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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, 1996 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 February 21, 1997, (computed by
reference to the quoted selling prices of such stock in the over-the-
counter market), was $272,661,000.
The number of shares outstanding of the registrant's Common Stock, $1 Par
Value, as of February 21, 1997: 9,873,300 Shares Outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the registrant's 1997 Annual
Meeting of Stockholders to be filed with the SEC in March 1997, are
incorporated by reference into Part III, Items 10-13.
HELIX TECHNOLOGY CORPORATION 10-K Annual Report
Commission File No. 0-6866 For Fiscal Year Ended
December 31, 1996
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 select 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.
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
$5.3 million on December 31, 1996, compared to $11.5 million at
December 31, 1995. Decreased bookings resulted primarily from the anticipated
weakening in the semiconductor capital equipment market. The Company
expects to recognize revenues from essentially all of the December 31,
1996 backlog during the 1997 calendar year.
Research and Development - The Company expended $7,668,000 in 1996 on
research and development efforts compared to $4,534,000 and $4,411,000 in
1995 and 1994, 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 1996 was
423 compared with 404 and 362 at the end of 1995 and 1994, 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, 1996, 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, 1996, there were 9,862,590 shares of common
stock outstanding and approximately 870 common stockholders of record.
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:
1996 First Second Third Fourth
Stock Price Quarter Quarter Quarter Quarter
High $41.25 $42.88 $39.25 $33.25
Low $25.00 $27.25 $23.25 $25.25
Cash dividend per share $ .25 $ .35 $ .35 $ .35
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
The Board of Directors declared a quarterly cash dividend of $0.35 per
common share payable on March 20, 1997, to common stockholders of record at
the close of business on March 6, 1997.
- 4 -
PART II
Item 6. Selected Financial Data
(in thousands except per share data)
1996 1995 1994 1993 1992
Net sales $128,383 $123,667 $86,761 $63,863 $50,822
Net income $ 21,957 $ 20,985 $10,603 $ 5,021* $ 2,868
Net income per share $ 2.20 $ 2.10 $ 1.08 $ .53* $ .30
Cash dividends per share $ 1.30 $ .58 $ .29 $ .2025 $ .19
Total assets $ 71,759 $ 69,074 $45,386 $32,662 $32,373
Capitalized lease obligations $ - $ - $ 36 $ 81 $ 123
Weighted average number of
common shares outstanding 9,989 10,007 9,849 9,562 9,500
* 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 - 1996 Compared With 1995
Net sales for 1996 increased to $128.4 million, an increase of $4.7 million
or 4% 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
in the second half of 1996 were sharply lower than in the first half as a
result of the slowdown in the global market for semiconductors and the
equipment required to produce these devices.
Total gross profit as a percentage of net sales improved 1.8 percentage
points compared with the prior year. The increase in gross profit was
principally due to efficiencies derived from the Company's manufacturing
competencies. As a result of the Company's flexible manufacturing
strategy, gross margins remained strong at the low revenue levels of the
second half of 1996.
The Company's investment in research and development increased 69% in 1996.
The Company continues to fund long-term strategic development programs
despite short-term market conditions.
The change in Selling, general and administrative expenses is attributable
to increases in selling costs and reduced performance-based management
compensation expense.
Interest income for 1996 was $1.3 million compared with $.6 million for
1995, 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 $88 thousand over last year.
The Company's provision for income taxes was $12.5 million and
$12.7 million in 1996 and 1995, respectively. The difference between the
statutory federal tax rate and the Company's effective tax rate of 36.25%
and 37.75%, for 1996 and 1995, respectively, is principally due to state
and foreign income taxes.
Liquidity and Capital Resources
Net cash provided by operating activities increased to $26.7 million in
1996. The Company invested $3.3 million, primarily in machinery and
equipment. Cash dividends paid to stockholders increased to $12.8 million.
At December 31, 1996, 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 1997 and that it has opportunities to consider further financing
options should additional funds be required.
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.
- 6 -
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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.
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.
Business Risks and Uncertainties
The Company operates in a changing and cyclical business environment that
involves a number of risks, some of which are beyond the Company's control.
The Company's future results will depend on its ability to manage the
cyclical nature of the semiconductor capital equipment industry, the
Company's ability to introduce new products to meet its customers' demands
for higher productivity and reliability, and the dependence of the Company
on key customers and key suppliers.
