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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 Fiscal Year Ended December 31, 1995.
Commission File Number 0-6866
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 February 23, 1996, (computed by
reference to the quoted selling prices of such stock in the over-the-counter
market), was $236,862,000.
The number of shares outstanding of the registrant's Common Stock, $1 Par
Value, as of February 23, 1996: 9,788,144 Shares Outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the registrant's 1996 Annual
Meeting of Stockholders to be filed with the SEC in March 1996, are
incorporated by reference into Part III, Items 10-13.
EXHIBITS INDEX
Index to exhibits required by Item 601 of SEC Regulation S-K can be found on
Pages 9-13.
HELIX TECHNOLOGY CORPORATION 10-K Annual Report
Commission File No. 0-6866 For Fiscal Year Ended
December 31, 1995
PART I
Item 1. Business
General - HELIX TECHNOLOGY CORPORATION ("the Company"), a Delaware
corporation organized in 1967, is engaged in the development and application
of cryogenic and vacuum technology. The Company provides innovative
solutions to customer requirements in selected markets worldwide.
Through its CTI-Cryogenics ("CTI") operations, the Company provides a
critical vacuum subsystem used in a broad range of electronic component
manufacturing equipment. The principal customers for CTI's vacuum products
are involved in the production of semiconductors, optical and magnetic data
storage media and advanced information displays. The Cryo-Torr cryogenic
vacuum pump product line combines the expertise of CTI in both cryogenics
and vacuum technology. (Cryo-Torr is a registered trademark of Helix
Technology Corporation.) CTI's On-Board cryogenic vacuum pumping system
incorporates built-in microprocessor capabilities to provide on-line
performance monitoring and diagnostics. (On-Board is a registered trademark
of Helix Technology Corporation.)
The Company also applies its technology and manufacturing competence to
provide specialized cryogenic refrigeration solutions for both military and
commercial customers. Applications for this capability include the cooling
of infrared detectors, advanced electronic circuits and superconducting
materials.
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 rapid response network 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.)
The Company encounters strong competition in both domestic and foreign
markets for its products. Competition comes from smaller firms and from
larger firms that have greater total resources than the Company. The
absence of statistics makes it impossible to state the Company's precise
position in its served markets, although the Company believes it enjoys a
world leadership in the market for cryogenic vacuum pumping systems.
Customer service, product quality, performance and price are all factors in
selling the Company's products.
No significant portion of the Company's business is seasonal or cyclical.
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 material in its products.
The Company holds many U.S. and foreign patents in the field of vacuum and
cryogenics that it believes are significant to its operations. Trademarks
are considered important to the Company's business. These trademarks are
protected by registration in the United States and other countries in which
the Company's products are marketed.
- 2 -
PART I
Item 1. Business (continued)
The Company and Ulvac Corporation of Chigasaki, Japan, operate a joint
venture, Ulvac Cryogenics, Inc., engaged in the manufacture and sale of
cryogenic vacuum pumps in Japan and some Asian countries. The joint venture
is 50% owned by each company.
Backlog - The backlog of orders believed to be firm was approximately
$11.5 million on December 31, 1995, compared to $9.6 million at December 31,
1994. Increases in bookings resulted primarily from record orders for the
Company's On-Board vacuum pumping systems. The Company expects to recognize
revenues from essentially all of the December 31, 1995, backlog during the
1996 calendar year.
Research and Development - The Company expended $4,534,000 in 1995 on
research and development efforts compared to $4,411,000 and $3,656,000 in
1994 and 1993, respectively. These expenditures reflect development
activities relating to product enhancements and new products for commercial
applications.
Employment - Total employment in the Company at the end of 1995 was 404
compared with 362 and 340 at the end of 1994 and 1993, 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 Industry Segments and Major Customers - The
Company's one industry segment is cryogenic and vacuum equipment.
Information concerning operations in different geographic areas and major
customers is included in Note G of Notes to Consolidated Financial
Statements included elsewhere in this report.
Item 2. Properties
The Company leases and occupies two buildings in Mansfield, Massachusetts,
totaling approximately 218,000 square feet. The Company also leases space
to house remote customer support facilities. A facility of approximately
11,000 square feet is leased in Santa Clara, California, and a facility of
12,000 square feet is leased in Austin, Texas. A total of approximately
16,000 square feet is leased in Europe to house three customer support
centers. The Company believes that its facilities are adequate to support
its current levels of production.
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.
- 3 -
PART I
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1995, no matters were submitted to a
vote of security holders through the solicitation of proxies or otherwise.
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 Over-The-Counter market (NASDAQ
symbol HELX). At December 31, 1995, there were 9,776,944 shares of common
stock outstanding and approximately 720 common stockholders of record. In
October 1994, the Board of Directors authorized a two-for-one common stock
split in the form of a 100% stock dividend. The par value remains at $1 per
share. Stock prices and all per share data have been retroactively restated
to reflect this stock split. At the Company's 1995 Annual Meeting of
Stockholders the number of authorized shares of common stock was increased
to 30,000,000 shares from 10,000,000 shares.
