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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] Annual Report Pursuant to
Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the Year Ended December 31, 1999 Commission File Number 0-6866
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
HELIX TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2423640
(State of incorporation) (IRS Employer Identification No.)
Mansfield Corporate Center, Nine Hampshire Street,
Mansfield, Massachusetts 02048-9171
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (508) 337-5111
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$1 Par Value
----------------
(Title of Class)
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the registrant's common stock held by
nonaffiliates of the registrant as of March 14, 2000, (computed by reference to
the quoted selling prices of such stock in the over-the-counter market), was
$1,604,742,626.
The number of shares outstanding of the registrant's Common Stock, $1 Par Value,
as of March 14, 2000, was 22,598,704.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the registrant's 2000 Annual Meeting
of Stockholders to be filed with the SEC in March 2000 are incorporated by
reference into Part III, Items 10-12.
HELIX TECHNOLOGY CORPORATION 10-K Annual Report
Commission File No. 0-6866 For the Year Ended
December 31, 1999
PART I
Item 1. Business
General HELIX TECHNOLOGY CORPORATION (the "Company" or "Helix"), a
Delaware corporation organized in 1967, provides critical enabling vacuum system
technology to a broad range of electronic component manufacturers, principally
for the production of semiconductors, data storage and flat panel displays.
The Company's On-Board technology is a comprehensive package of hardware and
software that can integrate both Helix and non-Helix vacuum products. (On-Board
is a registered trademark of Helix Technology Corporation.) These systems
provide original equipment manufacturers the flexibility to rapidly implement a
full range of process-driven solutions and end-user performance-enhancing
process controls, advanced diagnostics and communications capabilities to
increase system uptime and to lower the cost of ownership.
The Company's On-Board Cryopump product continues to be the industry standard
high-vacuum pump for both the PVD (Physical Vapor Deposition or "sputtering")
and ion implantation markets. Its On-Board Waterpumps, On-Board Turbopumps and
On-Board TurboPlus give the Company products to support the CVD (Chemical Vapor
Deposition) and etch processes.
The Company's STABIL-ION and CONVECTRON vacuum measurement systems are
considered industry standards and are used in the PVD, ion implantation, CVD and
etch processes. (STABIL-ION and CONVECTRON are registered trademarks of Helix
Technology Corporation.) The Company's vacuum gauging products are also
integrated into analytical instruments, primarily mass spectrometers.
The Company maintains Customer Support Centers strategically located throughout
the world to provide replacement parts, overhaul, repair and upgrade services.
The Company's unique GUTS (Guaranteed Up-Time Support) rapid response system,
which has been the industry benchmark since 1985, is designed to assure that
users of the Company's products have direct, twenty-four-hour-a-day access to
the resources of the Customer Support Centers. (GUTS is a registered trademark
of Helix Technology Corporation.)
In 1999, the Company introduced GOLDLink Support, its remote Global On-Line
Diagnostic service, and deployed it at several semiconductor fabrication
facilities in the United States and Europe. Beginning in 2000, the Company
expects to significantly expand this internet-based service to fabrication
facilities throughout the world. (GOLDLink is a registered service mark of Helix
Technology Corporation.)
When fully implemented, the Company expects that GOLDLink Support will enable
it to remotely monitor and control Helix and third-party vacuum system
components, at semiconductor fabrication facilities anywhere in the world, and
develop information that can be used to proactively maximize customers' vacuum
system uptime.
- 2 -
PART I
Item 1. Business (continued)
The Company encounters competition in both domestic and foreign markets for its
products. Competition comes from smaller firms and from larger firms which have
greater total resources than the Company. Customer service, product quality,
performance and price are all factors in selling the Company's products.
The Company's business is, generally, not dependent on the availability of raw
materials or components from any single source. Certain components, however, may
be available from only one or two qualified sources. The Company's policy is to
develop alternative sources for components and, where possible, to avoid using
scarce raw materials in its products.
The Company's business has been cyclical because of its dependence upon the
semiconductor industry that has historically been highly cyclical.
The Company holds many U.S. and foreign patents in the fields of vacuum pumping,
gauging and cryogenics that it believes are significant to its operations. These
patents expire at various years through 2019. No patents which the Company
considers significant expire during the next five years. The Company has a
number of trademarks that it considers important to its business. These
trademarks are protected by registration in the United States and other
countries in which the Company's products are marketed.
The Company and Ulvac Corporation of Chigasaki, Japan, operate a joint venture,
Ulvac Cryogenics, Inc. ("UCI") formed in 1981, which manufactures and sells
cryogenic vacuum pumps, principally to Ulvac Corporation. Each company owns 50%
of UCI and made initial cash investments of approximately $100,000, with no
subsequent cash investments. The joint venture arrangement includes a license
and technology agreement from the Company and a management and consultation
agreement from Ulvac Corporation. The Company and Ulvac Corporation essentially
share control of the joint venture.
On May 7, 1998, the Company acquired Granville-Phillips Company ("GPC"). GPC is
a world leader in the development and manufacture of instrumentation for vacuum
measurement and control used principally in the semiconductor, flat panel
display and data storage manufacturing processes.
Backlog - The backlog of orders believed to be firm was approximately
$13.8 million at December 31, 1999, compared to $4.8 million at December 31,
1998. The Company expects to recognize revenues from essentially all of the
December 31, 1999, backlog during 2000.
Research and Development - The Company expended $9,916,000 in 1999 on
research and development efforts compared to $10,106,000 and $11,540,000 in 1998
and 1997, respectively. These expenditures reflect development activities
relating to product enhancements and new products for commercial applications.
- 3 -
PART I
Item 1. Business (continued)
Employment - Total employment in the Company at the end of 1999 was 649
compared with 457 and 606 at the end of 1998 and 1997, respectively. This
includes 90 temporary employees at the end of 1999 compared to eight and 65 in
1998 and 1997, respectively.
Environmental Affairs - Compliance with federal, state and local
provisions relating to environmental quality has not had, and is not expected to
have, a material impact upon capital expenditures, earnings or the competitive
position of the Company.
Financial Information about One Reportable Segment and Major
Customers - The Company's one reportable segment is cryogenic and vacuum
equipment. The Company's largest customer is Applied Materials, the world's
largest manufacturer of semiconductor capital equipment, representing 29%, 20%
and 30% of net sales for 1999, 1998 and 1997, respectively. Information
concerning the Company's segment information and different geographical areas is
included in Note F of Notes to Consolidated Financial Statements included
elsewhere in this report.
Item 2. Properties
The Company occupies approximately 297,400 square feet worldwide, as described
in the table below.
Size Lease
Location (Sq. Ft.) Expires Functions
-------- --------- ------- ---------
Massachusetts 155,000 2006 Corporate headquarters, engineering,
63,000 2004 manufacturing, sales and
marketing and administration
Colorado 22,000 2000 Engineering, manufacturing, and
9,000 2001 sales and marketing
California 11,000 2000 Sales office, customer support and
repair depot
Texas 12,000 2000 Sales office and customer support
Arizona 1,300 2000 Sales office and customer support
Scotland 5,300 2020 Sales office and customer support
Germany 2,500 2000 Sales office and customer support
France 6,400 2000 Sales office, customer support and
repair depot
Japan 9,900 2000 Sales office, customer support and
repair depot
- 4 -
PART I
Item 2. Properties (continued)
During 2000, the Company will consolidate its Colorado operations into a new
60,000 square foot leased facility. In anticipation of this consolidation, the
Company sold its Colorado facility in December 1999, recognizing a $1.4 million
gain, and entered into a lease with the new owner to facilitate the transition
into the new facility.
The Company has also signed a lease for a 7,500 square foot sales and service
facility in Taiwan that will be occupied during 2000.
With these additions during 2000, the Company believes it has adequate
facilities to meet its currently anticipated requirements and that suitable
additional or substitute facilities will be available as required. The lease on
the Mansfield, Massachusetts, facility provides for renewal options for up to
fifteen additional years.
Item 3. Legal Proceedings
In the normal course of business, the Company is subject to various legal
proceedings and claims. The Company believes that the ultimate outcome of these
matters will not have a material effect on its financial statements.
The Company is a defendant in an action brought in 1998 in the Massachusetts
Superior Court by Raytheon Company which alleges that between 1992 and 1994 the
Company sold Raytheon defective components used in missile guidance systems
manufactured by Raytheon. The Company has not been in the business of selling
these components since 1994.
