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 March 31, 2000.
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 [ ]
The number of shares outstanding of the registrant's Common Stock, $1 par value,
as of March 31, 2000 was 22,598,704.
<PAGE>
HELIX TECHNOLOGY CORPORATION
Form 10-Q
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999......................................................3
Consolidated Statements of Operations for the Three-Month Periods
Ended March 31, 2000 and April 2, 1999.................................4
Consolidated Statements of Cash Flows for the Three-Month
Periods Ended March 31, 2000 and April 2, 1999.........................5
Consolidated Statements of Comprehensive Income for the
Three-Month Periods Ended March 31, 2000 and April 2, 1999.............6
Notes to Consolidated Financial Statements.............................7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........10-12
Item 3. Quantitative and Qualitative Disclosures about
Market Risk ............................................13
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................14
Item 6 (a). Exhibits................................................14
Item 6 (b). Reports on Form 8-K.....................................14
Signature...............................................................15
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
- ---------------------------------------------------------------------------------------------
Mar. 31, 2000 Dec. 31, 1999
(in thousands except per share data) (unaudited) (audited)
- ---------------------------------------------------------------------------------------------
ASSETS
Current:
<S> <C> <C>
Cash and cash equivalents $ 8,432 $ 11,408
Investments (Note 2) 16,085 15,912
Receivables - net of allowances 28,432 19,479
Inventories (Note 3) 18,850 18,442
Deferred income taxes (Note 4) 7,040 7,040
Other current assets 1,399 1,626
- ---------------------------------------------------------------------------------------------
Total Current Assets 80,238 73,907
- ---------------------------------------------------------------------------------------------
Property, plant and equipment at cost 40,730 38,724
Less: accumulated depreciation (28,955) (28,093)
- ---------------------------------------------------------------------------------------------
Net property, plant and equipment 11,775 10,631
Other assets 9,704 9,117
- ---------------------------------------------------------------------------------------------
TOTAL ASSETS $101,717 $ 93,655
=============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable $ 11,515 $ 8,490
Payroll and compensation 1,523 4,768
Retirement costs 4,822 4,561
Income taxes (Note 4) 6,706 3,238
Other accrued liabilities 934 975
- ---------------------------------------------------------------------------------------------
Total Current Liabilities 25,500 22,032
- ---------------------------------------------------------------------------------------------
Commitments - -
Stockholders' Equity:
Preferred stock, $1 par value; authorized
2,000,000 shares; issued and outstanding: none - -
Common stock, $1 par value; authorized 60,000,000
shares; issued and outstanding: 22,598,704 in 2000
and 22,375,631 in 1999 22,599 22,376
Capital in excess of par value 13,490 9,314
Treasury stock, $1 par value (85,541 shares in 2000 and
11,602 shares in 1999) (5,324) (198)
Retained earnings 44,320 39,063
Accumulated other comprehensive income 1,132 1,068
- ---------------------------------------------------------------------------------------------
Total Stockholders' Equity 76,217 71,623
- ---------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $101,717 $ 93,655
=============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 3
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<CAPTION>
- -------------------------------------------------------------------------------------
Three Months Ended
(in thousands except per share data) Mar. 31, 2000 Apr. 2, 1999
- -------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $50,050 $25,900
- -------------------------------------------------------------------------------------
Costs and expenses:
Cost of sales 25,948 15,111
Research and development 3,275 2,066
Selling, general and administrative 9,788 7,157
- -------------------------------------------------------------------------------------
39,011 24,334
- -------------------------------------------------------------------------------------
Operating income 11,039 1,566
Joint venture income 542 137
Interest and other income 297 236
- -------------------------------------------------------------------------------------
Income before taxes 11,878 1,939
Income taxes (Note 4) 3,920 679
- -------------------------------------------------------------------------------------
Net income $ 7,958 $ 1,260
=====================================================================================
Net income per share:
Basic (Note 5) $ 0.36 $ 0.06
Diluted (Note 5) $ 0.35 $ 0.06
=====================================================================================
Number of shares used in per share calculations:
Basic (Note 5) 22,419 22,307
Diluted (Note 5) 22,899 22,472
=====================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 4
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
- ---------------------------------------------------------------------------------------------
Three Months Ended
(in thousands) Mar. 31, 2000 Apr. 2, 1999
- ---------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 7,958 $ 1,260
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 974 1,022
Other (351) 8
Net change in operating assets and liabilities (A) (2,598) (1,175)
