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 April 2, 1999.
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 April 2, 1999 was 22,319,131.
HELIX TECHNOLOGY CORPORATION
Form 10-Q
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of April 2, 1999 and
December 31, 1998...................................................3
Consolidated Statements of Operations for the Three-Month Periods
Ended April 2, 1999 and March 27, 1998..............................4
Consolidated Statements of Cash Flows for the Three-Month
Periods Ended April 2, 1999 and March 27, 1998......................5
Consolidated Statements of Comprehensive Income for the Three-Month
Periods Ended April 2, 1999 and March 27, 1998......................6
Notes to Consolidated Financial Statements...............................7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..........10-14
Item 3. Quantitative and Qualitative Disclosures about
Market Risk ..............................................14
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.......15
Item 6 (a). Exhibits..................................................16
Item 6 (b). Reports on Form 8-K.......................................16
Signature.................................................................17
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------
Apr. 2, 1999 Dec. 31, 1998
(in thousands except per share data) (unaudited) (audited)
- --------------------------------------------------------------------------------------------
ASSETS
Current:
Cash and cash equivalents $ 6,535 $ 8,843
Investments (Note 2) 18,321 18,152
Receivables - net of allowances 13,555 9,783
Inventories (Note 3) 14,848 14,811
Deferred income taxes (Note 4) 5,157 5,157
Other current assets 1,291 1,106
- --------------------------------------------------------------------------------------------
Total Current Assets 59,707 57,852
- --------------------------------------------------------------------------------------------
Property, plant and equipment at cost 37,051 36,691
Less: accumulated depreciation (26,790) (25,990)
- --------------------------------------------------------------------------------------------
Net property, plant and equipment 10,261 10,701
Other assets 7,973 7,099
- --------------------------------------------------------------------------------------------
TOTAL ASSETS $ 77,941 $ 75,652
============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable $ 5,501 $ 3,752
Payroll and compensation 3,404 2,884
Retirement costs 3,862 3,588
Income taxes (Note 4) 1,042 507
Other accrued liabilities (Note 6) 1,295 1,553
- --------------------------------------------------------------------------------------------
Total Current Liabilities 15,104 12,284
- --------------------------------------------------------------------------------------------
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: 22,319,131 in 1999
and 1998 22,319 22,319
Capital in excess of par value 7,970 7,936
Treasury stock, $1 par value (27,892 shares in 1999 and
34,000 shares in 1998) (359) (438)
Accumulated other comprehensive income (loss) 412 (359)
Retained earnings 32,495 33,910
- --------------------------------------------------------------------------------------------
Total Stockholders' Equity 62,837 63,368
- --------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 77,941 $ 75,652
============================================================================================
The accompanying notes are an integral part of these financial statements.
Page 3
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
- --------------------------------------------------------------------------------------
Three Months Ended
(in thousands except per share data) Apr. 2, 1999 Mar. 27, 1998
- ---------------------------------------------------------------------------------------
Net sales $25,900 $31,494
Costs and expenses:
Cost of sales 15,111 16,792
Research and development 2,066 3,187
Selling, general and administrative 7,157 7,179
Merger and special charges (Note 6) - 1,515
- ---------------------------------------------------------------------------------------
24,334 28,673
- ---------------------------------------------------------------------------------------
Operating income 1,566 2,821
Joint venture income 137 372
Interest and other income 236 335
- ---------------------------------------------------------------------------------------
Income before taxes 1,939 3,528
Income taxes (Note 4) (679) (1,662)
- ---------------------------------------------------------------------------------------
Net income $ 1,260 $ 1,866
=======================================================================================
Net income per share:
Basic (Note 5) $ 0.06 $ 0.08
Diluted (Note 5) $ 0.06 $ 0.08
=======================================================================================
Number of shares used in per share calculations:
Basic (Note 5) 22,307 22,215
Diluted (Note 5) 22,472 22,373
=======================================================================================
The accompanying notes are an integral part of these financial statements.