The Company has denied all claims asserted against it by Raytheon and has
succeeded in having certain claims dismissed. The action is in the discovery and
motion phase. The Company believes that it has meritorious defenses and that,
although the ultimate outcome of the matters cannot be predicted with certainty,
the disposition of the matters should not have a material effect on the
financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1999, no matters were submitted to a vote
of security holders through the solicitation of proxies or otherwise.
- 5 -
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
The Company's common stock is traded on the Nasdaq Stock Market (Nasdaq symbol
HELX). At December 31, 1999, there were 22,375,631 shares of common stock
outstanding and approximately 740 common stockholders of record.
Price Range of Common Stock and Cash Dividend Per Common Share
The price range and cash dividend per common share of the Company's common stock
by quarter are:
First Second Third Fourth
1999 Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
Stock price
High $24.00 $24.00 $35.06 $49.50
Low $12.88 $15.13 $21.00 $32.44
Cash dividends per share $ 0.12 $ 0.12 $ 0.12 $ 0.12
First Second Third Fourth
1998 Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
Stock price
High $25.13 $20.63 $15.50 $14.00
Low $17.75 $14.75 $ 9.25 $ 6.81
Cash dividends per share (1) $ 0.21 $ 0.21 $ 0.21 $ 0.12
(1) In the first quarter of 1998, cash dividends per share are based on shares
outstanding at that time and therefore do not reflect the 2,383,000 shares
issued as part of the acquisition of Granville Phillips Company.
The Board of Directors declared a quarterly cash dividend of $0.12 per common
share payable on March 15, 2000, to common stockholders of record at the close
of business on March 7, 2000.
Item 6. Selected Consolidated Financial Data
The following table summarizes certain selected consolidated financial data,
which should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Company's consolidated
financial statements and related notes included elsewhere herein. In connection
with the acquisition of Granville-Phillips Company in 1998, accounted for as a
pooling of interests, all prior-period financial data has been restated to
include the impact of the combination.
- 6 -
PART II
Item 6. Selected Consolidated Financial Data (continued)
December 31
-----------------------------------------------------------------
(in thousands except per share data) 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
Net sales $139,389 $95,345 $157,076 $151,665 $145,370
Net income (loss) (1) $ 15,864 $(1,920) $ 25,544 $ 25,126 $ 24,694
Basic net income (loss)
per share (2) $ 0.71 $ (0.09) $ 1.15 $ 1.15 $ 1.14
Diluted net income (loss)
per share (2) $ 0.70 $ (0.09) $ 1.14 $ 1.14 $ 1.12
Cash dividends per share (1) (2) (3) $ 0.48 $ 0.75 $ 0.735 $ 0.65 $ 0.29
Total assets $ 93,655 $75,652 $ 96,219 $ 83,005 $ 79,509
Basic shares (2) 22,336 22,262 22,151 21,788 21,592
Diluted shares (2) 22,623 22,262 22,353 22,096 22,124
(1) Net income for the year ended December 31, 1999, reflects the gain on sale
of the Company's Colorado facility of $1,397,000. Net loss for the year
ended December 31, 1998, reflects merger and other special charges of
$3,546,000 related to the acquisition of Granville-Phillips Company and
restructuring and other special charges of $2,500,000 related to work force
reductions, exit costs for a leased facility and impairment of certain
assets. (See Notes H and I of Notes to Consolidated Financial Statements.)
(2) All share and per share data reflect a two-for-one common stock split
effective November 1997.
(3) Cash dividends per share declared in periods prior to the acquisition of
Granville-Phillips Company are based on shares outstanding at that time and
therefore do not reflect the 2,383,000 shares issued as part of the
acquisition.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The discussion in this item and elsewhere in this report contains
forward-looking statements involving risks and uncertainties that could cause
actual results to differ materially from those expressed in the forward-looking
statements. These risks and uncertainties include those described under "Certain
Factors That May Affect Future Results" below.
On May 7, 1998, the Company acquired Granville-Phillips Company ("GPC"). GPC is
a world leader in the development and manufacture of instrumentation for vacuum
measurement and control used principally in the semiconductor, flat panel
display and data storage manufacturing processes. The transaction was accounted
for as a pooling of interests; and accordingly, the financial results of the
Company for all periods presented include the financial position, results of
operations, stockholders' equity and cash flows of GPC.
- 7 -
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations - 1999 Compared with 1998
Throughout 1999, the global semiconductor capital equipment industry experienced
a rapid recovery from the significant worldwide downturn that occurred in 1998.
Because of this positive industry trend, net sales for 1999 were $139.4 million
compared to $95.3 million in 1998, an increase of $44.1 million or 46.2%.
Total gross profit as a percentage of net sales was 44.4% for 1999, compared to
39.8% for the prior year. The improvement in gross margin was primarily
attributable to increased production volume and the related decrease in
manufacturing unit costs.
Selling, general and administrative expenses increased in 1999 to $32.0 million
from $26.6 million in the prior year. The increase in spending is primarily
attributable to expenditures to support increased sales activities worldwide,
including expansion of the Company's sales and service location in Japan, and
the final year of expense related to a stock-based variable compensation plan.
Research and development expenses for 1999 were $9.9 million or 7.1% of net
sales, compared to $10.1 million or 10.6% of net sales for 1998. As the Company
entered 1999, its research and development spending focused on long-term
strategic initiatives. As industry conditions improved during the year, the
Company increased its spending to also include projects that meet near-term
customer requirements. The Company expects to spend approximately $13.0 million
to $14.0 million on research and development in 2000.
In 1998, the Company eliminated non-strategic spending while redirecting
resources to the Company's global customer support structure and other strategic
initiatives and took a charge of $2.5 million. These changes made available
approximately $5.0 million, which was redirected to the above-mentioned
operations in 1999. At October 1, 1999, the restructuring accrual was fully
utilized.
Royalty and equity income from the Company's joint venture in Japan increased by
$0.5 million in 1999 due to the turnaround in the Japanese semiconductor capital
equipment market.
Interest and other income for 1999 was $0.9 million compared with $1.2 million
for 1998, reflecting lower cash, cash equivalent and investment balances during
the year.
During 2000, the Company will consolidate its Colorado operations into a new
60,000 square foot leased facility. In anticipation of this consolidation, the
Company sold its Colorado facility in December 1999, recognizing a $1.4 million
gain, and entered into a lease with the new owner to facilitate the transition
into the new facility.
The Company recorded an income tax provision of $7.8 million for 1999 compared
to an income tax benefit of $0.7 million for the previous year. The 1999
provision of 33% is less than the federal statutory rate of 35% because the
Company benefited from research and development and other tax credits. In 1998,
the Company had an operating loss before taxes due to merger, restructuring and
special charges; and the Company benefited from research and development and
other tax credits.
- 8 -
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations - 1998 Compared with 1997
Net sales for 1998 were $95.3 million compared to $157.1 million in 1997, a
decrease of $61.8 million. This decline was attributable to the excess capacity
in the worldwide semiconductor industry, combined with the economic slump in the
Pacific Rim.
Total gross profit as a percentage of net sales was 39.8% for 1998, compared to
48.2% for the prior year. The reduction in gross margin was caused by the
substantial decline in production volume and the related increase in excess
capacity and manufacturing unit costs.
Research and development expenses for 1998 were $10.1 million or 10.6% of net
sales, compared to $11.5 million or 7.3% of net sales for 1997. As industry
conditions worsened during the year, the Company delayed certain expenditures on
projects it believed were not critical during the downturn. Despite the decline
in the semiconductor capital equipment business environment and the continued
weakness of the Asian markets, the Company continued to fund its long-term
strategic development programs in 1998 in order to position the Company for
growth as economics improved in the worldwide semiconductor industry.
Selling, general and administrative expenses decreased in 1998 to $26.6 million
from $30.9 million in the prior year. This reduction in spending was primarily
attributable to a decrease in variable compensation, lower sales commission
expense and a reduction in advertising and promotional expenditures, which was
partially offset by expenses associated with the opening of the Company's sales
office in Japan.
During 1998, the Company incurred certain special charges. In the second
quarter, the Company acquired GPC in a transaction accounted for as a pooling of
interests. Direct acquisition costs, including professional fees and
compensation expense for various incentive plans for certain GPC employees,
amounted to $3.5 million and were charged against results of operations. During
the third quarter, the Company restructured its domestic operations to eliminate
non-strategic spending, while redirecting resources to the Company's global
customer support structure and other strategic initiatives and took a charge of
$2.5 million. The restructuring included provisions for termination benefits of
$1.3 million paid to approximately 80 personnel, $1.0 million relating to the
closing of a leased facility and $0.2 million for the impairment of certain
assets. Approximately $0.7 million of the charge was non-cash, relating to the
write-off of certain leasehold improvements in the closed facility and the
impairment of the assets. The Company expected these changes would provide
approximately $5.0 million of annual cost savings in 1999. At December 31, 1998,
$0.9 million of restructuring and special charges remained in other accrued
expenses.
