-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OEVBfIPS4UJLkQaXFFOOjAMS/G02RijEvmuiwMJgIbekb81UiKSBaWPiVY4QXncb a3YcylI/jX9OFbYCMUiN+g== 0000912057-02-007152.txt : 20020414 0000912057-02-007152.hdr.sgml : 20020414 ACCESSION NUMBER: 0000912057-02-007152 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HELIX TECHNOLOGY CORP CENTRAL INDEX KEY: 0000046709 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 042423640 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-06866 FILM NUMBER: 02555418 BUSINESS ADDRESS: STREET 1: NINE HAMPSHIRE STREET STREET 2: NINE HAMPSHIRE ST CITY: MANSFIELD STATE: MA ZIP: 02048 BUSINESS PHONE: 5083375111 MAIL ADDRESS: STREET 1: NINE HAMPSHIRE STREET CITY: MANSFIELD STATE: MA ZIP: 02048 FORMER COMPANY: FORMER CONFORMED NAME: CRYOGENIC TECHNOLOGY INC DATE OF NAME CHANGE: 19760707 10-K 1 a2070436z10-k.txt FORM 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 YEAR ENDED DECEMBER 31, 2001, 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, 02048-9171 NINE HAMPSHIRE STREET, MANSFIELD, (zip code) MASSACHUSETTS (Address of principal executive offices)
(508) 337-5500 (Registrant's telephone number, including area code) 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 January 31, 2002, (computed by reference to the quoted selling prices of such stock in the over-the-counter market), was $453,120,376. The number of shares outstanding of the registrant's Common Stock, $1 Par Value, as of January 31, 2002, was 22,611,204. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Proxy Statement for the registrant's 2002 Annual Meeting of Stockholders to be filed with the SEC in February 2002 are incorporated by reference into Part III, Items 10-12. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS Helix is a world leader in the development, manufacture, and application of innovative vacuum technology solutions for the semiconductor, data storage, and flat panel display markets. Our vacuum systems provide enabling technology for several key steps within the semiconductor manufacturing process, including ion implantation, physical vapor deposition, chemical vapor deposition and etching. Semiconductor manufacturers use our systems to create and maintain a vacuum environment, which is critical to their manufacturing processes. We are a leading provider of vacuum systems technology to the world's largest semiconductor capital equipment and semiconductor manufacturers, placing us at a critical point in their advanced technology manufacturing process. We have long-standing customer relationships with many semiconductor capital equipment manufacturers, including Applied Materials, Axcelis, Matsushita, Novellus, Varian Semiconductor and Veeco, as well as semiconductor manufacturers such as Agere, Atmel, Fujitsu, Infineon, Intel, Motorola, NEC, Samsung, STMicroelectronics and Texas Instruments. Our products are also used in a broad range of industrial manufacturing applications and advanced research and development laboratories. We also provide an extensive range of global support and vacuum system monitoring services that lower our end-users' total costs of ownership. We increase our customers' system uptime through rapid response to potential operating problems. We also develop and deliver enhancements to our customers' installed base of production tools. Our service offerings include our GUTS (Guaranteed Up Time Support) customer response system and our GOLDLink (Global On-Line Diagnostics) support system, which provides a remote e-diagnostics solution that allows us to monitor, in real-time, the vacuum system performance of our customers' production tools. Our GOLDLink capability has made us a leading total solution provider in the emerging market for Internet-based, proactive e-diagnostics for the semiconductor and semiconductor capital equipment industries. INDUSTRY OVERVIEW The semiconductor industry in recent years has experienced significant growth in both the volume and complexity of devices manufactured. The growth in the volume of semiconductors produced has been driven by the increased demand for products historically using semiconductors, including telecommunications equipment, consumer electronics, personal computers and wireless communication devices, the incorporation of semiconductors into new product areas ranging from automobiles to children's toys, the growth of the Internet, and the proliferation of applications in the data storage and data transfer industry. Furthermore, growing consumer demand for smaller, more sophisticated electronic products, such as mobile phones, laptop computers and wireless networking equipment, has increased the complexity of the semiconductors integrated into these products. To meet these demands, semiconductor manufacturers have sought volume and efficiency improvements through increased equipment utilization, higher manufacturing yields, the addition of manufacturing equipment in existing facilities and the construction of new fabrication facilities. To achieve greater economies of production, the semiconductor industry is currently transitioning from building semiconductor wafers that are 200 millimeters in diameter to wafers that are 300 millimeters in diameter with the goal of producing more chips per wafer, thus lowering the cost per chip. This transition to new 300 millimeter equipment is expected to continue over the next five years and represents one of the primary drivers of growth in the semiconductor capital equipment industry in the near term. The production of advanced semiconductor chips is an extremely complex and logistically challenging manufacturing activity. To create integrated circuits, or semiconductor chips, a semiconductor manufacturer uses several sequential process steps including ion implantation, chemical vapor deposition and physical vapor deposition, which are referred to as CVD and PVD, and etching. Ion implantation equipment injects charged ions into the wafer to change a material's characteristics. CVD and PVD 2 equipment is used to deposit materials onto the surface of the wafer. Etching equipment removes unwanted materials from the wafer. These steps, which comprise the initial fabrication of the integrated circuit and are referred to in the industry as front-end processes, are repeated many times to create the desired pattern on the silicon wafer. Following these front-end processes, the wafer is cut into individual devices, or chips, which then undergo additional assembly and testing steps. Removing unwanted gases and other impurities is an integral aspect of several stages of the semiconductor fabrication process, particularly the deposition, ion implantation and etching stages. In order to achieve optimal production yields, semiconductor manufacturers must also ensure that each process operates at carefully controlled pressure levels. Impurities in the fabrication process or incorrect pressure levels can lower production yields, thereby significantly increasing the cost per usable semiconductor chip produced. To meet their manufacturing objectives, semiconductor manufacturers require high vacuum pumps to remove all potentially contaminating gases from the manufacturing process. In addition, in light of the importance of proper pressure measurement throughout the fabrication process, vacuum measurement systems that are capable of monitoring and maintaining appropriate pressure levels are critical to ensuring high product yields and preventing device defects. HELIX SOLUTION We are a leading manufacturer of highly specialized vacuum pumping and measurement systems that meet the demanding process requirements of manufacturers in the semiconductor, data storage and flat panel display markets. We also provide original equipment manufacturers, or OEMs, and end-users of our systems an extensive range of global support services, from vacuum systems design assistance to vacuum process performance monitoring. We believe our vacuum technology solutions increase productivity in the fabrication facility, thereby increasing the value of an OEM's production tool and increasing the device maker's return on investment. We also believe our leadership position in vacuum pumping and measurement systems stems from five key competitive advantages: COMPREHENSIVE, INTEGRATED VACUUM SOLUTIONS. We combine our innovative vacuum pumping and measurement components with our proprietary On-Board diagnostic and control technology to provide comprehensive, high-performance vacuum solutions. Our On-Board technology is based upon a comprehensive control architecture that serves as a foundation for the development of highly integrated product offerings. We provide both the hardware and software elements that integrate process control, diagnostics and communication capabilities for all components within the vacuum system. This integration capability extends to vacuum system components manufactured by other suppliers and allows our products to interoperate with their products. Our integrated solutions directly address our end-users' concerns by increasing system uptime, lowering the total cost of ownership, and facilitating the move to remote e-diagnostics of critical enabling processes. We further leverage the information collected by our On-Board technology to provide enhanced customer support services and a range of information-based services. BROAD CUSTOMER BASE. We have long-standing customer relationships with both OEMs and end-users of semiconductor capital equipment. Over the last three years, an average of approximately 35% of our net sales have come directly from end-users. We believe our strong relationships with end-users provide us with a competitive advantage over many other suppliers to the semiconductor capital equipment industry. Our work with both OEMs and end-users provides us with unique insights into emerging technologies and applications. We understand our customers' specific needs, and we incorporate our insights into our innovative product offerings. Our balanced mix of OEM and end-user customers and status as a supplier to essentially all of the major front-end OEMs in our segment demonstrates our leading position in the industry. SUPERIOR GLOBAL CUSTOMER SERVICE AND SUPPORT. Continuous production tool operation is critical for our customers. We believe providing a high level of service and support gives us a competitive advantage and enhances our ability to build long-term customer relationships. Our GUTS rapid response offering and 3 GOLDLink support technologies are an integral part of our service and support capabilities. Through our GUTS rapid response offering, we provide our customers anywhere in the world access 24 hours a day to a trained Helix employee who can diagnose a problem and, if necessary, dispatch to a customer a technician or part within one hour. GOLDLink allows us to help our customers monitor the operating performance of their manufacturing facilities and recommend preventative courses of action before problems occur. We have twelve service and support offices around the world, and as of December 31, 2001, 104, or 17%, of our employees were dedicated to our global customer service and support activities. WORLD CLASS, RESPONSIVE MANUFACTURING OPERATIONS. We have established a fast cycle-time manufacturing process that provides us with the flexibility to meet the rapidly changing requirements of our customers. We have harnessed our significant manufacturing expertise and our long-standing supplier relationships to build a "just-in-time" manufacturing process that utilizes outsourced subassembly for certain components and allows us to better manage the cyclicality of our business. Our "just-in-time" process allows us to respond to our OEM customers' rapidly changing product needs and help them operate their manufacturing processes at peak efficiency levels. TECHNOLOGICAL LEADERSHIP IN COMPLEX VACUUM SOLUTIONS. Since our inception in 1967, we have participated in the vacuum technology industry and have applied this knowledge to the development of sophisticated vacuum systems for advanced technology applications such as the building of integrated circuits. Our team of scientists, product development personnel, manufacturing specialists and hardware and software engineers are all focused on advancements in vacuum technology. Our customers recognize us as experts capable of assisting them in the design and selection of vacuum systems and components for their new product initiatives and fabrication facilities. As of December 31, 2001, we had 215 patents issued and 82 patents pending relating to the design and development of our products and systems. PRODUCTS AND SERVICES VACUUM PUMPING COMPONENTS AND SYSTEMS Our CTI-Cryogenics cryopumps and systems create an impurity-free vacuum environment for both the PVD and ion implantation markets. Our pumps offer customers rapid, customizable pump speeds, quick system pumpdown and impurity-free vacuum pumping processes without the use of fluids, lubricants or moving parts, ensuring high product yields and process throughputs. Our On-Board system enables central monitoring and control, either in-fab or at remote sites, of every significant function of both individual pumps and entire vacuum networks. We currently supply essentially all major front-end semiconductor capital equipment OEMs and semiconductor manufacturers. We also provide waterpumps and turbopumps, under the TurboPlus line of products, to support the CVD and etch processes. Our waterpumps are high-performance vacuum pumps that optimize the performance of CVD and etch systems by increasing water vapor pumping speed by a factor of five or more, improving system throughput and providing better process results. TurboPlus Vacuum Pumps offer the process advantages of throughput pumping from the turbopump and the uptime benefits of high-speed water vapor pumping, integrated into a compact package with a single, easy-to-use interface. Over the last three years, net sales of our CTI-Cryogenics products and related support services have represented the majority of our consolidated net sales. In 2001, the average selling price for our vacuum pumping systems was approximately $20,000. VACUUM MEASUREMENT COMPONENTS AND SYSTEMS Our Granville-Phillips STABIL-ION and CONVECTRON vacuum measurement components and systems are used in the PVD, ion implantation, CVD, and etch processes. Our vacuum gauging products are also integrated into analytical instruments, primarily mass spectrometers. STABIL-ION and CONVECTRON systems are individually calibrated at numerous pressure values resulting in a stable and 4 accurate gauge that does not change calibration with time of use. This stable calibration is essential to starting the production process at the same true pressure on every production run. It also provides improved gauge-to-gauge reproducibility, which is essential for process replication. Companies depend on our measurement systems to provide repeatable readings, ensuring that processes start at the desired pressure. Non-repeatable gauges can shift over time, causing two different effects: - If the gauge reads lower than the actual pressure, a process can be started when the pressure is too high, possibly causing product defects. - If the gauge reads higher than the actual pressure, the system will pump down to a pressure lower than necessary for a process. This is equivalent to system downtime. Over the last three years, net sales of our Granville-Phillips products and related services have represented between 16% and 19% of our net sales. The average selling price for our vacuum measurement systems is approximately $500. GLOBAL SUPPORT SERVICES To our customers, even a few minutes of production downtime is unacceptable. Given the magnitude of the investment in plant and equipment and the value of the work-in-process, which is expected to increase with the move to 300 millimeter production equipment, tool availability is a priority for our customers. We introduced our GUTS rapid response system in 1986. Our GUTS rapid response system is broadly recognized for delivering superior responsiveness to problems whenever and wherever they may occur. Every call to our customer service center is answered by a capable, empowered Helix employee who has the resources to diagnose a customer problem and initiate corrective action, including dispatching to the customer a technician or part in less than one hour. While our GUTS response system continues to be a leader in reactive customer support, the industry is moving to Internet-based proactive remote e-diagnostics to further enhance production efficiency and throughput and leverage industry-wide core competencies. We are well positioned to provide e-diagnostics using our On-Board Information Network and our GOLDLink capability. Coupled with our On-Board technology, the GOLDLink network provides us with the ability to access performance data of key vacuum system components, including third-party products, right at the production tool. GOLDLink consists of three key components: hardware and software located on tools in the manufacturing facility, our customer support center, and the networks connecting the tools and our support operations. Using our GOLDLink capability, we: - transmit tool performance data via the Internet directly from the fabrication facility to our GOLDLink customer support center in Massachusetts; - monitor and analyze the tool performance data, comparing the actual performance parameters with the optimum "expected" performance parameters (developed by our vacuum experts in conjunction with our customers and third-party suppliers); and - provide our customers with solutions to any vacuum system problems. 5 Some of our GOLDLink customers have chosen to also monitor the performance data themselves. Our GOLDLink capability allows our customers to redirect their employees to focus on their core competencies by leveraging our vacuum technology and control core competencies. Our ability to detect performance anomalies before they cause a system failure minimizes our customers' risk of significant tool downtime and can result in increased plant productivity. We have over 25 customer sites currently connected to the GOLDLink network, including customers in the United States, Europe, Japan and Korea. The GOLDLink support network has already logged over 350,000 connected hours of customer data. In each of the past three years, we received approximately 30% to 40% of our net sales from our global support services, including GOLDLink and, through the GUTS rapid response system, the delivery and installation of spare parts, retrofits and upgrades. CUSTOMERS We market and sell our products and services primarily to large, original equipment and end-user manufacturers of semiconductor, data storage, flat panel display, and other industrial applications. Net sales to OEMs represented 53%, 72% and 63% of our net sales for 2001, 2000 and 1999, respectively. SEMICONDUCTOR CUSTOMERS We sell our products and services primarily to semiconductor capital equipment manufacturers and end-users for incorporation into equipment used to make integrated circuits. Our products are currently used in a variety of applications including CVD, PVD, ion implantation and etch. We are also building products for use in the lithography process of semiconductor manufacturing. Precise vacuum pressure levels are critical in enabling the production of integrated circuits. We anticipate that the semiconductor capital equipment industry will continue to be a substantial part of our business for the foreseeable future. DATA STORAGE CUSTOMERS We sell products and services to data storage equipment manufacturers and to data storage device manufacturers for use in producing a variety of products including CDs; computer hard disks, including both media and thin-film heads; CD-ROMs; and DVDs. These products use a PVD process to produce optical and magnetic thin-film layers, as well as a protective wear layer. FLAT PANEL DISPLAY CUSTOMERS We sell our products and services to equipment manufacturers and manufacturers of flat panel displays, which have fabrication processes similar to those employed in manufacturing integrated circuits. Flat panel technology produces bright, sharp, large, color-rich images on flat screens for products ranging from hand-held computer games to laptop and desktop computer monitors to large-screen televisions. OTHER CUSTOMERS We sell our products and services to OEMs and producers of end products in a variety of industrial markets. Our products are used in a variety of analytical instruments, industrial, and scientific research products. Thin-film optical coatings are used in the manufacture of many industrial products including architectural glass, eyeglasses, lenses, and front surface mirrors. Thin films of diamond-like coatings and other materials are currently applied to products to strengthen and harden surfaces on such diverse products as tools, razor blades, automotive parts, and hip joint replacements. 6 The table below represents some of our customers in each of our primary target markets:
SEMICONDUCTORS SEMICONDUCTOR EQUIPMENT DATA STORAGE - ------------------------ ------------------------ ------------------------ Agere Applied Materials Unaxis Atmel Axcelis Veeco Fujitsu Matsushita Infineon Novellus FLAT PANEL DISPLAYS Intel Varian Semiconductor AKT Motorola Veeco Philips NEC Samsung ANALYTICAL INSTRUMENTS STMicroelectronics Agilent Texas Instruments Riber
Our one reportable segment is cryogenic and vacuum equipment. Our largest customer is Applied Materials, the world's largest manufacturer of semiconductor capital equipment, representing 21%, 40% and 29%, of our net sales for 2001, 2000 and 1999, respectively. Our 10 largest customers accounted for 37%, 60%, and 50%, of our net sales for 2001, 2000, and 1999, respectively. SALES AND MARKETING We sell our products and services, primarily through direct sales personnel, to customers in the United States, Europe, and the Pacific Rim. Our sales and service personnel are located at our headquarters in Mansfield, Massachusetts, and in regional offices in Longmont, Colorado; Santa Clara, California; Austin, Texas; Tempe, Arizona; Amsterdam, the Netherlands; Darmstadt, Germany; Orsay, France; Livingston, Scotland; Tokyo, Japan and Hsinchu, Taiwan. We also have distributors and representatives in other major markets. We market our products worldwide to companies in our target customer segments. We use several marketing programs focused on our targeted markets to support the sale and distribution of our products. We use exhibitions at a limited number of prominent trade shows and conferences and presentations at technology seminars to promote awareness of us and our products. We also utilize promotional product literature and advertise and publish technical articles in select trade and technical journals. MANUFACTURING We manufacture our pump and compressor components at one of our facilities in Mansfield, Massachusetts, and our measurement gauge components at our Longmont, Colorado facility. Our use of a lean manufacturing organization, including fast cycle times, embedded quality control, and supply chain management, positions us to meet or exceed our customers' demands. Our manufacturing activities consist of the assembly and testing of components and subassemblies, which are then integrated into our final products. Once final testing of all subassemblies is completed, the final product is subjected to a series of reliability enhancing operations prior to shipment to customers. We purchase a wide range of electronic, mechanical, and electrical components, some of which are designed to our specifications. We outsource some of our subassembly work. We consider our ability to meet our customers' significantly fluctuating product demands at consistently short lead times using demand flow and lean manufacturing techniques to be a distinct competitive advantage. Our 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. Our policy is to develop alternative sources for components and, where possible, to avoid using scarce raw materials in our products. 7 RESEARCH AND DEVELOPMENT Our industry continues to experience rapid technological change, requiring us to frequently introduce new products and enhancements. We believe that our success will depend upon our ability to identify and provide total systems solutions for our customers' problems. We seek to develop new products and enhancements to our existing products that meet changing customer requirements in our current and new markets. We have in the past made, and expect to continue to make, substantial investments in product and technological development. We believe our experience and relationships will remain important factors to enable us to develop products to meet our customers' needs to penetrate our target markets. Through our direct sales process, we monitor changing customer needs, changes in the marketplace and emerging industry standards, and are therefore better able to focus our research and development efforts to address these evolving industry requirements. We expended $16.1 million in 2001 and in 2000 and $9.9 million in 1999 on research and development efforts. We have continued our commitment to invest in new product development to maintain our technological and market leadership, including new products for commercial applications, projects for 300 millimeter products, and enhancements of our core products and GOLDLink support. We perform our research and product development activities at our headquarters facility in Mansfield, Massachusetts and at our Longmont, Colorado facility. JOINT VENTURE WITH ULVAC We participate in a joint venture, ULVAC Cryogenics, Inc., or UCI, with ULVAC Corporation of Chigasaki, Japan. Formed in 1981, UCI manufactures and sells cryogenic vacuum pumps, principally to ULVAC, one of the largest semiconductor OEMs in Japan. Each company owns 50% of UCI and we made an initial cash investment of approximately $100,000, with no subsequent cash investments. The joint venture arrangement includes a license and technology agreement from us and a management and consultation agreement from ULVAC. COMPETITION The markets for our products and services are highly competitive and are characterized by ongoing technological development and changing customer requirements. We believe that market-driven pressures on our customers to increase productivity and reduce costs are prevalent throughout the markets for our products. In markets in which we have an established presence, we compete primarily on the basis of product performance, applications expertise, and historical customer relationships and support. In new markets for our products, we compete primarily on the basis of product performance, price, and range of features. Other significant competitive factors in our markets include product reliability, on-time delivery, technology and the ability to adaptively provide solutions for our customers' evolving needs. We have foreign and domestic competitors for each of our product lines. Some of these competitors are subsidiaries or divisions of larger corporations and have greater resources than we have. If these competitors bring technologically superior products to market in the future, they could overcome our competitive advantages. Our ability to continue to compete successfully depends on our ability to make timely introductions of system enhancements and new products and services, particularly relating to the new 300 millimeter technology, while continuing to provide excellent pre- and post-sales support on existing products and services. We believe we will be required to maintain a high level of investment in research and development and sales and marketing in order to remain competitive. We are among a relatively small number of companies in the vacuum technology market. If one of our competitors acquires, or is acquired by, another company in this sector, it could result in a stronger competitor with greater resources than we have. Alternatively, if one of our customers were to acquire a vacuum technology company so that it could supply its own requirements, our net sales would decrease. 8 EMPLOYEES As of December 31, 2001, we had 597 permanent and 26 temporary employees worldwide, of which 520 were employed in North America, 62 in Asia and 41 in Europe. As of December 31, 2001, none of our employees based in the United States were represented by a union, and we have never experienced a work stoppage, slowdown or strike. We consider our relationship with our employees to be good. ENVIRONMENTAL AFFAIRS We are subject to environmental laws and regulations in the countries in which we operate that regulate, among other things: air emissions; water discharges; and the generation, use, storage, transportation, handling and disposal of solid and hazardous wastes produced by our manufacturing, research and development and sales activities. As with other companies engaged in like businesses, the nature of our operations exposes us to the risk of environmental liabilities, claims, penalties and orders. We believe, however, that our operations are in substantial compliance with applicable environmental laws and regulations and that there are no pending environmental matters that would have a material impact on our business. INTELLECTUAL PROPERTY We rely on patent, copyright, trademark and trade secret protection, as well as contractual restrictions, in the United States and in other countries to protect our proprietary rights in our products and our business. As of December 31, 2001, we had 99 patents in the United States and 116 patents in other countries, as well as 82 patent applications (18 in the United States and 64 in other countries) on file with various patent agencies worldwide. These patents expire at various years through 2020. No patents that we consider significant expire during the next five years. We have a number of trademarks that we consider important to our business. These trademarks are protected by registration in the United States and other countries in which we market our products. BACKLOG We had approximately $7.0 million backlog of orders that we believed to be firm at December 31, 2001, compared with $26.6 million at December 31, 2000. We expect to recognize revenue from essentially all of the December 31, 2001 backlog during 2002. ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below is information regarding our current executive officers who do not serve as our directors. Mr. Robert E. Anastasi is 55 and has served as Executive Vice President since February 2001. Prior to that he served as a Senior Vice President from July 1997 until February 2001 and as a Vice President from June 1991 to July 1997. Mr. Jay Zager is 52 and joined us as our Senior Vice President and Chief Financial Officer in January 2002. Prior to that Mr. Zager served as Executive Vice President and Chief Financial Officer of Inrange Technologies Corporation from May 2000 to October 2001. He served as a vice president in the Enterprise Solutions Group of Compaq Computer Corporation from 1998 through 1999. From 1985 through 1998, Mr. Zager held several senior management positions with Digital Equipment Corporation, including Vice President and Chief Financial Officer, Worldwide Engineering and Research; Vice President, Business Development; and Group Controller of the U.S. Sales and Service division. 9 ITEM 2. PROPERTIES We occupy approximately 345,300 square feet worldwide, as described in the table below.