Page 4
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
- ------------------------------------------------------------------------------------------
Three Months Ended
(in thousands) Apr. 2, 1999 Mar. 27, 1998
- ------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 1,260 $ 1,866
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Amortization of deferred compensation - 674
Depreciation 1,022 987
Other 8 (360)
Net change in operating assets and liabilities (A) (1,175) 2,247
- ------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,115 5,414
- ------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (582) (846)
Purchase of investments (3,828) (35,419)
Sale of investments 3,661 10,073
- ------------------------------------------------------------------------------------------
Net cash used by investing activities (749) (26,192)
- ------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net cash provided by employee stock plans - 37
Cash dividends paid (2,674) (4,164)
- ------------------------------------------------------------------------------------------
Net cash used by financing activities (2,674) (4,127)
- ------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (2,308) (24,905)
Cash and cash equivalents, at the beginning of the period 8,843 34,717
- ------------------------------------------------------------------------------------------
Cash and cash equivalents, at the end of the period $ 6,535 $ 9,812
==========================================================================================
(A) Change in operating assets and liabilities:
(Increase)/decrease in accounts receivable $(3,772) $ 1,235
(Increase)/decrease in inventories (37) (1,033)
(Increase)/decrease in other current assets (185) (87)
Increase/(decrease) in accounts payable 1,749 1,055
Increase/(decrease) in other accrued expenses 1,070 1,077
- ------------------------------------------------------------------------------------------
Net change in operating assets and liabilities $(1,175) $ 2,247
==========================================================================================
The accompanying notes are an integral part of these financial statements.
Page 5
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
- ------------------------------------------------------------------------------------------------
Three Months Ended
(in thousands) Apr. 2, 1999 Mar. 27, 1998
- ------------------------------------------------------------------------------------------------
Net income $1,260 $1,866
- ------------------------------------------------------------------------------------------------
Other comprehensive income (loss) before tax:
Foreign currency translation adjustment 1,223 (464)
Unrealized gain on available-for-sale investment 1 8
- ------------------------------------------------------------------------------------------------
Other comprehensive income (loss), before tax 1,224 (456)
Income tax related to items of other comprehensive income (453) 102
- ------------------------------------------------------------------------------------------------
Other comprehensive income (loss), net of tax 771 (354)
- ------------------------------------------------------------------------------------------------
Comprehensive income $2,031 $1,512
================================================================================================
Page 6
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 April 2, 1999, and March 27, 1998, contain all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial position as of April 2, 1999, and December 31,
1998, and the results of operations and cash flows for the periods ended April
2, 1999, and March 27, 1998. In May 1998, the Company completed the acquisition
of Granville-Phillips Company (GPC). The acquisition was accounted for as a
pooling of interests under Accounting Principles Board Opinion No. 16 (see Note
6). All prior period consolidated financial statements have been restated to
include the financial position, results of operations and cash flows of GPC as
though it had been part of the Company for all periods presented.
The results of operations for the three-month period ended April 2, 1999, 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 April 2, 1999, and March
27, 1998, 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 $18,321,000 and $18,152,000 as of April 2, 1999,
and December 31, 1998, respectively. The investments were classified as
"available-for-sale," and the difference in the cost and fair value of these
investments is immaterial and was included in other comprehensive income.
Note 3 - Inventories
- --------------------
(in thousands) Apr. 2, 1999 Dec. 31, 1998
- ----------------------------------------------------------------------
Finished goods $ 3,407 $ 3,067
Work in process 7,693 7,597
Materials and parts 3,748 4,147
------------------------------------
$14,848 $14,811
====================================
Inventories are stated at the lower of cost or market on a first-in, first-out
basis.
Page 7
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Income Taxes
- ---------------------
The net federal, state and foreign income tax provisions was $679,000 for the
three-month period ended April 2, 1999 and $1,662,000 for the three-month period
ended March 27, 1998. 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 April 2, 1999,
and March 27, 1998, was 35% and 47.1%, respectively. The effective tax benefit
for the three-month period ended March 27, 1998 was unfavorably impacted by the
merger and special charges which are not fully deductible for tax purposes.
