SHARE-BASED COMPENSATION PLANS

12 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 14: SHare-Based Compensation plans

Share-Based Compensation Plans

The Zygo Corporation 2012 Equity Incentive Plan (“2012 Plan”) permits the granting of stock options to purchase shares of common stock and the granting of restricted stock units. The Board of Directors may also amend the 2012 Plan to authorize the grant of other types of equity-based awards, without further action by our stockholders. We have 1,650,000 shares authorized for issuance under the 2012 Plan, of which 1,490,691 remain available for grant at June 30, 2013. The exercise price per share of common stock covered by an option may not be less than the fair market value per share on the date of grant. Options and grants of restricted stock units generally vest over a four year period at a rate of 25% each year. Restricted stock awards generally allow recipients to sell a portion of the stock award back to the Company, in order to cover tax liabilities resulting from the vesting of the award. Restricted stock awards granted prior to January 1, 2011 under the Zygo Corporation 2002 Equity Incentive Plan (“2002 Plan”), as amended in 2006, vest 50% after three years and 50% after four years. The 2002 Plan permitted the granting of stock options to purchase shares of common stock and the granting of restricted stock units. The 2002 Plan expired on August 27, 2012, and 0 further stock options or restricted stock units may be granted after that date.

As part of a director’s compensation for services to the Company, non-employee directors are granted 5,000 restricted shares which vest on an annual basis after one year and each new non-employee director is granted options to purchase 16,000 shares of common stock on his or her first day of service, at the market value per share on the date of grant. These options vest over a four year period at a rate of 25% each year. The Black-Scholes option-pricing model is used to calculate the fair value of stock option awards. The key assumptions for this valuation method include the expected term of the option, stock price volatility, risk-free interest rate, dividend yield, and exercise price. Under the assumptions indicated below, the weighted-average fair value of stock option grants for fiscal 2013, 2012 and 2011 were $10.79, $7.21 and $5.68, respectively.

Share-based compensation expense for the fiscal year ended June 30, 2013 was $5,546, with a related tax benefit of $2,078. This increased cost of goods sold by $1,003, selling, general and administrative expenses by $4,010 and research, development and engineering expenses by $533. Share-based compensation expense for the fiscal year ended June 30, 2012 was $4,128, with a related tax benefit of $1,486. This increased cost of goods sold by $790, selling, general and administrative expenses by $2,708 and research, development and engineering expenses by $630. Share-based compensation expense for the fiscal year ended June 30, 2011 was $3,965, with a related tax benefit of $1,427. This increased cost of goods sold by $650, selling, general and administrative expenses by $2,416 and research, development and engineering expenses by $899.

The table below indicates the key assumptions used in the option valuation calculations for options granted in fiscal 2013, 2012 and 2011, and a discussion of the methodology for developing each of the assumptions used in the valuation model:

	Fiscal Year Ended June 30,
	2013			2012	2011
	Minimum	Maximum			Minimum	Maximum
Term			7.3 Years	6.6 Years	4.1	5.1 Years
Volatility			59.2%	59.5%	45.7	57.1%
Dividend yield			0.0%	0.0%			0.0%
Risk-free interest rate	1.2	1.4%		1.5%	1.1	2.6%

Term – This is the period of time over which the options granted are expected to remain outstanding. Options granted generally have a maximum term of ten years. An increase in the expected term would increase compensation expense.

Volatility – This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. Volatilities are based on implied volatilities from traded options of Zygo’s shares and historical volatility of Zygo’s shares. An increase in the expected volatility would increase compensation expense.

Risk-Free Interest Rate – This is the U.S. Treasury rate at the time of the grant having a term equal to the expected term of the option. An increase in the risk-free interest rate would increase compensation expense.

Dividend Yield – We did not make any dividend payments during the last five fiscal years and we have no plans to pay dividends in the foreseeable future. An increase in the dividend yield would decrease compensation expense.

Stock Options

The following table summarizes information about the stock options granted under share-based compensation plans for fiscal 2013, 2012 and 2011. Included in the information below are outstanding options from the Zygo Corporation Amended and Restated Non-Qualified Stock Option Plan which expired in fiscal 2003 and the 2002 Plan which expired in August 2012, in both instances, to the extent the options remain exercisable.