LOCATION SIZE (SQ. FT.) LEASE EXPIRES FUNCTIONS - -------- -------------- ------------- ------------------------------------------------- Massachusetts.... 155,000 2006(1) Corporate headquarters, engineering, manufacturing, 63,000 2004 sales and marketing, customer support, repair center, and administration Colorado......... 60,000 2015 Engineering, manufacturing, and sales and marketing California....... 11,000 2003 Sales office, customer support, and repair center Texas............ 12,000 2005 Sales office and customer support Arizona.......... 3,000 2006 Sales office and customer support Scotland......... 5,300 2020 Sales office and customer support Germany.......... 2,500 2003 Sales office and customer support France........... 6,400 2003 Sales office, customer support, and repair center Japan............ 9,900 2002 Sales office and customer support 9,700 2002 Repair center Taiwan........... 7,500 2003 Sales office, customer support, and repair center
(1) THE LEASE ON THIS FACILITY PROVIDES FOR RENEWAL OPTIONS FOR UP TO FIFTEEN ADDITIONAL YEARS. We believe we have adequate facilities to meet our currently anticipated requirements and that suitable additional or substitute facilities will be available if required. ITEM 3. LEGAL PROCEEDINGS We are a defendant in an action brought in 1998 in the Massachusetts Superior Court by Raytheon Company which alleges that between 1992 and 1994 we sold Raytheon defective components used in missile guidance systems manufactured by Raytheon. We have not been in the business of selling these components since 1994. We have denied all claims that Raytheon has asserted and succeeded in having certain claims dismissed, although these dismissals are potentially appealable at the conclusion of the trial stage of the case. The action is in the discovery and motion phase and no trial date has been set. We believe that we have meritorious defenses and that, although the ultimate outcome of the matters cannot be predicted with certainty, the disposition of the matters should not have a material effect on our financial position. We are also involved in various legal proceedings in the normal course of business. In our opinion, these proceedings involve amounts that would not have a material effect on our financial position or results of operations if such proceedings were resolved unfavorably. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the quarter ended December 31, 2001, no matters were submitted to a vote of security holders through the solicitation of proxies or otherwise. 10 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS Our common stock is traded on the Nasdaq Stock Market under the symbol HELX. At December 31, 2001, there were 22,611,204 shares of common stock outstanding and approximately 612 common stockholders of record. PRICE RANGE OF COMMON STOCK AND CASH DIVIDEND PER COMMON SHARE The price range and cash dividend per common share of our common stock by quarter are:
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER -------- -------- -------- -------- 2001 High...................................................... $32.91 $33.44 $30.55 $24.50 Low....................................................... $21.13 $20.38 $14.75 $14.97 Cash dividends per share.................................. $ 0.12 $ 0.12 $ 0.12 $ 0.08 2000 High...................................................... $80.19 $67.50 $44.00 $30.38 Low....................................................... $43.38 $28.63 $27.25 $19.31 Cash dividends per share.................................. $ 0.12 $ 0.12 $ 0.12 $ 0.12
On February 20, 2002, the Board of Directors declared a quarterly cash dividend of $0.08 per common share payable on March 12, 2002, to common stockholders of record at the close of business on March 4, 2002. ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA The following table summarizes certain selected consolidated financial data that should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere herein. In connection with the acquisition of Granville-Phillips Company in 1998, accounted for as a pooling of interests, all prior-period financial data has been restated to include the impact of the combination.
December 31, --------------------------------------------------------- (IN THOUSANDS EXCEPT PER SHARE DATA) 2001 2000 1999 1998 1997 - ------------------------------------ --------- --------- --------- --------- --------- Net sales............................. $ 112,994 $ 253,085 $ 139,389 $ 95,345 $ 157,076 Net (loss) income(1).................. $ (5,940) $ 45,870 $ 15,864 $ (1,920) $ 25,544 Basic net (loss) income per share..... $ (0.26) $ 2.04 $ 0.71 $ (0.09) $ 1.15 Diluted net (loss) income per share... $ (0.26) $ 2.02 $ 0.70 $ (0.09) $ 1.14 Cash dividends per share(2)........... $ 0.44 $ 0.48 $ 0.48 $ 0.75 $ 0.74 Total assets.......................... $ 113,580 $ 141,968 $ 93,655 $ 75,652 $ 96,219 Basic shares.......................... 22,565 22,498 22,336 22,262 22,151 Diluted shares........................ 22,565 22,762 22,623 22,262 22,353
(1) NET LOSS FOR THE YEAR ENDED DECEMBER 31, 2001 REFLECTS A RESTRUCTURING CHARGE OF $1,047,000 RELATED TO WORK FORCE REDUCTIONS. NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1999, REFLECTS THE GAIN ON SALE OF OUR COLORADO FACILITY OF $1,397,000. NET LOSS FOR THE YEAR ENDED DECEMBER 31, 1998, REFLECTS MERGER AND OTHER SPECIAL CHARGES OF $3,546,000 RELATED TO THE ACQUISITION OF GRANVILLE-PHILLIPS COMPANY AND RESTRUCTURING AND OTHER SPECIAL CHARGES OF $2,500,000 RELATED TO WORK FORCE REDUCTIONS, EXIT COSTS FOR A LEASED FACILITY, AND IMPAIRMENT OF CERTAIN ASSETS. SEE NOTES H AND I OF "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS." 11 (2) CASH DIVIDENDS PER SHARE DECLARED IN PERIODS PRIOR TO THE ACQUISITION OF GRANVILLE-PHILLIPS COMPANY ARE BASED ON SHARES OUTSTANDING AT THAT TIME AND THEREFORE DO NOT REFLECT THE 2,383,000 SHARES ISSUED AS PART OF THE ACQUISITION. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS TOGETHER WITH OUR FINANCIAL STATEMENTS, RELATED NOTES AND OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS REPORT. IN ADDITION TO HISTORICAL INFORMATION, THE FOLLOWING DISCUSSION AND OTHER PARTS OF THIS REPORT CONTAIN FORWARD-LOOKING INFORMATION THAT INVOLVES RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED BY SUCH FORWARD-LOOKING INFORMATION DUE TO COMPETITIVE FACTORS AND OTHER FACTORS DISCUSSED UNDER "IMPORTANT FACTORS THAT MAY AFFECT FUTURE RESULTS" BELOW. OVERVIEW We are a world leader in the development, manufacture, and application of innovative vacuum technology solutions for the semiconductor, data storage, and flat panel display markets. Our vacuum systems provide enabling technology for several key steps within the semiconductor manufacturing process, including ion implantation, physical vapor deposition, chemical vapor deposition and etching. Semiconductor manufacturers use our systems to create and maintain a vacuum environment, which is critical to their manufacturing processes. We are a leading provider of vacuum systems technology to the world's largest semiconductor capital equipment and semiconductor manufacturers, placing us at a critical point in their advanced technology manufacturing process. We have long-standing customer relationships with many semiconductor capital equipment manufacturers, including Applied Materials, Axcelis, Matsushita, Novellus, Varian Semiconductor and Veeco, as well as semiconductor manufacturers such as Agere, Atmel, Fujitsu, Infineon, Intel, Motorola, NEC, Samsung, STMicroelectronics and Texas Instruments. Our products are also used in a broad range of industrial manufacturing applications and advanced research and development laboratories. We also provide an extensive range of global support and vacuum system monitoring services that lower our end-users' total costs of ownership. We increase our customers' system uptime through rapid response to potential operating problems. We also develop and deliver enhancements to our customers' installed base of production tools. Our service offerings include our unique GUTS (Guaranteed Up Time Support) customer response system and our innovative GOLDLink (Global On-Line Diagnostics) support system, which provides a remote e-diagnostics solution that allows us to monitor, in real-time, the vacuum system performance of our customers' production tools. Our GOLDLink capability has made us a leading total solution provider in the emerging market for Internet-based, proactive e-diagnostics for the semiconductor and semiconductor capital equipment industries. The principal market we serve is the global semiconductor capital equipment industry, a highly cyclical business. As a result, we have experienced significant variations in net sales, expenses, and results of operations in the periods presented and such variations are likely to continue. Net sales from sales of vacuum components and systems is recognized upon shipment provided title and risk of loss have been transferred to the customer, there is evidence of an arrangement, fees are fixed or determinable, and collection is reasonably assured. Net sales from global support services is comprised primarily of sales and installation of spare parts, retrofits and upgrades as well as other support services provided through our GUTS customer response system and GOLDLink support system. Global support services, including GOLDLink, are provided to some of our major customers under the terms of master support agreements, which typically have terms of between one and three years. These services are provided to some of our other customers on an individual or fee-for-service basis. Net sales from global support services is recognized as performed or ratably over the period of the related agreements. 12 Cost of sales consist primarily of labor, materials and overhead relating to the manufacturing of our vacuum components and systems, as well as labor and material costs associated with our global support services. We own 50% of a joint venture, ULVAC Cryogenics, Inc., or UCI, which manufactures and sells cryogenic vacuum pumps in Japan, principally to ULVAC Corporation. We account for the joint venture using the equity method of accounting, and we also receive royalties from the joint venture under the terms of a license and technology agreement. The royalties we receive from UCI, as well as our equity in the income and losses of UCI, are both included in our financial statements under joint venture income. RESULTS OF OPERATIONS FISCAL YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE FISCAL YEAR ENDED DECEMBER 31, 2000 In 2001, a slowdown in the global market for semiconductor capital equipment impacted us after we had experienced a period of significant growth in 1999 and 2000. Our net sales for 2001 were $113.0 million compared with net sales for 2000 of $253.1 million, a decrease of 55.4%. Cost of sales for 2001 was $75.3 million compared with $132.0 million for 2001, a decrease of 43.0%. The gross margin for 2001 was 33.4% compared with 47.9% for 2000. The reduction in gross margin was primarily attributable to decreased production volume as overhead costs were spread over a smaller sales base. Research and development expenses were $16.1 million for both 2001 and 2000, or 14.2% and 6.4% of net sales in 2001 and 2000, respectively. Despite the significant near-term reduction in product demand, we continued in 2001 to focus on developing technologies to support a new generation of products for 300 millimeter capable production tools, to expand our GOLDLink support service capability and to improve our core component product lines. Total selling, general and administrative expenses decreased to $35.1 million in 2001 compared with $42.4 million in 2000. Our spending declined due to cost containment measures, including reductions in senior management compensation expenses, initiated during 2001. During the third quarter of 2001, we implemented and completed a restructuring program in response to the continued slowdown in the semiconductor capital equipment industry that resulted in the reduction of approximately 110 permanent employees. As a result, we recorded a restructuring charge of approximately $1.0 million primarily related to severance payments and fringe benefit costs. Royalty and equity income from our joint venture in Japan decreased by $1.7 million to $2.4 million in 2001 from $4.1 million in 2000 due to the decline in the Japanese semiconductor capital equipment market in 2001. Interest and other income for 2001 was $0.9 million, compared with $1.2 million for 2000, reflecting lower interest rates and lower average cash, cash equivalent and investment balances in 2001. We had a pretax loss of $11.2 million in 2001, resulting in a tax benefit of $5.3 million, compared with pretax income of $68.0 million and a tax provision of $22.1 million for 2000. The effective tax rates for 2001 and 2000 were 47.0% and 32.5%, respectively. The tax rates differ from the U.S. statutory rate primarily due to tax credits and undistributed nontaxable equity income from our joint venture. These tax credits and equity income reduced our tax rate on 2000 pretax income and increased our tax rate on 2001 pretax losses. FISCAL YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE FISCAL YEAR ENDED DECEMBER 31, 1999 Throughout 2000, we continued to benefit from the significant increase in demand for semiconductor capital equipment. Net sales for 2000 were $253.1 million, compared with $139.4 million in 1999, an increase of $113.7 million, or 81.6%. Cost of sales for 2000 was $132.0 million compared with $77.5 million for 1999, an increase of 70.3%. Total gross margin for 2000 was 47.9%, compared with 44.4% for the prior year. The improvement in gross 13 margin was primarily attributable to increased sales volume, offset by costs relating to a new manufacturing and engineering center in Colorado, a new customer support center in Taiwan and expansion of our Japanese customer support center. Research and development expenses for 2000 were $16.1 million, or 6.4% of net sales, compared with $9.9 million, or 7.1% of net sales, for 1999. We increased our spending on projects for 300 millimeter products, GOLDLink global support and ongoing improvements to our core products. Selling, general and administrative expenses increased in 2000 to $42.4 million from $32.0 million in the prior year. The increase in spending was primarily attributable to expenditures for increased sales activities worldwide, our locations in Colorado, Taiwan, and Japan mentioned above, and GOLDLink global support. Royalty and equity income from our joint venture in Japan increased by $2.7 million to $4.1 million in 2000 from $1.4 million in 1999, due to improvements in the Japanese semiconductor capital equipment market in 2000. Interest and other income for 2000 was $1.2 million, compared with $0.9 million for 1999, reflecting higher interest rates and higher average cash, cash equivalent and investment balances during 2000. We recorded an income tax provision of $22.1 million for 2000, compared with $7.8 million for the previous year. The 2000 and 1999 effective tax rates of 32.5% and 33.0%, respectively, were less than the federal statutory rate of 35% because we benefited from research and development and other tax credits. QUARTERLY FINANCIAL RESULTS The following table presents selected unaudited financial information for the eight quarters in the period ended December 31, 2001. The results for any quarter are not necessarily indicative of future quarterly results and, accordingly, period-to-period comparisons should not be relied upon as an indication of future performance.