The major components of deferred tax assets are compensation and benefit plans,
inventory valuation, net operating loss and tax credit carry forwards,
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) Apr. 2, 1999 Mar. 27, 1998
- ------------------------------------------------------------------------------
Net income $ 1,260 $ 1,866
==============================
Basic shares 22,307 22,215
Add: Common equivalent shares (1) 165 158
------------------------------
Diluted shares 22,472 22,373
==============================
Basic net income per share $ 0.06 $ 0.08
==============================
Diluted net income per share $ 0.06 $ 0.08
==============================
(1) Common equivalent shares represent shares issuable upon conversion of
stock options (using the treasury stock method). Options outstanding not
included in the computation of diluted shares were 597,500 as of April 2, 1999,
and 210,000 as of March 27, 1998, because the option price was greater than the
average market price of the common shares.
Page 8
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Merger, Restructuring and Special Charges
- --------------------------------------------------
In the second quarter of 1998, the Company acquired Granville-Phillips Company
(GPC) in a transaction accounted for as a pooling of interests. The Company
issued 2,382,925 shares of common stock for all of the common stock of GPC.
Direct acquisition costs, primarily compensation expense relating to shares
issued to certain GPC employees as part of a restricted stock plan, and
professional fees amounted to $3.5 million in 1998, of which $1.5 million were
incurred in the first quarter of 1998 and were charged against the results of
operations.
During the third quarter of 1998, the Company recorded restructuring and other
special charges of $2.5 million. The charges primarily included provisions for
termination benefits of $1.3 million for approximately 80 personnel, exit costs
related to a leased facility of $1.0 million and $0.2 million for the impairment
of certain assets. As of April 2, 1999, $0.6 million of restructuring and
special charges remained in other accrued expenses, which the Company expects to
be paid or amortized by the third quarter of 1999.
Note 7 - New Accounting Pronouncements
- --------------------------------------
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging
Activities." The adoption of this Standard in 2000 is not expected to have a
material effect on the Company's consolidated financial statements.
Page 9
HELIX TECHNOLOGY CORPORATION
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
On May 7, 1998, the Company acquired Granville-Phillips Company (GPC). GPC is a
world leader in the development and manufacture of instrumentation for vacuum
measurement and control used principally in the semiconductor, flat panel
display and disk drive manufacturing processes. The transaction was accounted
for as a pooling of interests; and accordingly, the financial results of the
Company for the period ended March 27, 1998 includes financial position, results
of operations, comprehensive income and cash flows of GPC.
Results of Operations
- ---------------------
Net sales for the first quarter of 1999 were $25.9 million, $5.6 million less
than the $31.5 million for the first quarter of 1998, and $6.3 million more than
the $19.6 million for the fourth quarter of 1998. A slowdown in the global
market for semiconductor capital equipment began in late 1997 and continued
throughout most of 1998. Signs of a strengthening market are reflected in the
sequential net sales growth in the first quarter of 1999.
Gross profit percentage for the first quarter of 1999 was 41.7% compared with
46.7% for the first quarter of 1998 and 37.6% for the fourth quarter of 1998.
The changes in the gross profit percentage is directly attributable to changes
in net sales volume and related production levels and the impact of fixed
manufacturing costs.
Research and development expenditures were $2.1 million for the quarter or 8.0%
of net sales compared to $3.2 million or 10.1% of net sales for the same period
last year. As industry conditions worsened during 1998, the Company delayed
certain expenditures on projects it believed were not critical during the
downturn. The Company continues to fund its strategic development programs and
is selectively adjusting its spending on other programs to be in line with
industry conditions, positioning the Company for growth as the economics improve
in the worldwide semiconductor industry. Total Selling, general and
administrative expense increased by $0.4 million in the first quarter compared
to the same period in 1998, primarily due to the higher variable compensation
expense.
Operating income in the first quarter of 1999 decreased $1.3 million compared
with the first quarter of 1998 due to lower net sales in the first quarter of
1999, offset by merger and special charges of $1.5 million incurred in the first
quarter of 1998. Operating income for the first quarter was also positively
impacted by the restructuring that the Company undertook in the third quarter of
1998. The Company restructured its domestic operations to eliminate
non-strategic spending while redirecting resources to the Company's global
customer support structure and other strategic initiatives and took a charge of
$2.5 million during the third quarter of 1998. The Company expects that these
changes will provide approximately $5.0 million of annual cost savings in 1999.
At April 2, 1999, $0.6 million of restructuring and special charges remained in
other accrued expenses, which the Company expects to be paid or amortized by the
end of the third quarter of 1999.
