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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the Quarter Ended September 26, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from_______ to _______
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) (Zip Code)
Registrant's telephone number, including area code (508) 337-5111
_______________________________
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 ninety days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock as of the latest practicable date.
Class of Common Stock Outstanding at September 26, 1997
$1.00 par value 9,883,803 Shares
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HELIX TECHNOLOGY CORPORATION
Form 10-Q
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements 3-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
Part II. OTHER INFORMATION
Item 6 (a). Exhibits 11
Item 6 (b). Reports on Form 8-K 11
Signature 12
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HELIX TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
Sept. 26, 1997 Dec. 31, 1996
(in thousands) (unaudited) (audited)
ASSETS
Current:
Cash and cash equivalents $30,610 $29,378
Receivables - net of allowances 20,916 11,525
Inventories (Note 4) 10,610 12,370
Deferred income taxes (Note 3) 3,414 3,414
Other current assets 927 842
Total Current Assets 66,477 57,529
Property, plant and equipment at cost 25,772 24,219
Less: accumulated depreciation (16,574) (15,837)
Net property, plant and equipment 9,198 8,382
Other assets 6,641 5,848
TOTAL ASSETS $82,316 $71,759
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable $ 7,374 $ 4,780
Payroll and compensation 3,832 3,438
Retirement costs 2,824 2,212
Income taxes 2,257 1,049
Other accrued liabilities 412 442
Total Current Liabilities 16,699 11,921
Commitments - -
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: 9,893,203 in 1997 and
9,862,590 in 1996 9,893 9,863
Capital in excess of par value 4,704 3,162
Treasury stock (9,400 shares) (340) -
Currency translation adjustment 444 833
Retained earnings 50,916 45,980
Total Stockholders' Equity 65,617 59,838
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $82,316 $71,759
The accompanying notes are an integral part of these financial statements.
Page 3
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HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
For the three and nine-month periods ended
September 26, 1997 and September 27, 1996
(unaudited)
(in thousands except per share data)
Three Months Ended Nine Months Ended
Sept. 26 Sept. 27 Sept. 26 Sept. 27
1997 1996 1997 1996
Net Sales $35,622 $25,122 $97,575 $104,679
Costs and expenses:
Cost of sales 18,870 13,469 51,930 55,288
Research and development 2,083 2,062 6,305 5,660
Selling, general and
administrative 6,410 4,620 18,189 16,250
27,363 20,151 76,424 77,198
Operating income 8,259 4,971 21,151 27,481
Joint venture income 426 469 1,341 1,221
Interest income 384 333 1,102 921
Other (12) 8 (39) (44)
Income before taxes 9,057 5,781 23,555 29,579
Income taxes (Note 3) (3,025) (1,906) (8,244) (10,789)
Net income $ 6,032 $ 3,875 $15,311 $ 18,790
Net income per common share $ 0.60 $ 0.39 $ 1.53 $ 1.88
Average shares and equivalents 10,013 9,970 9,983 9,980
The accompanying notes are an integral part of these financial statements.
Page 4
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HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the nine months ended
Sept. 26 Sept. 27
(in thousands) 1997 1996
Cash flows from operating activities:
Net income $15,311 $18,790
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 2,328 2,463
Undistributed earnings of joint venture, other (1,182) (878)
Net change in operating assets and
liabilities (A) (1,699) 1,241
Net cash provided by operating activities 14,758 21,616
Cash flows from investing activities:
Capital expenditures (3,144) (2,685)
Net cash used by investing activities (3,144) (2,685)
Cash flows from financing activities:
Shares tendered for exercise of stock options (311) (2,065)
Net cash provided by employee stock plans 303 926
Purchase of treasury stock - (975)
Cash dividends paid (10,374) (9,340)
Net cash used by financing activities (10,382) (11,454)
Increase in cash and cash equivalents 1,232 7,477
Cash and cash equivalents, at the
beginning of the period 29,378 21,697
Cash and cash equivalents, at the
end of the period $30,610 $29,174
(A) Change in operating assets and liabilities:
(Increase)/decrease in accounts receivable $(9,391) $ 5,191
(Increase)/decrease in inventories 1,760 (771)
(Increase)/decrease in other current assets (85) (67)
Increase/(decrease) in accounts payable 2,594 (2,186)
Increase/(decrease) in other accrued
expenses 3,423 (926)
Net change in operating assets and
liabilities $(1,699) $ 1,241
The accompanying notes are an integral part of these financial statements.