Cash Dividend Per Common Share and Price Range of Common Stock
The cash dividend per common share and price range of Helix's common stock
by quarter are:
1995 First Second Third Fourth
Stock Price Quarter Quarter Quarter Quarter
High $22.00 $45.25 $55.75 $47.00
Low $14.75 $20.00 $43.00 $28.00
Cash dividend per share $ .11 $ .11 $ .11 $ .25
1994 First Second Third Fourth
Stock Price Quarter Quarter Quarter Quarter
High $10.13 $12.88 $17.63 $19.00
Low $ 6.75 $ 8.00 $11.25 $13.25
Cash dividend per share $ .06 $ .06 $ .06 $ .11
The Board of Directors declared a quarterly cash dividend of $0.25 per
common share payable on March 13, 1996, to common stockholders of record at
the close of business on February 28, 1996.
- 4 -
PART II
Item 6. Selected Financial Data
(in thousands except per share data)
1995 1994 1993 1992 1991
Net sales $123,667 $86,761 $63,863 $50,822 $55,759
Net income $ 20,985 $10,603 $ 5,021* $ 2,868 $ 3,082
Net income per share $ 2.10 $ 1.08 $ .53* $ .30 $ .32
Cash dividends per share $ .58 $ .29 $ .2025 $ .19 $ .19
Total assets $ 69,074 $45,386 $32,662 $32,373 $29,080
Capitalized lease obligations $ - $ 36 $ 81 $ 123 $ 161
Weighted average number of
common shares outstanding 10,007 9,849 9,562 9,500 9,488
* Includes $108,000 ($0.01 per share) cumulative tax benefit from adoption
of SFAS No. 109 in 1993.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - 1995 Compared With 1994
Net sales for 1995 increased to $123.7 million, an increase of $36.9 million
or 43% compared with prior year sales. The growth in revenues resulted
primarily from record sales of the Company's cryogenic vacuum products and
services used principally by semiconductor manufacturers worldwide.
Total gross profit as a percentage of net sales improved 4.4 percentage
points compared with the prior year. The increase in gross profit was
principally due to a favorable product mix and volume, driven by increased
sales of the On-Board cryogenic vacuum pumping system and efficiencies
derived from the Company's manufacturing competencies.
The Company's investment in research and development increased 3% in 1995.
Selling, general and administrative expenses increased 28% and were 16% and
18% of sales in 1995 and 1994, respectively.
The increase in Selling, general and administrative expenses is attributable
to increases in selling costs.
Interest income for 1995 was $623 thousand compared with $123 thousand for
1994, reflecting significantly higher cash balances.
- 5 -
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Royalty and equity income from the Company's joint venture in Japan improved
$593 thousand over last year.
The Company's provision for income taxes was $12.7 million and $5.8 million
in 1995 and 1994, respectively. The difference between the statutory
federal tax rate and the Company's effective tax rate of 37.75% and 35.5%,
for 1995 and 1994, respectively, is principally due to state and foreign
income taxes.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard (SFAS No. 123) - Accounting for Stock-Based
Compensation. SFAS No. 123 encourages, but does not require, companies to
recognize compensation costs for all stock-based compensation arrangements
using a fair value method of accounting. The Company has not adopted SFAS
No. 123, and has not yet determined the impact of such adoption on its
consolidated results of operations. The adoption of SFAS No. 123 will have
no cash flow impact on the Company.
Liquidity and Capital Resources
Net cash provided by operating activities increased to $24.2 million in
1995. The Company invested $3.1 million, primarily in machinery and
equipment. Cash dividends paid to stockholders increased to $5.7 million.
At December 31, 1995, the Company had informal bank lines of credit of
$12 million.
The Company believes anticipated cash flow from operations and funds
available under existing credit lines will be adequate to fund operations
through 1996 and that it has opportunities to consider further financing
options should additional funds be required.
Results of Operations - 1994 Compared With 1993
Net sales for 1994 increased to $86.8 million, an increase of $22.9 million
or 36% compared with prior year sales. The growth in revenues resulted
primarily from record sales of the Company's cryogenic vacuum products and
services used principally by semiconductor manufacturers worldwide.
Sales of On-Board vacuum pumping systems accounted for most of the
approximately $26.9 million increase in sales to commercial customers.
Continued growth in customer service activities also contributed to the
growth in revenues.
Sales for military applications decreased approximately $4 million in 1994
as a result of final shipments of Maverick missile coolers under a program
completed early in 1994.
