated by reference to
Exhibit 1 to the Company's Form 8A12B filed December 11,
1998).
4.6 -- Summary of Rights to Purchase Preferred Stock of the
Company (incorporated by reference to Exhibit 3 to the
Company's Form 8A12B/A filed December 22, 1998).
4.7 - Indenture dated as of August 13, 1999 by and between the
Company and Harris Trust Company of New York, as trustee
(incorporated by reference from Exhibit 99.3 to Benchmark's
Form 8-K dated August 24, 1999 and filed on September 8,
1999).
4.8* -- Form of Indenture relating to Subordinated Debt Securities.
5.1* -- Opinion of Bracewell & Patterson, L.L.P. as to the legality
of the securities.
8.1** -- Opinion regarding tax matters.
12.1* -- Statement regarding Computation of Ratios.
23.1* -- Consent of Bracewell & Patterson, L.L.P (included in
Exhibit 5.1).
23.2* -- Consent of KPMG LLP.
24.1 -- Powers of Attorney (included on the signature page of this
Registration Statement).
25.1** -- Form T-1 Statement of Eligibility of Trustee regarding
Subordinated Debt Securities of the registrant.
* Filed herewith.
** To be filed as an exhibit to our Current Report on Form 8-K in
connection with a specific offering.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule
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424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
[provided, however, that paragraphs (1)(i) and (1)(ii) of this section do not]
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the SEC by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement.]?
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of
this registration statement in reliance on Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was
declared effective; and
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE
offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Houston, State of Texas, on March 18, 2002.
BENCHMARK ELECTRONICS, INC.
/s/ DONALD E. NIGBOR
----------------------------
Donald E. Nigbor
CHIEF EXECUTIVE OFFICER
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Donald E. Nigbor and Cary T. Fu, each with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities (until revoked in writing) to sign any and all
amendments (including post-effective amendments and amendments thereto) to this
Registration Statement and any subsequent registration statement filed by the
Registrant pursuant to Rule 462 of the Securities Act of 1933, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing he might do or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME POSITION DATE
-------- ----------- --------
Chairman of the Board and Chief
Executive Officer
/s/ DONALD E. NIGBOR (principal executive officer) March 18, 2002
-------------------------------------- ------------------------------
Donald E. Nigbor
/s/ STEVEN A. BARTON Director and Executive March 18, 2002
-------------------------------------- Vice President ------------------------------
Steven A. Barton
/s/ CARY T. FU Director and President March 18, 2002
-------------------------------------- (principal operating officer) ------------------------------
Cary T. Fu
Chief Financial Officer
/s/ GAYLA J. DELLY (principal financial March 18, 2002
-------------------------------------- and accounting officer) ------------------------------
Gayla J. Delly
/s/ JOHN C. CUSTER Director March 18, 2002
-------------------------------------- ------------------------------
John C. Custer
/s/ PETER G. DORFLINGER Director March 18, 2002
-------------------------------------- ------------------------------
Peter G. Dorflinger
/s/ DAVID H. ARNOLD Director March 18, 2002
-------------------------------------- ------------------------------
David H. Arnold
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