Page 10
HELIX TECHNOLOGY CORPORATION
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations (continued)
- ---------------------
For the first quarter of 1999, the Company had a pretax income of $1.9 million
resulting in a tax provision of $0.7 million compared to pretax income of $3.5
million and a provision of $1.7 million for the same period a year ago. The
effective tax rate for the periods ended April 2, 1999, and March 27, 1998, was
35% and 47.1%, respectively. The tax rate in 1998 was unfavorably impacted by
merger and special charges, which are not fully deductible for tax purposes.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operating activities for the first three months of 1999 was
$1.1 million compared with $5.4 million for the comparable period in 1998,
primarily due to changes in accounts receivable. Accounts receivables at the end
of the first quarter of 1999 were $3.7 million higher than the December 31, 1998
balance because of the $6.3 million sequential quarterly net sales increase.
Conversely, accounts receivables at the end of the first quarter of 1998 were
$1.2 million lower than the December 31, 1997 balance because of the $9.2
million sequential quarterly net sales decrease.
Cash used by investing activities decreased by $25.5 million during the first
three months of 1999 compared with the same period last year, due to the
purchase of available-for-sale investments comprised primarily of short-term tax
exempt securities, which occurred during the first quarter of 1998.
Cash dividends paid to stockholders during the first three months of 1999 were
$2.7 million compared with $4.2 million during the first three months of 1998.
The quarterly cash dividend was reduced to $0.12 per common share beginning in
October 1998, compared to $0.21 per common share paid in the first quarter of
1998.
On April 29, 1999, the Board of Directors declared a quarterly cash dividend of
$0.12 per common share. The dividend is payable on May 19, 1999, to stockholders
of record at the close of business May 5, 1999.
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 were not material.
The Company believes that existing cash and investment balances will be adequate
to fund operations through 1999 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 Financial
Accounting Standard No. 133 (SFAS 133), "Accounting for Derivative Instruments
and Hedging Activities." The adoption of this Standard in 2000 is not expected
to have a material effect on the Company's consolidated financial statements.
Page 11
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 areintended 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
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: the need to
continuously develop, manufacture and gain customers' acceptance of new products
and product enhancements; dependence on a limited number of customers; its
ability to attract and retain certain key personnel; the ability of the Company
to protect its technology assets by obtaining and enforcing patents; 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
HELIX TECHNOLOGY CORPORATION
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Year 2000
- ---------
The Year 2000 problem refers to the potential for information systems to be
unable to correctly recognize and process calendar dates and date-sensitive
information involving dates on or after January 1, 2000. The Company is
addressing its Year 2000 risk within four categories: 1) internal business
software, 2) internal systems (hardware and software, exclusive of business
software), 3) external suppliers of goods and services, and 4) the Company's
products.
INTERNAL BUSINESS SOFTWARE. The Company's internal business systems that
collectively provide the major processing functions for its operations are not
Year 2000 compliant. The remediation/replacement of those systems was begun in
mid-1998 and will be completed in May 1999.
INTERNAL SYSTEMS. The Company utilizes other systems (exclusive of business
systems discussed above) to perform certain data processing, including
computer-based programs, networking equipment, laboratory equipment, building
security and atmosphere control systems, fax and copy machines, and others.
Starting in the first quarter of 1998, the Company initiated a comprehensive
program to address Year 2000 problems with such internal systems, consisting of:
forming a project team of representatives from across the Company; inventorying
and assessing each internal system to determine whether it was compliant or
non-compliant to Year 2000 problems; and developing a plan to address all
non-compliant systems.
The Company is on schedule with its remediation efforts and expects to be
completed by June 1999. Testing of each remediated initial system is performed
at the time of such remediation. Additional testing will be performed during the
second half of 1999, focusing on those systems classified as high risk of
failure as well as critical to the business. Independent organizations might be
employed to assist the Company as needed to test and verify such internal
systems are Year 2000 compliant.