- 6-
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Total gross profit as a percentage of net sales improved 4.8 percentage
points compared with prior year. Increased sales of On-Board vacuum products
and the completion of the low-margin Maverick missile program are the
primary reasons for improved gross profit in 1994.
The Company's investment in research and development increased 21% in 1994.
Selling, general and administrative expenses increased 27% and were 18% and
19% of sales in 1994 and 1993, respectively.
This increase in Selling, general and administrative expense is attributable
to increases in selling costs and performance-based executive compensation
(Note E).
Royalty and equity income from the Company's joint venture in Japan improved
over last year.
The Company's provision for income taxes was $5.8 million and $2.5 million
in 1994 and 1993, respectively. The difference between the statutory
federal tax rate and the Company's effective tax rate of 35.5% and 33.6%,
for 1994 and 1993, respectively, is due to state and foreign income taxes.
- 7 -
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 16
Consolidated Financial Statements of Helix Technology Corporation
Consolidated Balance Sheets as of December 31, 1995 and 1994 17
Consolidated Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993 18
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1995, 1994 and 1993 19
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1995, 1994 and 1993 20
Notes to Consolidated Financial Statements 21-30
Report of Independent Accountants 31
Quarterly Results (Unaudited) 32
Financial Statement Schedules for the Years Ended December 31, 1995,
1994 and 1993
II. Valuation and Qualifying Accounts 33
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 twenty-four-month period ended December 31, 1995.
- 8 -
PART III
Item 10. Directors and Executive Officers of The Registrant
Information required by this item is incorporated herein by reference to the
registrant's proxy statement for its 1996 Annual Meeting of Stockholders
which will be filed with the SEC in March 1996, 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 1996 Annual Meeting of Stockholders
which will be filed with the SEC in March 1996, 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 1996 Annual Meeting of Stockholders
which will be filed with the SEC in March 1996, pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions
Information required by this item is incorporated herein by reference to the
registrant's proxy statement for its 1996 Annual Meeting of Stockholders
which will be filed with the SEC in March 1996, pursuant to Regulation 14A.
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. 8
(3) Exhibits required by Item 601 of SEC
Regulation S-K.(Exhibit numbers refer to
exhibit number on Table I).
3. Articles of Incorporation Exhibit 3 to the
Restated articles of incorporation Company's Form 10-Q
as amended on May 7, 1987 and for the Quarter
May 18, 1988. Ended September 30,
1988.
- 9 -
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s) or
Incorporation by
Description Reference to
By-laws Exhibit (3)-3 to the
As amended on December 10, 1986 and Company's Form 10-K
December 9, 1987. 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.
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) Indenture of lease dated April 1, 1969, Exhibit 10.1 to a
between the First National Bank of Boston, Registration
Trustee, as Lessor, and 500 Incorporated Statement on Form
(The Company's former name), as Lessee. S-2, Registration
No. 2-84880.
(2) Guarantee by Arthur D. Little, Inc., Exhibit 10.1 to a
dated April 1, 1969, of the Indenture of Registration
Lease dated April 1, 1969, between the First Statement on Form
National Bank of Boston, Trustee, and 500 S-2, Registration
Incorporated (the Company's former name). No. 2-84880.
(3) Basic agreement between the Company and Exhibit 10.13 to
Ulvac Corporation dated August 17, 1981. a Registration
Statement on
Form S-2,
Registration
No. 2-84880.
- 10 -
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s) or
Incorporation by
Description Reference to
(4) Lease agreement dated July 24, 1984, Exhibit 10-(14)
between WRC Properties, Inc., as Lessor, to the Company's
and the Company as Lessee. Form 10-K for
the Year Ended
December 31, 1984.
(5) Lease Agreement dated May 23, 1991, Exhibit 10-(14)
between Mansfield Corporate Center Limited to the Company's
Partnership, as Lessor, and the Company Form 10K for the
as Lessee. Year Ended
December 31, 1991.
Compensation Plans, Contracts and Arrangements:
(6) The Company's 1992 Stock Option Plan Exhibit 6-(14)
for Non-Employee Directors. to the Company's
Form 10-K for the
Year Ended
December 31, 1992.
(7) The Company's 1981 Incentive Stock Exhibit 7-(14)
Option Plan as adopted on November 11, to the Company's
1981, and as amended on April 14, 1982, Form 10-K for the
February 6, 1985, December 9, 1987, Year Ended
February 5, 1988, April 13, 1988, December 31, 1992.
February 8, 1989, and February 13, 1992.
(8) The Company's informal incentive Exhibit 10.9 to a
bonus plan. Registration
Statement on Form
S-2, Registration
No. 2-84880.
(9) Employment agreement dated December 13, Exhibit 9-(14) to
1989, as amended and restated on the Company's
February 13, 1992, and re-executed on Form 10-K for the
May 28, 1992, between the Company and Year Ended
Robert J. Lepofsky. December 31, 1992.
