EX-99.1 2 c62575_ex99-1.htm c62575_ex99-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 99.1


For Further Information Call:
Walter A. Shephard
Chief Financial Officer
Voice: 860-704-3955
inquire@zygo.com

ZYGO RETURNS TO PROFITABILITY IN FOURTH QUARTER AND REPORTS FISCAL 2010
RESULTS
Q4 BOOKINGS INCREASE 121% YEAR OVER YEAR

MIDDLEFIELD, CT, August 19, 2010 – Zygo Corporation (NASDAQ: ZIGO) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2010. Fourth quarter revenues of $28.5 million increased 20% from the comparable prior year period, reflecting continued improvements in the overall business environment and strong orders for our metrology products. For fiscal 2010, the Company recorded net revenue of $101.3 million as compared with $114.7 million for fiscal 2009.

Zygo recorded net earnings for the fourth quarter of fiscal 2010 of $4.1 million, or $0.23 per diluted share, which included a net tax benefit of $1.5 million, or $0.09 per diluted share. This compares with a net loss of $47.4 million, or a $2.81 net loss per diluted share, in the fourth quarter of fiscal 2009. The net earnings from continuing operations for the fourth quarter of fiscal 2010 included $0.6 million of significant net charges, primarily related to inventory write-downs in our display product line and investment advisor expenses. Excluding those charges, the company would have recorded earnings of $0.26 per diluted share. The net loss from continuing operations for the fourth quarter of fiscal 2009 included $41.9 million in significant charges, net of taxes, equivalent to a $2.48 net loss per diluted share, which included asset impairment charges, write-downs and reserves on various balance sheet items, and a valuation allowance on our deferred tax assets. 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 included with this release.

In fiscal 2010, Zygo recorded a net loss of $6.3 million ($3.6 million net loss from continuing operations), or a net loss of $0.37 per diluted share ($0.21 net loss per diluted share from continuing operations) as compared with a net loss of $66.1 million ($62.0 million net loss from continuing operations), or $3.92 net loss per diluted share ($3.68 net loss per diluted share from continuing operations) in fiscal 2009. Excluding the impact of (i) costs for the acquisition of Zemetrics including the charge relating to the impairment of goodwill as part of the purchase price valuation, (ii) the Company’s evaluation of an

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unsolicited stock offer, (iii) search cost for a new chief executive officer, and (iv) inventory adjustments, there were net earnings in fiscal 2010 from continuing operations of $2.0 million, or $0.11 per diluted share on a non-GAAP basis. The fiscal 2009 net loss from continuing operations on a non-GAAP basis, excluding the impact of merger and acquisition costs, intangible and fixed asset impairments, inventory and deferred tax asset valuation reserves and restructuring related charges was $12.2 million, or $0.73 net loss per diluted share.

Commenting on the fourth quarter results, Walter Shephard, Chief Financial Officer of Zygo Corporation said, “The cost cutting initiatives we implemented in the last year helped position us to achieve positive fourth quarter GAAP operating profit of $2.8 million, and net earnings of $4.1 million which was aided by an income tax benefit. Our balance sheet remains strong and, in particular, our cash position increased $5.6 million in this past quarter to over $47 million.”

Gross bookings for the fourth quarter of fiscal 2010 were $32.7 million, an increase of 121% as compared with gross bookings of $14.8 million in the fourth quarter of fiscal 2009. Bookings for the Metrology Solutions Division accounted for 73% of the bookings received, with the Optical Systems Division contributing the remaining 27%. Backlog rose slightly to $44.9 million at June 30, 2010 despite the cancellation of $3.1 million of flat panel display orders related to remaining systems to be delivered in connection with the sale of the product line in October 2009.

Booking highlights include:

  • A $3.1 million follow-on optics order for large slab laser fusion amplifier fabrication.

  • Continued positive trend for our semiconductor equipment stage metrology products with $5.9 million in bookings. This is the fourth consecutive quarter over quarter increase in bookings and the largest quarterly bookings in two years for stage metrology products.

  • Total metrology segment bookings that doubled over the prior year quarter and increased 47% from the third quarter of fiscal 2010.