Forward-Looking Statements
This Annual Report, other SEC filings, and pronouncements and press
releases made from time to time by the Company through its senior
management may include a number of forward-looking statements, including,
but not limited to, statements with respect to the Company's future
financial performance, operating results, plans and objectives. Such
statements are made pursuant to the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995. Actual results may differ
materially from those anticipated by such statements depending upon a
variety of factors, some of which are itemized in the "Business Risks and
Uncertainties" section above. The Company undertakes no responsibility to
update any forward-looking statements which may be made to reflect events
or circumstances occurring after the dates the statements were made or to
reflect the occurrence of unanticipated events.
- 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, 1996 and 1995..........17
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994.....................................18
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1996, 1995 and 1994.................19
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994...............................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, 1996,
1995 and 1994
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, 1996.
- 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 1997 Annual Meeting of
Stockholders which will be filed with the SEC in March 1997, 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 1997 Annual Meeting of
Stockholders which will be filed with the SEC in March 1997, 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 1997 Annual Meeting of
Stockholders which will be filed with the SEC in March 1997, 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 1997 Annual Meeting of
Stockholders which will be filed with the SEC in March 1997, 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 8
and required schedules are indexed under Item 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) Basic agreement between the Company Exhibit 10.13 to
and Ulvac Corporation dated August 17, a Registration
1981. Statement on Form
S-2, Registration
No. 2-84880.
(2) 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.
- 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
(3) Lease Agreement dated May 23, 1991, Exhibit 10-(14) to
between Mansfield Corporate Center Limited the Company's
Partnership, as Lessor, and the Company Form 10-K
as Lessee. for the Year Ended
December 31, 1991.
Compensation Plans, Contracts and
Arrangements:
(4) 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.
(5) The Company's 1996 Stock Option Plan Exhibit B to the
for Non-Employee Directors. Company's Proxy
Statement for its
1996 Annual Meeting
of Stockholders held
on April 24, 1996.
(6) The Company's informal incentive Exhibit 10.9 to a
bonus plan. Registration
Statement on Form
S-2, Registration
No. 2-84880.
(7) Employment agreement dated Exhibit 9-(14) to
December 13, 1989, as amended and restated the Company's
on 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.
(8) 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
(9) The Company's Amended and Restated Exhibit 10-(11) to
Employee Savings Plan dated December 15, the Company's
1994. Form 10-K for the
Year Ended
December 31, 1994.
(10) The Company's Amended and Restated Exhibit 10-(12) to
Employees' Pension Plan dated December 15, the Company's
1994. Form 10-K for the
Year Ended
December 31, 1994.
(11) The Company's Amended and Restated Exhibit 10-(13) to
Employee Personal Account Plan dated the Company's
December 15, 1994. Form 10-K for the
Year Ended
December 31, 1994.
(12) The Company's Supplemental Key Exhibit 14-(14) to
Executive Retirement Plan effective 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
- 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, 1996.
(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
5th day of March, 1997.
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 5th day of March, 1997, in the capacities indicated.
Signatures Titles
(i) Principal Executive Officer
Robert J. Lepofsky President and Chief Executive Officer
(Signature)
(ii) Principal Financial Officer
Stephen D. Allison Vice President and
(Signature) Chief Financial Officer
- 14 -
(iii) A Majority of the Board of Directors
R. Schorr Berman* Director
Arthur R. Buckland* Director
Frank Gabron* Director
Milton C. Lauenstein* Director
Robert J. Lepofsky Director
(Signature)
Marvin G. Schorr* Director and Chairman of the Board
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, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996. 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 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, 1996 and 1995, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
(Signature)
Boston, Massachusetts
February 7, 1997
- 16 -
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
(in thousands) Notes 1996 1995
ASSETS
Current:
Cash and cash equivalents (including repurchase
agreements of $18,500 in 1996 and $21,400
in 1995) A $ 29,378 $ 21,697
Receivables - net of allowances of $148 in
1996 and $150 in 1995 11,525 17,974
Inventories A 12,370 12,122