(10) The Company's Section 125 Plan. Exhibit 18 to
Form 8, Amendment
No. 1 to 1985 Annual
Report on Form 10-K.
- 11 -
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 Amended and Restated Exhibit 10-(11)
Employee Savings Plan dated December 15, to the Company's
1994. Form 10-K for the
Year Ended
December 31, 1994.
(12) The Company's Amended and Restated Exhibit 10-(12)
Employee's Pension Plan dated December 15, to the Company's
1994. Form 10-K for the
Year Ended
December 31, 1994.
(13) The Company's Amended and Restated Exhibit 10-(13)
Employees' Personal Account Plan dated to the Company's
December 15, 1994. Form 10-K for the
Year Ended
December 31, 1994.
(14) The Company's Supplemental Key Exhibit 14-(14)
Executive Retirement Plan effective to the Company's
February 13, 1992. Form 10-K for the
Year Ended
December 31, 1992.
11. Schedule of Computation of Earnings per Share
21. Subsidiaries of the Registrant
23. Consent of Independent Accountants
24. Powers of Attorney
27. Financial Data Schedule (EDGAR version only)
- 12 -
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(b) The Company was not required to file any reports on Form 8-K during the
quarter ended December 31, 1995.
(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) Schedules I, III, and IV are not
filed because they are either not applicable or the items do not exceed
the various disclosure levels.
- 13 -
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
13th day of March, 1996.
HELIX TECHNOLOGY CORPORATION
(Registrant)
Robert J. Lepofsky
(Signature)
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 13th day of March, 1996, in the capacities indicated.
Signatures Titles
(i) Principal Executive Officer
Robert J. Lepofsky President and Chief Executive
(Signature) Officer
(ii) Principal Financial Officer
Stephen D. Allison Vice President and Chief
(Signature) Financial Officer
- 14 -
(iii) A Majority of the Board of Directors
R. Schorr Berman* Director
Frank Gabron* Director and Chairman of the Board
Milton C. Lauenstein* Director
Robert J. Lepofsky Director
(Signature)
Marvin G. Schorr* Director
Wickham Skinner* Director
Mark S. Wrighton* Director
*Robert J. Lepofsky
(Signature)
Attorney-in-Fact
- 15 -
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board Of Directors and Stockholders
of Helix Technology Corporation:
We have audited the accompanying consolidated balance sheets of Helix
Technology Corporation as of December 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1995. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Helix Technology Corporation as of December 31, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
(Signature)
Boston, Massachusetts
February 7, 1996
- 16 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
(in thousands) Notes 1995 1994
ASSETS
Current:
Cash and cash equivalents A $ 21,697 $ 8,050
Receivables - net of allowances of $150 in
1995 and $157 in 1994 17,974 12,219
Inventories A 12,122 9,556
Deferred income taxes A&D 3,039 2,460
Other current assets 556 586
Total Current Assets 55,388 32,871
Property, plant and equipment at cost A 25,387 22,750
Less: accumulated depreciation (17,061) (14,913)
Net property, plant and equipment 8,326 7,837
Other assets A&F 5,360 4,678
TOTAL ASSETS $ 69,074 $ 45,386
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable $ 6,558 $ 4,896
Payroll and compensation E 3,755 3,305
Retirement costs H 1,359 610
Income taxes A&D 4,756 1,182
Other accrued liabilities 705 450
Total Current Liabilities 17,133 10,443
Deferred income taxes A&D 388 562
Capitalized lease obligations C - 36
Commitments C - -
Stockholders' Equity:
Preferred stock, $1 par value; authorized
2,000,000 shares; issued and outstanding: none - -
Common stock, $1 par value; authorized 30,000,000
shares; issued and outstanding: 9,776,944 in
1995 and 9,667,642 in 1994 E 9,777 9,668
Capital in excess of par value 3,659 2,157
Currency translation adjustment A&F 1,307 1,043
Retained earnings E 36,810 21,477
Total Stockholders' Equity 51,553 34,345
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 69,074 $ 45,386
The accompanying notes are an integral part of these financial statements.
- 17 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended
December 31,
(in thousands except per share data) Notes 1995 1994 1993
Net sales $123,667 $86,761 $63,863
Costs and expenses:
Cost of sales 67,740 51,336 40,889
Research and development A 4,534 4,411 3,656
Selling, general and administrative E 19,588 15,327 12,104
91,862 71,074 56,649
Operating income 31,805 15,687 7,214
Interest expense - - (82)
Joint venture income F 1,392 799 365
Other 517 (47) (101)
Income before taxes 33,714 16,439 7,396
Income taxes A&D (12,729) (5,836) (2,483)
Income before the cumulative effect
of a change in accounting principle 20,985 10,603 4,913
Cumulative effect of a change in
accounting for income taxes A&D - - 108
Net income $ 20,985 $10,603 $ 5,021
Income per common share before the
cumulative effect of a change in
accounting principle $ 2.10 $ 1.08 $ .52
Cumulative effect of a change in
accounting for income taxes A&D - - .01
Net income per common share A&E $ 2.10 $ 1.08 $ .53
Average shares and equivalents A&E 10,007 9,849 9,562
The accompanying notes are an integral part of these financial statements.