QUARTER ENDED ----------------------------------------------------------------------------------------- MARCH 31, JUNE 30, SEPT. 29, DEC. 31, MARCH 30, JUNE 29, SEPT. 28, DEC. 31, 2000 2000 2000 2000 2001 2001 2001 2001 --------- -------- --------- -------- --------- -------- --------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net sales....................... $50,050 $58,525 $69,913 $74,597 $48,641 $26,604 $20,445 $17,304 Cost of sales................... 25,948 30,858 36,495 38,649 28,507 18,495 14,444 13,829 Research and development........ 3,275 3,934 4,182 4,740 4,233 4,209 3,731 3,896 Selling, general and administrative................ 9,788 10,457 11,182 10,994 9,905 9,460 7,860 7,850 Restructuring charge............ -- -- -- -- -- -- 1,047 -- Operating income (loss)......... 11,039 13,276 18,054 20,214 5,996 (5,560) (6,637) (8,271) Net income (loss)............... 7,958 9,764 13,478 14,670 4,980 (3,235) (4,082) (3,603) Basic net income (loss) per share......................... 0.36 0.43 0.60 0.65 0.22 (0.14) (0.18) (0.16) Diluted net income (loss) per share......................... 0.35 0.43 0.59 0.65 0.22 (0.14) (0.18) (0.16)
LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $9.2 million in 2001 compared with $31.9 million in 2000, primarily due to our net loss in 2001, partially offset by a reduction in working capital. In 2001, we spent $15.9 million on capital expenditures, principally for our new Japanese service center, implementation of our global information system and enhancements to the GOLDLink support system. In 2000, capital expenditures were $12.4 million, principally due to the consolidation of our Colorado operations into a new 60,000 square foot leased facility, the opening of our GOLDLink global support operations center in Massachusetts, the opening of a sales and service location in Taiwan, and the first phase of our global information system. We expect our capital expenditures in 2002 will be significantly lower than 2001. 14 Cash dividends paid to our stockholders during 2001 were $9.9 million, compared with $10.8 million for 2000. We paid a quarterly common stock dividend of $0.12 per share in 2000 and for the first three quarters of 2001. In October 2001, after considering the current uncertain business environment in the semiconductor equipment industry, our board of directors reduced the quarterly dividend to $0.08 per share, resulting in aggregate quarterly cash savings of approximately $1.0 million. We have an agreement with a bank to sell specific Japanese Yen-"denominated" receivables, subject to recourse provisions. During 2001, approximately $1.6 million of receivables were sold under these arrangements. As of December 31, 2001 and 2000, approximately $0.5 million and $1.0 million, respectively, of these receivables sold to the bank remained outstanding. We do not believe we are materially at risk for any losses as a result of this agreement. We manage our 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. We have a three year revolving credit agreement with Fleet National Bank entered into in July 2000 that permits us to borrow up to $25.0 million, subject to compliance with certain covenants. Loans under the credit agreement bear interest for each calendar quarter at an annual rate equal to, at our option, either the applicable LIBOR rate or the lender's base rate, plus a varying margin. We have no borrowings outstanding under the credit agreement. As of December 31, 2001, we are not in compliance with one of the financial covenants, relating to profitability, and therefore cannot access the line of credit at this time. As a result, we are currently in negotiations with the bank to amend the agreement. We believe that our existing funds and anticipated cash flow from operations will satisfy our working capital and capital expenditure requirements for at least the next 12 months. LEGAL PROCEEDINGS We are a defendant in an action brought in 1998 in the Massachusetts Superior Court by Raytheon Company which alleges that between 1992 and 1994 we sold Raytheon defective components used in missile guidance systems manufactured by Raytheon. We have not been in the business of selling these components since 1994. We have denied all claims that Raytheon has asserted and succeeded in having certain claims dismissed, although these dismissals are potentially appealable at the conclusion of the trial stage of the case. The action is in the discovery and motion phase and no trial date has been set. We believe that we have meritorious defenses and that, although the ultimate outcome of the matters cannot be predicted with certainty, the disposition of the matters should not have a material effect on our financial position. We are also involved in various legal proceedings in the normal course of business. In our opinion, these proceedings involve amounts that would not have a material effect on our financial position or results of operations if such proceedings were resolved unfavorably. RECENT ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations." SFAS 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminates the pooling of interests method. In July 2001, the FASB issued Statement of Financial Accounting Standards No. 142 (SFAS 142), "Goodwill and Other Intangible Assets," which became effective for us on January 1, 2002. SFAS 142 requires, among other things, the discontinuance of goodwill amortization and includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles and reclassification of certain intangibles out of previously reported goodwill. The revised standards include transition rules and requirements for identification, valuation and recognition of a much broader list of intangibles as part of business combinations than prior practice, most of which will continue to be amortized. 15 In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144 (SFAS 144), "Accounting for the Impairment or Disposal of Long-Lived Assets." The objectives of SFAS 144 are to address significant issues relating to the implementation of FASB Statement No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and to develop a single accounting model, based on the framework established in SFAS 121, for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, its provisions are to be applied prospectively. We believe that the adoption of these standards will not have a material impact on our consolidated financial statements. IMPORTANT FACTORS THAT MAY AFFECT FUTURE RESULTS This Annual Report on Form 10-K contains forward-looking statements. These forward-looking statements appear principally in the sections entitled "Business" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations." Forward-looking statements may appear in other sections of this report as well. Generally, the forward-looking statements in this report use words like "expect," "anticipate," "plan," "believe," "seek," "estimate," and similar expressions. The forward-looking statements include statements about: - our strategic plans; - the outlook for our business and industry; - anticipated expenses; - anticipated sources of future revenues; and - the sufficiency of capital to meet working capital and capital expenditure requirements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that could cause our future results to differ materially from those expressed in any forward-looking statements made by or on behalf of us. Many such factors are beyond our ability to control or predict. Readers are accordingly cautioned not to place undue reliance on forward-looking statements. We disclaim any intent or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise. Our 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 our results of operations. We cannot assure you that developments in the semiconductor industry or the semiconductor equipment industry will occur at the rate or in the manner that we expect. In addition to the cyclical nature, risks, and uncertainties of the semiconductor industry, we face the following risks and uncertainties among others: - dependence on a limited number of customers and concentration of sales to one or a few customers; - reduction of potential customers due to industry consolidation and outsourcing of the manufacture of semiconductors; - the need to continuously develop, manufacture, and gain customers' acceptance of new products and product enhancements; 16 - the need to achieve widespread market acceptance among our customers and others of our GOLDLink support initiative; - our ability to continue to provide satisfactory levels of product services and maintenance and warranty support to our customers; - our ability to compete successfully with current and future competitors in our industry; - our ability to continue necessary capital investments during industry downturns and to anticipate or expand sales; - dependence upon sole- and limited-source suppliers for certain components and subassemblies included in our products and systems; - potential liability claims based on alleged defects in our products or errors in performing product-related services; - economic downturns abroad affecting our sales to foreign markets; - our ability to protect our proprietary technology without substantial costs and disruption to our core business strategy; - our ability to attract and retain certain key personnel; and - our ability to expand through acquisitions of complementary businesses and to integrate successfully any acquired companies. As a result of the foregoing and other factors, we may experience material fluctuations in our future operating results on a quarterly or annual basis, which could materially affect our business, financial position, results of operations, and stock price. These risks and uncertainties are discussed in more detail in Exhibit 99.1 to this Annual Report on Form 10-K. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FOREIGN CURRENCY EXCHANGE RATE RISK A portion of our business is conducted outside the United States through our foreign subsidiaries. Our foreign subsidiaries maintain their accounting records in their local currencies. Consequently, fluctuations in exchange rates affect the period-to-period comparability of results. To reduce the risks associated with foreign currency rate fluctuations, we have entered into forward exchange contracts on a continuing basis to offset the currency exposures. The gains and losses on these transactions partially offset the unrealized and realized foreign exchange gains and losses of the underlying exposures. The net gains and losses were immaterial for the years presented and were included in cost of sales. We plan to continue to use forward exchange contracts to mitigate the impact of exchange rate fluctuations. The notional amount of our outstanding foreign currency contracts at December 31, 2001, was $9.2 million. The potential fair value loss for a hypothetical 10% adverse change in forward currency exchange rates at December 31, 2001, would be $1.0 million. The potential loss was estimated calculating the fair value of the forward exchange contracts at December 31, 2001, and comparing that with the value calculated using the hypothetical forward currency exchange rates. CREDIT RISK We are exposed to concentration of credit risk in cash and cash equivalents, investments, trade receivables, and short-term foreign exchange forward contracts. We place our cash and cash equivalents with our primary bank, a major financial institution, with a high-quality credit rating. Our investments consist of money market funds, municipal government agencies and tax-free bonds or investment-grade securities. We enter into short-term foreign currency exchange contracts with our primary bank. 17 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........................... 19 Consolidated Financial Statements of Helix Technology Corporation Consolidated Balance Sheets as of December 31, 2001 and 2000.................................................... 20 Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000, and 1999... 21 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2001, 2000, and 1999... 22 Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999................. 23 Notes to Consolidated Financial Statements.................. 24 Financial Statement Schedule for the Years Ended December 31, 2001, 2000, and 1999 II. Valuation and Qualifying Accounts..................... 37
Schedules other than those listed above have been omitted, since they are either inapplicable or not required. 18 REPORT OF INDEPENDENT ACCOUNTANTS To The Board of Directors and Stockholders of Helix Technology Corporation: In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Helix Technology Corporation and its subsidiaries at December 31, 2001 and 2000 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts January 29, 2002 19 HELIX TECHNOLOGY CORPORATION CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ------------------- 2001 2000 -------- -------- (IN THOUSANDS EXCEPT SHARE DATA) ASSETS Current: Cash and cash equivalents................................. $ 7,789 $ 15,435 Investments............................................... 9,271 16,654 Receivables--net of allowances of $400 in 2001 and $197 in 2000.................................................... 11,997 40,243 Inventories............................................... 27,293 30,204 Income tax receivable..................................... 7,344 -- Deferred income taxes..................................... 5,707 6,444 Other current assets...................................... 2,577 2,208 -------- -------- Total Current Assets........................................ 71,978 111,188 -------- -------- Property, plant, and equipment.............................. 65,115 49,940 Less: accumulated depreciation.............................. (35,614) (31,115) -------- -------- Net property, plant, and equipment.......................... 29,501 18,825 Other assets (Note E)....................................... 12,101 11,955 -------- -------- TOTAL ASSETS................................................ $113,580 $141,968 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current: Accounts payable.......................................... $ 9,105 $ 17,993 Payroll and compensation.................................. 986 3,060 Retirement costs (Note G)................................. 6,758 5,586 Income taxes.............................................. 3,064 6,015 Other accrued liabilities................................. 700 747 -------- -------- Total Current Liabilities................................. 20,613 33,401 -------- -------- Commitments and contingencies (Note B) 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: 22,611,204 in 2001 and 22,537,204 in 2000................................................... 22,611 22,537 Capital in excess of par value.............................. 13,878 12,263 Treasury stock, $1 par value; 3,840 shares in 2001 and 2000...................................................... (232) (232) Retained earnings........................................... 58,261 74,123 Accumulated other comprehensive loss........................ (1,551) (124) -------- -------- Total Stockholders' Equity.................................. 92,967 108,567 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $113,580 $141,968 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 20 HELIX TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, ------------------------------------ 2001 2000 1999 ---------- ---------- ---------- (IN THOUSANDS EXCEPT PER SHARE DATA) Net sales................................................... $112,994 $253,085 $139,389 Costs and expenses: Cost of sales............................................. 75,275 131,950 77,487 Research and development.................................. 16,069 16,131 9,916 Selling, general and administrative....................... 35,075 42,421 31,976 Restructuring charge (Note H)............................. 1,047 -- -- -------- -------- -------- 127,466 190,502 119,379 -------- -------- -------- Operating (loss) income..................................... (14,472) 62,583 20,010 Joint venture income (Note E)............................... 2,398 4,132 1,415 Interest and other income................................... 867 1,241 856 Gain on sale of building (Note I)........................... -- -- 1,397 -------- -------- -------- (Loss) income before taxes.................................. (11,207) 67,956 23,678 Income tax (benefit) provision.............................. (5,267) 22,086 7,814 -------- -------- -------- Net (loss) income........................................... $ (5,940) $ 45,870 $ 15,864 ======== ======== ======== Net (loss) income per share: Basic..................................................... $ (0.26) $ 2.04 $ 0.71 Diluted................................................... $ (0.26) $ 2.02 $ 0.70 Number of shares used in per share calculations: Basic..................................................... 22,565 22,498 22,336 Diluted................................................... 22,565 22,762 22,623
The accompanying notes are an integral part of these consolidated financial statements. 21 HELIX TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK -------------------- ACCUMULATED CAPITAL OTHER STATEMENTS OF PAR IN EXCESS TREASURY RETAINED COMPREHENSIVE COMPREHENSIVE SHARES VALUE OF PAR STOCK EARNINGS INCOME (LOSS) TOTAL INCOME ---------- -------- --------- -------- -------- -------------- -------- -------------- (IN THOUSANDS EXCEPT SHARE DATA) Balance, December 31, 1998..................... 22,319,131 $22,319 $ 7,936 $ (438) $33,910 $ (359) $ 63,368 ---------- ------- ------- ------- -------- ------- -------- Comprehensive income, net of tax: Net income............... -- -- -- 15,864 -- 15,864 $15,864 Other comprehensive income: Foreign currency translation adjustments.......... -- -- -- -- 1,467 1,467 1,467 Unrealized loss on available-for-sale investment........... -- -- -- -- (40) (40) (40) ------- ------- Other comprehensive income................. -- -- -- -- 1,427 1,427 ------- Comprehensive income....... $17,291 ======= Shares issued for stock options.................. 56,500 57 746 -- -- -- 803 Shares issued for employee savings plan............. -- 302 318 -- -- 620 Income tax effect from exercise of stock options.................. -- 330 -- -- -- 330 Shares tendered for exercise of stock options.................. -- -- (78) -- -- (78) Cash dividends............. -- -- -- (10,711) -- (10,711) ---------- ------- ------- ------- -------- ------- -------- Balance, December 31, 1999..................... 22,375,631 22,376 9,314 (198) 39,063 1,068 71,623 ---------- ------- ------- ------- -------- ------- -------- Comprehensive income, net of tax: Net income............... -- -- -- 45,870 -- 45,870 $45,870 Other comprehensive loss: Foreign currency translation adjustments.......... -- -- -- -- (1,233) (1,233) (1,233) Unrealized gain on available-for-sale investment........... -- -- -- -- 41 41 41 ------- ------- Other comprehensive loss................... -- -- -- -- (1,192) (1,192) ------- Comprehensive income....... $44,678 ======= Shares issued for stock options.................. 235,024 235 4,083 -- -- -- 4,318 Shares issued for employee savings plan............. -- 42 711 -- -- 753 Retirement of treasury stock.................... (73,451) (74) (4,361) 4,435 -- -- -- Income tax effect from exercise of stock options.................. -- 3,185 -- -- -- 3,185 Shares tendered for exercise of stock options.................. -- -- (5,180) -- -- (5,180) Cash dividends............. -- -- -- (10,810) -- (10,810) ---------- ------- ------- ------- -------- ------- -------- Balance, December 31, 2000..................... 22,537,204 22,537 12,263 (232) 74,123 (124) 108,567 ---------- ------- ------- ------- -------- ------- -------- Comprehensive income, net of tax: Net loss................. -- -- -- (5,940) -- (5,940) $(5,940) Other comprehensive loss: Foreign currency translation adjustments.......... -- -- -- -- (1,462) (1,462) (1,462) Unrealized gain on available-for-sale investment........... -- -- -- -- 35 35 35 ------- ------- Other comprehensive loss................... -- -- -- -- (1,427) (1,427) ------- Comprehensive loss......... $(7,367) ======= Shares issued for stock options.................. 74,000 74 1,480 -- -- -- 1,554 Income tax effect from exercise of stock options.................. -- 135 -- -- -- 135 Cash dividends............. -- -- -- (9,922) -- (9,922) ---------- ------- ------- ------- -------- ------- -------- Balance, December 31, 2001..................... 22,611,204 $22,611 $13,878 $ (232) $58,261 $(1,551) $ 92,967 ========== ======= ======= ======= ======== ======= ========
The accompanying notes are an integral part of these consolidated financial statements. 22 HELIX TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, --------------------------------- 2001 2000 1999 --------- --------- --------- (IN THOUSANDS) Cash flows from operating activities: Net (loss) income......................................... $ (5,940) $ 45,870 $ 15,864 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization........................... 5,268 4,233 4,045 Deferred income taxes................................... 737 596 (1,883) Gain on sale of property................................ -- -- (1,397) Undistributed earnings of joint venture, other.......... (1,643) (4,085) (533) Performance-based stock compensation.................... -- -- 1,581 Shares issued for employee savings plan................. -- 753 620 Income tax effect from exercise of stock options........ 135 3,185 330 Net change in other operating assets and liabilities (1)................................................... 10,656 (18,672) (6,197) -------- -------- -------- Net cash provided by operating activities................. 9,213 31,880 12,430 -------- -------- -------- Cash flows from investing activities: Proceeds from sale of property............................ -- -- 2,500 Capital expenditures...................................... (15,944) (12,427) (4,561) Purchase of investments................................... (36,624) (42,512) (23,910) Sale of investments....................................... 44,077 41,826 26,092 -------- -------- -------- Net cash (used) provided by investing activities.......... (8,491) (13,113) 121 -------- -------- -------- Cash flows from financing activities: Shares tendered for exercise of stock options............. -- (5,180) (78) Net cash provided by employee stock plans................. 1,554 1,250 803 Cash dividends paid....................................... (9,922) (10,810) (10,711) -------- -------- -------- Net cash used by financing activities..................... (8,368) (14,740) (9,986) -------- -------- -------- (Decrease) increase in cash and cash equivalents............ (7,646) 4,027 2,565 Cash and cash equivalents, January 1........................ 15,435 11,408 8,843 -------- -------- -------- Cash and cash equivalents, December 31...................... $ 7,789 $ 15,435 $ 11,408 ======== ======== ======== (1) Change in other operating assets and liabilities: Decrease (increase) in receivables...................... $ 28,246 $(20,764) $ (9,696) Decrease (increase) in inventories...................... 2,911 (11,762) (3,631) (Increase) decrease in income tax receivable............ (7,344) -- -- (Increase) decrease in other current assets............. (369) (582) (520) (Decrease) increase in accounts payable................. (8,888) 9,503 4,738 (Decrease) increase in other accrued expenses........... (3,900) 4,933 2,912 -------- -------- -------- Net change in other operating assets and liabilities...... $ 10,656 $(18,672) $ (6,197) ======== ======== ======== Income taxes paid........................................... $ 3,929 $ 15,294 $ 6,619 ======== ======== ========
Supplemental disclosure of non-cash activity in 2001, 2000, and 1999 of $0, $3,068,000, and $0, respectively, was reclassed from other accrued expenses to equity in connection with issuance of stock options. The accompanying notes are an integral part of these consolidated financial statements. 23 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly owned 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. USE OF ESTIMATES 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 financial statements to conform with the current presentation. FOREIGN CURRENCY TRANSLATION Assets and liabilities of subsidiaries outside the United States are translated into U.S. dollars using current exchange rates. Revenue and expense accounts are translated at the average rates in effect during the year. The effects of foreign currency translation adjustments are included in accumulated other comprehensive income (loss) as a component of stockholders' equity. Transaction gains/losses were not material. The effect of foreign currency exchange rates on cash and cash equivalents was not material. CASH AND CASH EQUIVALENTS Cash and cash equivalents include demand deposits, money market accounts, and other highly liquid investments with original maturities of three months or less at the date of purchase. INVESTMENTS The Company's investments are classified as available-for-sale securities, and the difference in the cost and fair value of these investments is included in other comprehensive income until maturity or sale of the investment at which time it is included in interest and other income. The Company's investments consist of the following:
DECEMBER 31, --------------------------------------------- 2001 2000 --------------------- --------------------- COST FAIR VALUE COST FAIR VALUE -------- ---------- -------- ---------- (IN THOUSANDS) Money market funds...................... $ 946 $ 946 $ 2,397 $ 2,397 Municipal bonds, government agencies, and tax-free bonds.................... 8,245 8,325 14,201 14,257 ------ ------ ------- ------- $9,191 $9,271 $16,598 $16,654 ====== ====== ======= =======
CREDIT RISK Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, short-term investments, short-term foreign exchange 24 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) contracts, and trade receivables. Cash and cash equivalents are placed with the Company's primary bank, a major financial institution, with a high quality credit rating. The Company's investments consist of money market funds, municipal government agencies and tax-free bonds or investment-grade securities. The short-term foreign currency exchange contracts are entered into with its primary bank. The Company's customers are concentrated primarily in one industry segment, the semiconductor manufacturing industry, and, historically, a significant portion of the Company's sales have been to a limited number of customers within this industry. The Company performs ongoing credit evaluations of its customers' financial condition and may require deposits on large orders but does not require collateral or other security to support customer receivables. INVENTORIES
DECEMBER 31, ------------------- 2001 2000 -------- -------- (IN THOUSANDS) Finished goods............................................ $ 8,570 $ 9,522 Work in process........................................... 13,067 15,336 Materials and parts....................................... 5,656 5,346 ------- ------- $27,293 $30,204 ======= =======
Inventories are stated at the lower of cost or market on a first-in, first-out basis. PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment is stated at cost.
