SOURCE: Zygo Corporation

Zygo Corporation

February 04, 2010 16:36 ET

ZYGO Reports Fiscal 2010 Second Quarter Results

Revenues Increase 22% From First Quarter of Fiscal 2010; Bookings Up 26% From First Quarter

MIDDLEFIELD, CT--(Marketwire - February 4, 2010) - Zygo Corporation (NASDAQ: ZIGO) today announced revenues of $26.1 million for the second quarter of fiscal 2010, which ended on December 31, 2009, an increase of 22% compared with revenues of $21.3 million in the first quarter of fiscal 2010, reflecting continued recovery in the Company's core optical and metrology markets. The Company reported revenues of $33.4 million in the second quarter of fiscal 2009.

Bookings for the second quarter of fiscal 2010 were $28.6 million, increases of 26% from bookings of $22.7 million in the first quarter of fiscal 2010 and 27% from bookings of $22.6 million in the second quarter of fiscal 2009. Bookings for the Metrology Solutions division accounted for 58% of the bookings received in the second quarter of fiscal 2010, with the Optical Systems division contributing the remaining 42%.

For the second quarter of fiscal 2010, ZYGO reported a net loss of $1.9 million ($953,000 from continuing operations), or a loss of $0.11 ($0.07 from continuing operations) per diluted share, as compared with a net loss of $4.0 million ($3.5 million from continuing operations), or $0.24 ($0.23 from continuing operations) per diluted share, for the second quarter of fiscal 2009. The second quarter of fiscal 2010 loss from continuing operations included $1.6 million of operating expenses related to severance costs due to our reorganization efforts and costs associated with the retirement of our former CEO and search for a new CEO. Excluding these items, the Company would have reported a net profit from continuing operations of $358,000, or $0.02 per diluted share. A reconciliation between GAAP (Accounting Principles Generally Accepted in the United States of America) operating results and non-GAAP operating results is provided following the financial statements that are part of this release.

Commenting on the second quarter results, Walter Shephard, Chief Financial Officer of Zygo Corporation, said, "ZYGO performed well in the quarter, generating significant sequential growth in bookings and revenues, supporting our belief in the continuing recovery in the Company's markets and growing demand for ZYGO's leading technologies and products. As a result of cost reduction efforts, the Company also had a marked improvement in financial performance as compared with the second quarter of fiscal 2009. We also realized a significant improvement in gross profit, which increased to 42% for the quarter, and, similarly, our operating expenses declined significantly compared with the prior year period."

Dr. Chris Koliopoulos, President and Chief Executive Officer of Zygo Corporation, said, "The second quarter results reinforce the reasons why I came to ZYGO, including my belief in ZYGO's leading technology and its strong positions in the optics and metrology markets. My objective is to build on our core technology and increase our market penetration by providing our customers with solutions where demands of precision, accuracy, and throughput are required. In the near term, ZYGO is on the right path to increase revenues and profitability through directed marketing efforts in our core markets, gross profit improvement, and cost containment measures."

Bookings in our Optical Systems division increased by a robust 67% over the first quarter of fiscal 2010, including the following bookings:

--  $3.4 million from a large laser fusion customer for delivery
    within twelve months,
--  $3.1 million for a Helmet Mounted Display product,
--  $3.0 million for a contract manufacturing medical product.

For the first six months of fiscal 2010, the Company recorded revenues of $47.4 million and a net loss of $7.7 million ($4.8 million from continuing operations), or a loss of $0.45 ($0.31 from continuing operations) per diluted share, compared with revenues of $70.9 million and a net loss of $3.5 million ($2.3 million from continuing operations), or $0.21 ($0.18 from continuing operations) per diluted share, for the first six months of fiscal 2009.

"As ZYGO enters its fifth decade, I am excited about the future growth of the company," said Dr. Koliopoulos. "Celebrating 40 years in the field of high tech optics and precision optical metrology, ZYGO has accumulated the knowledge, experience, and advanced technology over these 40 years to be a dominant player among our peers in the global optics community. I look forward to working with our employees in developing our business model to further capitalize on opportunities and increase shareholder value."