- 18 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Capital
Par in Excess Translation Retained
(in thousands) Value of Par Adjustment Earnings Total
Balance, December 31, 1992 $9,498 $ 1,231 $ 489 $10,567 $21,785
Shares issued for stock options 38 132 - - 170
Shares tendered for exercise of
stock options (5) 1 - - (4)
Currency translation adjustment - - (1) - (1)
Net income - 1993 - - - 5,021 5,021
Cash dividends ($.2025 per share) - - - (1,923) (1,923)
Balance, December 31, 1993 9,531 1,364 488 13,665 25,048
Shares issued for stock options 147 666 - - 813
Income tax benefit from exercise
of stock options - 203 - - 203
Shares tendered for exercise of
stock options (10) (76) - - (86)
Currency translation adjustment - - 555 - 555
Net income - 1994 - - - 10,603 10,603
Cash dividends ($.29 per share) - - - (2,791) (2,791)
Balance, December 31, 1994 9,668 2,157 1,043 21,477 34,345
Shares issued for stock options 185 2,708 - - 2,893
Income tax benefit from exercise
of stock options - 1,273 - - 1,273
Shares tendered for exercise
of stock options (76) (2,479) - - (2,555)
Currency translation adjustment - - 264 - 264
Net income - 1995 - - - 20,985 20,985
Cash dividends ($.58 per share) - - - (5,652) (5,652)
Balance, December 31, 1995 $9,777 $ 3,659 $1,307 $36,810 $51,553
The accompanying notes are an integral part of these financial statements.
- 19 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
(in thousands) 1995 1994 1993
Cash flows from operating activities:
Net income $20,985 $10,603 $ 5,021
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 2,562 2,049 1,777
Decrease in noncurrent deferred income taxes (174) (9) (168)
Undistributed earnings of joint venture, other (418) (120) (248)
Increase in accrual for performance-based
executive compensation 1,938 1,827 541
Net change in other operating assets
and liabilities(1) (665) (3,486) 173
Net cash provided by operating activities 24,228 10,864 7,096
Cash flows from investing activities:
Capital expenditures (3,051) (2,237) (1,655)
Net cash used by investing activities (3,051) (2,237) (1,655)
Cash flows from financing activities:
Net decrease in short-term debt - - (3,600)
Decrease in capital lease obligations (36) (42) (38)
Shares tendered for exercise of stock options (2,555) (86) (4)
Net cash provided by employee stock plans 713 665 170
Cash dividends paid (5,652) (2,791) (1,923)
Net cash used by financing activities (7,530) (2,254) (5,395)
Increase in cash and cash equivalents 13,647 6,373 46
Cash and cash equivalents, January 1 8,050 1,677 1,631
Cash and cash equivalents, December 31 $21,697 $ 8,050 $ 1,677
(1) Change in other operating assets
and liabilities:
(Increase)/decrease in accounts receivable $(5,755) $(3,131) $ 61
(Increase)/decrease in inventories (2,566) (1,359) 151
(Increase)/decrease in other current assets (549) (998) (330)
Increase/(decrease) in accounts payable 1,662 1,473 (761)
Increase/(decrease) in other accrued expenses 6,543 529 1,052
Net change in other operating assets and
liabilities $ (665) $(3,486) $ 173
Supplemental disclosures:
Interest paid $ - $ - $ 85
Income taxes paid $ 8,217 $ 6,930 $ 1,675
Supplemental disclosure of non-cash activity:
In 1995 and 1994, $2,180,000 and $148,000, respectively, were reclassed from
accrued executive compensation to equity in connection with issuance of
stock options.
The accompanying notes are an integral part of these financial statements.
- 20 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
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 statements of cash flows to conform with the current
presentation.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its 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.
Foreign Currency Translation
Assets and liabilities of operations outside of 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
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.
Inventories
(in thousands) 1995 1994
Finished goods $ 3,870 $2,404
Work in process 7,340 6,115
Materials and parts 912 1,037
Net inventories $12,122 $9,556
Inventories are stated at the lower of cost or market on a first-in, first-
out basis.
Cash Equivalents
Short-term investments with maturities of three months or less from the date
of purchase are classified as cash equivalents.
- 21 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Revenue Recognition
The Company records revenue on its standard products when units are shipped.