DECEMBER 31, ------------------- 2001 2000 -------- -------- (IN THOUSANDS) Machinery and equipment................................... $44,037 $39,462 Leasehold improvements.................................... 9,383 7,697 Construction in progress.................................. 11,695 2,781 ------- ------- $65,115 $49,940 ======= =======
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 15 years. Maintenance and repairs are charged to expense as incurred and betterments are capitalized. The cost of assets sold or retired and related depreciation are removed from the accounts at the time of sale and any resulting gain or loss is reflected in income. REVENUE RECOGNITION The Company recognizes revenue from product sales upon shipment provided title and risk of loss have been transferred to the customer, there is evidence of an arrangement, the price is fixed or determinable, 25 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) and collection is reasonably assured. Revenue from global support services is recognized as performed or ratably over the period of the related agreements. RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred. CAPITALIZED SOFTWARE COSTS The Company capitalizes internal-use software development costs in accordance with the provisions of SoP 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." The capitalized cost is amortized beginning when it is placed into service on a straight-line basis over its estimated life ranging from 3 to 7 years. IMPAIRMENT OF LONG-LIVED ASSETS The Company periodically evaluates the recoverability of long-lived assets whenever events and changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the carrying values of the asset are evaluated in relation to the operating performance and future undiscounted cash flows of the underlying business. The net book value of the underlying asset is adjusted to fair value if the sum of the expected discounted cash flows is less than book value. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. STOCK COMPENSATION Employee stock awards under the Company's and its subsidiaries' compensation plans are accounted for in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", ("APB 25") and related interpretations. The Company provides the disclosure requirements of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123") and related interpretations. 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 and its 50% owned joint venture since these earnings are indefinitely reinvested. The Company assesses the need for a valuation allowance at each balance sheet date based on all available evidence. NET (LOSS) INCOME PER SHARE Basic net (loss) income per common share is based on the weighted average number of common shares outstanding during the year. Diluted net (loss) income per common share reflects the potential dilution that could occur if outstanding stock options were exercised and converted into common stock at the beginning of the period. 26 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The following table sets forth the computation of basic and diluted net (loss) income per common share:
FOR THE YEARS ENDED DECEMBER 31, --------------------------------- 2001 2000 1999 --------- --------- --------- (IN THOUSANDS EXCEPT PER SHARE DATA) Net (loss) income................................ $(5,940) $45,870 $15,864 ======= ======= ======= Basic shares..................................... 22,565 22,498 22,336 Add: Common equivalent shares (1)................ -- 264 287 ------- ------- ------- Diluted shares................................... 22,565 22,762 22,623 Basic net (loss) income per share................ $ (0.26) $ 2.04 $ 0.71 ======= ======= ======= Diluted net (loss) income per share.............. $ (0.26) $ 2.02 $ 0.70 ======= ======= =======
- ------------------------ (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 468,000 in 2001 because the Company was in a net loss position and the inclusion of such shares would be anti-dilutive. As of December 31, 2000, 80,000 options outstanding were not included in the computation, because the option price was greater than the average market price of the common shares. As of December 31, 1999, the Company had no stock options that were anti-dilutive. B. COMMITMENTS AND CONTINGENCIES The Company leases certain facilities and equipment under long-term operating leases. Future minimum lease payments under the noncancelable operating leases are:
OPERATING LEASES ---------------- (IN THOUSANDS) 2002........................................................ $ 5,040 2003........................................................ 4,077 2004........................................................ 3,372 2005........................................................ 2,819 2006........................................................ 1,678 Later years................................................. 5,471 ------- Total....................................................... $22,457 =======
Total rental expense under operating leases was $5,777,000 in 2001, $5,334,000 in 2000 and $4,130,000 in 1999. The Company enters into short-term foreign currency forward contracts with its primary bank to minimize the effect of foreign currency exchange rate fluctuations on certain intercompany transactions with its wholly owned European, Taiwanese, and Japanese subsidiaries. These derivative instruments are not designated as hedging instruments; therefore, gains and losses on these transactions are recorded in cost of sales. The gains and losses on these instruments partially offset the realized and unrealized foreign exchange gains and losses of the underlying exposures. The net gains and losses were not material for the years ended December 31, 2001, 2000 and 1999. The notional amounts of the Company's outstanding 27 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) B. COMMITMENTS AND CONTINGENCIES (CONTINUED) foreign currency forward contracts at December 31, 2001 and 2000, were $9,210,000 and $12,022,000, respectively. The Company has an agreement with a bank to sell specific Japanese Yen-"denominated" receivables, subject to recourse provisions. During 2001, approximately $1,616,000 of receivables were sold under these arrangements. As of December 31, 2001 and 2000, approximately $480,000 and $1,049,000, respectively, of these receivables sold to the bank remained outstanding. The Company does not believe it is materially at risk for any losses as a result of this agreement. The Company is a defendant in an action brought in 1998 in the Massachusetts Superior Court by Raytheon Company which alleges that between 1992 and 1994 the Company sold Raytheon defective components used in missile guidance systems manufactured by Raytheon. The Company has not been in the business of selling these components since 1994. The Company has denied all claims that Raytheon has asserted and succeeded in having certain claims dismissed, although these dismissals are potentially appealable at the conclusion of the trial stage of the case. The action is in the discovery and motion phase and no trial date has been set. The Company believes that it has meritorious defenses and that, although the ultimate outcome of the matters cannot be predicted with certainty, the disposition of the matters should not have a material effect on our financial position. The Company is also involved in various legal proceedings in the normal course of business. The Company believes these proceedings involve amounts that would not have a material effect on its financial position or results of operations if such proceedings were resolved unfavorably. The Company has a three year revolving credit agreement with Fleet National Bank entered into in July 2000 that permits it to borrow up to $25.0 million, subject to compliance with certain covenants. Loans under the credit agreement bear interest for each calendar quarter at an annual rate equal to, at the Company's option, either the applicable LIBOR rate or the lender's base rate, plus a varying margin. The Company has no borrowings outstanding under the credit agreement. As of December 31, 2001, the Company is not in compliance with one of the financial covenants, relating to profitability, and therefore cannot access the line of credit at this time. As a result, the Company is currently in negotiations with the bank to amend the agreement. 28 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) C. INCOME TAXES The components of (loss) income before income taxes and the related (benefit from) provision for income taxes are presented below:
FOR THE YEARS ENDED DECEMBER 31, --------------------------------- 2001 2000 1999 --------- --------- --------- (IN THOUSANDS) (Loss) income before income taxes: Domestic.................................... $(11,281) $66,906 $22,500 Foreign..................................... 74 1,050 1,178 -------- ------- ------- $(11,207) $67,956 $23,678 ======== ======= ======= Income tax (benefit) provision: Current: Federal..................................... $ (6,123) $18,271 $ 8,114 Foreign..................................... 22 748 558 State....................................... 97 2,471 1,025 -------- ------- ------- (6,004) 21,490 9,697 Deferred: Federal..................................... 587 400 (1,675) State....................................... 150 196 (208) -------- ------- ------- 737 596 (1,883) -------- ------- ------- Total........................................... $ (5,267) $22,086 $ 7,814 ======== ======= =======
The Company's deferred tax assets and (liabilities) are comprised of the following:
DECEMBER 31, ------------------- 2001 2000 -------- -------- (IN THOUSANDS) Deferred tax assets: Inventory valuation......................................... $2,198 $2,810 Compensation and benefit plans.............................. 2,636 2,802 Leases...................................................... 138 163 Depreciation................................................ 435 484 Net operating loss and tax credit carryforwards............. 95 104 Other....................................................... 259 144 ------ ------ Total deferred tax assets................................. 5,761 6,507 Deferred tax liabilities.................................... (54) (63) ------ ------ Net deferred tax assets................................... $5,707 $6,444 ====== ======
Deferred income taxes on undistributed earnings of the foreign subsidiaries are not material. The Company believes that its deferred tax assets are more likely than not realizable; therefore, no valuation allowance is required. 29 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) C. INCOME TAXES (CONTINUED) The table below reconciles the expected U.S. federal income tax (benefit) provision to the recorded income tax (benefit) provision in the statements of operations:
DECEMBER 31, ------------------------------ 2001 2000 1999 -------- -------- -------- (IN THOUSANDS) Federal tax computed at statutory rate of 35%..... $(3,923) $23,785 $8,287 State income taxes, net of federal income tax benefit......................................... 160 1,733 531 Foreign sales corporation tax benefit............. -- (1,508) (548) Foreign earnings not subject to U.S. income taxes........................................... (575) (1,127) (308) R&D and foreign tax credits....................... (400) (1,150) (508) Other, net........................................ (529) 353 360 ------- ------- ------ Income tax (benefit) provision.................... $(5,267) $22,086 $7,814 ======= ======= ======
D. 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 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 2011. At December 31, 2001 and 2000, respectively, 842,250 and 916,250 shares of common stock were reserved for stock options. At December 31, 2001, 2000 and 1999, respectively, 188,625, 161,000 and 115,274 nonqualified stock options were exercisable. In 1989 the Company entered into an agreement with its president under which options to purchase up to 800,000 shares of the Company's common stock were granted at a price of $1.69 per share, exercisable over a ten-year period subject to the attainment of certain financial performance targets. At December 31, 1999, options for the purchase of 640,000 shares had been exercised. The remaining 160,000 shares became exercisable on March 1, 2000, and were exercised. In connection with this agreement, compensation expense of $0 and $1,581,000 was charged in 2000 and 1999, respectively. In the first quarter of 1999, the Company entered into a new employment agreement with its president under which nonqualified options to purchase up to 200,000 shares of the Company's common stock were granted at the fair market value of $20.81 per share, vesting over an eight-year period. 30 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) D. CAPITAL STOCK (CONTINUED) The following table summarizes option activity for the years ended 1999, 2000, and 2001:
NUMBER OF WEIGHTED AVERAGE OPTIONS OUTSTANDING COMMON SHARES EXERCISE PRICE - ------------------- ------------- ---------------- January 1, 1999................................ 570,774 $14.41 Options granted................................ 331,500 $21.68 Options exercised.............................. (56,500) $14.21 Options canceled............................... (73,500) $20.65 -------- December 31, 1999.............................. 772,274 $16.95 Options granted................................ 40,000 $55.95 Options exercised.............................. (235,024) $ 7.54 Options canceled............................... (32,375) $24.60 -------- December 31, 2000.............................. 544,875 $23.42 Options granted................................ 98,500 $27.79 Options exercised.............................. (74,000) $21.01 Options canceled............................... (101,000) $33.84 -------- December 31, 2001.............................. 468,375 $22.47 ========
The following table summarizes information concerning outstanding and exercisable options at December 31, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ----------------------------------------------- ---------------------------- RANGE OF WEIGHTED AVERAGE WEIGHTED WEIGHTED EXERCISE NUMBER REMAINING AVERAGE NUMBER AVERAGE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE - --------------- ----------- ---------------- -------------- ----------- -------------- $ 2.86 - $18.44 93,250 2.6 years $16.41 89,250 $16.74 $20.81 - $20.81 237,625 5.8 years $20.81 53,875 $20.81 $23.11 - $28.83 122,500 7.5 years $26.01 40,500 $23.94 $40.69 - $65.97 15,000 8.1 years $57.54 5,000 $53.33 - --------------- ------- --------- ------ ------- ------ $ 2.86 - $65.97 468,375 5.7 years $22.47 188,625 $20.42
The Company adopted the disclosure-only option under Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." If the accounting provisions of 31 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) D. CAPITAL STOCK (CONTINUED) SFAS 123 had been adopted, the effect on net (loss) income and basic and diluted net (loss) income per share would have been as follows:
FOR THE YEARS ENDED DECEMBER 31, --------------------------------- 2001 2000 1999 --------- --------- --------- (IN THOUSANDS EXCEPT PER SHARE DATA) As Reported Net (loss) income................................ $(5,940) $45,870 $15,864 Basic net (loss) income per share................ $ (0.26) $ 2.04 $ 0.71 Diluted net (loss) income per share.............. $ (0.26) $ 2.02 $ 0.70 Pro Forma Net (loss) income................................ $(6,447) $45,023 $15,179 Basic net (loss) income per share................ $ (0.29) $ 2.00 $ 0.68 Diluted net (loss) income per share.............. $ (0.29) $ 1.98 $ 0.67
The weighted average fair value of options granted during 2001, 2000, and 1999 was $14.80, $31.96 and $10.63, 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:
2001 2000 1999 -------- -------- -------- Dividend yield............................................ 1.8% 1.2% 1.8% Expected stock price volatility........................... 60% 60% 50% Risk-free interest rate................................... 5.13% 6.38% 5.18% Expected holding period (years)........................... 6.4 6.2 7.4
E. OTHER ASSETS The Company owns 50% of a 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 each of the three fiscal years ended September 30 are as follows:
2001 2000 1999 -------- -------- -------- (IN THOUSANDS) Net sales........................................ $36,233 $46,199 $24,229 ======= ======= ======= Gross profit..................................... $11,294 $16,511 $ 7,847 ======= ======= ======= Net income....................................... $ 3,284 $ 6,443 $ 1,762 ======= ======= ======= Joint venture income, including royalty income and equity income.............................. $ 2,398 $ 4,132 $ 1,415 ======= ======= =======
32 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) E. OTHER ASSETS (CONTINUED) Condensed balance sheet information as of September 30 is as follows:
2001 2000 -------- -------- (IN THOUSANDS) Current assets............................................ $29,690 $41,743 Noncurrent assets......................................... 5,994 5,230 ------- ------- Total assets.............................................. $35,684 $46,973 ======= ======= Current liabilities....................................... $12,152 $23,075 Long-term liabilities..................................... 1,248 1,118 Stockholders' equity...................................... 22,284 22,780 ------- ------- Total liabilities and stockholders' equity................ $35,684 $46,973 ======= =======
The Company's net investment in the joint venture of approximately $11,142,000 and $10,998,000 at December 31, 2001 and 2000, respectively, is reported in other assets. The Company's net investment at December 31, 2001 and 2000, reflects a cumulative translation loss of $254,000 and a cumulative translation gain of $728,000, respectively. This currency translation gain or loss, which is included in stockholders' equity, resulted from translating the balance sheet of the joint venture into U.S. dollars. F. SEGMENT INFORMATION LINE OF BUSINESS AND FOREIGN OPERATIONS The Company operates in one reportable segment: the development, manufacture, sale, and support of cryogenic and vacuum equipment. The Company's management currently uses consolidated financial information in determining how to allocate resources and assess performance. The consolidated financial statements include the accounts of wholly owned international subsidiaries that operate customer support facilities to sell and service products manufactured in the United States. A summary of United States and international operations follows for the years ended December 31:
UNITED STATES INTERNATIONAL CONSOLIDATED -------- ------------- ------------ (IN THOUSANDS) 2001 Net sales................................ $ 87,418 $25,576 $112,994 Long-lived assets........................ $ 37,114 $ 4,488 $ 41,602 2000 Net sales................................ $217,885 $35,200 $253,085 Long-lived assets........................ $ 27,531 $ 3,249 $ 30,780 1999 Net sales................................ $119,154 $20,235 $139,389 Long-lived assets........................ $ 17,328 $ 2,420 $ 19,748
33 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) F. SEGMENT INFORMATION (CONTINUED) EXPORT SALES AND SIGNIFICANT CUSTOMERS The Company's export sales of $7,795,000 in 2001, $16,431,000 in 2000 and $10,663,000 in 1999 are included in U.S. results. The Company's largest customer represented 21%, 40%, and 29% of net sales for 2001, 2000, and 1999, respectively. G. EMPLOYEE BENEFIT PLANS A noncontributory defined benefit pension plan and a defined contribution plan function together as the Company's retirement program, covering substantially all of the Company's employees who have one year of service. The following tables set forth the funded status of the defined benefit pension plan and the amount reflected in the Company's consolidated balance sheets, projected benefit obligation, and fair value of assets of the plan. RECONCILIATION OF FUNDED STATUS
DECEMBER 31, ------------------- 2001 2000 -------- -------- (IN THOUSANDS) Funded status............................................. $(2,715) $ 944 Unrecognized prior service cost........................... 17 26 Unrecognized net transition asset......................... (66) (106) Unrecognized net actuarial gain........................... (2,618) (5,245) ------- ------- Accrued pension cost...................................... $(5,382) $(4,381) ======= =======
RECONCILIATION OF PROJECTED BENEFIT OBLIGATION
2001 2000 -------- -------- (IN THOUSANDS) Benefit obligation January 1............................... $ 7,986 $5,879 Service cost............................................. 1,401 1,146 Interest cost............................................ 693 574 Actuarial loss........................................... 1,300 787 Benefits paid............................................ (652) (400) Settlements or curtailments.............................. (238) -- ------- ------ Benefit obligation December 31............................. $10,490 $7,986 ======= ======
34 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) G. EMPLOYEE BENEFIT PLANS (CONTINUED) RECONCILIATION OF FAIR VALUE OF ASSETS
2001 2000 -------- -------- (IN THOUSANDS) Fair value of assets January 1.............................. $8,930 $8,215 Actual return on plan assets.............................. (503) 615 Benefits paid............................................. (652) (400) Transfer from Personal Account Plan....................... -- 500 ------ ------ Fair value of assets December 31............................ $7,775 $8,930 ====== ======
The Company's net pension cost included the following components:
2001 2000 1999 -------- -------- -------- (IN THOUSANDS) Service cost........................................ $1,401 $1,146 $1,024 Interest cost....................................... 693 574 515 Expected return on assets........................... (669) (611) (546) Net amortization of: Prior service cost................................ 7 7 7 Net actuarial gain................................ (156) (291) (125) Transition obligation............................. (39) (39) (39) Curtailment gain.................................... (236) -- -- ------ ------ ------ Net periodic pension cost........................... $1,001 $ 786 $ 836 ====== ====== ======
Key assumptions used in computing year-end obligations for the defined benefit plan were:
2001 2000 1999 -------- -------- -------- Discount rate for obligations............................. 7.25% 7.50% 8.00% Rate of compensation increase............................. 5.00% 5.00% 5.50% Long-term rate of return on assets........................ 9.00% 9.00% 9.00%
The Company has Employee Savings Plans, qualified under Section 401(k), which are designed to supplement retirement income. The Company contributes a percentage of the participants' contributions up to a defined maximum amount. The contributions expense, net of forfeitures, was $1,799,000 in 2001, $1,817,000 in 2000 and $1,239,000 in 1999. The Company has 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 $167,000 in 2001, $217,000 in 2000 and $186,000 in 1999 in connection with this plan. H. RESTRUCTURING CHARGES During the third quarter of 2001, the Company implemented and completed a restructuring program that resulted in the reduction of approximately 110 employees in response to the continued slowdown in the 35 HELIX TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) H. RESTRUCTURING CHARGES (CONTINUED) semiconductor capital equipment industry. As a result, the Company recorded a restructuring charge of approximately $1.0 million primarily related to severance and fringe benefit costs. I. GAIN ON SALE OF BUILDING The Company sold its Colorado facility in December 1999, recognizing a $1.4 million gain, and moved to a new leased facility during 2000. J. RECENT ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations." SFAS 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminates the pooling of interests method. In July 2001, the FASB issued Statement of Financial Accounting Standards No. 142 (SFAS 142), "Goodwill and Other Intangible Assets," which became effective for us on January 1, 2002. SFAS 142 requires, among other things, the discontinuance of goodwill amortization and includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles and reclassification of certain intangibles out of previously reported goodwill. The revised standards include transition rules and requirements for identification, valuation and recognition of a much broader list of intangibles as part of business combinations than prior practice, most of which will continue to be amortized. In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144 (SFAS 144), "Accounting for the Impairment or Disposal of Long-Lived Assets." The objectives of SFAS 144 are to address significant issues relating to the implementation of FASB Statement No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and to develop a single accounting model, based on the framework established in SFAS 121, for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, its provisions are to be applied prospectively. The Company believes that the adoption of these standards will not have a material impact on its consolidated financial statements. 36 HELIX TECHNOLOGY CORPORATION SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999 (IN THOUSANDS)
ADDITIONS ----------------------- BALANCE AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE AT BEGINNING COSTS AND OTHER FROM END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RESERVES OF PERIOD - ----------- ---------- ---------- ---------- ---------- ---------- Year ended December 31, 2001 Allowance for doubtful accounts........ $197 $328 $ -- $125 $400 ==== ==== ==== ==== ==== Year ended December 31, 2000 Allowance for doubtful accounts........ $185 $100 $ -- $ 88 $197 ==== ==== ==== ==== ==== Year ended December 31, 1999 Allowance for doubtful accounts........ $228 $ 63 $ -- $106 $185 ==== ==== ==== ==== ====
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE We did not change accountants or file any Current Reports on Form 8-K reporting a disagreement on an accounting principle, practice or financial statement disclosure during the three-year period ended December 31, 2001. 37 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Officers are elected annually by the Board and serve at the discretion of the Board. Additional information required by this item is incorporated herein by reference to the registrant's proxy statement for its 2002 Annual Meeting of Stockholders that will be filed with the SEC on February 21, 2002 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 2002 Annual Meeting of Stockholders that will be filed with the SEC on February 21, 2002, 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 2002 Annual Meeting of Stockholders that will be filed with the SEC on February 21, 2002, pursuant to Regulation 14A. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There were no related-party transactions. 38 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Financial Statements. The Consolidated Financial Statements are listed under Item 8 of this report. 2. Financial Statement Schedules. The required Financial Statement Schedules are listed under Item 8 of this report. 3. Exhibits. The Exhibits filed as part of this report are listed on the Exhibit Index immediately following the signature page hereto, which Exhibit Index is incorporated herein by reference.