As a result of the decline in net sales and the special charges recorded during
1998, the Company experienced an operating loss of $4.8 million or 5.0% of net
sales, compared to an operating profit of $33.3 million or 21.2% of net sales
for the prior year.
- 9 -
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations - 1998 Compared with 1997 (continued)
Royalty and equity income from the Company's joint venture in Japan decreased by
$0.8 million in 1998 due to the downturn in the Japanese semiconductor capital
equipment market.
Interest and other income for 1998 was $1.2 million compared with $1.8 million
for 1997, reflecting lower cash, cash equivalent and investment balances during
the year.
The Company recorded an income tax benefit of $0.7 million for 1998 compared to
a tax provision of $11.3 million for the previous year. In 1998, the Company had
an operating loss before taxes due to merger, restructuring and special charges.
The Company benefited from research and development and other tax credits. The
1997 provision of 30.6% is less than the federal statutory rate of 35% because
Granville-Phillips Company was an S-Corporation prior to the acquisition and,
therefore, not subject to federal income tax.
Liquidity and Capital Resources
Net cash provided by operating activities was $12.4 million in 1999. The Company
invested $4.6 million, primarily in machinery and equipment, during 1999. The
increase of approximately $2.0 million from 1998 was principally due to spending
on information systems for its Japanese operation and Year 2000 remediation
efforts.
The Company's normal annual capital needs are approximately $4.0 million to $5.0
million. However, in 2000 the Company has four major initiatives that will
result in capital spending of approximately $10.0 million. These initiatives
are: consolidation of its Colorado operations into a new 60,000 square foot
leased facility, the first phase of a new corporate information system, its
GOLDLink global support operations center and the opening of a sales and service
location in Taiwan.
Cash dividends paid to stockholders during 1999 were $10.7 million compared to
$16.1 million for 1998. In October 1998, the Company's Board of Directors
reduced the quarterly dividend from $0.21 per common share to $0.12 per common
share.
The Company manages its foreign exchange rate risk arising from intercompany
foreign currency denominated transactions through the use of foreign currency
forward contracts. The gains and losses on these transactions are not material.
The Company believes that existing cash, cash equivalents, investment balances
and anticipated cash flow from operations will be adequate to fund operations
for the foreseeable future.
- 10 -
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Legal Proceedings
In the normal course of business, the Company is subject to various legal
proceedings and claims. The Company is a defendant in an action brought by
Raytheon Company claiming damages from the sale of allegedly defective
components by the Company to Raytheon, which the Company no longer sells. The
Company believes that it has meritorious defenses to the claims and that,
although the outcome of the action cannot be predicted with certainty, the
disposition of the claim should not have a material effect on the financial
position of the Company.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities " This statement establishes accounting and
reporting standards for derivative instruments, including some derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Company will adopt SFAS 133 in
2001, in accordance with SFAS 137, which deferred the effective date of SFAS
133. The adoption of this standard in 2001 is not expected to have a material
impact on the Company's consolidated financial statements.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB
101 summarizes the staff's view in applying generally accepted accounting
principles to selected revenue recognition issues. The application of the
guidance in SAB 101 will be required in the Company's first quarter of 2000. The
Company has evaluated the application of SAB 101 and determined that it will
have no impact.
Certain Factors That May Affect Future Results
From time to time, information provided by the Company, statements made by its
employees or information included in its filings with the Securities and
Exchange Commission may contain statements that are "forward-looking statements"
involving risks and uncertainties. In particular, statements in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
relating to the Company's shipment levels, profitability, business and industry
outlook and sufficiency of capital to meet working capital and capital
expenditure requirements may be forward-looking statements. The words "expect,"
"anticipate," "plan," "believe," "seek," "estimate" and similar expressions are
intended to identify such forward-looking statements. Such statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions that could cause the Company's future results to differ materially
from those expressed in any forward-looking statements made by or on behalf of
the Company. Many such factors are beyond the Company's ability to control or
predict. Readers are accordingly cautioned not to place undue reliance on
forward-looking statements. The Company disclaims any intent or obligation to
update publicly any forward-looking statements, whether in
- 11 -
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Certain Factors That May Affect Future Results (continued)
response to new information or future events or otherwise. Important factors
that may cause the Company's actual results to differ materially from such
forward-looking statements include, but are not limited to, the factors
discussed below.
The Company's business depends in large part upon the capital expenditures of
semiconductor manufacturers, which, in turn, depend on the current and
anticipated market demand for integrated circuits and products utilizing
integrated circuits. The semiconductor industry is highly cyclical and has
historically experienced periodic downturns, which generally have had a severe
effect on the semiconductor industry's demand for capital equipment and have
adversely affected the Company's results of operations. There can be no
assurance that developments in the semiconductor industry or the semiconductor
equipment industry will occur at the rate or in the manner expected by the
Company.
In addition to the cyclical nature, risks and uncertainties of the semiconductor
industry, the Company faces the following risks and uncertainties among others:
the need to continuously develop, manufacture and gain customers' acceptance of
new products and product enhancements; dependence on a limited number of
customers and concentration of sales to one or a few customers; the Company's
ability to attract and retain certain key personnel; the ability of the Company
to protect its technology assets by obtaining and enforcing patents; and
dependence on sole and limited source suppliers for certain components and
subassemblies included in the Company's products and systems. As a result of the
foregoing and other factors, the Company may experience material fluctuations in
its future operating results on a quarterly or annual basis which could
materially affect its business, financial position, results of operations and
stock price.
Year 2000
The Year 2000 problem refers to the potential for information systems to be
unable to correctly recognize and process calendar dates and date-sensitive
information involving dates on or after January 1, 2000. In 1997, the Company
began to address its Year 2000 risk within four categories: 1) internal business
software, 2) internal systems (hardware and software, exclusive of business
software), 3) external suppliers of goods and services, and 4) the Company's
products. The Company has not experienced any material Year 2000 problems to
date in any of these categories but will continue monitoring its Year 2000 risk
on an ongoing basis.
The Company's total cost associated with addressing the Year 2000 problem was
approximately $1.0 million. Of the total cost, approximately $0.8 million
relates to new systems and has been capitalized.
- 12 -
PART II
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
Foreign Currency and Exchange Rate Risk
A portion of the Company's business is conducted outside the United States
through its foreign subsidiaries. The foreign subsidiaries maintain their
accounting records in their local currencies. Consequently, period-to-period
comparability of results of operations is affected by fluctuations in exchange
rates. To reduce the risks associated with foreign currency rate fluctuations,
the Company has entered into forward exchange contracts on a continuing basis to
hedge the currency exposures. Gains and losses on forward exchange contracts
qualifying for hedge accounting were immaterial for years presented and were
classified in cost of sales. The Company plans to continue to use forward
exchange contracts to mitigate the impact of exchange rate fluctuations. The
notional amount of the Company's outstanding foreign currency contracts at
December 31, 1999, was $4,027,000. The potential fair value loss for a
hypothetical 10% adverse change in forward currency exchange rates at December
31, 1999, would be $451,600. The potential loss was estimated calculating the
fair value of the forward exchange contracts at December 31, 1999, and comparing
that with the value calculated using the hypothetical forward currency exchange
rates.
- 13 -
PART II
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
SCHEDULES COVERED BY THE REPORT OF
INDEPENDENT ACCOUNTANTS
Page(s)
Report of Independent Accountants..........................................23
Consolidated Financial Statements of Helix Technology Corporation
Consolidated Balance Sheets as of December 31, 1999 and 1998........24
Consolidated Statements of Operations for the Years Ended
December 31, 1999, 1998 and 1997................................25
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1999, 1998 and 1997............26
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1999, 1998 and 1997..........................27
Notes to Consolidated Financial Statements..............................28-42
Report of Independent Accountants..........................................43
Quarterly Results (Unaudited)..............................................44
Financial Statement Schedule for the Years Ended December 31, 1999,
1998 and 1997
II. Valuation and Qualifying Accounts..........................45
Schedules other than those listed above have been omitted since they are either
inapplicable or not required.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Company did not change accountants or file a Form 8-K reporting a
disagreement on an accounting principle, practice or financial statement
disclosure during the two-year period ended December 31, 1999.
- 14 -
PART III
Item 10. Directors and Executive Officers of The Registrant
Officers are elected annually by the Board and serve at the discretion of the
Board. Set forth below is information regarding the current Executive Officers
of the Company who are not Directors of the Company.