Revenues associated with certain government-related contracts are recognized
upon shipment based on sales value per unit, and costs are based on
estimated average cost per unit over the entire contract. Changes in
estimated average unit costs are recognized in the period they become known.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
The Company provides for income taxes based on provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes," adopted at the beginning of 1993. 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.
Earnings Per Share
Net income per common share is based on the weighted average number of
common shares outstanding during each year after giving effect to stock
options considered to be dilutive common stock equivalents. Fully diluted
net income per common share is not materially different from primary net
income per common share.
Property, Plant and Equipment
(in thousands) 1995 1994
Building - capital lease $ 1,847 $ 1,847
Machinery and equipment 19,497 17,236
Leasehold improvements 4,043 3,667
Total $25,387 $22,750
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 10 years.
- 22-
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Property, Plant and Equipment (continued)
Maintenance and repairs are charged to expense as incurred, and betterments
are capitalized. A capital lease on the Company's Waltham facility is
depreciated on a straight-line method over the life of the lease.
Accumulated depreciation of the capital lease was $1,813,000 at December 31,
1995, and $1,745,000 at December 31, 1994.
New Accounting Pronouncements
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123), will require the Company to either elect
expense recognition or the disclosure-only alternative for stock-based
employee compensation. SFAS 123 must be adopted in the Company's 1996
financial statements with comparable disclosures for the prior year. The
Company has not yet determined whether it will elect the expense recognition
or disclosure-only alternative permitted under SFAS 123 and therefore has
not yet determined the impact of such adoption on the consolidated results
of operations.
B. Bank Credit Arrangements
The Company's informal lines of credit with several banks amounted to
$12,000,000 on December 31, 1995 and 1994. At December 31, 1995 and 1994,
no borrowings were outstanding.
C. Lease Obligations and Commitments
The Company leases its facilities and certain equipment under long-term
operating and capital leases. In 1991, in connection with consolidating its
operations in Mansfield, the Company entered into a noncancelable operating
lease, which expires December 31, 2006. The lease includes scheduled base
rent increases through the term of the lease and renewal options up to
fifteen additional years.
The Company's Waltham facility, which is under a capital lease, was
subleased in 1992. The sublease revenues are expected to cover the
remaining obligations of the capital lease, which expires on September 30,
1996. Future minimum lease payments under the noncancelable operating and
capital leases are:
($ thousands) 1996 1997 1998 1999 2000 Later Yrs Total
Operating leases 2,701 2,802 2,610 2,415 1,913 13,260 25,701
Capital lease,
including interest 37 - - - - - 37
Total rental expense under operating leases was $3,028,445 in 1995,
$3,030,000 in 1994, and $3,151,000 in 1993.
- 23 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. Lease Obligations and Commitments (continued)
The Company enters into short-term foreign currency forward contracts with
its primary banks to minimize the effect of fluctuations on its foreign
currency denominated transactions, principally intercompany trade
receivables, with its wholly owned European subsidiaries. Net realized and
unrealized gains and losses on these transactions are not material and are
recorded in the statements of operations. The Company's outstanding foreign
currency forward contracts at December 31, 1995 and 1994, were $3,329,000
and $1,250,000, respectively.
D. Income Taxes
The Company adopted SFAS No. 109 as of January 1, 1993. The cumulative
effect of this change in accounting principle increased net income by
$108,000 for that year. The provisions for income taxes are as follows:
(in thousands) 1995 1994 1993
Current tax expense:
Federal $ 9,816 $ 5,197 $2,058
State 2,443 1,340 481
Foreign 1,223 555 474
Total current 13,482 7,092 3,013
Deferred tax expense:
Federal (710) (942) (411)
State (43) (314) (119)
Total deferred (753) (1,256) (530)
Total provision for taxes $12,729 $ 5,836 $2,483
- 24 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. Income Taxes (continued)
Significant components of deferred income taxes are as follows:
December 31, December 31,
(in thousands) 1995 1994
Gross deferred assets:
Inventory valuation $ 1,073 $ 904
Compensation 1,806 1,400
Warranties 100 104
Leases 256 163
Other 59 54
Total gross deferred assets $ 3,294 $2,625
Gross deferred liabilities:
Depreciation $ (643) $ (727)
Total gross deferred liabilities $ (643) $ (727)
Net deferred assets $ 2,651 $1,898
Deferred income taxes on undistributed earnings of the foreign subsidiaries
are not material. The Company does not believe that a valuation allowance
is required for the net deferred tax assets.
Domestic income before income taxes was approximately $31,065,000,
$14,950,000 and $6,035,000 in 1995, 1994 and 1993, respectively. Foreign
income before income taxes for the same years was approximately $2,649,000,
$1,489,000, and $1,361,000, respectively.
Tax returns for the years through 1991 have been examined by the Internal
Revenue Service.