Deferred income taxes A&D 3,414 3,039
Other current assets 842 556
Total Current Assets 57,529 55,388
Property, plant and equipment at cost A 24,219 25,387
Less: accumulated depreciation (15,837) (17,061)
Net property, plant and equipment 8,382 8,326
Other assets A&F 5,848 5,360
TOTAL ASSETS $ 71,759 $ 69,074
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable $ 4,780 $ 6,558
Payroll and compensation E 3,438 3,755
Retirement costs H 2,212 1,359
Income taxes A&D 1,049 4,756
Other accrued liabilities 442 705
Total Current Liabilities 11,921 17,133
Deferred income taxes A&D - 388
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: 9,862,590 in
1996 and 9,776,944 in 1995 E 9,863 9,777
Capital in excess of par value 3,162 3,659
Currency translation adjustment A&F 833 1,307
Retained earnings E 45,980 36,810
Total Stockholders' Equity 59,838 51,553
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 71,759 $ 69,074
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 1996 1995 1994
Net sales $128,383 $123,667 $86,761
Costs and expenses:
Cost of sales 68,081 67,740 51,336
Research and development A 7,668 4,534 4,411
Selling, general and administrative E 20,922 19,588 15,327
96,671 91,862 71,074
Operating income 31,712 31,805 15,687
Joint venture income F 1,480 1,392 799
Interest income 1,282 621 123
Other (32) (104) (170)
Income before taxes 34,442 33,714 16,439
Income taxes A&D (12,485) (12,729) (5,836)
Net income $ 21,957 $ 20,985 $10,603
Net income per common share A&E $ 2.20 $ 2.10 $ 1.08
Average shares and equivalents A&E 9,989 10,007 9,849
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, 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
Shares issued for stock options 210 1,626 - - 1,836
Income tax benefit from
exercise of stock options - 1,739 - - 1,739
Shares tendered for exercise of
stock options (84) (2,927) - - (3,011)
Retirement of treasury stock (40) (935) - - (975)
Currency translation adjustment - - (474) - (474)
Net income - 1996 - - - 21,957 21,957
Cash dividends ($1.30 per share) - - - (12,787) (12,787)
Balance, December 31, 1996 $9,863 $ 3,162 $ 833 $ 45,980 $ 59,838
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) 1996 1995 1994
Cash flows from operating activities:
Net income $ 21,957 $20,985 $10,603
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 3,235 2,562 2,049
Decrease in noncurrent deferred income taxes (388) (174) (9)
Undistributed earnings of joint venture, other (962) (418) (120)
Increase in accrual for performance-based
executive compensation 750 1,938 1,827
Net change in other operating assets
and liabilities(1) 2,092 (665) (3,486)
Net cash provided by operating activities 26,684 24,228 10,864
Cash flows from investing activities:
Capital expenditures (3,291) (3,051) (2,237)
Net cash used by investing activities (3,291) (3,051) (2,237)
Cash flows from financing activities:
Decrease in capital lease obligations - (36) (42)
Shares tendered for exercise of stock options (3,011) (2,555) (86)
Net cash provided by employee stock plans 1,061 713 665
Purchase of treasury stock (975) - -
Cash dividends paid (12,787) (5,652) (2,791)
Net cash used by financing activities (15,712) (7,530) (2,254)
Increase in cash and cash equivalents 7,681 13,647 6,373
Cash and cash equivalents, January 1 21,697 8,050 1,677
Cash and cash equivalents, December 31 $ 29,378 $21,697 $ 8,050
(1) Change in other operating assets
and liabilities:
(Increase)/decrease in accounts receivable $ 6,449 $(5,755) $(3,131)
(Increase)/decrease in inventories (248) (2,566) (1,359)
(Increase)/decrease in other current
assets (661) (549) (998)
Increase/(decrease) in accounts payable (1,778) 1,662 1,473
Increase/(decrease) in other accrued
expenses (1,670) 6,543 529
Net change in other operating assets and
liabilities $ 2,092 $ (665) $(3,486)
Income taxes paid $ 15,288 $ 8,217 $ 6,930
Supplemental disclosure of non-cash activity:
In 1996 and 1995, $775,000 and $2,180,000, respectively, was 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 operations 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.
Cash Equivalents
Short-term investments with original maturities or put features of three
months or less from the date of purchase are classified as cash
equivalents. Cash and cash equivalents include demand deposits, overnight
repurchase agreements fully collateralized by U.S. Government backed
securities, and U.S. Government backed variable rate demand notes.
Inventories
(in thousands) 1996 1995
Finished goods $ 3,854 $ 3,870
Work in process 7,655 7,340
Materials and parts 861 912
Net inventories $12,370 $12,122
Inventories are stated at the lower of cost or market on a first-in, first-
out basis.
- 21 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Property, Plant and Equipment
(in thousands) 1996 1995
Building - capital lease $ - $ 1,847
Machinery and equipment 21,488 19,497
Leasehold improvements 2,731 4,043
Total $24,219 $25,387
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.
Maintenance and repairs are charged to expense as incurred, and betterments
are capitalized.
Revenue Recognition
The Company records revenue on its standard products when units are shipped
and on services when rendered.
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." 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.