Mr. Robert E. Anastasi is 53 and has served the Company as Senior Vice President
since July 1997 and prior to that as Vice President since June 1991.
Mr. Michael El-Hillow is 48 and has served the Company as Senior Vice President
and Chief Financial Officer since July 1997 and prior to that as Vice President
and Chief Financial Officer since April 1997. He was Vice President and Chief
Financial Officer of A.T. Cross Company from January 1991 until April 1997.
Mr. Christopher Moody is 44 and has served the Company as Senior Vice President
since August 1997. He was Vice President of Japan Sales at KLA-Tencor
Corporation from April 1996 until August 1997 and Director of Sales for KLA
Instruments Wafer Inspection Division from January 1995 until April 1996. He
served as National Sales Manager at Eaton Corporation, Semiconductor Equipment
Division, from 1993 until January 1995.
Additional information required by this item is incorporated herein by reference
to the registrant's proxy statement for its 2000 Annual Meeting of Stockholders
which will be filed with the SEC in March 2000, pursuant to Regulation 14A.
Item 11. Executive Compensation
Information required by this item is incorporated herein by reference to the
registrant's proxy statement for its 2000 Annual Meeting of Stockholders that
will be filed with the SEC in March 2000, pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information required by this item is incorporated herein by reference to the
registrant's proxy statement for its 2000 Annual Meeting of Stockholders that
will be filed with the SEC in March 2000, pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions
There were no related-party transactions.
- 15 -
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Page Number(s) or
Incorporation by
Description Reference to
(a) Financial Statements, Schedules & Exhibits:
(1), (2) The Consolidated Financial Statements
and required schedules are indexed
under Item 8. 14
(3) Exhibits required by Item 601 of SEC
Regulation S-K. (Exhibit numbers refer
to exhibit number on Table I.)
2.1 Agreement and Plan of Merger dated as Exhibit 2.1 to the
of April 16, 1998, among Helix Company's Form 8-K
Technology Corporation, Helix filed May 15, 1998.
Acquisition Corporation, Granville-
Phillips Company and certain
principal stockholders of Granville-
Phillips Company.
2.2 Escrow Agreement dated May 7, 1998. Exhibit 2.3 to the
Company's Form 8-K
filed May 15, 1998.
3. Restated Certificate of Incorporation, Exhibit 3 to the
as amended on May 7, 1987, and Company's Form 10-Q
May 18, 1988. for the Quarter Ended
September 30, 1988.
By-laws, as amended on December 10, Exhibit (3)-3 to the
1986, and December 9, 1987. Company's Form 10-K
for the Year Ended
December 31, 1987.
4A. Description of Common Stock Exhibit 3 to the
Company's Form
10-Q for the
Quarter Ended
September 30, 1988.
- 16 -
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s) or
Incorporation by
Description Reference to
4B. Description of Preferred Stock Exhibit 3 to the
Company's Form
10-Q for the
Quarter Ended
September 30, 1988.
10. Material Contracts:
(1) Basic agreement between the Company Exhibit 10.13 to
and Ulvac Corporation dated a Registration
August 17, 1981. Statement on Form
S-2, Registration
No. 2-84880.
(2) Lease agreement dated July 24, 47-49
1984, as amended July 26, 1999,
between Long Gate LLC as Lessor
and the Company as Lessee.
(3) Lease agreement dated May 23, Exhibit 10-(14) to the
1991, between Mansfield Corporate Company's Form 10-K
Center Limited Partnership as for the Year Ended
Lessor and the Company as Lessee. December 31, 1991.
(4) Lease agreement dated May 21, Exhibit 10-(4) to the
1996, between LakeCenter Plaza, Company's Form 10-K
Ltd., LLLP as Lessor and the for the Year Ended
Company as Lessee. December 31, 1998.
(5) Lease agreement dated August 7, Exhibit 10-(5) to the
1998, between Mitsubishi Jisho Company's Form 10-K
Co., Ltd. as Lessor and the for the Year Ended
Company as Lessee. December 31, 1998.
- 17 -
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s) or
Incorporation by
Description Reference to
Management Compensation Plans, Contracts and Arrangements:
(6) Lease agreement dated May 14, 50-91
1999, between MUM IV, LLC as
Lessor and the Company as Lessee.
(7) The Company's 1996 Equity Incentive Exhibit A to the
Plan. Company's Proxy
Statement for its
1996 Annual Meeting
of Stockholders held
on April 24, 1996.
(8) The Company's 1996 Stock Option Exhibit B to the
Plan for Non-Employee Directors. Company's Proxy
Statement for its
1996 Annual Meeting
of Stockholders held
on April 24, 1996.
(9) The Company's informal incentive Exhibit 10.9 to a
bonus plan. Registration
Statement on Form
S-2, Registration
No. 2-84880.
(10) Employment agreement dated Exhibit 10-(1) to the
February 11, 1999, between the Company's Form 10-Q
Company and Robert J. Lepofsky. for the Quarter Ended
April 2, 1999.
- 18 -
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s) or
Incorporation by
Description Reference to
(11) The Company's Supplemental Key Exhibit 14-(14) to
Executive Retirement Plan the Company's Form
effective February 13, 1992. 10-K for the Year
Ended December 31,
1992.
(12) Employment Agreement dated July 18, Exhibit 10-(13) to
1997, between the Company and the Company's Form
Robert E. Anastasi. 10-K for the Year
Ended December 31,
1997.
(13) Employment Agreement dated July 18, Exhibit 10-(14) to
1997, between the Company and the Company's Form
Michael El-Hillow. 10-K for the Year
Ended December 31,
1997.
(14) Employment Agreement dated Exhibit 10-(15) to
August 18, 1997, between the the Company's Form
Company and Christopher Moody. 10-K for the Year
Ended December 31,
1997.
(15) The Company's Supplemental Benefit 92-93
Plan effective April 1, 1999.
- 19 -
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s) or
Incorporation by
Description Reference to
21. Subsidiaries of the Registrant. 94
23. Consent of Independent Accountants. 95
27.1 Financial Data Schedule (EDGAR version only).
(b) The Company did not file any reports on Form 8-K during the quarter ended
December 31, 1999.
(c) Exhibits required by Item 601 of Regulation S-K are indexed under (a)(3)
above.
(d) Separate financial statements of: (1) subsidiaries not consolidated and
fifty percent or less owned persons; (2) affiliates whose securities are
pledged as collateral; and (3) other Schedules are not filed because they
are either not applicable or the items do not exceed the various
disclosure levels.
- 20 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized, this 17th day of March, 2000.
HELIX TECHNOLOGY CORPORATION
(Registrant)
/s/Robert J. Lepofsky
----------------------------------
Robert J. Lepofsky
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant on this 17th day of March, 2000, in the capacities
indicated.
Signatures Titles
(i) Principal Executive Officer
/s/Robert J. Lepofsky
---------------------
Robert J. Lepofsky President and Chief Executive Officer
(ii) Principal Financial and
Accounting Officer
/s/Michael El-Hillow
--------------------
Michael El-Hillow Senior Vice President and Chief
Financial Officer
- 21 -
(iii) A Majority of the Board of Directors
/s/Arthur R. Buckland Director
------------------------
Arthur R. Buckland
/s/Matthew O. Diggs, Jr. Director
------------------------
Matthew O. Diggs, Jr.
/s/Frank Gabron Director
-------------------------
Frank Gabron
/s/Robert H. Hayes Director
-------------------------
Robert H. Hayes
/s/Robert J. Lepofsky Director
-------------------------
Robert J. Lepofsky
/s/Marvin G. Schorr Director and Chairman of the Board
-------------------------
Marvin G. Schorr
/s/Mark S. Wrighton Director
-------------------------
Mark S. Wrighton
- 22 -
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors and Stockholders
of Helix Technology Corporation:
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, stockholders' equity and cash
flows present fairly, in all material respects, the financial position of Helix
Technology Corporation at December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 21, 2000
- 23 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
(in thousands except share data) Notes 1999 1998
- ------------------------------------------------------------------------------------------------
ASSETS
Current:
Cash and cash equivalents A $ 11,408 $ 8,843
Investments A 15,912 18,152
Receivables - net of allowances of $185 in
1999 and $228 in 1998 19,479 9,783
Inventories A 18,442 14,811
Deferred income taxes A&C 7,040 5,157
Other current assets 1,626 1,106
-------------------------
Total Current Assets 73,907 57,852
-------------------------
Property, plant and equipment at cost A 38,724 36,691
Less: accumulated depreciation (28,093) (25,990)
-------------------------
Net property, plant and equipment 10,631 10,701
Other assets A&E 9,117 7,099
-------------------------
TOTAL ASSETS $ 93,655 $ 75,652
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable $ 8,490 $ 3,752
Payroll and compensation 4,768 2,884
Retirement costs G 4,561 3,588
Income taxes A&C 3,238 507
Other accrued liabilities H 975 1,553
-------------------------
Total Current Liabilities 22,032 12,284
-------------------------
Commitments B - -
Stockholders' Equity:
Preferred stock, $1 par value; authorized
2,000,000 shares; issued and outstanding: none - -
Common stock, $1 par value; authorized 60,000,000
shares; issued and outstanding: 22,375,631 in 1999
and 22,319,131 in 1998 D 22,376 22,319
Capital in excess of par value 9,314 7,936
Treasury stock, $1 par value, 11,602 shares in
1999 and 34,000 shares in 1998 (198) (438)
Retained earnings 39,063 33,910
Accumulated other comprehensive income (loss) 1,068 (359)
-------------------------
Total Stockholders' Equity 71,623 63,368
-------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 93,655 $ 75,652
=========================
The accompanying notes are an integral part of these consolidated financial
statements.