Zygo Corporation is a worldwide supplier of optical metrology instruments, precision optics, and electro-optical design and manufacturing services, serving customers in the semiconductor capital equipment and industrial markets.

Note: ZYGO's teleconference to discuss the results of the second quarter of fiscal 2010 will be held at 5 PM Eastern Time on February 4, 2010 and can be accessed by dialing 800-920-2968. This call is web cast live on ZYGO's web site at www.zygo.com. The call may also be accessed for 30 days following the teleconference.

IMPORTANT INFORMATION

This communication may be deemed to be solicitation material in respect of ZYGO's solicitation of proxies in connection with its Annual Meeting of Stockholders scheduled to be held on February 10, 2010. In connection with the solicitation of proxies, ZYGO filed with the U.S. Securities and Exchange Commission (the "SEC") a definitive proxy statement and other relevant documents concerning the proposals to be presented at the Annual Meeting of Stockholders.

ZYGO also filed additional definitive proxy materials with the SEC, including information with respect to the addition of Dr. Chris Koliopoulos to the slate of nominees being proposed for election at the Annual Meeting of Stockholders. Stockholders are advised to read the additional definitive proxy materials as well as the definitive proxy statement, previously mailed or delivered by internet delivery to stockholders, and other documents related to the solicitation of proxies from stockholders of ZYGO for use at the Annual Meeting of Stockholders, because they contain important information. Additional definitive proxy materials and a form of proxy has been mailed or delivered by internet delivery to ZYGO's stockholders and are available, along with other relevant documents, at no charge, at the SEC's website at http://www.sec.gov and at http://www.proxyvote.com.

ZYGO and its directors and executive officers may be deemed to be participants in the solicitation of proxies from ZYGO stockholders. Certain information regarding the participants and their interests in the solicitation is set forth in the additional definitive proxy materials and the definitive proxy materials for ZYGO's Annual Meeting of Stockholders, which are available free of charge from the SEC at its website as indicated above.

Forward-Looking Statements

All statements other than statements of historical fact included in this news release regarding financial performance, condition and operations, and the business strategy, plans, anticipated revenues, bookings, market acceptance, growth rates, market opportunities, and objectives of management of the Company for future operations are forward-looking statements. Forward-looking statements are intended to provide management's current expectations or plans for the future operating and financial performance of the Company based upon information currently available and assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "plans," "strategy," "project," and other words of similar meaning in connection with a discussion of future operating or financial performance. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors. Among the important factors that could cause actual events to differ materially from those in the forward-looking statements are fluctuations in capital spending of our customers; fluctuations in revenues to our major customer; manufacturing and supplier risks; risks of order cancellations, push-outs and de-bookings; dependence on timing and market acceptance of new product development; rapid technological and market change; risks in international operations; risks related to the reorganization of our business; dependence on proprietary technology and key personnel; length of the revenues cycle; environmental regulations; investment portfolio returns; fluctuations in our stock price; the risk that anticipated growth opportunities may be smaller than anticipated or may not be realized; risks related to the acquisition of Zemetrics and integration of the business and employees; the risk related to the Company's transition to new senior management; and the risk associated with unsolicited proposals to purchase outstanding shares of the Company's common stock. Zygo Corporation undertakes no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date of this news release. Further information on potential factors that could affect Zygo Corporation's business is described in our reports on file with the Securities and Exchange Commission, including our Form 10-K, as amended by two Form 10-K/A filings, for the fiscal year ended June 30, 2009, filed with the Securities and Exchange Commission on September 14, 2009, October 26, 2009, and December 23, 2009, respectively.