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HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
In the opinion of the Company, the accompanying consolidated financial
statements for the periods ended September 26, 1997, and September 27,
1996, contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position as of
September 26, 1997, and December 31, 1996, and the results of operations
and cash flows for the periods ended September 26, 1997, and September 27,
1996.
The results of operations for the nine-month period ended September 26,
1997, are not necessarily indicative of the results expected for the full
year.
The condensed financial statements included herein have been prepared by
the Company, without audit of the nine-month periods ended September 26,
1997, and September 27, 1996, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to present fairly the
Company's financial position. These condensed financial statements should
be read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K.
Note 2
Net Income Per Common Share
Net income per common share is based upon the weighted average number of
common shares and common share equivalents outstanding during the periods,
as determined by use of the treasury stock method. Primary and fully-
diluted net income per common share are essentially the same for the
periods presented.
Page 6
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HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3
Income Taxes
The federal, state and foreign income tax provisions of $8,244,000 and
$10,789,000 for the nine-month periods ended September 26, 1997, and
September 27, 1996, respectively, reflect the effects of various available
tax credits. Tax credits are treated as reductions of income tax
provisions in the year in which the credits are realized. The Company does
not provide for United States taxes on the undistributed earnings of its
wholly owned foreign subsidiaries.
A certain level of export income of the Company's Foreign Sales Corporation
(FSC) is permanently exempt from federal income tax; accordingly, the
income tax provisions for the nine-month periods ended September 26, 1997,
and September 27, 1996, include the federal tax benefit on export income of
the FSC.
The effective income tax rate for the nine-month periods ended
September 26, 1997, and September 27, 1996, was 35.0% and 36.48%,
respectively.
The major components of deferred tax assets and liabilities are inventory
valuation, compensation and leases, respectively. Based on past
experience, the Company expects that the future taxable income will be
sufficient for the realization of the deferred tax assets. The Company
believes that a valuation allowance is not required.
Note 4
Inventories
(in thousands) Sept. 26, 1997 Dec. 31, 1996
Finished goods $ 3,307 $ 3,854
Work in process 6,952 7,655
Materials and parts 351 861
Net inventories $10,610 $12,370
Inventories are stated at the lower of cost or market on a first-in, first-
out basis.
Page 7
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HELIX TECHNOLOGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Revenues for the third quarter were $35.6 million, an increase of $10.5
million or 42% compared with the third quarter a year ago. Revenues for
the nine-month period were $97.6 million compared with $104.7 million in
the first nine months of 1996, a decrease of 7%. Revenues have continued
their sequential quarterly improvement during 1997, as the global market
for semiconductor capital equipment has strengthened, after a slowdown
which began during the second half of 1996.
Gross profit percentage for the quarter was 47.0% compared with 46.4% a
year ago. Gross profit percentage for the first nine months of 1997 was
46.8% versus 47.2% for the first nine months of 1996. The Company's
flexible manufacturing strategies and on-going cost reduction initiatives
have resulted in continued strong gross profit performance, despite the
year to year reduction in sales.
Research and development expenditures increased $.6 million in the first
nine months of 1997 compared with the same period last year as the Company
continues to introduce new products. Total selling, general and
administrative expense increased by $1.9 million in the first nine months
of 1997 versus the first nine months of 1996, primarily due to increased
selling and variable compensation expenses.
Operating income in the third quarter increased $3.3 million compared with
the third quarter of 1996 because of higher revenue levels. Operating
income for the first nine months of 1997 decreased by $6.3 million compared
with the same period a year ago due to lower revenue levels.
The Company's provision for income taxes was $8.2 million and $10.8 million
for the first nine months of 1997 and 1996, respectively. The effective
tax rate for the first nine months of 1997 was 35.0% versus 36.48% for the
first nine months of 1996. The lower tax rate is primarily due to
increased tax credits for research and development expenditures. The
difference between the statutory federal rate and the Company's effective
tax rate is due to state and foreign income taxes.