The following table reconciles income tax based on the federal statutory
rate to the income tax provision in the Statement of Operations:
(in thousands) 1995 1994 1993
Federal tax computed at statutory rate of 35%
in 1995 and 1994 and 34% in 1993 $11,800 $5,754 $2,515
State income taxes, net of federal tax benefit 1,545 557 212
Foreign sales corporation tax benefit (704) (102) (48)
Earnings not subject to U.S. income taxes (287) (140) (17)
R&D tax credit (100) (291) (201)
Other 475 58 22
Income tax provision $12,729 $5,836 $2,483
Effective tax rate 37.75% 35.5% 33.6%
- 25 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
E. Capital Stock
Options for the purchase of shares of the Company's common stock have been
granted to officers, directors and key employees under various incentive and
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.
Options expire at various dates through the year 2005. At December 31, 1995
and 1994, respectively, 537,776 and 723,126 shares of common stock were
reserved for stock options. At December 31, 1995 and 1994, respectively,
185,200 and 179,300 nonqualified and incentive stock options were
exercisable. In 1989, the Company entered into an agreement with its
President under which options to purchase up to 400,000 shares of the
Company's common stock were granted, at a price of $3.375 per share,
exercisable over a ten-year period subject to the attainment of certain
financial performance targets. Based on 1995 performance, options for the
purchase of 40,000 shares will become exercisable on March 1, 1996. Based
on 1994 performance, options for the purchase of 40,000 shares became
exercisable on March 1, 1995. In addition, based on cumulative performance
for the five-year period ending December 31, 1994, 120,000 shares also
became exercisable on March 1, 1995. Based on 1993 performance, options for
the purchase of 40,000 shares became exercisable on March 1, 1994. In
connection with this agreement, compensation expense of $1,938,000 and
$1,827,000 was charged to "Selling, general and administrative expenses" in
1995 and 1994, respectively.
Number of Option
Options Outstanding Common Shares Price Range
December 31, 1992 739,600 $ 3.38 - $ 6.69
Options granted 10,000 $ 5.41 - $ 5.41
Options lapsed (14,000) $ 5.72 - $ 6.25
Options exercised (38,400) $ 3.35 - $ 6.31
December 31, 1993 697,200 $ 3.38 - $ 6.69
Options granted 83,000 $ 7.69 - $14.25
Options lapsed (18,000) $ 7.69 - $14.25
Options exercised (146,650) $ 3.38 - $ 7.69
December 31, 1994 615,550 $ 3.38 - $ 9.31
Options granted 17,500 $16.75 - $27.88
Options exercised (185,350) $ 3.38 - $ 7.69
December 31, 1995 447,700 $ 3.38 - $27.88
- 26 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F. 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 the three years
ended September 30, 1995, are as follows:
(in thousands) 1995 1994 1993
Net sales $27,845 $18,697 $14,490
Gross profit $ 7,894 $ 3,946 $ 2,687
Net income/(loss) $ 1,642 $ 370 $ (68)
Fee income, including royalty income
and equity income $ 1,392 $ 799 $ 365
Condensed balance sheet information as of September 30, is as follows:
(in thousands) 1995 1994
Current assets $18,390 $15,124
Noncurrent assets 5,010 5,118
Total assets $23,400 $20,242
Current liabilities $10,200 $ 8,329
Long-term liabilities 1,300 1,313
Stockholders' equity 11,900 10,600
Total liabilities and
stockholders' equity $23,400 $20,242
The Company's net investment in the joint venture of approximately
$5,302,000 and $4,622,000 at December 31, 1995 and 1994, respectively, is
included in "Other assets." The Company's net investment at December 31,
1995 and 1994, reflects a cumulative translation adjustment of $1,202,000
and $1,317,000, respectively (net of income taxes of $648,000 and $678,000,
respectively). This currency translation adjustment, which is also shown as
a separate component of the stockholders' equity, resulted from translating
the balance sheet of the joint venture into U.S. dollars.
- 27 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
G. Segment Information
Line of Business and Foreign Operations
The Company's operations comprise a single line of business; the
development, manufacture and sale of cryogenic and vacuum equipment.
The consolidated financial statements include the accounts of wholly owned
European subsidiaries which operate customer support facilities to sell and
service products manufactured in the United States. A summary of domestic
and European operations follows:
Corporate
Expenses
United and Assets/
(in thousands) States Europe Eliminations Consolidated
1995
Revenues $117,407 $14,400 $(8,140) $123,667
Operating income 34,362 2,806 (5,363) 31,805
Identifiable assets 39,588 9,209 20,277 69,074
1994
Revenues $ 82,012 $10,582 $(5,833) $ 86,761
Operating income 18,413 1,636 (4,362) 15,687
Identifiable assets 32,036 6,288 7,062 45,386
1993
Revenues $ 59,756 $ 8,313 $(4,206) $ 63,863
Operating income 8,368 1,436 (2,590) 7,214
Identifiable assets 26,376 5,239 1,047 32,662
Corporate expenses consist of certain general and administrative expenses
not allocable to operations. Corporate assets consist of cash and cash
equivalents. Intercompany transactions are at prices which are comparable
to unrelated party sales.