EXTERNAL SUPPLIERS OF GOODS AND SERVICES. Starting in January 1998, the Company
undertook a program to understand and mitigate Year 2000 problems with those
external suppliers who are crucial to the Company's operations, including parts
providers, carriers, telecommunications providers, utilities, financial
institutions and others. A series of questionnaires was sent to external
suppliers. As a result, the Company has determined that the majority of the
Company's suppliers are either Year 2000 compliant or are aware of the problem
and have an active program underway to address their particular problems. For
each supplier who is not Year 2000 compliant, the Company has defined a
contingency plan in case the supplier cannot or will not resolve its Year 2000
problems in a timely manner. The plan elements differ for each supplier but
generally consist of one or more actions such as: work with the supplier to help
resolve their Year 2000 problems; develop alternative suppliers for sole-source
components; redesign products to negate the need for non-compliant suppliers;
maintain back-up inventories of critical components to protect against temporary
disruptions in supply; evaluate alternative component and product delivery
mechanisms; and monitor those suppliers who have active Year 2000 programs
underway to verify progress against those suppliers' scheduled milestones.
Page 13
HELIX TECHNOLOGY CORPORATION
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Year 2000 (Continued)
- ---------------------
The Company will continue these monitoring activities until satisfied that all
crucial suppliers are Year 2000 compliant. In addition, the Company has enhanced
its new supplier qualification process to require new suppliers to be Year 2000
compliant in all aspects of their operations and products.
THE COMPANY'S PRODUCTS. Certain of the Company's products contain embedded
software. In 1997, the Company performed an assessment of all such software to
determine Year 2000 compliance. As a result, the Company believes that there are
no material issues regarding the use of its products. The Company also has
enhanced its product development and testing processes to ensure that all new
products are Year 2000 compliant.
The Company estimates that the total cost associated with addressing the Year
2000 problem is approximately $0.9 million, of which approximately $0.8 million
has been incurred to date. Of the total cost, approximately $0.8 million relates
to new systems and has been capitalized, and the remainder has or will be
expensed as incurred. These cost estimates are approximate and subject to change
due to unforeseen internal or external conditions.
While the Company believes that it is addressing all material Year 2000
problems, there are a number of risks associated with Year 2000, only some of
which are within the control of the Company. These risks include unforeseen
difficulties in completing certain Year 2000 programs, an incomplete inventory
of internal systems, and the failure of one or more suppliers to adequately
address the Year 2000 problem. The Company's Year 2000 efforts are meant to help
manage and mitigate these risks.
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, 1998. For more information please read the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K.
Page 14
HELIX TECHNOLOGY CORPORATION
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on April
29, 1999. Proposal I submitted to a vote of security holders
at the meeting was the election of Directors. The following
Directors, being all the Directors of the Corporation, were
elected at the meeting, with the number of votes cast for each
Director or withheld from each Director being set forth after
his respective name:
Name Votes For Votes Withheld
--------------------------------------------------------------
Arthur R. Buckland 19,317,107 329,723
Matthew O. Diggs, Jr. 19,326,990 319,840
Frank Gabron 19,224,520 422,310
Robert H. Hayes 19,222,064 424,766
Robert J. Lepofsky 19,329,061 317,769
Marvin G. Schorr 19,213,837 432,993
Mark S. Wrighton 19,330,159 316,671
No abstentions or broker non-votes were recorded.
Proposal II submitted to a vote of security holders at the
meeting was an amendment of the Company's Certificate of
Incorporation to divide the Board of Directors of the Company
into three classes. Votes cast were as follows:
For Against Abstain Non-Vote
--------------------------------------------------------------
6,708,248 8,923,037 63,989 3,951,556
The proposal was not approved.
Proposal III submitted to a vote of security holders at the
meeting was ratification of the appointment of
PricewaterhouseCoopers LLP, as the Company's independent
accountants for fiscal year 1999.
For Against Abstain
--------------------------------------------------------------
19,569,041 26,272 51,517
The proposal was approved.
Page 15
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).
10.1 Employment agreement dated February 11, 1999, between
the Company and Robert J. Lepofsky.
27.1 Financial Data Schedule (EDGAR version only)
27.2 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
April 2, 1999.
Page 16
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 10, 1999 By: /s/Michael El-Hillow
- -------------------- --------------------------------
Date Michael El-Hillow
Senior Vice President
Chief Financial Officer
Page 17