- 24 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,
(in thousands except per share data) Notes 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------
Net sales $139,389 $ 95,345 $157,076
--------------------------------------
Costs and expenses:
Cost of sales 77,487 57,373 81,325
Research and development A 9,916 10,106 11,540
Selling, general and administrative D 31,976 26,581 30,891
Merger, restructuring and special charges H - 6,046 -
--------------------------------------
119,379 100,106 123,756
--------------------------------------
Operating income (loss) 20,010 (4,761) 33,320
Joint venture income E 1,415 957 1,744
Interest and other income 856 1,234 1,754
Gain on sale of building I 1,397 - -
--------------------------------------
Income (loss) before taxes 23,678 (2,570) 36,818
Income tax provision (benefit) A&C 7,814 (650) 11,274
-------------------------------------
Net income (loss) $ 15,864 $ (1,920) $ 25,544
======================================
Net income (loss) per share:
Basic A&D $ 0.71 $ (0.09) $ 1.15
Diluted A&D $ 0.70 $ (0.09) $ 1.14
======================================
Number of shares used in per share calculations:
Basic A&D 22,336 22,262 22,151
Diluted A&D 22,623 22,262 22,353
======================================
Pro Forma Results (unaudited)
Income (loss) before taxes $ (2,570) $ 36,818
Income tax (benefit) provision (824) 12,767
------------------------
Pro forma net income (loss) $ (1,746) $ 24,051
========================
Pro forma net income (loss) per share:
Basic $ (0.08) $ 1.09
Diluted $ (0.08) $ 1.08
========================
The accompanying notes are an integral part of these consolidated financial
statements.
- 25 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock Accumulated
Capital Other Statements of
Par in Excess Deferred Treasury Retained Comprehensive Comprehensive
(in thousands) Value of Par Compensation Stock Earnings Income (Loss) Total Income
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 $22,035 $ 2,104 $(885) $ - $ 45,396 $ 833 $ 69,483
Comprehensive income, net of tax:
Net income - - - - 25,544 - 25,544 $25,544
Other comprehensive loss:
Foreign currency translation
adjustments - - - - - (762) (762) (762)
------ --------
Other comprehensive loss - - - - - (762) (762)
--------
Comprehensive income $24,782
========
Shares issued for stock options 157 1,625 - - - - 1,782
Income tax effect from exercise
of stock options - 448 - - - - 448
Restricted stock (Note H) 73 494 (68) - - - 499
Shares tendered for exercise of
stock options (52) (987) - - - (1,039)
Cash dividends - - - - (16,260) - (16,260)
-------------------------------------------------------------------------------
Balance, December 31, 1997 22,213 3,684 (953) - 54,680 71 79,695
-------------------------------------------------------------------------------
Comprehensive loss, net of tax:
Net loss - - - - (1,920) - (1,920) $(1,920)
Other comprehensive loss:
Foreign currency translation
adjustments - - - - - (440) (440) (440)
Unrealized gain on available-
for-sale investment - - - - - 10 10 10
------ --------
Other comprehensive loss - - - - - (430) (430)
--------
Comprehensive loss $(2,350)
========
Shares issued for stock options 106 1,785 - - - - 1,891
Income tax effect from exercise
of stock options - (224) - - - - (224)
Restricted stock and acquisition
adjustment (Note H) - 2,691 953 - (2,783) - 861
Shares tendered for exercise of
stock options - - - (438) - - (438)
Cash dividends - - - - (16,067) - (16,067)
-------------------------------------------------------------------------------
Balance, December 31, 1998 22,319 7,936 - (438) 33,910 (359) 63,368
-------------------------------------------------------------------------------
Comprehensive income, net of tax:
Net income - - - - 15,864 - 15,864 $15,864
Other comprehensive income:
Foreign currency translation
adjustments - - - - - 1,467 1,467 1,467
Unrealized loss on available-
for-sale investment - - - - - (40) (40) (40)
------- --------
Other comprehensive income - - - - - 1,427 1,427
--------
Comprehensive income $17,291
========
Shares issued for stock options 57 746 - - - - 803
Shares issued for employee
savings plan - 302 - 318 - - 620
Income tax effect from exercise
of stock options - 330 - - - - 330
Shares tendered for exercise of
stock options - - - (78) - - (78)
Cash dividends - - - - (10,711) - (10,711)
-------------------------------------------------------------------------------
Balance, December 31, 1999 $22,376 $ 9,314 $ - $(198) $ 39,063 $ 1,068 $ 71,623
===============================================================================
The accompanying notes are an integral part of these consolidated financial statements.
- 26 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
(in thousands) 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income (loss) $ 15,864 $ (1,920) $ 25,544
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 4,045 3,999 3,713
Deferred income taxes (1,883) (923) (801)
Gain on sale of property (1,397) - -
Restructuring charge - 667 -
Undistributed earnings of joint venture, other (533) (769) (1,561)
Amortization of deferred compensation - 861 499
Performance-based stock compensation 1,581 959 1,300
Shares issued for employee savings plan 620 - -
Net change in other operating assets and liabilities (1) (5,867) 4,535 (1,235)
----------------------------------------
Net cash provided by operating activities 12,430 7,409 27,459
----------------------------------------
Cash flows from investing activities:
Proceeds from sale of property 2,500 - -
Capital expenditures (4,561) (2,557) (5,248)
Purchase of investments (23,910) (53,047) (4,444)
Sale of investments 26,092 38,585 3,470
----------------------------------------
Net cash provided/(used) by investing activities 121 (17,019) (6,222)
----------------------------------------
Cash flows from financing activities:
Shares tendered for exercise of stock options (78) (438) (1,039)
Net cash provided by employee stock plans 803 241 543
Cash dividends paid (10,711) (16,067) (16,260)
----------------------------------------
Net cash used by financing activities (9,986) (16,264) (16,756)
----------------------------------------
Increase (decrease) in cash and cash equivalents 2,565 (25,874) 4,481
Cash and cash equivalents, January 1 8,843 34,717 30,236
----------------------------------------
Cash and cash equivalents, December 31 $ 11,408 $ 8,843 $ 34,717
========================================
(1) Change in other operating assets and liabilities:
(Increase)/decrease in accounts receivable $ (9,696) $ 8,402 $ (4,871)
(Increase)/decrease in inventories (3,631) 560 484
(Increase)/decrease in other current assets (520) 12 (218)
Increase/(decrease) in accounts payable 4,738 (1,284) 67
Increase/(decrease) in other accrued expenses 3,242 (3,155) 3,303
----------------------------------------
Net change in other operating assets and liabilities $ (5,867) $ 4,535 $ (1,235)
========================================
Income taxes paid $ 6,619 $ 3,528 $ 10,131
========================================
Supplemental disclosure of non-cash activity in 1999, 1998 and 1997, $0,
$1,650,000 and $1,240,000, respectively, was reclassed from accrued expenses to
equity in connection with issuance of stock options.
The accompanying notes are an integral part of these consolidated financial
statements.
- 27 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates. Certain reclassifications have been made to prior
years' consolidated financial statements to conform with the current
presentation.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries after elimination of all intercompany
transactions. The investment in and operating results of the Company's
50%-owned joint venture are included on the basis of the equity method of
accounting.
Business Combination
In May 1998, the Company acquired Granville-Phillips Company ("GPC"). The
acquisition was accounted for as a pooling of interests under Accounting
Principles Board Opinion No. 16 "Business Combinations." All prior period
consolidated financial statements have been restated to include the
financial position, results of operations, stockholders' equity and cash
flows of GPC.