Export Sales and Significant Customers
The Company's export sales, principally to customers in the Far East, were
$8,330,000 in 1995, $8,888,000 in 1994 and $6,784,000 in 1993.
In 1995, the Company's two largest customers represented 30% and 12% of
sales. In 1994 and 1993, the Company's largest customer represented 23% and
16% of sales, respectively. Sales to U.S. Government agencies and their
contractors were 2%, 7% and 16% in 1995, 1994 and 1993, respectively. In
1993 a single government contractor accounted for 11%.
- 28 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. 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.
In February 1994, the Company decided that, beginning in 1994, it would
discontinue future contributions to the Company's Defined Contribution Plan.
The Company will now fund the Pension Plan directly and not by the way of
the Defined Contribution Plan.
The Company's funding policy is to contribute not less than the minimum
required amount in accordance with the Internal Revenue Code and ERISA. The
following table sets forth the funded status of the defined benefit pension
plan at December 31, 1995 and 1994, in accordance with SFAS No. 87.
(in thousands) 1995 1994
Accumulated benefit obligation, including
nonvested benefit obligations of $28 and $8 in
1995 and 1994, respectively $(4,316) $(3,435)
Projected benefit obligation (7,188) (5,086)
Plan assets at fair value 6,812 5,810
Plan assets in excess of projected benefit obligations (376) 724
Unrecognized net transition asset (301) (340)
Unrecognized prior service cost 68 77
Unrecognized net gain (491) (941)
Accrued pension cost recognized on the
consolidated balance sheets $(1,100) $ (480)
The Company's net pension cost included the following components:
(in thousands) 1995 1994 1993
Service cost $ 664 $ 691 $ 76
Interest cost 470 391 337
Actual return on plan assets (1,396) (11) (609)
Net amortization and deferral 882 (492) 139
Net pension cost of defined benefit plan $ 620 $ 579 $ (57)
Net cost of defined contribution plan $ - $ - $ 621
- 29 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. Employee Benefit Plans (continued)
Key assumptions used in computing pension cost for the defined benefit plan
were:
1995 1994 1993
Discount rate for obligations 7.0% 7.75% 7.0%
Rate of compensation increase 5.0% 5.5% 5.0%
Long-term rate of return on assets 9.0% 9.0% 9.0%
Defined benefit plan assets include marketable equity securities, corporate
and government debt securities and cash.
The Company has an Employee Savings Plan, qualified under Section 401(k),
that is designed to supplement income to be received from the Company's
retirement program. The Company contributes a percentage of the
participants' contributions up to a defined maximum amount. The matching
contributions expense, net of forfeitures, was $383,000 in 1995, $333,000 in
1994 and $307,000 in 1993.
In 1992, the Company adopted 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 $130,000 in 1995 and $119,000 in 1994 in connection with
this Plan.
- 30 -
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 16 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 8 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.
COOPERS & LYBRAND L. L. P.
(Signature)
Boston, Massachusetts
February 7, 1996
- 31 -
HELIX TECHNOLOGY CORPORATION
QUARTERLY RESULTS
(UNAUDITED)
First Second Third Fourth
(in thousands except per share data) Quarter Quarter Quarter Quarter
1995
Net sales $27,154 $29,030 $32,253 $35,230
Gross profit 12,084 12,910 14,508 16,425
Operating income 6,284 7,448 8,428 9,645
Net income 4,336 4,983 5,502 6,164
Primary net income per share $ .43 $ .50 $ .55 $ .62
1994
Net Sales $18,785 $21,251 $22,355 $24,370
Gross profit 6,776 8,829 9,356 10,464
Operating income 2,640 4,008 4,260 4,779
Net income 1,757 2,621 2,857 3,368
Primary net income per share $ .18 $ .27 $ .29 $ .34
-32-
HELIX TECHNOLOGY CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands)
Column A Column B Column C Column D Column E
Additions
----------------------
Balance at Charged to Charged to Deductions Balance at
Beginning Costs and Other From End of
Description of Period Expenses Accounts Reserves Period
Year ended December 31, 1995
Allowance for doubtful accounts $157 $ - $ - $ 7 $150
Warranty $264 $989 $ - $983 $270
Year ended December 31, 1994
Allowance for doubtful accounts $ 43 $131 $ - $ 17 $157
Warranty $161 $739 $ - $636 $264
Year ended December 31, 1993
Allowance for doubtful accounts $ 50 $ 26 $ - $ 33 $ 43
Warranty $166 $622 $ - $627 $161