(b) The Company did not file any Current Reports on Form 8-K during the quarter ended December 31, 2001. (c) Exhibits required by Item 601 of Regulation S-K are listed on the Exhibit Index immediately following the signature page hereto. (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) other Schedules are not filed because they are either not applicable or the items do not exceed the various disclosure levels. 39 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 20th day of February, 2002. HELIX TECHNOLOGY CORPORATION (Registrant) /s/ ROBERT J. LEPOFSKY ------------------------------------------ Robert J. Lepofsky 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 20th day of February, 2002, in the capacities indicated.
SIGNATURES TITLES ---------- ------ (i) Principal Executive Officer /s/ ROBERT J. LEPOFSKY ------------------------------------------- President and Chief Executive Officer Robert J. Lepofsky (ii) Principal Financial Officer /s/ JAY ZAGER ------------------------------------------- Senior Vice President and Chief Financial Jay Zager Officer (iii) Principal Accounting Officer /s/ TEODOR KLOWAN, JR. ------------------------------------------- Corporate Controller and Chief Accounting Teodor Klowan, Jr. Officer
40
SIGNATURES TITLES ---------- ------ (iv) A Majority of the Board of Directors /s/ ARTHUR R. BUCKLAND ------------------------------------------- Director Arthur R. Buckland /s/ MATTHEW O. DIGGS, JR. ------------------------------------------- Director Matthew O. Diggs, Jr. /s/ FRANK GABRON ------------------------------------------- Director Frank Gabron /s/ ROBERT H. HAYES ------------------------------------------- Director Robert H. Hayes /s/ ROBERT J. LEPOFSKY ------------------------------------------- Director Robert J. Lepofsky /s/ MARVIN G. SCHORR ------------------------------------------- Director and Chairman of the Board Marvin G. Schorr /s/ MARK S. WRIGHTON ------------------------------------------- Director Mark S. Wrighton
41 EXHIBIT INDEX 2.1 Agreement and Plan of Merger dated as of April 16, 1998, among Helix Technology Corporation, Helix Acquisition Corporation, Granville-Phillips Company, and certain principal stockholders of Granville-Phillips Company. Filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed May 15, 1998 and incorporated herein by reference. 2.2 Escrow Agreement dated May 7, 1998. Filed as Exhibit 2.3 to the Company's Current Report on Form 8-K filed May 15, 1998 and incorporated herein by reference. 3.1 Restated Certificate of Incorporation, as amended on May 7, 1987, May 18, 1988, April 20, 1995 and April 29, 1998. Filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed May 15, 1998 and incorporated herein by reference. 3.2 Bylaws, as amended through December 9, 1987. Filed herewith. 10.1 Basic agreement between the Company and Ulvac Corporation dated August 17, 1981. Filed as Exhibit 10.13 to a Registration Statement on Form S-2, Registration No. 2-84880, and incorporated herein by reference. 10.2 Lease agreement dated July 24, 1984, as amended July 26, 1999, between Long Gate LLC as Lessor and the Company as Lessee. Filed as Exhibit 10.2 to the Company's Form 10-K for the Year Ended December 31, 1999 and incorporated herein by reference. 10.3 Lease agreement dated May 23, 1991, between Mansfield Corporate Center Limited Partnership as Lessor and the Company as Lessee. Filed as Exhibit 10-(14) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference. 10.4 Lease agreement dated May 21, 1996, between LakeCenter Plaza, Ltd., LLP as Lessor and the Company as Lessee. Filed as Exhibit 10-(4) to the Company's Form 10-K for the Year Ended December 31, 1998 and incorporated herein by reference. 10.5 Lease agreement dated August 7, 1998, between Mitsubishi Jisho Co., Ltd. as Lessor and the Company as Lessee. Filed as Exhibit 10-(5) to the Company's Form 10-K for the Year Ended December 31, 1998 and incorporated herein by reference. 10.6 Lease agreement dated May 14, 1999, between MUM IV, LLC as Lessor and the Company as Lessee. Filed as Exhibit 10.6 to the Company's Form 10-K for the Year Ended December 31, 1999 and incorporated herein by reference. 10.7 Revolving Credit Agreement, dated July 18, 2000, by and between Helix Technology Corporation and Fleet National Bank. Filed as Exhibit 4.1 to the Company's Form 10-Q for the Quarter Ended September 29, 2000 and incorporated herein by reference. 10.8 The Company's informal incentive bonus plan. Filed as Exhibit 10.9 to a Registration Statement on Form S-2, Registration No. 2-84880 and incorporated herein by reference.* 10.9 The Company's Supplemental Key Executive Retirement Plan effective February 13, 1992. Filed as Exhibit 14-(14) to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference.* 10.10 The Company's 1996 Equity Incentive Plan. Included as Exhibit A to the Company's Definitive Proxy Statement on Schedule 14-A filed on March 25, 1996 for its 1996 Annual Meeting of Stockholders held on April 24, 1996 and incorporated herein by reference.* 10.11 The Company's Amended and Restated Stock Option Plan for Non-Employee Directors. Filed herewith.* 10.12 Employment Agreement dated July 18, 1997, between the Company and Robert E. Anastasi. Filed as Exhibit 10-(13) to the Company's Form 10-K for the Year Ended December 31, 1997 and incorporated herein by reference.*
10.13 Employment Agreement dated February 11, 1999, between the Company and Robert J. Lepofsky. Filed as Exhibit 10-(1) to the Company's Form 10-Q for the Quarter Ended April 2, 1999 and incorporated herein by reference.* 10.14 The Company's Supplemental Benefit Plan. Filed as Exhibit 10.15 to the effective April 1, 1999. Company's Form 10-K for the Year Ended December 31, 1999 and incorporated herein by reference.* 10.15 Directors' Deferred Compensation Plan. Filed herewith.* 21.1 Subsidiaries of the Registrant. Filed herewith. 23.1 Consent of Independent Accountants. Filed herewith. 99.1 Important Factors That May Affect Future Results. Filed herewith.
- ------------------------ * Denotes management contract or compensation plan. EX-3.2 3 a2070436zex-3_2.txt EXHIBIT 3-2 BYLAWS OF HELIX TECHNOLOGY CORPORATION AS AMENDED MAY 16, 1967 JUNE 23, 1967, OCTOBER 7, 1968, APRIL 9, 1969, MARCH 9, 1977, DECEMBER 16, 1977, DECEMBER 10, 1986 AND DECEMBER 9, 1987 ARTICLE I. OFFICES SECTION 1. PRINCIPAL OFFICE. The principal office of the corporation shall be established and maintained in the City of Wilmington, County of New Castle, State of Delaware. SECTION 2. OTHER OFFICES. The corporation may also have offices at such other places within or without the State of Delaware as the Board of Directors may from time to time select or the business of the corporation may require. ARTICLE II. MEETING OF STOCKHOLDERS SECTION 1. PLACE. All meetings of the stockholders may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. SECTION 2. ANNUAL MEETINGS. The annual meeting of stockholders for the election of directors and the transaction of other business, commencing with the year 1978, shall be held on such date and at such time as the Board of Directors or the President shall by notice designate, but each such annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. SECTION 3. NOTICE OF ANNUAL MEETING. Written notice stating the time and place of the meeting shall be given by the Secretary to each stockholder entitled to vote thereat, at his last known post office address at least ten days before the meeting by mailing the same in a postage prepaid envelope addressed to such stockholder. SECTION 4. LIST OF STOCKHOLDERS. The Officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, during ordinary business hours, for a period of at least ten days prior to the election, either at a place within the city, town or village where the election is to be held and which place shall be specified in the notice of the meeting, or, if not specified, at the place where said meeting is to be held, and the list shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. SECTION 5. SPECIAL MEETINGS. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called at any time by the President or by the Board of Directors and shall be so called on written request of the registered holders of twenty percent or more of the stock of the corporation then outstanding and entitled to vote which request shall state the object of such meeting. SECTION 6. NOTICE OF SPECIAL MEETINGS. Written notice stating the time, place and purpose of the meeting shall be given by the Secretary or any other Officer of the corporation to 2 each stockholder at his last known post office address, at least ten days before the meeting by mailing the same in a postage prepaid envelope addressed to each stockholder entitled to vote at such meeting. SECTION 7. WAIVER OF NOTICE. Notice of any annual or special meeting of stockholders need not be given to any stockholder who shall attend such meeting in person or by proxy, or who shall waive notice thereof in writing or by telegraph either in person or by attorney thereunto duly authorized. Notice of any adjourned meeting need not be given. SECTION 8. QUORUM. At all meetings of the stockholders of the corporation, except as otherwise provided by statute, the holders of a majority of the outstanding stock entitled to vote and present in person or by proxy shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority in interest of the stockholders so present in person or by proxy and entitled to vote may adjourn the meeting from time to time until a quorum is obtained without any other notice than by announcement at the meeting. At such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 9. VOTING. At all meetings of stockholders, all questions, except those on which the voting is specially regulated by statute or by the Certificate of Incorporation or by these Bylaws, shall be determined by a majority vote of the stockholders present in person or by proxy and entitled to vote. SECTION 10. ACTION WITHOUT A MEETING. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action, the meeting and vote of stockholders may be dispensed with if all of the stockholders who would have been entitled to vote, upon the action if such meeting were held shall consent in writing to such 3 corporate action being taken, which consent in writing shall have the same force and effect as a vote taken at a meeting of stockholders duly called and held. ARTICLE III. DIRECTORS SECTION 1. NUMBER, ELECTION AND TERM OF OFFICE. The number of directors which shall constitute the whole Board shall not be less than 3 nor more than 15 persons as shall be determined by the Board of Directors. At such meeting of the stockholders for the election of Directors, the Directors shall be chosen by a plurality of the votes given at each election. Each Director shall continue in office until the annual meeting of the stockholders held next after his election and until his successor shall have been elected and qualified. If at any such annual meeting or any adjournment thereof an election of Directors shall not be held, or if the stockholders shall fail to hold an annual meeting, the Directors shall be elected at a special meeting, called for that purpose, as provided in Article II, or Section 5 of these Bylaws. SECTION 2. PLACE OF MEETING. The Board of Directors may hold its meetings, both regular and special, either within or the State of Delaware. SECTION 3. MEETING OF NEWLY ELECTED BOARD OF DIRECTORS. Each newly elected Board of Directors shall hold its first meeting at such time and place, within or without the State of Delaware, as shall be fixed by vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum is present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may by held at such time and place, within or without the State of Delaware, as shall be specified in a notice 4 given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all the Directors. SECTION 4. REGULAR MEETINGS. Regular meetings of the Board may be held without notice at such times and places as shall be determined from to time to time by resolution of the Board. SECTION 5. SPECIAL MEETINGS -- NOTICE. Special meetings of the Board may be called by the President or the Secretary or on the written request of any two Directors. Notice of the time, place and purpose of such meeting shall be given by the Secretary or any other Officer of the corporation at least three days before the meeting either personally or by mail or telegraph, addressed to each Director at his last known post office address. SECTION 6. WAIVER OF NOTICE. Notice of any special meeting need not be given to any Director who shall be present thereat or who shall waive such notice in writing or by telegraph. SECTION 7. QUORUM AND VOTE REQUIREMENTS. A majority of the whole Board of Directors shall constitute a quorum for the transaction of business, and any act of a majority of the whole Board at a meeting shall be the act of the Board of Directors, except as may be otherwise specifically provided. If a quorum shall not be present at any meeting of the Board of Directors, the Directors present thereat may adjourn the meeting from time to time without notice thereof other than announcement at the meeting, until a quorum is obtained. SECTION 8. ACTION WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all the members of the Board, or of such committee, as the case may be, and such written consent is filed with the minutes of proceeding of the Board or the committee. 5 SECTION 9. POWERS OF DIRECTORS. In addition to the powers and authority by the Certificate of Incorporation and these Bylaws conferred upon them, the Board of Directors shall manage the property and business of the corporation and may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders. SECTION 10. COMPENSATION OF DIRECTORS. The Directors as such shall not receive any stated salary for their services but by resolution of the Board a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board, but nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. SECTION 11. VACANCIES. If any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any Director or otherwise, or any new directorship is created by any increase in the authorized number of Directors, Directors to fill the vacancy or vacancies or to fill any newly created directorship or directorships may be elected (a) by the stockholders at any meeting of stockholders, (b) by the Board of Directors at any meeting of the Board at which a quorum is present, or (c) by a majority of the Directors then in office though less than a quorum, or by a sole remaining Director, and the Directors so chosen shall hold office until the next annual election of Directors and until their successors, if any, are elected and duly qualified for such office, unless sooner displaced as provided by or in these Bylaws. Directors elected by the stockholders to fill any such vacancy or vacancies or any newly created directorship or directorships shall displace Directors elected in any other manner to fill any such vacancy or vacancies or any such newly created directorship or directorships. 6 SECTION 12. REMOVAL OF DIRECTORS. Any Director may be removed, either for or without cause, at any time, by action of the holders of record of a majority of the outstanding shares of stock entitled to vote thereon at a meeting of the holders of such shares, and the vacancy in the Board of Directors caused by any such removal may be filled by action of such stockholders at such meeting or at any subsequent meeting. SECTION 13. PRESIDING OFFICER. The Directors shall each year at the time of election of Officers, elect from among their members a Chairman who shall preside at all meetings of the Board of Directors. In, his absence, the Directors present may select a Chairman to preside at the meeting. ARTICLE IV. COMMITTEES OF DIRECTORS SECTION 1. DESIGNATION. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate and appoint one or more committees consisting of at least two Directors of the corporation. Any vacancy occurring in the membership of any such committee shall be filled by the Board of Directors by the affirmative vote of at least a majority of the whole Board. SECTION 2. POWERS AND DUTIES. Each committee of Directors shall possess and may exercise such and all of the powers and shall perform all of the duties of the Board of Directors while said Board is not in session (including the power to authorize the execution and delivery on behalf of the corporation of any and all documents and instruments and to cause the seal of the corporation to be affixed to any and all papers that may require it), except the power to amend these Bylaws and except as the exercise of such powers and the performance of such duties by such committee may be limited or restricted by resolution of the Board of Directors passed by a majority of the whole Board. 7 SECTION 3. QUORUM AND VOTING. At all meetings of any committee of Directors, the presence of a majority of all members of the committee shall be necessary to constitute a quorum for the transaction of business, and the affirmative vote of a majority of all members shall be necessary to any action taken by such committee. SECTION 4. RULES. Each committee of Directors may adopt such rules and regulations, not inconsistent with law nor with the provisions of the Certificate of Incorporation or of these Bylaws or of any applicable resolution of the Board of Directors, for the calling and holding of meetings of the committee and for the transaction of business at such meetings, as the committee may deem necessary or desirable. Each such committee shall keep regular minutes of its proceedings and shall report the same to the next meeting of the Board of Directors. ARTICLE V. OFFICERS SECTION 1. NUMBER. The Officers of the corporation shall be chosen by the Board of Directors and shall be a President, one or more Vice Presidents, a Secretary and a Treasurer, and such additional Officers as the Board of Directors may from time to time appoint, such as, but not limited to, a Chief Executive Officer, a Chief Financial Officer, a Chairman of the Board, one or more Assistant Secretaries and one or more Assistant Treasurers. Any two or more of such offices may be occupied by the same person. All Officers shall hold office for a term of one year or until their successors are chosen. SECTION 2. PRESIDENT. The President shall have power to call special meetings of the Board of Directors and of stockholders for any purpose. He shall exercise general supervision over the business affairs of the corporation, and shall have such powers and perform such duties as are incidental to his office. He may sign, in the name of the corporation, all authorized 8 contracts, documents, checks, and bonds or other obligations. He shall also do and perform such acts as he may be authorized to perform from time to time by the Board of Directors. SECTION 3. VICE PRESIDENT. During the absence or disability of the President, any of the Vice Presidents shall exercise the same powers and duties as are herein provided to be exercised by the President. Any Vice President shall perform such other duties and may exercise such other powers as from time to time may be assigned to him by the Board of Directors or the President. He may sign, in the name of the corporation, all authorized contracts, documents, checks, bonds or other obligations. SECTION 4. TREASURER. The Treasurer shall have the custody of all the funds, securities, evidence of indebtedness and other valuable documents of the corporation. He shall receive and give or cause to be given receipts and acquittances for monies paid in for the account of the corporation; he shall enter or cause to be entered in the books of account of the corporation to be kept for that purpose, full and accurate records of all monies received and paid out for the account of the corporation, and whenever required by the President or the Board of Directors he shall render a statement of his cash and other accounts. He shall keep or cause to be kept such other books as will show a true record of the expenses, losses, gains, assets and liabilities of the corporation. He shall perform such other duties as may be assigned to him by the Board of Directors or the President. SECTION 5. ASSISTANT TREASURERS. The Assistant Treasurers shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer, and shall perform such further duties as may be prescribed by the Board of Directors, the President or the Treasurer. 9 SECTION 6. SECRETARY. The Secretary shall give or cause to be given notice of all meetings of the Board of Directors and of the stockholders and all such other notices as are required by law or by these Bylaws and, in the case of his absence, the same may be given by the President, or by any person thereunto by him directed. He shall, when present, act as Secretary of all meetings of the stockholders and of the Board of Directors. He shall record all proceedings of said meetings in a book to be kept for that purpose. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it when authorized by the Board of Directors or by the President and shall attest the same. He shall perform such other duties as may be assigned to him by the President or the Board of Directors. SECTION 7. ASSISTANT SECRETARIES. The Assistant Secretaries shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such further duties as may be prescribed by the Board of Directors, the President or the Secretary. SECTION 8. VACANCIES. If any of the above offices shall become vacant by death, resignation or otherwise, such vacancy shall be filled by the Board of Directors. In such case the Officer so elected shall hold office only until the next meeting of the Board of Directors at which the office would be filled. SECTION 9. DUTIES OF OFFICERS MAY BE DELEGATED. In the case of the absence of any Officer of the corporation, or for any other reason the Board may deem sufficient, the Board may delegate, for the time being, the powers and duties or any of them of such Officer to any other Officer, or to any Director. 10 ARTICLE VI. EXECUTION OF INSTRUMENTS AND DEPOSITS OF CORPORATE FUNDS SECTION 1. EXECUTIVE OF INSTRUMENTS GENERALLY. The President, any Vice President, the Treasurer, the Secretary and the Assistant Secretary, subject to the approval of the Board of Directors, may enter into any contract or execute and deliver any instrument in the name and on behalf of the corporation. The Board of Directors may authorize any Officer or Officers, or agent or agents, to enter into any contract or execute and deliver any instrument in the name and on behalf of the corporation, and such authorization may be general or confined to specific instances. Unless otherwise provided by the Board, any Officer shall have authority to sign tax returns on behalf of the corporation. SECTION 1(A). Officers and employees, regardless of the foregoing provisions of Section 1 hereof, are not authorized to dispose of capital assets, including but not limited to patents and other intellectual property or rights thereto, without specific approval of the Board of Directors. SECTION 2. LOANS. No loan or advances shall be contracted on behalf of the corporation and no negotiable paper shall be issued in its name, unless and except as authorized by the Board of Directors. Such authorization may be general or confined to specific instances. Any Officer or agent of the corporation thereunto so authorized may effect loans and advances for the corporation, and for such loans and advances may make, execute and deliver promissory notes, bonds, or other evidences of indebtedness of the corporation. Any Officer or agent of the corporation thereunto so authorized may pledge, hypothecate or transfer as security for the payment of any and all loans, advances, indebtedness and liabilities of the corporation, any and all stocks, bonds, other securities and other personal property at any time held by the corporation, and to that end may endorse, assign and deliver the same and do every act and thing necessary or proper in connection therewith. 