Dr. Chris Koliopoulos, President and Chief Executive Officer of Zygo Corporation commented, “The increasing booking trends are very encouraging as we believe the markets we participate in are continuing to strengthen. We are especially pleased with the fourth quarter results, posting a quarterly profit for the first time in seven quarters. On a non-GAAP basis, this is our third consecutive quarter of positive earnings. Our gross margins remained strong at 45% on a non-GAAP basis, in line with our third quarter gross margin, which were historic highs, as we continue to benefit from improvements to our operations.”

“Through improving economic conditions and the good efforts of our workforce, we believe Zygo has turned the corner and expect to see continuing growth in our businesses for the next quarter,” added Dr. Koliopoulos.

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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, biomedical, scientific and industrial markets.

Note: Zygo’s teleconference to discuss the results of the fourth quarter of fiscal 2010 will be held at 5 PM Eastern Time on August 19, 2010 and can be accessed by dialing 800-952-6697. 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.

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; and the risk related to the Company’s recent and announced changes to senior management. 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.

 

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

(Thousands, except per share amounts)
 
      Three Months Ended       Twelve Months Ended  
      June 30,       June 30,  
      2010            2009                 2010            2009  
Revenues   $     28,485     $ 23,821     $     101,330     $     114,734  
Cost of goods sold     16,120       24,840       59,361       82,301  
                   Gross margin     12,365       (1,019 )     41,969       32,433  
Selling, general, and administrative expenses     7,066       9,744       30,281       46,093  
Research, development, and engineering expenses     3,195       6,105       14,284       23,234  
Impairment of goodwill     -       -       2,003       -  
Provision for doubtful accounts and notes     (659 )     2,136       (761 )     3,150  
                   Operating expenses     9,602       17,985       45,807       72,477  
                   Operating profit (loss)     2,763           (19,004 )     (3,838 )     (40,044 )
Other income                                
                   Interest income     8       85       87       885  
                   Miscellaneous income     68       352       51       142  
                   Total other income     76       437       138       1,027  
Earnings (loss) from continuing operations before income tax,                                
including noncontrolling interest     2,839       (18,567 )     (3,700 )     (39,017 )
Income tax benefit (expense)     1,537       (28,690 )     1,032       (22,193 )
Net earnings (loss) from continuing operations     4,376       (47,257 )     (2,668 )     (61,210 )
Loss from discontinued operations, net of tax     (2 )     (124 )     (2,669 )     (4,059 )
 
Net earnings (loss) including noncontrolling interest     4,374       (47,381 )     (5,337 )     (65,269 )
Less: Net earnings attributable to noncontrolling interest     280       44       957       795  
Net earnings (loss) attributable to Zygo Corporation   $ 4,094     $ (47,425 )   $ (6,294 )   $ (66,064 )
Basic - Earnings (loss) per share attributable                                
               to Zygo Corporation                                
                   Continuing operations   $ 0.23     $ (2.80 )   $ (0.21 )   $ (3.68 )
                   Discontinued operations     (0.00 )     (0.01 )     (0.16 )     (0.24 )
                   Net earnings (loss) per share   $ 0.23     $ (2.81 )   $ (0.37 )   $ (3.92 )
Diluted - Earnings (loss) per share attributable                                
                 to Zygo Corporation                                
                   Continuing operations   $ 0.23     $ (2.80 )   $ (0.21 )   $ (3.68 )
                   Discontinued operations     (0.00 )     (0.01 )     (0.16 )     (0.24 )
                   Net earnings (loss) per share   $ 0.23     $ (2.81 )   $ (0.37 )   $ (3.92 )
Weighted average shares outstanding                                
                   Basic shares     17,462       16,894       17,183       16,843  
                   Diluted shares     17,727       16,894       17,183       16,843  
 
Net earnings (loss) from continuing operations attributable to Zygo                                
Corporation   $ 4,096     $ (47,301 )   $ (3,625 )   $ (62,005 )

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Zygo Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

(Thousands)
      June 30, 2010                    June 30, 2009    
Assets                
Current assets:                
                 Cash and cash equivalents   $ 46,536      $ 32,723   
                 Marketable securities     1,000       4,015  
                 Receivables, net     19,948       20,874  
                 Inventories     25,220       30,452  
                 Prepaid expenses and other     1,643       1,527  
                 Income tax receivable     1,050       1,022  
                 Current assets of discontinued operations     17       294  
                       Total current assets     95,414       90,907  
 