- ---------------------------------------------------------------------------------------------
Net cash provided by operating activities 5,983 1,115
- ---------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (2,118) (582)
Purchase of investments (4,814) (3,828)
Sale of investments 4,663 3,661
- ---------------------------------------------------------------------------------------------
Net cash used by investing activities (2,269) (749)
- ---------------------------------------------------------------------------------------------
Cash flows from financing activities:
Shares tendered for exercise of stock options (5,167) -
Net cash provided by employee stock plans 1,178 -
Cash dividends paid (2,701) (2,674)
- ---------------------------------------------------------------------------------------------
Net cash used by financing activities (6,690) (2,674)
- ---------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (2,976) (2,308)
Cash and cash equivalents, at the beginning of the period 11,408 8,843
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents, at the end of the period $ 8,432 $ 6,535
=============================================================================================
(A) Change in operating assets and liabilities:
(Increase) in accounts receivable $(8,953) $(3,772)
(Increase) in inventories (408) (37)
Decrease/(increase) in other current assets 227 (185)
Increase in accounts payable 3,025 1,749
Increase in other accrued expenses 3,511 1,070
- ---------------------------------------------------------------------------------------------
Net change in operating assets and liabilities $(2,598) $(1,175)
=============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 5
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
<CAPTION>
- ---------------------------------------------------------------------------------------------
Three Months Ended
(in thousands) Mar. 31, 2000 Apr. 2, 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $7,958 $1,260
- ---------------------------------------------------------------------------------------------
Other comprehensive income before tax:
Foreign currency translation adjustment 142 1,223
Unrealized gain on available-for-sale investment 21 1
- ---------------------------------------------------------------------------------------------
Other comprehensive income, before tax 163 1,224
Income tax related to items of other comprehensive income (99) (453)
- ---------------------------------------------------------------------------------------------
Other comprehensive income, net of tax 64 771
- ---------------------------------------------------------------------------------------------
Comprehensive income $8,022 $2,031
=============================================================================================
</TABLE>
Page 6
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
- ------------------------------
In the opinion of the Company, the accompanying consolidated financial
statements for the periods ended March 31, 2000, and April 2, 1999, contain all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial position as of March 31, 2000, and December 31,
1999, and the results of operations and cash flows for the periods ended March
31, 2000, and April 2, 1999.
The results of operations for the three-month period ended March 31, 2000, are
not necessarily indicative of the results expected for the full year.
The consolidated financial statements included herein have been prepared by the
Company, without audit of the three-month periods ended March 31, 2000, and
April 2, 1999, 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 and results of operations. These
consolidated 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 - Investments
- --------------------
The Company had investments of $16,085,000 and $15,912,000 as of March 31, 2000,
and December 31, 1999, respectively. The investments were classified as
"available-for-sale," and the difference between the cost and fair value of
these investments was immaterial and is included in other comprehensive income.
Note 3 - Inventories
- --------------------
- ------------------------------------------------------------------
(in thousands) Mar. 31, 2000 Dec. 31, 1999
- ------------------------------------------------------------------
Finished goods $ 5,064 $ 5,157
Work in process 9,569 8,716
Materials and parts 4,217 4,569
- ------------------------------------------------------------------
$18,850 $18,442
==================================================================
Inventories are stated at the lower of cost or market on a first-in, first-out
basis.
Page 7
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Income Taxes
- ---------------------
The net federal, state and foreign income tax provisions were $3,920,000 for the
three-month period ended March 31, 2000 and $679,000 for the three-month period
ended April 2, 1999. 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 federal income taxes on the undistributed earnings of its wholly
owned foreign subsidiaries, since these earnings are indefinitely reinvested.
The effective income tax rate for the three-month periods ended March 31, 2000,
and April 2, 1999, was 33% and 35%, respectively.
The major components of deferred tax assets are compensation and benefit plans,
inventory valuation and depreciation, 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 5 - Net Income Per Share
- -----------------------------
Basic net income per common share is based on the weighted average number of
common shares outstanding during the period. Diluted net income per common share
reflects the potential dilution that could occur if outstanding stock options
were exercised.