11 SECTION 3. DEPOSITS. All funds of the corporation ,not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositaries as the Board of Directors may select, or as may be selected by any Officer or Officers or agent or agents authorized so to do by the Board of Directors. Endorsements for deposit to the credit of the corporation in any of its duly authorized depositaries shall be made in such manner as the Board of Directors from time to time may determine. SECTION 4. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, and all notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such Officer or Officers or agent or agents of the corporation, and in such manner, as from time to time shall be determined by the Board of Directors. SECTION 5. PROXIES. Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the corporation may be executed and delivered from time to time on behalf of the corporation by the President or a Vice President or by any other person or persons thereunto authorized by the Board of Directors. ARTICLE VII. SHARES SECTION 1. CERTIFICATES OF STOCK. Certificates for the shares of the capital stock of the corporation shall be in such form as shall be approved by the Board of Directors. They shall be numbered in the order of their issue and shall be signed by the President or any Vice President and by the Secretary or ,an Assistant Secretary or Treasurer or an Assistant Treasurer, and the seal of the corporation shall be affixed thereto. These Officers shall sign in person, or, when so determined by the Board of Directors their lithographed signatures may be submitted for their personal signatures upon all certificates of stock issued by the corporation and shall be considered to have the same force and effect as if signed in person. 12 SECTION 2. TRANSFER OF STOCK. Transfers of shares of the capital stock of the corporation shall be made only on the books of the corporation by the holder thereof or by his attorney-in-fact thereunto duly authorized by a Power of Attorney executed and filed with the Secretary of the corporation and on surrender of the certificate or certificates for such shares. Every certificate surrendered to the corporation shall be marked "cancelled" with the date of cancellation, and no new certificates shall be issued in exchange therefor until the old certificate has been surrendered and cancelled, or pursuant to Section 4 of this Article VII. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the absolute owner thereof for all purposes, and accordingly shall not be bound to recognize any legal, equitable or other claim to or interest in such share or shares on the part of any other person whether or not it or they shall have express or other notice thereof, except as otherwise provided by the statutes of the State of Delaware; provided, however, that whenever any transfer of shares shall be made for collateral security and not absolutely, and written notice thereof shall be given to the Secretary of the corporation, such fact shall be expressed in the entry of the transfer. The transfer of certain shares of capital stock shall be restricted as provided in the Certificate of Incorporation and as stated on the shares involved. SECTION 3. CLOSING OF TRANSFER BOOKS AND FIXING OF RECORD DATES. The Board of Directors shall have the power to close the stock transfer books of the corporation for a period not exceeding fifty days preceding the date of any meeting of stockholders, or the date for payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect or for a period not exceeding fifty days in connection with obtaining the consent of stockholders for any purpose. In lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not 13 exceeding fifty days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of and to vote at such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment or rights, or to exercise such rights or to give such consent, as the case may be, notwithstanding any transfer of any such stock on the books of the corporation after any such record date fixed as aforesaid. SECTION 4. LOST OR DESTROYED CERTIFICATES. The holder of any shares of stock of the corporation shall immediately notify the corporation of any loss or destruction of the certificates representing the same. The corporation may issue a new certificate in the place of any certificate theretofore issued by it, alleged to have been lost or destroyed, and the Board of Directors may require the owner of the lost or destroyed certificate or his legal representatives to give the corporation a bond in such sum and in such form as the Board of Directors may direct or approve, and with such surety or sureties as may be satisfactory to the Board of Directors, to indemnify the corporation against any claim or liability that may be asserted against or incurred by it on account of the alleged loss or destruction of any such certificate or the issuance of such 14 new certificate. A new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors, it is proper to do so. ARTICLE VIII. GENERAL PROVISIONS SECTION 1. DIVIDENDS. Subject to the provisions of the Certificate of Incorporation of the corporation, the Board of Directors may declare dividends on the common stock from the surplus or net profits arising from the business of the corporation whenever and in such amount as in their opinion the condition of the affairs of the corporation shall render advisable. The Board of Directors may in their discretion use and apply any of such surplus or net profits in a reserve fund to meet contingencies or for the purpose of maintaining or increasing the property or business of the corporation or for any other purpose which they may think is conducive to the best interests of the corporation. SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall be determined by the Board of Directors of the corporation. SECTION 3. SEAL. The seal of the corporation shall be circular in form and shall bear the name of the corporation and the words and figures showing that it was incorporated in the State of Delaware in the year 1967. SECTION 4. INSPECTION OF BOOKS. The Board of Directors may determine from time to time whether and to what extent and at what times and under what conditions and requirements the accounts and books of the corporation or any of them, except the stock ledger, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any book or document of the corporation except as such right may be conferred by the statutes of the State of Delaware or by resolution of the Board of Directors or of the stockholders. 15 ARTICLE IX. AMENDMENTS SECTION 1. POWERS OF BOARD OF DIRECTORS TO AMEND, ETC. The Board of Directors shall have the power to make, alter, amend and repeal the Bylaws of the corporation at any regular meeting of the Board or at any special meeting thereof if notice of such proposed alteration, amendment or repeal is included in the notice of such special meeting, except as otherwise provided in the Certificate of Incorporation. SECTION 2. STOCKHOLDERS' POWER TO AMEND. The stockholders may make, alter, amend and repeal the Bylaws of the corporation at any annual meeting of the stockholders or at any special meeting thereof if notice of such proposed alteration, amendment or repeal is included in the notice of such special meeting, and all Bylaws made by the Board of Directors may be amended, altered or repealed by the stockholders. ARTICLE X. INDEMNIFICATION OF DIRECTORS AND OFFICERS SECTION 1. INDEMNIFICATION IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article X, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a Director or Officer of the corporation, or is or was serving at the request of the corporation as a Director or Officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not 16 opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful provided, however, that the corporation shall indemnify any such person seeking indemnification in connection with an action, suit, counterclaim or proceeding (or part thereof) brought by such person (excluding an action brought to enforce indemnification under Section 6 hereof) only if such indemnification for such action, suit, counterclaim or proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The termination of any action, suit, counterclaim or proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption (i) that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and (ii) with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his conduct was unlawful SECTION 2. INDEMNIFICATION IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article X, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a Director or Officer of the corporation, or is or was serving at the request of the corporation as a Director or Officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation 17 unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is, fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. SECTION 3. DETERMINATION OF RIGHT OF INDEMNIFICATION. Any indemnification under this Article X (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the Director or Officer is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article X, as the case may be. Such determination shall be made promptly and in any event within forty-five (45) days following application of the, person seeking indemnification by independent legal counsel in a written opinion, unless the Board of Directors by a majority vote of a quorum consisting of Directors who are not parties to such action, suit or proceeding has approved such indemnification. Such independent legal counsel shall be selected by the Board of Directors and approved by the person seeking indemnification (which approval shall not be unreasonably withheld) and the expenses of such legal counsel shall be paid by the corporation. SECTION 4. INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the other provisions of this Article X, to the extent that any person seeking indemnification hereunder has been successful on the merits or otherwise, including the dismissal of an action without prejudice or the settlement of an action without admission of liability, in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, such person shall be indemnified against all expenses (including attorneys' fees) incurred in connection therewith, without the necessity of authorization in the specified case. 18 SECTION 5. GOOD FAITH DEFINED. For purposes of any determination under Section 3 of this Article X, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to, believe his conduct was unlawful, if his action is based on the records or books of account of the corporation or another enterprise, or on information supplied to him by the Officers of the corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the corporation or another enterprise or on information or records given or reports made to the corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the corporation or another enterprise. .The term "another enterprise" as used in this Section 5 shall mean any other corporation or any partnership, joint venture, trust, or other enterprise of which such person is or was serving at the request of the corporation as a Director or Officer. The provisions of this Section 5 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this Article, as the case may be. SECTION 6. INDEMNIFICATION BY A COURT. Notwithstanding any contrary determination in the specific case under Section 3 of this Article X, and notwithstanding the absence of any determination thereunder, any Director or Officer may apply to any court of competent jurisdiction for indemnification to the extent otherwise permissible under this Article X. The basis of such indemnification by a court shall be a determination by such court that indemnification of the Director or Officer is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 1 or 2 of this Article X, as the case may be. 19 Notice of any application for indemnification pursuant to this Section 6 shall be given to the corporation promptly upon the filing of such application. SECTION 7. EXPENSES PAYABLE IN ADVANCE. Expenses incurred in defending or investigating the defense of a threatened or pending action, suit, or proceeding or in bringing a suit under Section 6 hereof, shall be paid by the corporation in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of the Director or Officer to repay such expenses if it shall be ultimately determined that he is not entitled to be indemnified by the corporation as authorized in this Article X. SECTION 8. NON-EXCLUSIVITY AND SURVIVAL OF INDEMNIFICATION. The indemnification and advancement of expenses provided by or granted pursuant to this Article X shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any statute, provision of the corporation's Certificate of Incorporation, Bylaw, agreement, contract, vote of stockholders or disinterested Directors, or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the corporation that indemnification of the persons specified in Sections 1 and 2 of this Article X shall be made to the fullest extent permitted by this Article X or by such statute, provision, bylaw, agreement, contract, vote, or direction. The provisions of this Article X shall not be deemed to preclude or to provide for the indemnification of any person who is not specified in Sections 1 or 2 of this Article X but whom the corporation has the power or obligation to indemnify under the provisions of the General corporation Law of the State of Delaware, or otherwise. By action of its Board of Directors, the corporation may provide indemnification to employees and agents of the corporation, or, if serving at the request of the 20 corporation, employees and agents of another corporation, partnership, joint venture, trust, or other enterprise, with the same scope and effect (of such lesser or greater scope and effect as such Board may approve) as the indemnification of Directors and Officers provided in this Article X. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article X shall continue as to a person who has ceased to be a Director or Officer and shall inure to the benefit of the heirs, executors, and administrators of such person. All rights to indemnification under this Article X shall be deemed to be provided by a contract between the corporation and the Director or Officer who serves in such capacity at any time while this Article X and other relevant provisions of the General corporation Law of the State of Delaware and other applicable law, if any, are in effect. Any repeal or modification of this Article X shall not affect any rights or obligations then existing. SECTION 9. INSURANCE. The corporation may purchase and maintain insurance on behalf of any person who is or was a Director, Officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a Director, Officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power or the obligation to indemnify him against such liability under the provisions of this Article X or under the provisions of the General corporation Law of the State of Delaware, or otherwise. SECTION 10. OTHER ENTERPRISES, FINES, AND SERVING AT CORPORATION'S REQUEST. For purposes of this Article, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include 21 any service as a Director or Officer of the corporation which imposes duties on, or involves services by, such Director or Officer with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Article. SECTION 11. SAVINGS CLAUSE. If this Article or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each Director or Officer of the corporation as to expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including a grand jury proceeding and an action by the corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated or by any other applicable vote, agreement or law. EX-10.11 4 a2070436zex-10_11.txt EXHIBIT 10.11 Exhibit 10.11 AMENDED AND RESTATED HELIX TECHNOLOGY CORPORATION STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS 1. PURPOSE The purpose of the Helix Technology Corporation Stock Option Plan for Non-Employee Directors (the "Plan") is to attract and retain the services of experienced and knowledgeable Directors of Helix Technology Corporation (the "Corporation") for the benefit of the Corporation and its stockholders and to provide additional incentives for such Directors to continue to serve the best interests of the Corporation and its stockholders through continuing ownership of its common stock. 2. SHARES SUBJECT TO THE PLAN The total number of shares of common stock, par value $1.00 per share (the "Common Stock"), of the Corporation which may be issued pursuant to options granted under the Plan (including options granted under the Plan prior to the date of this amendment and restatement ("Prior Options")) shall not exceed 200,000 in the aggregate (the "Shares"), subject to adjustment in accordance with Section 9 hereof. Shares for which options have been granted pursuant to the Plan, but which options have lapsed or otherwise terminated or been canceled to any extent prior to full exercise, shall become available for additional options granted under the Plan. 3. ADMINISTRATION OF PLAN The Plan shall be administered by the Human Resources and Compensation Committee of the Board of Directors (the "Board") or such other committees as the Board may appoint satisfying the requirements of requirements to qualify for an exemption under Rule 16b-3 under the Securities Exchange Act of 1934 (the "Committee"). The Committee shall appoint a person (the "Plan Administrator") to keep records of all elections of Directors and the grant, vesting and exercise of all options, and the sale or other disposition of all Shares acquired pursuant to such exercise. Grants of stock options under the Plan shall be made by the Committee as provided in Section 4. All questions of interpretation with respect to the Plan and options granted under it shall be determined by the Committee, and such determination shall be final and binding upon all persons having an interest in the Plan. The Committee shall have the power to (i) make all determinations necessary or advisable for administering the Plan, (ii) correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any stock option grant in the manner and to the extent that the Committee shall deem expedient to carry it into effect, and (iii) constitute and appoint a person or persons to execute and deliver in the name and on behalf of the Corporation all such grants, agreements, instruments and other documents. It is the intent of this Plan that it operate in all events subject to approval of the Plan by the stockholders of the Corporation and that the granting and vesting of such options under it be within the authority of the Committee in accordance with the terms of this Plan, subject to the authority, discretion or power of the stockholders to fail to elect an 1 optionee to the Board of Directors of the Corporation, or to remove an optionee from the Board of Directors of the Corporation, or to amend or terminate this Plan. 4. GRANT OF OPTIONS (a) ANNUAL OPTION GRANT. Upon the conclusion of each regular annual meeting of the Corporation's stockholders held in the year 2002 or thereafter, each Director of the Corporation who is not otherwise an employee of the Corporation or any of its subsidiaries (a "Non-Employee Director") who will continue serving as a member of the Board thereafter and who does not hold Prior Options which have not yet vested, shall be granted an Option to acquire 2,000 shares under the Plan (the "Annual Option"). (b) INITIAL OPTION GRANT. Any Non-Employee Director of the Corporation who is elected for the first time otherwise than at an annual meeting after the 2002 meeting shall receive an initial Option to acquire 2,000 shares under the Plan (the "Initial Option") which shall become exercisable as of the date of the annual meeting following such Non-Employee Director's election. The Non-Employee Director shall be eligible to receive Annual Options as described in Section 4(a). (c) EARLY GRANT OF ANNUAL OPTIONS. For a Non-Employee Director elected as Director for the first time, the Committee may, in its discretion, grant the Annual Option in a year prior to which the Annual Option is earned at the time an Initial Option is granted, provided that any such Annual Option (the "Early Annual Option") shall become vested according to the vesting schedule that would have applied to the option had the option been granted on its regularly scheduled grant date. The Committee may only grant Early Annual Options as far as four years prior to the date on which the Annual Option would have been granted had such option not been granted early. 5. OPTION GRANT Each option granted under the Plan shall be a Non-Qualified Stock Option and shall be evidenced by a Grant of Option duly executed on behalf of the Corporation and shall comply with and be subject to the terms and conditions of the Plan. 6. OPTION EXERCISE PRICE The option exercise price for an option granted under the Plan shall be the fair market value of the Shares covered by the option at the time the option is granted. Fair market value shall be the mean between the high and low quoted selling prices of the Common Stock on the date the option is granted as reported on the Nasdaq National Market or, if not so quoted, on the principal national securities exchange on which the Common Stock is then listed. The option exercise price shall be subject to adjustment in accordance with Section 9 hereof. 2 7. MANNER OF EXERCISE OF OPTIONS (a) TIME AND MANNER OF EXERCISE OF OPTIONS. Options granted under the Plan shall become exercisable in full on the one year anniversary of the date of the grant, subject to the limitations applicable to Early Annual Options set forth in Section 4(b). To the extent that the right to exercise an option has accrued and is in effect, the option may be exercised in full at one time or in part from time to time, by giving written notice to the Corporation, signed by the person or persons exercising the option, stating the number of Shares with respect to which the option is being exercised, accompanied by payment in full for such Shares. Payment may be made in whole or in part by (i) cash or cash equivalents, (ii) shares of Common Stock of the Corporation already owned for a period of at least six months, or not acquired directly or indirectly from the Corporation by the person exercising the option, valued at fair market value as defined above on the business day immediately prior to the date of exercise, (iii) delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker approved by the Corporation to sell all or part of the shares of Common Stock being purchased under the Plan and to deliver all or part of the sales proceeds to the Corporation, or (iv) such other form of payment which the Committee determines to be acceptable and consistent with applicable laws, regulations and rules. (b) TAXES. The optionee shall pay to the Corporation, or make provision satisfactory to the Committee for payment of, any taxes required by law to be withheld in respect of any option granted under the plan no later than the date of the event creating the tax liability. In the Committee's discretion, the minimum statutory withholding obligations, based on the minimum statutory withholding rates for federal and state tax purposes, may be paid in whole or in part in Shares of Common Stock retained from the exercise of the option, valued at the fair market value of the Common Stock on the date of exercise. (c) TERM OF OPTIONS. The Expiration Date for each option shall be the earlier of (i) the 10th anniversary of the date of grant or, (ii) the date 12 months after the termination of such Non-Employee Director's service as a director for any reason. 