                    Zygo Corporation and Subsidiaries
             Condensed Consolidated Statements of Operations
                               (Unaudited)

(Thousands, except per share amounts)

                              Three Months Ended       Six Months Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
Revenues                    $   26,081  $   33,400  $   47,406  $   70,893
Cost of goods sold              15,128      21,144      29,279      42,150
                            ----------  ----------  ----------  ----------
      Gross profit              10,953      12,256      18,127      28,743
                            ----------  ----------  ----------  ----------
Selling, general, and
 administrative expenses         8,533      12,144      15,088      21,229
Research, development, and
 engineering expenses            3,896       5,561       7,543      10,867
Provision for doubtful
 accounts and notes               (168)        617          53         999
                            ----------  ----------  ----------  ----------
      Operating expenses        12,261      18,322      22,684      33,095
                            ----------  ----------  ----------  ----------
      Operating loss            (1,308)     (6,066)     (4,557)     (4,352)
                            ----------  ----------  ----------  ----------

Other income
      Interest income               23         291          74         660
      Miscellaneous income          24         467          84          23
                            ----------  ----------  ----------  ----------
      Total other income            47         758         158         683
                            ----------  ----------  ----------  ----------
Loss from continuing
 operations before income
 tax, including
 non-controlling interest       (1,261)     (5,308)     (4,399)     (3,669)
Income tax benefit
 (expense)                         308       1,853        (374)      1,322
                            ----------  ----------  ----------  ----------

Net loss from continuing
 operations                       (953)     (3,455)     (4,773)     (2,347)

Loss from discontinued
 operations, net of tax           (639)       (214)     (2,474)       (543)
                            ----------  ----------  ----------  ----------
Net loss including
 non-controlling interest       (1,592)     (3,669)     (7,247)     (2,890)
Net earnings attributable
 to non-controlling
 interest                          313         372         445         648
                            ----------  ----------  ----------  ----------
Net loss attributable to
 Zygo Corporation           $   (1,905) $   (4,041) $   (7,692) $   (3,538)
                            ==========  ==========  ==========  ==========

Net loss from continuing
 operations attributable to
 Zygo Corporation           $   (1,266) $   (3,827) $   (5,218) $   (2,995)
                            ==========  ==========  ==========  ==========

Basic and Diluted - Loss
 per share attributable
 to Zygo Corporation
      Continuing operations $    (0.07) $    (0.23) $    (0.31) $    (0.18)
      Discontinued
       operations                (0.04)      (0.01)      (0.15)      (0.03)
                            ----------  ----------  ----------  ----------
      Net loss per share    $    (0.11) $    (0.24) $    (0.45) $    (0.21)
                            ==========  ==========  ==========  ==========

Weighted average shares
 outstanding
      Basic and Diluted
       shares                   16,993      16,834      16,968      16,805
                            ==========  ==========  ==========  ==========



                    Zygo Corporation and Subsidiaries
                  Condensed Consolidated Balance Sheets
                               (Unaudited)


                                        December 31, 2009   June 30, 2009
                                        ----------------- -----------------
Assets
Current assets:
     Cash and cash equivalents          $          37,745 $          32,723
     Marketable securities                          1,000             4,015
     Receivables, net                              21,015            20,874
     Inventories                                   24,383            30,452
     Prepaid expenses and other                     1,846             1,527
     Income tax receivable                          1,252             1,022
     Current assets of discontinued
      operations                                       78               294
                                        ----------------- -----------------
          Total current assets                     87,319            90,907

Marketable securities                                 627               499
Property, plant, and equipment, net                24,886            27,325
Intangible assets, net                              4,172             4,211
Other assets                                        1,011             1,013
Non-current assets of discontinued
 operations                                             -               144
                                        ----------------- -----------------
Total assets                            $         118,015 $         124,099
                                        ================= =================

Liabilities and Stockholders' Equity
Current liabilities:
     Accounts payable                   $           4,870 $           5,089
     Accrued expenses                              15,020            15,745
     Current liabilities of
      discontinued operations                         474               331
                                        ----------------- -----------------
          Total current liabilities                20,364            21,165