The following table sets forth the computation of basic and diluted net income
per common share:
- -------------------------------------------------------------------------
Three Months Ended
(in thousands except per share data) Mar. 31, 2000 Apr. 2, 1999
- -------------------------------------------------------------------------
Net income $ 7,958 $ 1,260
=========================================================================
Basic shares 22,419 22,307
Add: Common equivalent shares (1) 480 165
- -------------------------------------------------------------------------
Diluted shares 22,899 22,472
=========================================================================
Basic net income per share $ 0.36 $ 0.06
=========================================================================
Diluted net income per share $ 0.35 $ 0.06
=========================================================================
(1) Common equivalent shares represent shares issuable upon conversion of stock
options (using the treasury stock method). The Company had no stock options
that were anti-dilutive as of the first quarter of 2000. The Company had
597,000 options outstanding not included in the computation of diluted
shares for the first quarter of 1999, because the option price was greater
than the average market price of the common shares.
Page 8
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - New Accounting Pronouncements
- --------------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including some derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Company will adopt SFAS 133 in
2001, in accordance with SFAS 137, which deferred the effective date of SFAS
133. The adoption of this standard in 2001 is not expected to have a material
impact on the Company's consolidated financial statements.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB
101 summarizes the staff's view in applying generally accepted accounting
principles to selected revenue recognition issues. The application of the
guidance in SAB 101 will be required in the second quarter of 2000. The Company
has evaluated the application of SAB 101 and determined that it will have no
material impact.
Page 9
<PAGE>
HELIX TECHNOLOGY CORPORATION
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
- ---------------------
Throughout 1999, the global semiconductor capital equipment industry experienced
a rapid recovery from the significant worldwide downturn that occurred in 1998.
This positive industry trend continued into the first quarter of 2000. As a
result, net sales for the first quarter ended March 31, 2000, (the "2000
Quarter") were $50.1 million compared with net sales for the first quarter ended
April 2, 1999, (the "1999 Quarter") of $25.9 million, an increase of 93.2%.
The gross profit percentage for the 2000 Quarter was 48.2% compared with 41.7%
for the 1999 Quarter. The improvement in gross margin was primarily attributable
to increased production volume and the related decrease in manufacturing unit
costs.
Research and development expenses were $3.3 million for the 2000 Quarter or 6.5%
of net sales compared to $2.1 million or 8.0% of net sales for the 1999 Quarter.
As industry conditions improved during the past five quarters, the Company
increased its spending on projects that meet near-term customer requirements.
The Company expects to spend approximately $14.0 million to $15.0 million on
research and development in 2000.
Total selling, general and administrative expenses were $9.8 million and
increased by $2.6 million in the 2000 Quarter compared with the 1999 Quarter.
The increase in spending is primarily attributable to expenditures to support
increased sales activities worldwide, including expansion of the Company's sales
and service location in Japan and initial costs relating to a sales and service
location in Taiwan.
Operating income was $11.0 million and increased $9.5 million in the 2000
Quarter compared with the 1999 Quarter. The primary reasons for the increase are
higher net sales, decreases in manufacturing unit costs and spending growth that
was lower than sales growth.
For the 2000 Quarter, the Company had pretax income of $11.9 million resulting
in a tax provision of $3.9 million compared to a pretax income of $1.9 million
and a tax provision of $0.7 million for the 1999 Quarter. The effective tax rate
was 33% for the 2000 Quarter. The effective tax rate was 33% for the full year
1999.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operating activities for the 2000 Quarter was $6.0 million
compared with $1.1 million for the 1999 Quarter, primarily due to the increase
in net income.
The Company's normal annual capital needs are approximately $4.0 million to $5.0
million. However, in 2000 the Company has four major initiatives that will
result in capital spending of approximately
Page 10
<PAGE>
HELIX TECHNOLOGY CORPORATION
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources (continued)
- -------------------------------
$10.0 million. These initiatives are: consolidation of its Colorado operations
into a new 60,000 square foot leased facility, the first phase of a new
corporate information system, its GOLDLink global support operations center and
the opening of a sales and service location in Taiwan. Cash used by investing
activities was $2.3 million during the 2000 Quarter, primarily due to increased
capital expenditures related to the planned consolidation of the Company's
Colorado operations into a new facility.
Cash dividends paid to stockholders during both the 2000 Quarter and the 1999
Quarter were $2.7 million.
The Company believes that existing cash, cash equivalents, investment balances
and anticipated cash flow from operations will be adequate to fund operations
and its capital expenditure program for the foreseeable future and that it has
opportunities to consider further financing options should additional funds be
required.
New Accounting Pronouncements
- -----------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including some derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Company will adopt SFAS 133 in
2001, in accordance with SFAS 137, which deferred the effective date of SFAS
133. The adoption of this standard in 2001 is not expected to have a material
impact on the Company's consolidated financial statements.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB
101 summarizes the staff's view in applying generally accepted accounting
principles to selected revenue recognition issues. The application of the
guidance in SAB 101 will be required in the Company's second quarter of 2000.