Foreign Currency Translation
Assets and liabilities of operations outside the United States are
translated into U.S. dollars using current exchange rates. Income and
expense accounts are translated at the average rates in effect during the
year. The effects of foreign currency translation adjustments are
included in comprehensive income as a component of stockholders' equity.
The cumulative translation adjustment for the Company's 50%-owned joint
venture is reported net of income taxes. Transaction gains/losses were
not material. The effect of foreign currency exchange rates on cash and
cash equivalents was not material.
Cash and Cash Equivalents
Cash and cash equivalents include demand deposits, money market accounts
and other highly liquid investments with original maturities of three
months or less.
- 28 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Investments
The Company's investments are classified as available-for-sale
securities, and the difference in the cost and fair value of these
investments is included in comprehensive income. The Company's
investments consist of the following:
December 31,
------------------------------------------
1999 1998
------------------- -------------------
(in thousands) Cost Fair Value Cost Fair Value
-------------------------------------------------------------------------
Money market funds $ 1,855 $ 1,855 $ 2,336 $ 2,336
Municipal and tax-free bonds 14,114 14,057 15,516 15,531
Treasury bills - - 285 285
-----------------------------------------
$15,969 $15,912 $18,137 $18,152
=========================================
Financial Instruments
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash
equivalents, short-term investments and trade accounts receivable. The
Company invests in investment-grade securities. The Company's customers
are concentrated in one industry segment, the semiconductor manufacturing
industry, and, historically, a significant portion of the Company's sales
have been to a limited number of customers within this industry. The
Company performs ongoing credit evaluations of its customers' financial
condition and may require deposits on large orders but does not require
collateral or other security to support customer receivables.
Inventories
December 31,
(in thousands) 1999 1998
----------------------------------------------------------------------
Finished goods $ 5,157 $ 3,067
Work in process 8,716 7,597
Materials and parts 4,569 4,147
------------------------
$18,442 $14,811
========================
Inventories are stated at the lower of cost or market on a first-in,
first-out basis.
- 29 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Property, Plant and Equipment
December 31,
(in thousands) 1999 1998
-------------------------------------------------------------
Land $ - $ 20
Leasehold improvements 3,962 5,454
Machinery and equipment 34,762 31,217
---------------------
$38,724 $36,691
=====================
Depreciation is provided on the straight-line method over the estimated
useful lives of the assets. Leasehold improvements are amortized over the
lesser of their useful life or the remaining life of the lease. Estimated
useful lives of machinery and equipment range from 3 to 15 years.
Maintenance and repairs are charged to expense as incurred, and
betterments are capitalized. The cost of assets sold or retired and
related depreciation are removed from the accounts at the time of sale
and any resulting gain or loss is reflected in income.
Revenue Recognition
The Company records revenue on its products when units are shipped and
when services are performed.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
Deferred income taxes result from temporary differences in the
recognition of revenues and expenses between financial statements and tax
returns. Tax credits are recognized when realized for tax purposes using
the "flow-through" method of accounting. The Company has not provided for
federal income taxes applicable to undistributed earnings of its foreign
subsidiaries since these earnings are indefinitely reinvested.
- 30 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Net Income Per Share
Basic net income (loss) per common share is based on the weighted average
number of common shares outstanding during the year. Diluted net income
(loss) per common share reflects the potential dilution that could occur
if outstanding stock options were exercised.
The following table sets forth the computation of basic and diluted net
income (loss) per common share:
For the years ended December 31,
(in thousands except per share data) 1999 1998 1997
-------------------------------------------------------------------------
Net income (loss) $15,864 $(1,920) $25,544
===============================
Basic shares 22,336 22,262 22,151
Add: Common equivalent shares (1) 287 - 202
-------------------------------
Diluted shares 22,623 22,262 22,353
Basic net income (loss) per share $ 0.71 $ (0.09) $ 1.15
===============================
Diluted net income (loss) per share $ 0.70 $ (0.09) $ 1.14
===============================
(1) Common equivalent shares represent shares issuable upon conversion of
stock options (using the treasury stock method). As of December 31,
1999, the Company had no stock options that were anti-dilutive.
Options outstanding not included in the computation of diluted shares
were 491,000 in 1998 because the Company was in a net loss position,
and the inclusion of such shares would be anti-dilutive. For 1997,
30,000 options outstanding were not included in the computation,
because the option price was greater than the average market price of
the common shares.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for
Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative
instruments, including some derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging
activities. The Company will adopt SFAS 133 in 2001, in accordance with
SFAS 137, which deferred the effective date of SFAS 133. The adoption of
this Standard in 2001 is not expected to have a material impact on the
Company's financial statements.
- 31 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
New Accounting Pronouncements (continued)
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 summarizes the staff's view in applying generally
accepted accounting principles to selected revenue recognition issues.
The application of the guidance in SAB 101 will be required in the
Company's first quarter of 2000. The Company has evaluated the
application of SAB 101 and determined that it will have no impact.
B. Lease Commitments and Contingent Obligations
The Company leases certain facilities and equipment under long-term
operating leases.
Future minimum lease payments under the noncancelable operating leases
are:
(in thousands) Operating Leases
-------------------------------------------------------------------
2000 $ 4,495
2001 3,550
2002 3,491
2003 3,267
2004 3,025
Later years 9,428
----------
Total $ 27,256
==========
Total rental expense under operating leases was $4,130,000 in 1999,
$3,526,000 in 1998, and $3,289,000 in 1997.
The Company enters into short-term foreign currency forward contracts
with its primary bank to minimize the effect of foreign currency exchange
rate fluctuations on certain intercompany transactions with its wholly
owned European and Japanese subsidiaries. Net realized and unrealized
gains and losses on these transactions are not material and are recorded
in the statements of operations. The notional amounts of the Company's
outstanding foreign currency forward contracts at December 31, 1999 and
1998, were $4,027,000 and $2,153,000, respectively.
In the normal course of business, the Company is subject to various legal
proceedings and claims. The Company is a defendant in an action brought
by Raytheon Company claiming damages from the sale of allegedly defective
components by the Company to Raytheon, which the Company no longer sells.
The Company believes that it has meritorious defenses to the claims and
that, although the outcome of the action cannot be predicted with
certainty, the disposition of the claim should not have a material effect
on the financial position of the Company.
- 32 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. Income Taxes
The components of income (loss) before income taxes and the related
provision for (benefit from) income taxes are presented below:
For the years ended December 31,
(in thousands) 1999 1998 1997
------------------------------------------------------------------------
Income (loss) before income taxes:
Domestic $22,500 $(2,572) $36,106
Foreign 1,178 2 712
----------------------------------
$23,678 $(2,570) $36,818
==================================
Provision for (benefit from)
income taxes:
Current:
Federal $ 8,114 $ 176 $10,096
Foreign 558 18 250
State 1,025 79 1,729
----------------------------------
9,697 273 12,075
Deferred:
Federal (1,675) (611) (656)
State (208) (312) (145)
----------------------------------
(1,883) (923) (801)
----------------------------------
Total $ 7,814 $ (650) $11,274
==================================
The Company's deferred tax assets and (liabilities) are comprised of the
following:
December 31,
(in thousands) 1999 1998
------------------------------------------------------------------------
Deferred tax assets:
Inventory valuation $ 1,821 $ 1,411
Compensation and benefit plans 3,643 2,208
Leases 190 223
Depreciation 671 305
Net operating loss and tax credit carryforwards 457 656
Other 335 434
---------------------
Total deferred tax assets 7,117 5,237
Deferred tax liabilities (77) (80)
---------------------
Net deferred tax assets $ 7,040 $ 5,157
=====================
Deferred income taxes on undistributed earnings of the foreign
subsidiaries are not material. The Company believes that its deferred tax
assets are more likely than not realizable; therefore, no valuation
allowance is required.