Long-term income tax payable                        1,826             1,826
Other long-term liabilities                         1,361             1,081
Non-current liabilities of discontinued
 operations                                           365                 -
Commitments and contingencies                           -                 -
Total stockholders' equity - Zygo
 Corporation                                       92,449            98,583
Non-controlling interest                            1,650             1,444
                                        ----------------- -----------------
  Total stockholders' equity                       94,099           100,027
                                        ----------------- -----------------
Total liabilities and stockholders'
 equity                                 $         118,015 $         124,099
                                        ================= =================



                    Zygo Corporation and Subsidiaries
                   Reported Results to Non-GAAP Results
                               (Unaudited)

(Thousands of dollars, except per share amounts)

                                    Three Months Ended   Six Months Ended
                                       December 31,        December 31,
                                    ------------------  ------------------
                                      2009      2008      2009      2008
                                    --------  --------  --------  --------
GAAP operating loss (as reported)   $ (1,308) $ (6,066) $ (4,557) $ (4,352)
  Adjustments to operating expenses
     Severence charges (SG&A)            422         -       435         -
     Severence charges (RD&E)            305         -       377         -
     CEO retirement and search
      costs (SG&A)                       897         -       897         -
     Royalty claim                         -     1,360         -     1,360
     ESI merger related expenses
      (SG&A)                               -     1,852         -     2,194
                                    --------  --------  --------  --------
  Total non-GAAP adjustments to
   operating expenses                  1,624     3,212     1,709     3,554
                                    --------  --------  --------  --------
  Non-GAAP operating profit (loss),
   as adjusted                      $    316  $ (2,854) $ (2,848) $   (798)
                                    ========  ========  ========  ========

  Other income (as reported)              47       758       158       683
  Net earnings attributable to
   non-controlling interest (as
   reported)                             313       372       445       648
  Income tax benefit (expense) *1        308       996      (374)      288
                                    --------  --------  --------  --------

  Non-GAAP net earnings (loss) -
   continuing operations as
   adjusted                         $    358  $ (1,472) $ (3,509) $   (475)
                                    ========  ========  ========  ========

  GAAP loss per share - continuing
   operations (as reported)         $  (0.07) $  (0.23) $  (0.31) $  (0.18)
  Non-GAAP net earnings (loss) per
   share - continuing operations as
   adjusted                         $   0.02  $  (0.09) $  (0.21) $  (0.03)
  Weighted average shares used in
   basic shares calculation           16,993    16,834    16,968    16,805
  Weighted average shares used in
   diluted shares calculation         17,154         -         -         -

*1 The Company's reported results for fiscal 2010 include a full valuation allowance on its deferred tax assets. Accordingly, for purposes of computing non-GAAP net earnings (loss), as adjusted, the Company has assumed no tax benefit would be recorded in fiscal 2010. Fiscal 2009 results on the non-GAAP basis were adjusted based on the effective tax rates in the respective fiscal 2009 periods.

Non-GAAP operating profit (loss), as adjusted, non-GAAP net earnings (loss), as adjusted and non-GAAP net earnings (loss) per share, as adjusted, are operating performance measures defined by the Company and used by the Company's management to evaluate its operating activities and a reconciliation of such amounts to reported results is presented above. These non-GAAP financial measures are not intended to replace reported amounts of operating profit (loss), net earnings (loss) or net earnings (loss) per share, which respectively are the most directly comparable GAAP financial measures. The Company believes that providing such a reconciliation is useful to users of the financial statements, since it excludes certain significant and unusual charges in the Company's results, thus enhancing comparability of the Company's results between periods presented. These non-GAAP measures are not alternatives to the most directly comparable reported measures under GAAP and should not be considered as alternatives to operating profit (loss), net earnings (loss), and net earnings (loss) per shares or any other measure of consolidated operating results under GAAP.

Contact Information

  • For Further Information Call:
    Walter A. Shephard
    Chief Financial Officer
    Voice: 860-704-3955
    Email Contact