- 22 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Stock Buyback
In April 1996, the Board of Directors approved a management plan to
repurchase shares of common stock. A total of 40,000 shares were
repurchased in July 1996 under this plan at a cost of $975,000. In
December 1996, the Board of Directors voted to rescind the stock repurchase
plan.
B. Bank Credit Arrangements
The Company's informal lines of credit amounted to $12,000,000 on
December 31, 1996 and 1995. There were no borrowings for the years ended
December 31, 1996 and 1995.
C. Lease Obligations and Commitments
The Company leases its facilities and certain equipment under long-term
operating leases. The Company has a noncancelable operating lease for its
corporate headquarters and manufacturing operations, 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.
Future minimum lease payments under the noncancelable operating leases are:
(thousands) Operating Leases
1997 $ 2,937
1998 2,758
1999 2,501
2000 1,988
2001 1,926
Later Years 11,413
Total $23,523
Total rental expense under operating leases was $3,018,138 in 1996,
$3,028,445 in 1995, and $3,030,000 in 1994.
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, 1996 and 1995, were
$477,000 and $3,329,000, respectively.
- 23 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. Income Taxes
The provisions for income taxes are as follows:
(in thousands) 1996 1995 1994
Current tax expense:
Federal $10,593 $ 9,816 $ 5,197
State 2,369 2,443 1,340
Foreign 285 1,223 555
Total current 13,247 13,482 7,092
Deferred tax expense:
Federal (624) (710) (942)
State (138) (43) (314)
Total deferred (762) (753) (1,256)
Total provision for taxes $12,485 $12,729 $ 5,836
Significant components of deferred income taxes are as follows:
December 31,
(in thousands) 1996 1995
Gross deferred assets:
Inventory valuation $1,181 $1,009
Compensation 1,994 1,870
Leases 300 256
Other 159 159
Total gross deferred assets $3,634 $3,294
Gross deferred liabilities:
Depreciation $ (220) $ (643)
Total gross deferred liabilities $ (220) $ (643)
Net deferred assets $3,414 $2,651
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 $33,870,000,
$31,065,000 and $14,950,000 in 1996, 1995 and 1994, respectively. Foreign
income before income taxes for the same years was approximately $572,000,
$2,649,000, and $1,489,000, respectively.
- 24 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. Income Taxes (continued)
The following table reconciles income tax based on the federal statutory
rate to the income tax provision in the statements of operations:
(in thousands) 1996 1995 1994
Federal tax computed at statutory rate of 35% $12,055 $11,800 $5,754
State income taxes, net of federal tax benefit 1,450 1,545 557
Foreign sales corporation tax benefit (923) (704) (102)
Earnings not subject to U.S. income taxes (333) (287) (140)
R&D tax credit (150) (100) (291)
Other 386 475 58
Income tax provision $12,485 $12,729 $5,836
Effective tax rate 36.25% 37.75% 35.50%
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 2006. At December 31,
1996 and 1995, respectively, 762,500 and 537,776 shares of common stock
were reserved for stock options. At December 31, 1996 and 1995,
respectively, 47,125 and 185,200 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 1996 performance, options for the
purchase of 40,000 shares will become exercisable on March 1, 1997. Based
on 1995 and 1994 performance, options for the purchase of 40,000 shares
became exercisable on March 1, 1996, and March 1, 1995, respectively. 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.
In connection with this agreement, compensation expense of $750,000,
$1,938,000 and $1,827,000 was charged to "Selling, general and
administrative expenses" in 1996, 1995 and 1994, respectively.
- 25 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
E. Capital Stock (continued)
Number of Weighted Average
Options Outstanding Common Shares Exercise Price
December 31, 1993 697,200 $ 4.17
Options granted 83,000 $ 8.83
Options lapsed (18,000) $12.06
Options exercised (146,650) $ 4.53
December 31, 1994 615,550 $ 4.49
Options granted 17,500 $21.52
Options exercised (185,350) $ 3.84
December 31, 1995 447,700 $ 5.42
Options granted 70,000 $32.79
Options exercised (210,200) $ 5.05
December 31, 1996 307,500 $11.90
The Company adopted the disclosure only option under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation"
(SFAS 123) as of December 31, 1996. If the accounting provisions of
SFAS 123 had been adopted as of the beginning of 1995, the effect on 1995 and
1996 net income would not have been material.
The weighted average fair value of options granted during 1996 and 1995 was
$12.31 and $8.90, 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 used for grants in 1996:
dividend yield of 4.2%; expected stock price volatility of 50%; risk-free
interest rate of 6.3% and expected holding periods of 6.6 years.