Marketable securities     922       499  
Property, plant, and equipment, net     23,029       27,325  
Intangible assets, net     5,387       4,211  
Other assets     413       1,013  
Non-current assets of discontinued operations     -       144  
Total assets   $ 125,165     $ 124,099  
 
Liabilities and Stockholders' Equity                
Current liabilities:                
                 Accounts payable   $ 8,426     $ 5,089  
                 Accrued expenses     14,064       15,745  
                 Income tax payable     152       -  
                 Current liabilities of discontinued operations     287       331  
                       Total current liabilities     22,929       21,165  
 
Long-term income tax payable     -       1,826  
Other long-term liabilities     1,359       1,081  
Non-current liabilities of discontinued operations     281       -  
Commitments and contingencies     -       -  
 
Total stockholders' equity - Zygo Corporation     98,403       98,583  
Noncontrolling interest     2,193       1,444  
        Total stockholders' equity     100,596       100,027  
Total liabilities and stockholders' equity   $ 125,165     $ 124,099  

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

(Thousands, except per share amounts)
      Three Months Ended       Twelve Months Ended  
      June 30,       June 30,  
         2010                    2009                    2010                    2009     
GAAP operating profit (loss) (as reported)   $ 2,763     $ (19,004 )   $ (3,838 )   $ (40,044 )
       Adjustments to cost of goods sold                                
           Tuscon restructuring     -       452               452  
           Intangible impairment     -       2,935               2,935  
           Severance charges     -       150       -       504  
           Asset impairment charges *1     -       2,911       -       2,911  
           Inventory adjustments *1     543       2,476       543       4,338  
       Adjustments to bad debt *2                                
           Bad debt     (661 )     1,961       (661 )     2,885  
       Adjustments to operating expenses                                
           Zemetrics goodwill impairment (SG&A)     -       -       2,003       -  
           Zemetrics acquisition costs (SG&A)     -       -       457       -  
           II-VI related costs (SG&A)     645       -       1,381       -  
           CEO retirement and search costs (SG&A)     -       -       929       -  
           Severance charges (SG&A)     -       668       472       1,011  
           Severance charges (RD&E)     59       20       436       192  
           ESI merger related expenses (SG&A)     -       30       -       8,283  
           Asset impairment charges (SG&A)     -       185       -       471  
           Asset impairment charges (RD&E)     -       1,467       -       2,228  
           Royalty claim (SG&A)     -       -       -       1,360  
           Property lease expense (SG&A)     -       -       19       -  
       Total non-GAAP adjustments to operating expenses     586       13,255       5,579       27,570  
       Non-GAAP operating profit (loss), as adjusted   $ 3,349     $ (5,749 )   $ 1,741     $ (12,474 )
 
       Other income (expense) (as reported)     76       437       138       1,027  
       Income tax benefit (expense) *3     1,537       -       1,032       -  
 
       Less: Net earnings attributable to noncontrolling interest (as reported)     280       44       957       795  
       Non-GAAP net earnings (loss) - continuing operations, as adjusted   $ 4,682     $ (5,356 )   $ 1,954     $ (12,242 )
 
       GAAP earnings (loss) per diluted share - continuing operations                                
       (as reported)   $ 0.23     ($ 2.80 )   ($ 0.21 )   ($ 3.68 )
       Non-GAAP net earnings (loss) per share - continuing operations,                                
       as adjusted   $ 0.26     ($ 0.32 )   $ 0.11     ($ 0.73 )

*1 Management has included certain fiscal 2010 and 2009 inventory adjustments for specific inventory in this reconciliation as such adjustments are considered unusual due to their size and severity. Inventory adjustments of a nature that occur in the ordinary course have not been included in such reconciliation.

*2 Management has included certain provisions and reversals of provisions in fiscal 2010 and 2009, primarily related to display customers and the extension of a note receivable to Solvision in this reconciliation as a significant, unusual item. Provisions for doubtful accounts of a nature that occur in the ordinary course have not been included in such reconciliation.

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*3 The Company’s reported results for fiscal 2010 and full year 2009 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 from deferred tax assets would be recorded in fiscal 2010 and 2009.

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.

 

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