8. OPTIONS NOT TRANSFERABLE The right of an optionee to exercise an option granted to him or her under the Plan and any interest therein or in the Shares received upon exercise shall be assignable or transferable by such optionee in a respect other than by will or the laws of descent and distribution only at the discretion of the Board, and any such option shall be exercisable during the lifetime of such optionee only by him or her except as expressly permitted by the Board. Any option granted under the Plan shall become null and void and shall be without further force or effect upon the bankruptcy of the optionee, or upon any attempted assignment or transfer of such option or any interest therein (except as provided in the preceding sentence), including, without limitation, any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition, attachment, 3 trustee process or similar process, whether legal or equitable with respect to such option or any interest therein. 9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION In the event that the outstanding shares of the Common Stock of the Corporation are changed into or exchanged for a different number or kind of shares or other securities of the Corporation or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares or dividends payable in capital stock, appropriate adjustment shall be made in the number and kind of Shares as to which outstanding options, or portions thereof then unexercised shall be exercisable, to the end that the proportionate interest of the optionee shall be maintained as before the occurrence of such event; such adjustment in outstanding options shall be made without change in the total price applicable to the unexercised portion of such options and with a corresponding adjustment in the option price per Share. 10. RESTRICTIONS ON ISSUANCE OF SHARES The Corporation may impose such conditions with respect to the exercise of options, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. 11. TERMINATION AND AMENDMENT OF PLAN Unless sooner terminated as herein provided, or extended with the approval of the stockholders of the Corporation, the Plan shall terminate on February 20, 2012, except as to options granted prior to that date. The Board may at any time terminate the Plan or make such modifications or amendments thereto as it deems advisable; provided, however, that except as provided in Section 9 the Board may not, without the approval of the stockholders of the Corporation, (i) increase materially the benefits accruing to participants hereunder, (ii) increase the maximum aggregate number of shares for which options may be granted under the Plan or the number of shares for which an option may be granted to any optionee, (iii) modify the provisions of Section 4 regarding eligibility, (iv) extend the expiration date of the Plan, or (v) modify the provisions of Section 6 regarding the exercise price. Termination or any modification or amendment of the Plan shall not, without the consent of an optionee, materially adversely affect his or her rights under an option previously granted to him or her. 12. SCOPE OF AMENDMENT AND RESTATEMENT This Plan is amended and restated as of April 24, 2002 and its terms shall apply to options granted from and after such date. Prior Options shall be governed by the terms and provisions of the Plan as in effect when such options were granted. 4 ----------------------------------------- THIS PLAN WAS APPROVED BY THE BOARD OF DIRECTORS ON FEBRUARY 14, 1996. THIS PLAN WAS APPROVED BY THE STOCKHOLDERS ON APRIL 24, 1996. THIS PLAN WAS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 20, 2002. THIS PLAN AS AMENDED WAS APPROVED BY THE STOCKHOLDERS ON _________ ___, 2002. 5 EX-10.15 5 a2070436zex-10_15.txt EXHIBIT 10.15 Exhibit 10.15 HELIX TECHNOLOGY CORPORATION DIRECTORS' DEFERRED COMPENSATION PLAN ARTICLE I GENERAL 1.1 ESTABLISHMENT OF PLAN. Helix Technology Corporation ("Helix") hereby establishes the Helix Directors' Deferred Compensation Plan (the "plan"), effective as of February 20, 2002, to allow each member of the Helix Board of Directors who is not also an officer or employee of Helix to defer receipt of all or a portion of the cash compensation payable to him or her as a director of Helix until his or her termination of services as director or, subject to requirements set forth in Section 3.1, such other date as may be specified by him or her. 1.2 NO RIGHT TO CORPORATE ASSETS. This plan is unfunded and Helix will not be required to set aside, segregate or deposit any funds or assets of any kind to meet its obligations hereunder. Nothing in this plan will give a participant, a participant's beneficiary or any other person any equity or other interest in the assets of Helix, or create a trust of any kind or a fiduciary relationship of any kind between Helix and any such person. Any rights that a participant, beneficiary or other person may have under this plan will be solely those of a general unsecured creditor of Helix. 1.3 LIMITATION ON RIGHTS CREATED BY PLAN. Nothing in this plan will give a participant any right to continue as a director of Helix. 1.4 NONALIENATION OF BENEFITS. The rights and benefits of a participant in this plan are personal to the participant. No interest, right or claim under this plan and no distribution therefrom will be assignable, transferable or subject to sale, mortgage, pledge, hypothecation, anticipation, garnishment, attachment, execution or levy, except by designation of beneficiaries as provided in Section 3.5. 1.5 BINDING EFFECT OF PLAN. This plan will be binding upon and inure to the benefit of participants and designated beneficiaries and their heirs, executors and administrators, and to the benefit of Helix and its assigns and successors in interest. 1.6 ADMINISTRATION. This plan will be administered by such person or committee as the Chief Executive Officer of Helix shall designate (the "Administrator"). 1.7 INTERPRETATION. This plan will be construed, enforced and administered according to the laws of the State of Delaware. ARTICLE II DEFERRAL OF COMPENSATION 2.1 DEFERRAL AGREEMENT. Any member of the Board of Directors of Helix who is not an officer or employee of Helix or its subsidiaries (an "outside director") is eligible to participate in this plan. An outside director may participate in the plan by executing an agreement before the first day of any calendar quarter in which such agreement will take effect authorizing Helix to defer all or a portion of his or her compensation as director (the "deferral agreement"). A deferral agreement will remain in effect for each succeeding calendar quarter unless the participant files a written revocation or superseding deferral agreement with the Secretary of Helix. A deferral agreement for any particular quarter is irrevocable after the last day of the immediately preceding calendar quarter. 2.2 AMOUNT OF DEFERRAL. Each participant may elect in his or her deferral agreement to defer 25 percent, 50 percent, 75 percent or 100 percent of the total cash compensation paid to the participant as an outside director of Helix. 2.3 DEFERRAL ACCOUNT. For bookkeeping purposes only, the Administrator will establish and maintain an account (the "deferral account") for each participant which documents the compensation deferred by the participant, earnings credited to the account and payments from the account. The deferral account will consist of a subaccount for amounts earning interest, which will be denominated on a dollar basis (the "cash account"), and a subaccount for amounts invested in hypothetical shares of Helix Common Stock, $1.00 par value ("Helix Stock"), which will be denominated on a share basis (the "stock equivalent account"). Each participant will indicate in his or her deferral agreement the percentage of future deferrals to be invested in the cash account and the stock equivalent account. Amounts may not be transferred between the cash account and the stock equivalent account except pursuant to Section 3.2. 2.4 CASH ACCOUNT. As of the first day of each calendar quarter, the Administrator will credit to the participant's cash account an amount equal to the amount of compensation otherwise payable to the participant in the preceding calendar quarter which the participant has elected to defer and invest in the cash account. As of the last day of each calendar quarter, the Administrator will credit interest on the balance in the cash account on that date at the prorata rate payable on 10-year Treasury notes hypothetically purchased on the first day of such calendar quarter. For a participant receiving installment payments, interest will be credited on the balance from time to time remaining in the cash account until the account has been completely paid. 2.5 STOCK EQUIVALENT ACCOUNT. As of the first day of each calendar quarter, the Administrator will credit to the participant's stock equivalent account a number of shares of Helix Stock equal to the amount of compensation otherwise payable to the participant in the preceding calendar quarter which the participant has elected to defer and invest in such Helix Stock divided by the applicable stock price for such Helix Stock. The applicable stock price for such Helix Stock shall mean the closing price of Helix Stock on the last trading day during the applicable calendar quarter as reported by the Nasdaq National Market. As of the date of payment of any cash dividend on Helix Stock, the Administrator will credit to the stock equivalent account a number of shares of Helix Stock upon which such dividend was declared equal to (i) the cash dividend per share times the number of shares Helix Stock credited to the stock equivalent account as of the dividend record date divided by (ii) the closing price for such Helix Stock on the date of payment of the dividend. As of the date of payment of any stock dividend on Helix Stock, the Administrator will credit to the stock equivalent account a number of shares equal to the stock dividend declared times the number of shares of Helix Stock credited to the stock equivalent account as of the dividend record date. In the event of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, exchange of shares or similar change affecting the Helix Stock, appropriate adjustment will be made in the number and/or kind of shares or other securities credited to the stock equivalent account. The stock equivalent account is maintained for bookkeeping purposes only, and shares credited to the stock equivalent account are not considered actual shares of Helix Stock for any purpose and a participant will have no rights as a stockholder with respect to such shares. Shares will include fractional shares computed to three decimal places. 2 ARTICLE III PAYMENT OF DEFERRED COMPENSATION 3.1 COMMENCEMENT OF PAYMENT. Each participant will elect in his or her deferral agreement to have payments commence in any calendar year as may be specified; provided, however, that the earliest calendar year that a participant may elect to have payments commence shall be the second calendar year following the date of such election. For example, a deferral agreement executed in 2002 may not specify a payment commencement date earlier than 2004. Such election will be irrevocable. Notwithstanding the foregoing, payments shall commence earlier as described in Sections 3.3 and 3.4 below upon a participant's termination of services as director. 3.2 ELECTION OF FORM OF PAYMENT. Each participant will elect in his or her deferral agreement to have his or her cash account paid in either a lump sum or in annual installments for a period specified by the participant, which period may not exceed five years. Each participant will elect in his or her deferral agreement to have his or her stock equivalent account paid in a lump sum or transferred to his or cash account if installment payments described in Section 3.4 apply on the date a lump sum would be paid in an amount equal to the number of shares of Helix Stock in his or her stock equivalent account times the closing price for such Helix Stock as of the trading day preceding the date of transfer. 3.3 LUMP SUM PAYMENTS. A participant who elects to have his or her deferral account paid in a lump sum will receive the lump sum payment on or before March 1 of the year specified in the deferral agreement for commencement of payment or, if the distribution event is due to his or her termination of services as director, within ten (10) days following such termination of services. The lump sum payment will consist of cash in the amount credited to his or her cash account plus an amount equal to the number of shares of Helix Stock in his or her stock equivalent account times the closing price for such Helix Stock as of the trading day preceding the date of payment. 3.4 INSTALLMENT PAYMENTS. A participant who elects to have his or her deferral account paid in annual installments will receive an installment payment on or before March 1 of each year that installments are due commencing with the year specified in his or her deferral agreement or, if the distribution event is due to his or her termination of services as director, on a date within 10 days following such termination of services. Each installment payment will consist of cash in the amount credited to his or her cash account, including any amounts transferred from his or her stock equivalent account, on the date of payment divided by the number of annual installments remaining to be paid. 3.5 BENEFICIARIES. A participant may designate in his or her deferral agreement a beneficiary or beneficiaries (which may be an entity other than a natural person) to receive any payments to be made upon his or her death. A participant may elect to have payments to beneficiaries paid in a lump sum or in annual installments for a period not to exceed five years. At any time, and from time to time, a participant may change or revoke his or her designation of beneficiary or form of payment without the consent of any beneficiary. Any such designation, change or revocation must be made in writing and filed with the Secretary. If the participant designates more than one beneficiary, any payments to beneficiaries will be made in equal percentages unless the participant designates otherwise. Any portion of a participant's deferral account that is not disposed of by designation of beneficiary upon the participant's death will be paid to his or her estate. 3.6 PAYMENTS ON DEATH. If a participant dies before full payment of his or her deferral account, Helix will make payments to the participant's designated beneficiary or beneficiaries, or to his or 3 her estate, as applicable, of the amount remaining in the deceased participant's deferral account. Such payments will be in the form designated by the participant and will commence on the first day of the calendar quarter following the death of the participant (or as soon thereafter as practicable) and, in the case of annual installments, will be paid on or before March 1 of each succeeding year. 3.7 HARDSHIP DISTRIBUTIONS FROM ACCOUNTS. The Administrator may, in its discretion, distribute a portion or all of a participant's cash account in case of an unforeseeable emergency. For purposes of this Section 3.7, an unforeseeable emergency shall mean severe financial hardship to a participant that arises from a sudden and unexpected illness or accident of the participant or of a dependent of a participant, loss of the participant's property due to casualty, or similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of such participant. The Administrator will determine the date of payment of the distribution. Hardship distributions are not permitted from a participant's stock equivalent account. ARTICLE IV AMENDMENT AND TERMINATION 4.1 AMENDMENT. Helix may, without the consent of any participant, beneficiary or other person, amend the plan at any time and from time to time; provided, however, that no amendment will reduce the amount credited to the deferral account of any participant. 4.2 TERMINATION. Helix may terminate the plan at any time. Upon termination of the plan, payments from a participant's deferral account shall be made in the manner and at the time prescribed in Article III; provided, however, that Helix may, in its discretion, distribute a participant's deferral account in a lump sum as soon as practicable after the date the plan is terminated. Adopted by the Board of Directors on February 20, 2002. 4 EX-21 6 a2070436zex-21.txt EX-21 EXHIBIT 21. SUBSIDIARIES OF THE REGISTRANT
SUBSIDIARY PLACE ORGANIZED - ------------------------------------ ------------------------------------ Helix Securities Corporation Massachusetts CTI-Cryogenics, Inc. Barbados Helix Technology UK Limited England Helix Technology SA France Helix Technology GmbH Germany Helix Technology K.K. Japan Granville-Phillips Company Delaware Helix Vacuum Technology Ltd. Taiwan Helix Technology Limited Hong Kong CTI-Nuclear, Inc. Ohio
EX-23.1 7 a2070436zex-23_1.txt EX-23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (File Nos. 333-09245 and 333-09247) of our report dated January 29, 2002 relating to the financial statements and financial statement schedule, which appear in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts February 21, 2002 EX-99.1 8 a2070436zex-99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 IMPORTANT FACTORS THAT MAY AFFECT FUTURE RESULTS From time to time, we may make forward-looking public statements, such as statements concerning our strategic plans; the outlook for our business and industry; anticipated expenses; anticipated sources of future revenues; and the sufficiency of capital to meet working capital and capital expenditure requirements, as well as other estimates relating to future operations. Forward-looking statements may be in reports filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in press releases or in informal statements made with the approval of an authorized executive officer. The words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "believe," "could," "intend," "may," "opportunity," "plan," "potential" or similar terms and expressions are intended to identify "forward-looking statements" within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended, as enacted by the Private Securities Litigation Reform Act of 1995. We wish to caution you not to place undue reliance on these forward-looking statements that speak only as of the date on which they are made. In addition, we wish to advise you that the factors listed below, as well as other factors we have not currently identified, could affect our financial or other performance and could cause our actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods or events in any current statement. We will not undertake and we specifically decline any obligation to publicly release revisions to these forward-looking statements to reflect either circumstances after the date of the statements or the occurrence of events that may cause us to re-evaluate our forward-looking statements. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act, we are hereby filing the following cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements made by us or on our behalf: THE SEMICONDUCTOR EQUIPMENT INDUSTRY IS HIGHLY CYCLICAL AND IS CURRENTLY EXPERIENCING A SEVERE, PROLONGED DOWNTURN. The semiconductor equipment industry is characterized by up and down business cycles, the timing, length and volatility of which are difficult to predict. Our 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. Sudden changes in demand for semiconductors have affected and will continue to affect the timing and amounts of our customers' capital equipment purchases and investments in new technology. The semiconductor industry is currently experiencing a severe and prolonged downturn, creating pressure on our net sales, gross margin, net income and cash flow. OVERSUPPLY IN THE SEMICONDUCTOR INDUSTRY MAY REDUCE DEMAND FOR CAPITAL EQUIPMENT, INCLUDING OUR PRODUCTS. Inventory buildups in telecommunications equipment, consumer electronics, personal computers and wireless communications devices have dramatically decreased demand for integrated circuits. As a result, the semiconductor industry is currently experiencing a period of oversupply of semiconductors. This oversupply has caused semiconductor manufacturers to reevaluate their capital spending plans, which has resulted in significantly reduced demand for capital equipment, including systems such as ours. A number of our customers have reduced, delayed or canceled their capital expenditures, which has harmed our results of operations. For example, in 2001, our net sales declined by approximately $140 million, or 55%, from the prior year. Our future success will depend in large part on the resurgence of various electronics 1 industries that use semiconductors, and we cannot predict whether or when demand for integrated circuits will improve. WE DERIVE A SIGNIFICANT PORTION OF OUR SALES FROM A LIMITED NUMBER OF CUSTOMERS, AND OUR SALES COULD DECLINE SIGNIFICANTLY IF WE LOSE A CUSTOMER OR IF A CUSTOMER CANCELS, REDUCES OR DELAYS AN ORDER. Historically, we have derived a significant portion of net sales from a limited number of customers. In 2001, our ten largest customers accounted for approximately 37% of our net sales and a single customer, Applied Materials, accounted for approximately 21% of our net sales. We anticipate that a small number of customers will continue to account for a large portion of our net sales for the foreseeable future. The loss, reduction or delay of any orders from these customers could significantly reduce our sales and harm our reputation in our industry. INDUSTRY CONSOLIDATION AND OUTSOURCING OF THE MANUFACTURE OF SEMICONDUCTORS MAY REDUCE THE NUMBER OF OUR POTENTIAL CUSTOMERS. The substantial expense of building, upgrading or expanding a semiconductor fabrication facility is increasingly causing semiconductor companies to contract with foundries, which manufacture semiconductors designed by others. As manufacturing shifts to foundries, the number of our potential customers could decrease, which would increase our dependence on our remaining customers. In addition, consolidation within the semiconductor manufacturing industry is increasing. If semiconductor manufacturing is consolidated within a small number of foundries and other large companies, our failure to win any significant contracts to supply equipment to any of those customers could seriously harm our reputation and materially and adversely affect our results of operations. In addition, industry consolidation may cause delays in the purchase of our products and cause a reexamination of strategic and purchasing decisions by our current and potential customers. We could lose valuable relationships with key personnel of a customer due to budget cuts, layoffs or other disruptions caused by industry consolidation. IF WE FAIL TO DEVELOP AND SELL NEW OR ENHANCED PRODUCTS AND SERVICES FOR SEMICONDUCTOR MANUFACTURERS, WE WILL NOT BE ABLE TO COMPETE EFFECTIVELY. Rapid technological innovation in semiconductor manufacturing processes requires the semiconductor equipment industry to anticipate or respond quickly to evolving customer requirements and could render our current product offerings obsolete. We believe that our continued success will depend significantly on our ability to quickly develop, manufacture and introduce new products and product enhancements that address our customers' needs, including their customer support requirements. The timely development of new or enhanced products is a complex and uncertain process. We may experience design, manufacturing, marketing or other difficulties that could delay or prevent the development, introduction or commercialization of any new or enhanced products. We may not anticipate successfully and accurately technological or market trends, or manage successfully long development cycles. We may be required to collaborate with third parties to develop these products and may not be able to do so on a timely and cost-effective basis, if at all. If we are not successful in marketing and selling these products to customers with whom we have formed long-term relationships, our net sales could be adversely affected. If any of our new or enhanced products has reliability or quality problems, such problems may result in reduced orders, higher manufacturing costs, delays in collecting accounts receivable, and additional service and warranty expense. If we are not able to develop new products or enhancements to existing products on a timely and cost-effective basis, or if the new products or product enhancements that we introduce fail to achieve market acceptance, our ability to grow our business would be harmed and competitors could achieve greater market share. 