Liquidity and Capital Resources
Cash provided by operating activities for the first nine months of 1997 was
$14.8 million compared with $21.6 million for the comparable period last
year.
The Company's informal bank lines of credit amount to $12.0 million. There
were no borrowings under these agreements during 1997 or 1996.
Cash dividends paid to stockholders during the first nine months of 1997
were $10.4 million compared with $9.3 million for the first half of 1996.
Page 8
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HELIX TECHNOLOGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
At the Company's Board of Directors Meeting held on October 16, 1997, the
Company's Board of Directors declared a two-for-one common stock split,
which will be effected in the form of a 100 percent stock dividend.
Stockholders will receive one share of common stock for each share owned.
Stock certificates will be distributed on November 13, 1997, to
stockholders of record on October 30, 1997.
The Company's Board of Directors also increased the quarterly dividend by
20 percent to $0.42 per share on a present (pre-split) basis. The dividend
will be payable on November 13, 1997, to stockholders of record on
October 30, 1997.
After adjusting for the stock split, the quarterly dividend will be $0.21
per common share. Total outstanding shares after the stock split will be
approximately 19.8 million shares compared with the current outstanding
shares of about 9.9 million.
The Company manages its foreign exchange rate risk arising from
intercompany foreign currency denominated transactions through the use of
foreign currency forward contracts. The gains and losses on these
transactions are not material.
The Company believes anticipated cash flow from operations will be adequate
to meet its anticipated requirements.
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 10-Q, 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
Page 9
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HELIX TECHNOLOGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
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.
New Accounting Pronouncements
In February, 1997, the Financial Accounting Standards Board issued
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128).
SFAS 128 specifies the computation, presentation and disclosure
requirements for earnings per share and is effective for periods ending
after December 15, 1997. Adoption of this accounting standard is not
expected to have a material effect on the earnings per share computation of
the Company.
In June, 1997 the Financial Accounting Standards Board issued Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130).
SFAS 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income is defined as the change in
equity of a business enterprise during a period from transactions and other
events and circumstances from nonowner sources. The impact of adopting
SFAS 130, which is effective for the Company in 1998, has not been
determined.
In June, 1997 the Financial Accounting Standards Board issued Financial
Accounting Standards No. 131, "Disclosure about Segments of an Enterprise
and Related Information" (SFAS 131). SFAS 131 requires public companies to
report segment information on the basis used internally to measure segment
performance in complete financial statements and in condensed interim
financials issued to stockholders. This segment information includes their
products and services, the geographic areas in which they operate and their
major customers. The impact of adopting SFAS 131, which is effective for
the Company in 1998, has not been determined.
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HELIX TECHNOLOGY CORPORATION
PART II. OTHER INFORMATION
Item 6(a). Exhibits
4A Description of Common Stock (incorporated herein, by
reference to Exhibit 3 to the Form 10-Q for the quarter
ended September 30, 1988).
4B Description of Preferred Stock (incorporated herein, by
reference to Exhibit 3 to the Form 10-Q for the quarter
ended September 30, 1988).
27 Financial Data Schedule (EDGAR version only).
Item 6(b). Reports on Form 8-K
No Form 8-K was required to be filed during the quarter ended
September 26, 1997.
Page 11
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HELIX TECHNOLOGY CORPORATION
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HELIX TECHNOLOGY CORPORATION
(Registrant)
Date: October 24, 1997 By: Michael El-Hillow
Senior Vice President,
Chief Financial Officer and
Chief Accounting Officer
Page 12
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-26-1997
<CASH> 30,610
<SECURITIES> 0
<RECEIVABLES> 21,062
<ALLOWANCES> (146)
<INVENTORY> 10,610
<CURRENT-ASSETS> 66,477
<PP&E> 25,772
<DEPRECIATION> (16,574)
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<CURRENT-LIABILITIES> 16,699
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0
0
<COMMON> 9,893
<OTHER-SE> 55,724
<TOTAL-LIABILITY-AND-EQUITY> 82,316
<SALES> 97,575
<TOTAL-REVENUES> 97,575
<CGS> 51,930
<TOTAL-COSTS> 24,494
<OTHER-EXPENSES> (2,404)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 23,555
<INCOME-TAX> 8,244
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