The Company has evaluated the application of SAB 101 and determined that it will
have no material impact.
Page 11
<PAGE>
HELIX TECHNOLOGY CORPORATION
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Certain Factors That May Affect Future Results
- ----------------------------------------------
From time to time, information provided by the Company, statements made by its
employees or information included in its filings with the Securities and
Exchange Commission may contain statements that are not historical facts but
that are "forward-looking statements" involving risks and uncertainties. In
particular, statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" relating to the Company's shipment levels,
profitability, sufficiency of capital to meet working capital and capital
expenditure requirements may be forward-looking statements. The words "expect,"
"anticipate," "internal," "plan," "believe," "seek," "estimate" and similar
expressions are intended to identify such forward-looking statements. Such
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that could cause the Company's future results to
differ materially from those expressed in any forward-looking statements made by
or on behalf of the Company. Many such factors are beyond the Company's ability
to control or predict. Readers are accordingly cautioned not to place undue
reliance on forward-looking statements. The Company disclaims any intent or
obligation to update publicly any forward-looking statements, whether in
response to new information or future events or otherwise. Important factors
that may cause the Company's actual results to differ from such forward-looking
statements include, but are not limited to, the factors discussed below.
The Company's business depends in large part upon the capital expenditures of
semiconductor manufacturers, which, in turn, depend on the current and
anticipated market demand for integrated circuits and products utilizing
integrated circuits. The semiconductor industry is highly cyclical and has
historically experienced periodic downturns, which generally have had a severe
effect on the semiconductor industry's demand for capital equipment and have
adversely affected the Company's results of operations. There can be no
assurance that developments in the semiconductor industry or the semiconductor
equipment industry will occur at the rate or in the manner expected by the
Company.
In addition to the cyclical nature, risks and uncertainties of the semiconductor
industry, the Company faces the following risks and uncertainties among others:
the need to continuously develop, manufacture and gain customers' acceptance of
new products and product enhancements; dependence on a limited number of
customers and concentration of sales to one or a few customers; the Company's
ability to attract and retain certain key personnel; the ability of the Company
to protect its technology assets by obtaining and enforcing patents; and
dependence on sole and limited source suppliers for certain components and
subassemblies included in the Company's products and systems. As a result of the
foregoing and other factors, the Company may experience material fluctuations in
its future operating results on a quarterly or annual basis which could
materially affect its business, financial position, results of operations and
stock price.
Page 12
<PAGE>
HELIX TECHNOLOGY CORPORATION
PART I
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no significant changes in the Company's market risks since the
year ended December 31, 1999. For more information please read the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999.
Page 13
<PAGE>
HELIX TECHNOLOGY CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In the normal course of business, the Company is subject to
various legal proceedings and claims. The Company is a
defendant in an action brought by Raytheon Company claiming
damages from the sale of allegedly defective components by the
Company to Raytheon, which the Company no longer sells. The
Company believes that it has meritorious defenses to the
claims and that, although the outcome of the action cannot be
predicted with certainty, the disposition of the claim should
not have a material effect on the financial position of the
Company.
Item 6(a). Exhibits
27.1 Financial Data Schedule (EDGAR version only).
Item 6(b). Reports on Form 8-K
The Company did not file any Current Report on Form 8-K during
the quarter ended March 31, 2000.
Page 14
<PAGE>
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)
May 1, 2000 By: /s/Michael El-Hillow
- --------------------- --------------------------
Date Michael El-Hillow
Senior Vice President
Chief Financial Officer
Page 15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 8,432
<SECURITIES> 16,085
<RECEIVABLES> 28,612
<ALLOWANCES> 180
<INVENTORY> 18,850
<CURRENT-ASSETS> 80,238
<PP&E> 40,730
<DEPRECIATION> 28,955
<TOTAL-ASSETS> 101,717
<CURRENT-LIABILITIES> 25,500
<BONDS> 0
0
0
<COMMON> 22,599
<OTHER-SE> 53,618
<TOTAL-LIABILITY-AND-EQUITY> 101,717
<SALES> 50,050
<TOTAL-REVENUES> 50,050
<CGS> 25,948
<TOTAL-COSTS> 13,063
<OTHER-EXPENSES> (839)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,878
<INCOME-TAX> 3,920
<INCOME-CONTINUING> 7,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,958
<EPS-BASIC> 0.36
<EPS-DILUTED> 0.35
</TABLE>