- 33 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. Income Taxes (continued)
The table below reconciles the expected U.S. federal income tax provision
(benefit) to the recorded income tax provision (benefit) in the
statements of operations:
December 31,
----------------------------------
(in thousands) 1999 1998 1997
----------------------------------------------------------------------------------------------
Federal tax computed at statutory rate of 35% $8,287 $(899) $12,886
State income taxes, net of federal income tax benefit 531 (151) 1,063
Non-taxable S-Corporation loss (income) - 165 (1,514)
Foreign sales corporation tax benefit (548) - (907)
Earnings not subject to U.S. income taxes (308) (191) (414)
R&D and foreign tax credits (508) (357) (516)
Non-deductible acquisition costs - 620 -
Other, net 360 163 676
-----------------------------------
Income tax provision (benefit) $7,814 $(650) $11,274
===================================
Prior to the acquisition on May 7, 1998, Granville-Phillips Company
("GPC") had elected to be treated as an S-Corporation for federal income
tax reporting purposes. Under this election, the individual stockholders
of GPC are deemed to have received a pro rata distribution of taxable
income of GPC (whether or not an actual distribution was made), which is
included in their taxable income. Accordingly, GPC did not provide for
federal income taxes. Unaudited pro forma net income (loss) per share for
1998 and 1997 reflects the unaudited pro forma income tax benefit
(provision) of GPC as if GPC was combined and subject to the effective
federal and state statutory rates of approximately 38% throughout these
periods. GPC's S-Corporation tax reporting status was terminated on the
date of the acquisition and, therefore, the undistributed earnings of
$2.8 million as of the date of acquisition have been reclassified to
additional paid-in capital.
D. Capital Stock
On October 16, 1997, the Company's Board of Directors authorized a
two-for-one common stock split that was effected in the form of a 100%
stock dividend. Stock certificates were distributed on November 13, 1997,
to stockholders of record on October 30, 1997. All references in the
financial statements and notes to number of shares, per share amounts and
market prices of the Company's common stock have been retroactively
restated to reflect the increased number of common shares outstanding.
Options for the purchase of shares of the Company's common stock have
been granted to officers, directors and key employees under various
nonqualified stock option agreements. The terms of these agreements
provide that the options are exercisable over a number of years from the
date of grant at not less than the fair market value at the date of
grant.
- 34 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. Capital Stock (continued)
Options expire at various dates through the year 2009. At December 31,
1999 and 1998, respectively, 1,151,274 and 1,207,774 shares of common
stock were reserved for stock options. At December 31, 1999 and 1998,
respectively, 115,274 and 97,024 nonqualified stock options were
exercisable. In 1989, the Company entered into an agreement with its
president under which options to purchase up to 800,000 shares of the
Company's common stock were granted, at a price of $1.69 per share,
exercisable over a ten-year period subject to the attainment of certain
financial performance targets. At December 31, 1999, options for the
purchase of 640,000 shares had become exercisable. The remaining 160,000
shares will become exercisable on March 1, 2000. In connection with this
agreement, compensation expense of $1,581,000, $959,000 and $1,300,000
was charged in 1999, 1998 and 1997, respectively.
In the first quarter of 1999, the Company entered into a new employment
agreement with its president under which nonqualified options to purchase
up to 200,000 shares of the Company's common stock were granted at the
fair market value of $20.81 per share, vesting over an eight-year period.
The following table summarizes option activity for the years ended 1997,
1998 and 1999:
Number of Weighted Average
Options Outstanding Common Shares Exercise Price
------------------------------------------------------------------------
December 31, 1996 615,000 $ 5.95
Options granted 121,000 $ 20.90
Options exercised (157,226) $ 3.45
Options cancelled (82,000) $ 14.66
-----------
December 31, 1997 496,774 $ 8.95
Options granted 180,000 $ 22.33
Options exercised (106,000) $ 2.27
---------
December 31, 1998 570,774 $ 14.41
Options granted 331,500 $ 21.68
Options exercised (56,500) $ 14.21
Options cancelled (73,500) $ 20.65
------------
December 31, 1999 772,274 $ 16.95
============
- 35 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. Capital Stock (continued)
The following table summarizes information concerning currently
outstanding and exercisable options:
Options Outstanding Options Exercisable
---------------------------------------------------- --------------------------------
Range of Number Weighted Average Weighted Number Weighted
Exercise Outstanding Remaining Average Exercisable Average
Prices at 12/31/99 Contractual Life Exercise Price at 12/31/99 Exercise Price
--------------------------------------------------------------------------------------------------------------
$ 1.69 - $ 1.69 160,000 .16 years $ 1.69 - -
$ 2.86 - $ 3.85 12,274 3.82 years $ 3.68 12,274 $ 3.68
$ 9.13 - $20.81 407,500 7.09 years $19.56 64,000 $16.76
$23.11 - $40.69 192,500 8.09 years $24.97 39,000 $24.96
--------------- ------- ------------ ------ --------- ------
$ 1.69 - $40.69 772,274 5.85 years $16.95 115,274 $18.14
The Company adopted the disclosure only option under Statement of
Financial Accounting Standards No. 123 (SFAS 123), "Accounting for
Stock-Based Compensation" as of December 31, 1996. If the accounting
provisions of SFAS 123 had been adopted, the effect on net income (loss)
and basic and diluted net income (loss) per share would have been as
follows:
For the years ended December 31,
(in thousands except per share data) 1999 1998 1997
------------------------------------------------------------------------
As Reported
Net income (loss) $15,864 $(1,920) $25,544
Basic net income (loss) per share $ 0.71 $ (0.09) $ 1.15
Diluted net income (loss) per share $ 0.70 $ (0.09) $ 1.14
Pro Forma
Net income (loss) $15,179 $(2,438) $25,371
Basic net income (loss) per share $ 0.68 $ (0.11) $ 1.15
Diluted net income (loss) per share $ 0.67 $ (0.11) $ 1.14
The weighted average fair value of options granted during 1999, 1998 and
1997 was $10.63, $8.44 and $8.06, respectively. The fair value of each
option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions:
1999 1998 1997
------------------------------------------------------------------------
Dividend yield 1.8% 4.2% 4.2%
Expected stock price volatility 50% 50% 50%
Risk-free interest rate 5.18% 5.49% 6.34%
Expected holding period (years) 7.4 6.4 6.4
- 36 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
E. Other Assets
The Company has a 50/50 joint venture company, Ulvac Cryogenics, Inc.,
with an unrelated Japanese manufacturer to produce cryogenic vacuum pumps
in Japan.
Condensed results of operations for the joint venture for each of the
three fiscal years ended September 30, are as follows:
(in thousands) 1999 1998 1997
------------------------------------------------------------------------
Net sales $24,229 $19,511 $27,638
===============================
Gross profit $ 7,847 $ 5,280 $ 8,488
===============================
Net income $ 1,762 $ 1,092 $ 2,364
===============================
Joint venture income, including
royalty income and equity income $ 1,415 $ 957 $ 1,744
===============================
Condensed balance sheet information as of September 30, is as follows:
(in thousands) 1999 1998
------------------------------------------------------------------------
Current assets $26,548 $15,314
Noncurrent assets 4,119 2,906
-------------------
Total assets $30,667 $18,220
===================
Current liabilities $11,291 $ 4,572
Long-term liabilities 1,113 829
Stockholders' equity 18,263 12,819
-------------------
Total liabilities and
stockholders' equity $30,667 $18,220
===================
The Company's net investment in the joint venture of approximately
$8,549,000 and $6,500,000 at December 31, 1999 and 1998, respectively, is
reported in other assets. The Company's net investment at December 31,
1999 and 1998, reflects a cumulative translation gain (loss) of
$1,083,000 and ($168,000), respectively (net of income tax provision of
$583,000 and benefit of $90,000, respectively). This currency translation
gain or loss, which is included in stockholders' equity, resulted from
translating the balance sheet of the joint venture into U.S. dollars.
F. Segment Information
Line of Business and Foreign Operations
The Company adopted Statement of Financial Accounting Standards No. 131
(SFAS 131), "Disclosure about Segments of an Enterprise and Related
Information" for 1998. The Company operates in several operating segments
and in one reportable segment: the development, manufacture, sale and
support of cryogenic and vacuum equipment. These operating segments have
been combined in accordance with the aggregation criteria of SFAS 131.
- 37 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F. Segment Information (continued)
The consolidated financial statements include the accounts of wholly
owned international subsidiaries which operate customer support
facilities to sell and service products manufactured in the United
States. A summary of United States and International operations follows
for the years ended December 31:
United
(in thousands) States International Consolidated
------------------------------------------------------------------------
1999
Net sales $119,154 $20,235 $139,389
Long-lived assets $ 17,328 $ 2,420 $ 19,748
1998
Net sales $ 81,747 $13,598 $ 95,345
Long-lived assets $ 16,707 $ 1,093 $ 17,800
1997
Net sales $143,083 $13,993 $157,076
Long-lived assets $ 18,387 $ 531 $ 18,918
Intercompany transactions are at prices that are comparable to
third-party sales.
Export Sales and Significant Customers
The Company's export sales, principally to customers in the Far East,
were $10,663,000 in 1999, $9,231,000 in 1998 and $13,105,000 in 1997.