2 IF OUR GOLDLINK SUPPORT INITIATIVE DOES NOT ACHIEVE WIDESPREAD MARKET ACCEPTANCE AMONG OUR CUSTOMERS AND THIRD-PARTY MANUFACTURERS, THEN OUR NET SALES AND OUR ABILITY TO EXPAND OUR CUSTOMER SUPPORT CAPABILITIES COULD BE ADVERSELY AFFECTED. In order to expand our customer support capabilities, we intend to expand our Global On-Line Diagnostics, or GOLDLink, e-diagnostics network to include more items of production equipment in a customer's manufacturing facility and a larger number of components and subassemblies on each item of production equipment. We intend the expansion of our GOLDLink System to include production equipment, components and subassemblies that are manufactured by us, as well as by other companies. In connection with the expansion of the GOLDLink network, we also intend to integrate our Guaranteed Up Time Support, or GUTS, reactive customer support system to include third-party products. Any failure of our customer support products to achieve widespread market acceptance among customers or third-party manufacturers could adversely affect net sales of our products, which could harm our business. Net sales of the GOLDLink support initiative were not material in 2001. IF WE ARE UNABLE TO CONTINUE TO PROVIDE SATISFACTORY LEVELS OF MAINTENANCE AND WARRANTY SUPPORT TO CUSTOMERS, OUR REPUTATION MAY BE ADVERSELY AFFECTED, WE MAY BE UNABLE TO ATTRACT NEW CUSTOMERS AND WE MAY LOSE EXISTING CUSTOMERS. We provide a high level of customer service and product support to help our customers maximize production yields by minimizing downtime due to scheduled and unscheduled maintenance. If our customer service personnel fail to continue to provide prompt and effective product maintenance and warranty support to our customers, or if our diagnostic solutions technology operates at less than the level of performance required to minimize maintenance downtime, then our reputation and the reputation of our products and services could be damaged, which would adversely affect our net sales. IF WE FAIL TO COMPETE SUCCESSFULLY IN THE HIGHLY COMPETITIVE SEMICONDUCTOR EQUIPMENT INDUSTRY, OUR SALES AND PROFITABILITY WILL DECLINE. We encounter aggressive competition in the market for semiconductor manufacturing equipment. Many of our current and potential competitors have greater resources than we have, including capital, name recognition, technical and marketing resources, customer service and support resources, and manufacturing capabilities. We believe that, to remain competitive, we must offer a broad range of products, maintain customer service and support centers worldwide, and invest significant resources in product and process research and development in order to develop new products and enhance our existing products in a timely manner. Competitors with substantially greater resources than we have may be better positioned to compete successfully in the industry. We expect our current competitors to continue to improve the design and performance of their existing products and processes and to introduce new products and processes with improved price and performance characteristics. Our product sales may be threatened by new technologies, products or market trends, and we may have to adjust the prices of our products and services to stay competitive. In addition, new competitors may emerge in the markets we serve. Moreover, a relatively small number of firms compete in the vacuum technology market. An acquisition of, or by, one of our competitors in the sector may result in a substantially strengthened competitor with greater financial, engineering, manufacturing, marketing and customer service and support resources than we have. If our current or future competitors enter into strategic relationships with leading semiconductor manufacturers covering products similar to those sold or being developed by us, our ability to sell products to those manufacturers may be adversely affected. We cannot assure you that we will be able to compete successfully with our existing competitors or with new competitors. 3 DOWNTURNS IN THE SEMICONDUCTOR INDUSTRY MAKE IT DIFFICULT TO ANTICIPATE OR EXPAND SALES. We anticipate that a significant portion of any new orders will depend upon demand from semiconductor manufacturers that build, upgrade or expand fabrication facilities. If, as a result of an industry downturn, these prospective customers postpone or abandon their plans to build, upgrade or expand fabrication facilities, or otherwise reduce or fail to make capital expenditures, demand for our systems may decline. We may be unable to generate significant new orders for our systems, which would adversely affect our sales levels. In addition, the high rate of technical innovation in the semiconductor industry requires continual investments in engineering, research and development, marketing and global support services to develop and sell new products and to maintain extensive customer service and support capabilities. These investments create significant fixed costs that limit our ability to reduce expenses during downturns in proportion to declining sales. WE DO NOT HAVE LONG-TERM PURCHASE AGREEMENTS WITH OUR CUSTOMERS, AND AS A RESULT, OUR CUSTOMERS COULD STOP PURCHASING OUR PRODUCTS AND SERVICES AT ANY TIME. We generally do not obtain firm, long-term volume purchase commitments from our customers, and we generally experience short lead-times for customer orders. In addition, customer orders can be canceled and volume levels can be reduced or delayed. We may be unable to replace canceled, delayed, or reduced orders with new business. OUR DEPENDENCE UPON A LIMITED NUMBER OF SUPPLIERS FOR MANY COMPONENTS AND SUBASSEMBLIES COULD RESULT IN INCREASED COSTS OR DELAYS IN THE MANUFACTURE AND SALE OF OUR PRODUCTS. We rely to a substantial extent on outside vendors to manufacture many components and subassemblies for our products. We obtain many of these components and subassemblies from either a sole source or a limited group of suppliers. Because of our reliance on outside vendors generally, and on a limited group of suppliers in some cases, we may be unable to obtain an adequate supply of required components on a timely basis, at a price and on other terms acceptable to us, or at all. In addition, we often quote prices to our customers and accept customer orders for our products prior to purchasing components and subassemblies from our suppliers. If our suppliers increase the cost of components or subassemblies, we may not have alternative sources of supply and may not be able to raise the prices of our products to cover all or part of the increased cost of components, which may harm our results of operations. The manufacture of some of these components and subassemblies is a complex process and requires long lead times. As a result, we have in the past and may in the future experience delays or shortages. If we are unable to obtain adequate and timely deliveries of required components or subassemblies, we may have to seek alternative sources of supply or manufacture these components internally. This could delay our ability to manufacture or to ship our systems on a timely basis, causing us to lose sales, incur additional costs, delay new product introductions and suffer harm to our reputation. CLAIMS BASED ON DEFECTS IN OUR PRODUCTS OR ERRORS IN PERFORMING PRODUCT-RELATED SERVICES COULD RESULT IN COSTLY LITIGATION AGAINST US. Our products and services are used in several key steps in the fabrication of semiconductors, which is a complex and expensive process. As a result, any failure of our systems could interrupt our customers' production schedules, which would result in costly unscheduled downtime. We may be subject to significant liability claims or liquidated damages pursuant to contracts with our customers as a result of any malfunction of our systems. Our insurance may not, or may not be sufficient to, cover us against liability claims or may not continue to be available to us. Liability claims could also require us to spend significant 4 time and money in litigation. As a result, any of these claims, whether or not successful, could seriously damage our reputation and harm our business, financial condition and results of operations. In 1998, Raytheon brought an action against us in the Massachusetts Superior Court alleging that between 1992 and 1994 we sold Raytheon defective components used in missile guidance systems manufactured by Raytheon. We have not been in the business of selling these components since 1994. We have denied all claims asserted against us by Raytheon and have succeeded in having certain claims dismissed, although these dismissals are potentially appealable at the conclusion of the trial stage of the case. The action is currently in the discovery and motion phase and no trial date has been set. SALES TO FOREIGN MARKETS CONSTITUTED APPROXIMATELY 30% OF OUR NET SALES IN 2001. THEREFORE OUR NET SALES AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED BY DOWNTURNS IN ECONOMIC CONDITIONS IN COUNTRIES OUTSIDE THE UNITED STATES AND OTHER RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. Sales of our products and services to customers outside the United States, including exports from our U.S. facilities, accounted for approximately 30% of our net sales in 2001. We anticipate that international sales will continue to account for a significant portion of our net sales. We also expect to expand the sales and marketing activities for our products and services to markets outside the United States, particularly the Asia-Pacific market, and to hire additional international personnel. Because of our dependence upon international sales, we are subject to a number of risks, including: - unexpected changes in laws or regulations resulting in more burdensome governmental controls, tariffs, restrictions, embargoes or export license requirements; - difficulties in obtaining required export licenses; - volatility in currency exchange rates; - political and economic instability, particularly in the Asia-Pacific market; - difficulties in accounts receivable collections; - extended payment terms beyond those customarily offered in the United States; - difficulties in managing distributors or representatives outside the United States; - difficulties in staffing and managing foreign subsidiary operations; and - potentially adverse tax consequences. Substantially all of our sales to date have been denominated in U.S. dollars. Our products become less price competitive in countries with currencies that are declining in value in comparison to the dollar. This could cause us to lose sales or force us to lower our prices, which would reduce our gross margins. If it becomes necessary for us to make sales denominated in foreign currencies, we will become more exposed to the risk of currency conversion rate fluctuations. OUR PROPRIETARY TECHNOLOGY IS IMPORTANT TO THE CONTINUED SUCCESS OF OUR BUSINESS. OUR FAILURE TO PROTECT THIS PROPRIETARY TECHNOLOGY MAY SIGNIFICANTLY IMPAIR OUR COMPETITIVE POSITION. Our ability to compete effectively with other companies depends, in part, on our ability to protect our technology assets by obtaining and enforcing patents. We have a number of patents in the United States and other countries and additional applications are pending for new developments in our equipment and processes. Although we seek to protect our intellectual property rights through patents, we cannot be certain that: - we will be able to protect our technology adequately; - competitors will not be able to develop similar technology independently; 5 - any of our pending patent applications will be issued; - claims allowed under any issued patents will be broad enough to protect our technology; or - intellectual property laws will protect our intellectual property rights. Our competitive position is also dependent upon unpatented trade secrets. Trade secrets are difficult to protect. Our competitors may independently develop proprietary information and techniques that are substantially equivalent to ours or otherwise gain access to our trade secrets, such as through unauthorized or inadvertent disclosure of our trade secrets. WE MAY BECOME INVOLVED IN LITIGATION RELATING TO OUR INTELLECTUAL PROPERTY RIGHTS, WHICH MAY RESULT IN SUBSTANTIAL EXPENSE AND MAY DIVERT OUR ATTENTION FROM THE IMPLEMENTATION OF OUR BUSINESS STRATEGY. We believe that the success of our business depends, in part, on obtaining patent protection for our key technology, defending our issued patents and preserving our trade secrets. Litigation may be necessary in order to enforce our patents, copyrights or other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement. These types of litigation could result in substantial costs and diversion of resources and could harm our business, financial condition and results of operations. Moreover, litigation may not adequately protect our intellectual property rights. In addition, we may be sued by third parties that claim our products infringe their intellectual property rights. This risk is exacerbated by the fact that the validity and breadth of claims covered in vacuum technology patents involve complex legal and factual questions. Any litigation or claims against us, whether valid or not, could result in substantial costs, place a significant strain on our financial resources, divert management resources and harm our reputation. Such claims could result in awards of substantial damages, which could have a significant adverse effect on our results of operations. In addition, intellectual property litigation or claims could force us to: - cease selling, incorporating or using any of our products that incorporate the challenged intellectual property, which would adversely affect our net sales; - obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, if at all; and - redesign our products, which would be costly and time-consuming. WE MAY NOT BE ABLE TO MAINTAIN AND EXPAND OUR BUSINESS IF WE ARE NOT ABLE TO RETAIN, HIRE AND INTEGRATE ADDITIONAL QUALIFIED PERSONNEL. Our success depends in large part upon our ability to attract and retain qualified, experienced employees to operate and expand our business. There is substantial competition for experienced engineering, technical, financial, sales and marketing personnel in our industry. In particular, we must attract and retain highly skilled design and process engineers. Competition for such personnel is intense. The cyclical nature of our business also causes our staffing needs to fluctuate unexpectedly. During periods when our need for employees increases, we often depend on temporary employees. Temporary employees become scarce during up business cycles and often require additional training. If we are unable to retain our existing key personnel, or attract and retain additional qualified personnel, we may from time to time experience inadequate levels of staffing to develop, manufacture and market our products and perform services for our customers. As a result, our growth could be limited due to our lack of capacity to develop and market our products to our customers, or we could fail to meet our delivery commitments or experience deterioration in service levels or decreased customer satisfaction, all of which could adversely affect us and cause the value of our common stock to decline. 6 WE MAY SEEK TO EXPAND THROUGH ACQUISITIONS OF COMPLEMENTARY BUSINESSES, AND WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE ACQUIRED COMPANIES. We may seek to acquire complementary companies in the future. In addition to the difficulties we may face in identifying and consummating acquisitions, we will also be required to integrate and consolidate any acquired businesses or assets with our existing operations. Managing an acquired business entails numerous operational and financial risks, including difficulties in integrating disparate administrative, accounting and finance, and information systems, difficulties in assimilating acquired operations and new personnel, diversion of management's attention from other business concerns, and potential loss of key employees or customers of any acquired operations. Accordingly, we may be unable to successfully identify, consummate and integrate future acquisitions or operate acquired businesses profitably. Our success will depend, to a significant extent, on the ability of our executive officers and other members of senior management to respond to these challenges effectively. If we are unable to integrate successfully an acquired company, our future growth may suffer, and our results of operations could be harmed. OUR SALES AND RESULTS OF OPERATIONS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS, WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE. Our sales and results of operations have fluctuated significantly from quarter to quarter in the past, and we expect them to continue to vary in the future due to the cyclical nature of the semiconductor equipment industry and a variety of other factors, many of which are beyond our control. Downward fluctuations in our quarterly results have historically resulted in decreases in the price of our common stock. Some of the factors that could affect our quarterly sales and results of operations include: - changes or slowdowns in economic conditions in the semiconductor and semiconductor capital equipment industries and other industries in which our customers operate; - the timing and volume of orders placed by major customers; - customer cancellations of previously placed orders and shipment delays; - variations in customers' capital spending budgets or inventory management practices; - our ability to develop, manufacture, introduce and support our current product lines as well as new products and product enhancements; - announcements, new product introductions and reductions in the prices of products offered by our competitors; - our ability to obtain sufficient supplies of sole or limited source components and subassemblies for our products; and - our ability to realize forecasted sales for a particular period. Our results of operations in one or more future quarters may fall below the expectations of analysts and investors. In those circumstances, the trading price of our common stock would likely decrease. WE MAY NEED ADDITIONAL FINANCING IN THE FUTURE, AND WE MAY BE REQUIRED TO ISSUE ADDITIONAL SECURITIES. ANY ADDITIONAL FINANCING MAY RESULT IN RESTRICTIONS ON OUR OPERATIONS OR SUBSTANTIAL DILUTION TO OUR STOCKHOLDERS. We may need to raise additional funds in the future, for example, to develop new technologies, support our expansion, respond to competitive pressures, acquire complementary businesses or respond to unanticipated situations. We may try to raise additional funds through public or private financings, strategic relationships or other arrangements. Our ability to obtain debt or equity funding will depend on a number of factors, including market conditions, our operating performance and investor interest. Additional funding may not be available to us on acceptable terms or at all. If adequate funds are not available, we may be required to revise our business plan to reduce expenditures, including curtailing our 7 growth strategies, foregoing acquisitions or reducing our product development efforts. If we succeed in raising additional funds through the issuance of equity or convertible securities, the issuance could result in substantial dilution to existing stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these new securities would have rights, preferences and privileges senior to those of the holders of our common stock. The terms of these securities, as well as any borrowings under our credit agreement, could impose restrictions on our operations. As of December 31, 2001, we are not in compliance with one of the covenants in our credit agreement, and therefore cannot access the line of credit. While we are currently in negotiations with the bank to amend the agreement, these negotiations may not be successful. WE MAY BE UNABLE TO PAY DIVIDENDS IN THE FUTURE. Our stockholders may receive dividends out of legally available funds if, and when, they are declared by our board of directors. Our policy has been to pay dividends out of cash in excess of the needs of the business. Currently, we declare dividends quarterly at a rate of $0.08 per share of common stock. Our credit facility contains restrictions on our ability to pay dividends. We may incur additional indebtedness in the future that may prohibit or further restrict our ability to declare and pay dividends. We may also be restricted from paying dividends in the future due to restrictions imposed by state corporation laws, our financial condition and results of operations, capital requirements, covenants contained in our various financing agreements, management's assessment of future capital needs and other factors considered by our board of directors. INCREASING POLITICAL AND SOCIAL TURMOIL, SUCH AS TERRORIST AND MILITARY ACTIONS, INCREASE THE DIFFICULTY FOR US, OUR VENDORS AND OUR CUSTOMERS TO FORECAST ACCURATELY AND PLAN FUTURE BUSINESS ACTIVITIES AND COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Recent political and social turmoil, including the terrorist attacks of September 11, 2001, can be expected to put further pressure on economic conditions in the United States and worldwide. These political, social and economic conditions make it difficult for us, our suppliers and our customers to forecast accurately and plan future business activities. Our business, financial condition and results of operations may be materially adversely affected by a fluctuation in net sales relative to our forecasted value, as we may not be able to vary our incurred expenses in response to net sales actually realized. 8 -----END PRIVACY-ENHANCED MESSAGE-----