	June 30, 2013					June 30, 2012					June 30, 2011
	Shares Covered by Options			Weighted Average Exercise Price		Shares Covered by Options			Weighted Average Exercise Price		Shares Covered by Options			Weighted Average Exercise Price
Options - Outstanding at beginning of year		1,244,897		$	11.03		1,436,240		$	10.57		1,976,892		$	20.14
Granted		172,934		$	18.36		229,562		$	12.47		100,000		$	12.13
Exercised		(120,219	)	$	10.05		(365,642	)	$	9.79		(166,852	)	$	10.05
Expired or cancelled		(20,309	)	$	11.71		(55,263	)	$	12.87		(473,800	)	$	51.07
Options - Outstanding at end of year		1,277,303		$	12.11		1,244,897		$	11.03		1,436,240		$	10.57
Options vested or expected to vest		479,548		$	13.88		548,144		$	11.20		1,402,221		$	10.56
Options - Exercisable at end of year		785,024		$	10.96		681,185		$	10.87		925,990		$	10.70

Outstanding options at June 30, 2013, had an intrinsic value of $5,254 with a weighted average remaining contractual life of 6.3 years. Exercisable options at the end of the year had an intrinsic value of $3,867 with a weighted average remaining contractual life of 5.1 years. Outstanding options at June 30, 2012, had an intrinsic value of $8,506 with a weighted average remaining contractual life of 6.4 years. Exercisable options at June 30, 2012 had an intrinsic value of $4,763 with a weighted average remaining contractual life of 4.8 years.

The following table summarizes information about our stock options granted under our share-based compensation plans as of June 30, 2013.

			Options Outstanding						Options Exercisable
Range of Exercise Prices			Number Outstanding as of June 30, 2013		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable as of June 30, 2013		Weighted Average Exercise Price
Minimum		Maximum
$ 5.09	-	$  8.80		162,800		6.4	$	6.91		117,800	$	6.67
$ 9.01	-	$12.51		749,149		6.1	$	11.10		503,899	$	10.80
$12.53	-	$14.74		101,600		2.3	$	13.51		101,600	$	13.51
$14.82	-	$20.09		263,754		8.1	$	17.65		61,725	$	16.29
$ 5.09	-	$20.09		1,277,303		6.3	$	12.11		785,024	$	10.96

As of June 30, 2013, there was $1,667 of total unrecognized compensation cost related to stock options. These costs are expected to be recognized over a weighted average period of 1.9 years.

The total intrinsic value of stock options exercised was $889, $2,823 and $449 and the total fair value of stock awards vested was $700, $803 and $959 during the fiscal years ended June 30, 2013, 2012 and 2011, respectively.

Cash received from stock option exercises and the associated tax benefit for the fiscal years ended June 30, 2013, 2012 and 2011 was $1,221, $2,629 and $1,834, respectively.

Restricted Stock

The following table summarizes information about restricted stock units granted under share-based compensation plans for the fiscal years ended June 30, 2013, 2012, and 2011:

	June 30, 2013					June 30, 2012					June 30, 2011
	Shares			Weighted Average Fair Value		Shares			Weighted Average Fair Value		Shares			Weighted Average Fair Value
Non vested balance at beginning of year		734,332		$	9.92		713,975		$	8.00		588,093		$	9.04
Granted		162,901		$	18.49		176,812		$	13.78		362,500		$	8.28
Vested		(233,136	)	$	9.61		(148,500	)	$	11.39		(172,865	)	$	8.89
Forfeited		(10,186	)	$	10.69		(7,955	)	$	6.43		(63,753	)	$	9.06
Non vested balance at end of year		653,911		$	12.15		734,332		$	9.92		713,975		$	8.00

As of June 30, 2013, there was $2,308 of total unrecognized compensation costs related to restricted stock awards. These costs are expected to be recognized over a weighted average period of 1.4 years.

At June 30, 2013, an aggregate of 1,490,691 shares remained available for future grants under our share-based compensation plans, which cover stock awards and stock options. We issue shares to satisfy stock option exercises and restricted stock awards, as applicable.