The following table summarizes information concerning currently outstanding
and exercisable options:
Options Outstanding Options Exercisable
---------------------------------- ---------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 12/31/96 Life Price at 12/31/96 Price
$ 3.38 - $ 5.72 175,000 3.2 years $ 3.58 15,000 $ 5.72
$ 7.69 - $16.75 55,000 7.3 years $ 9.63 30,250 $ 8.76
$27.88 - $36.88 77,500 7.4 years $32.32 1,875 $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, 1996, are as follows:
(in thousands) 1996 1995 1994
Net sales $25,751 $27,845 $18,697
Gross profit $ 7,415 $ 7,894 $ 3,946
Net income/(loss) $ 1,901 $ 1,642 $ 370
Fee income, including royalty income
and equity income $ 1,480 $ 1,392 $ 799
Condensed balance sheet information as of September 30, is as follows:
(in thousands) 1996 1995
Current assets $18,399 $18,390
Noncurrent assets 3,565 5,010
Total assets $21,964 $23,400
Current liabilities $ 8,654 $10,200
Long-term liabilities 902 1,300
Stockholders' equity 12,408 11,900
Total liabilities and stockholders' equity $21,964 $23,400
The Company's net investment in the joint venture of approximately
$5,792,000 and $5,302,000 at December 31, 1996 and 1995, respectively, is
included in "Other assets." The Company's net investment at December 31,
1996 and 1995, reflects a cumulative translation adjustment of $766,000 and
$1,202,000, respectively (net of income taxes of $412,000 and $648,000,
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
1996
Revenues $123,893 $13,093 $(8,603) $128,383
Operating income 35,249 561 (4,098) 31,712
Identifiable assets 37,018 7,183 27,558 71,759
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
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
$9,684,000 in 1996, $8,330,000 in 1995 and $8,888,000 in 1994.
In 1996, the Company's two largest customers represented 28% and 10% of
sales. In 1995, the Company's two largest customers represented 30% and
12% of sales. In 1994, the Company's largest customer represented 23%.
- 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 1994, the Company
discontinued future contributions to the Company's 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, 1996 and 1995, in accordance with SFAS No. 87.
(in thousands) 1996 1995
Accumulated benefit obligation, including nonvested
benefit obligations of $85 and $28 in 1996 and 1995,
respectively $(3,346) $(3,406)
Projected benefit obligation (5,964) (6,277)
Plan assets at fair value 7,553 6,811
Plan assets in excess of projected benefit obligations 1,589 534
Unrecognized net transition asset (262) (301)
Unrecognized prior service cost 60 68
Unrecognized net gain (3,196) (1,401)
Accrued pension cost recognized on the
consolidated balance sheets $(1,809) $(1,100)
The Company's net pension cost included the following components:
(in thousands) 1996 1995 1994
Service cost $ 840 $ 664 $ 691
Interest cost 443 470 391
Actual return on plan assets (1,024) (1,396) (11)
Net amortization and deferral 450 882 (492)
Net pension cost of defined benefit plan $ 709 $ 620 $ 579
- 29 -
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. Employee Benefit Plans (continued)
Key assumptions used in computing year end obligations for the defined
benefit plan were:
1996 1995 1994
Discount rate for obligations 7.5% 7.0% 7.75%
Rate of compensation increase 5.5% 5.0% 5.5%
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 $421,000 in 1996, $383,000
in 1995 and $333,000 in 1994.
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 $140,000 in 1996, $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, 1997
- 31 -
HELIX TECHNOLOGY CORPORATION
QUARTERLY RESULTS
(UNAUDITED)
First Second Third Fourth
(in thousands except per share data) Quarter Quarter Quarter Quarter
1996
Net sales $40,206 $39,351 $25,122 $23,704
Gross profit 18,967 18,771 11,653 10,911
Operating income 11,251 11,259 4,971 4,231
Net income 7,390 7,525 3,875 3,167
Primary net income per share $ .74 $ .75 $ .39 $ .32
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
-32-
HELIX TECHNOLOGY CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1996, 1995 and 1994
(in thousands)
Column A Column B Column C Column D Column E
Additions
----------------------------------
Balance at Balance at
Beginning Charged to Charged to Deductions End of
Description of Period Costs and Expenses Other Accounts From Reserves Period
Year ended December 31, 1996
Allowance for doubtful accounts $150 $ - $ - $ 2 $148
Warranty $270 $1,279 $ - $1,281 $268
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