The Company's largest customer represented 29%, 20%, and 30% of net sales
for 1999, 1998 and 1997, respectively.
- 38 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
G. Employee Benefit Plans
The Company's retirement and savings plans cover substantially all of the
Company's employees who have one year of service. A noncontributory
defined benefit pension plan and a defined contribution plan function
together as the Company's retirement program.
The Company adopted Statement of Financial Accounting Standards No. 132,
"Employees' Disclosure about Pensions and Other Retirement Benefits,"
during 1998. The following tables set forth the funded status, projected
benefit obligation and fair value of assets of the plan.
Reconciliation of Funded Status
December 31,
(in thousands) 1999 1998
------------------------------------------------------------------------
Funded status $ 2,336 $ 1,402
Unrecognized prior service cost 33 40
Unrecognized net transition asset (145) (184)
Unrecognized net actuarial gain (5,819) (4,018)
--------------------
Accrued pension cost $(3,595) $(2,760)
====================
Reconciliation of Projected Benefit Obligation
(in thousands) 1999 1998
-------------------------------------------------------------------------
Beginning of year benefit obligation (January 1) $ 7,271 $ 6,369
Service cost 1,024 981
Interest cost 515 508
Actuarial (gain) loss (1,975) 963
Benefits paid (956) (1,061)
Curtailment gain (1) - (489)
--------------------
End of year benefit obligation (December 31) $ 5,879 $ 7,271
====================
Reconciliation of Fair Value of Assets
(in thousands) 1999 1998
-------------------------------------------------------------------------
Beginning of year, fair value of assets (January 1) $ 8,673 $ 8,190
Actual return on plan assets 498 1,544
Benefits paid (956) (1,061)
--------------------
End of year, fair value of assets (December 31) $ 8,215 $ 8,673
====================
- 39 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
G. Employee Benefit Plans (continued)
The Company's net pension cost included the following components:
(in thousands) 1999 1998 1997
-------------------------------------------------------------------
Service cost $1,024 $ 981 $ 894
Interest cost 515 508 481
Expected return on assets (546) (563) (537)
Net amortization of:
Prior service cost 7 8 8
Net actuarial gain (125) (131) (131)
Transition obligation (39) (39) (39)
Curtailment gain(1) - (489) -
------------------------------------
Net periodic pension cost $ 836 $ 275 $ 676
====================================
(1) The curtailment gain relates to certain participants in the pension
plan who were terminated from employment in connection with the
Company's restructuring plan. (Note H).
Key assumptions used in computing year-end obligations for the defined
benefit plan were:
1999 1998 1997
------------------------------------------------------------------------
Discount rate for obligations 7.75% 6.75% 7.0%
Rate of compensation increase 5.5% 5.0% 5.0%
Long-term rate of return on assets 9.0% 9.0% 9.0%
The Company has Employee Savings Plans, qualified under Section 401(k),
which are designed to supplement retirement income. The Company
contributes a percentage of the participants' contributions up to a
defined maximum amount. The contributions expense, net of forfeitures,
was $1,239,000 in 1999, $826,000 in 1998 and $812,000 in 1997.
The Company has a Supplemental Key Executive Retirement Plan which is
designed to supplement benefits paid to participants under
Company-funded, tax-qualified retirement plans. The Company recorded
additional retirement costs of $186,000 in 1999, $170,000 in 1998 and
$69,000 in 1997 in connection with this Plan.
- 40 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. Merger, Restructuring and Special Charges
In the second quarter of 1998, the Company acquired Granville-Phillips
Company ("GPC") in a transaction accounted for as a pooling of interests.
GPC operates in the same line of business as the Company; the
development, manufacture, sale and support of vacuum equipment. The
Company issued 2,382,925 shares of common stock in exchange for all
outstanding common stock of GPC at May 7, 1998. Direct acquisition costs,
primarily compensation expense relating to shares issued to certain GPC
employees as part of a restricted stock plan, and professional fees
amounted to $3.5 million and were charged against the results of
operations. At the time of the acquisition, GPC common shares included in
the restricted stock plan were exchanged for the equivalent value of the
Company's common shares. GPC was an S-Corporation for tax purposes prior
to the acquisition. In accordance with SAB Topic 4B, the amount of
undistributed earnings of $2.8 million generated during the periods that
GPC was taxed as an S-Corporation was reclassified from retained earnings
to capital in excess of par value at the time of the merger and $0.8
million was recorded in capital in excess of par value for stock
incentive plans in 1998.
The following information presents certain statement of operations data
of the Company and GPC for the periods prior to the acquisition.
(Unaudited)
Three Months Ended Year Ended
(in thousands) Mar. 31, 1998 Dec. 31, 1997
--------------------------------------------------------------------
Net sales for:
Helix $25,872 $131,519
GPC 5,622 25,557
-----------------------------
Combined $31,494 $157,076
=============================
Net income (loss) for:
Helix $ 2,941 $ 21,315
GPC (1,075) 4,229
-----------------------------
Combined $ 1,866 $ 25,544
=============================
During the third quarter of 1998, the Company recorded restructuring and
other special charges of $2.5 million. The Company restructured its
domestic operations to eliminate non-strategic spending, while
redirecting resources to the Company's global customer support structure
and other strategic initiatives. The charges primarily included
provisions for termination benefits of $1.3 million for approximately 80
personnel, exit costs related to a leased facility of $1.0 million and
$0.2 million for the impairment of certain assets. At December 31, 1999,
the restructuring accrual was fully utilized.
- 41 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. Merger, Restructuring and Special Charges (continued)
The amounts accrued and charged against the provisions described above
were as follows:
1998 1999
Cash Payments Dec. 31, Cash Payments Dec. 31
and Asset 1998 and Asset 1999
(in thousands) Provision Write-offs Balance Write-offs Balance
- -----------------------------------------------------------------------------------------------
Employee termination
benefits $1,300 $1,000 $300 $300 $ -
Leased facility 1,000 400 600 600 -
Asset impairment 200 200 - - -
-------------------------------------------------------------------
Total $2,500 $1,600 $900 $900 $ -
===================================================================
I. Gain on Sale of Building
During 2000, the Company will consolidate its Colorado operations into a
new 60,000 square foot leased facility. In anticipation of this
consolidation, the Company sold its Colorado facility in December 1999,
recognizing a $1.4 million gain, and entered into a lease with the new
owner to facilitate the transition into the new facility.
- 42 -
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board Of Directors and Stockholders
of Helix Technology Corporation:
Our report on the consolidated financial statements of Helix Technology
Corporation is included on Page 23 of this Form 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule listed in the index on Page 14 of this Form 10-K.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 21, 2000
- 43 -
HELIX TECHNOLOGY CORPORATION
QUARTERLY RESULTS
(UNAUDITED)
First Second Third Fourth
(in thousands except per share data) Quarter Quarter Quarter Quarter
- -------------------------------------------------------------------------------------------------------------
1999
Net sales $25,900 $32,533 $39,036 $41,920
Gross profit 10,789 14,154 17,605 19,354
Operating income 1,566 4,004 6,510 7,930
Net income 1,260 2,992 4,785 6,827
Basic net income per share $ 0.06 $ 0.13 $ 0.21 $ 0.31
Diluted net income per share $ 0.06 $ 0.13 $ 0.21 $ 0.30
1998
Net sales $31,494 $25,706 $18,550 $19,595
Gross profit 14,702 9,955 5,948 7,367
Operating income (loss) 2,821 (1,873) (4,765) (944)
Net income (loss) 1,866 (434) (3,431) 79
Basic net income (loss) per share $ 0.08 $ (0.02) $ (0.15) $ 0.00
Diluted net income (loss) per share $ 0.08 $ (0.02) $ (0.15) $ 0.00
- 44 -
HELIX TECHNOLOGY CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1999, 1998 and 1997
(in thousands)
Additions
---------------------------
Balance at Charged to Charged to Deductions Balance at
Beginning Costs and Other from at End of
Description of Period Expenses Accounts Reserves Period
- -----------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1999
Allowance for doubtful accounts $228 $ 63 $ - $ 106 $185
===================================================================================================================
Warranty $297 $ 742 $ - $ 748 $291
===================================================================================================================
Year ended December 31, 1998
Allowance for doubtful accounts $240 $ 5 $ - $ 17 $228
===================================================================================================================
Warranty $292 $1,375 $ - $1,370 $297
===================================================================================================================
Year ended December 31, 1997
Allowance for doubtful accounts $238 $ 17 $ - $ 15 $240
===================================================================================================================
Warranty $303 $1,614 $ - $1,625 $292
===================================================================================================================
- 45 -