8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to section 13 or 15(D) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)             January 26, 2006            

ZYGO CORPORATION   

(Exact Name of Registrant as Specified in its Charter)

Delaware	0-12944	06-0964500
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
Laurel Brook Road, Middlefield, CT		06455-0448
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (860) 347-8506

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On January 26, 2006, Zygo Corporation announced its financial results for the second quarter ended December 31, 2005. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits

99.1 Zygo Corporation Earnings Press Release, dated January 26, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ZYGO CORPORATION

Date: January 26, 2006	By:	/s/ J. Bruce Robinson
		Name:	J. Bruce Robinson
		Title:	Chairman, President and Chief Executive Officer

EXHIBIT INDEX

99.1 Press Release, dated January 26, 2006, issued by Zygo Corporation announcing its financial results for the second quarter ended December 31, 2005.

EX-99

Exhibit 99.1

Walter Shephard

Vice President, Finance, Chief Financial Officer, and Treasurer

Voice: 860-704-3955

inquire@zygo.com

For Immediate Release

ZYGO POSTS STRONG SALES & EARNINGS FOR ITS SECOND QUARTER

---RECORD ORDERS OF $50.3 MILLION---

MIDDLEFIELD, CT, JANUARY 26, 2006 – Zygo Corporation (NASDAQ: ZIGO) today announced earnings for the second quarter of fiscal 2006 of $3.8 million, or $0.21 per diluted share, as compared with earnings of $2.3 million, or $0.13 per diluted share, for the same period in fiscal 2005. The fiscal 2006 second quarter results include share-based payment compensation expense of $0.5 million ($0.8 million pre-tax), or $0.03 per diluted share, of which $0.6 million pre-tax is included in operating expenses and $0.2 million pre-tax is included in cost of goods sold. The fiscal 2005 second quarter results do not include any share-based payment compensation expense but do include a loss from discontinued operations of $0.01 per diluted share.

For the first six months of fiscal 2006, the Company recorded earnings of $6.2 million, or $0.34 per diluted share, compared with earnings of $3.6 million, or $0.20 per diluted share for the first six months of fiscal 2005. The results for the first six months of fiscal 2006 include share-based payment compensation expense of $0.8 million ($1.2 million pre-tax), or $0.04 per diluted share. The results for the first six months of fiscal 2005 do not include any share-based payment compensation expense but do include a loss from discontinued operations of $0.01 per diluted share.

Net sales for the second quarter of fiscal 2006 increased 22% to $43.8 million as compared with the same period in the prior year. Net sales for the first six months of fiscal 2006 increased 23% to $78.4 million as compared with the first six months of fiscal 2005.

“We are extremely pleased with the financial results of the second quarter,” stated Bruce Robinson, ZYGO’s Chairman and CEO. “Both our semiconductor and industrial revenues grew at double digit rates from the comparable period in the prior year and we continue to see improvement in our gross profit and operating profit lines.”

Orders for the second quarter of fiscal 2006 were a record $50.3 million as compared with $39.6 million for the second quarter of fiscal 2005. Orders from the Company’s semiconductor segment accounted for 52% of the orders received, with the industrial segment accounting for 48% of the orders received. Backlog at December 31, 2005 totaled $77.0 million, an increase of $6.4 million, or 9%, from September 30, 2005 and of $12.1 million, or19%, from December 31, 2004.

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“The results of our second quarter order performance continues to validate our strategy of taking ZYGO’s unique patented technology to selected markets,” Mr. Robinson continued. “We believe that the orders we received in the quarter for our two semiconductor initiatives reflects the progress we are making in transforming ZYGO from predominantly OEM based products to integrated in-line metrology.”

Order highlights for the second quarter of fiscal 2006 included:

• Orders for our Flat Panel business were over $6.0 million, including our first systems in China.

• We received follow-on orders for our back-end packaging tool.

• Orders from our U.S.-based laser fusion customer totaled over $10.0 million.

• Orders from our lithography customers remain strong.

• Cash and securities, at $57.5 million, have increased 63% over the same period last year.

Mr. Robinson closed his remarks by stating, “The solid performance of the Company for the first half of the year is especially gratifying as we have seen a strong performance in both our semiconductor and industrial segments. Our growth strategies have provided the Company with a number of opportunities to build on our early successes in a production environment.”

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 2006 will be held at 6 PM Eastern Standard Time on January 26, 2006 and can be accessed by dialing 888-793-1698. 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.

All statements other than statements of historical fact included in this news release regarding our financial position, business strategy, plans, anticipated growth rates, 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 net sales to our major customer, manufacturing and supplier risks, dependence on new product development, rapid technological and market change, risks in international operations, dependence on proprietary technology and key personnel, length of the sales cycle, environmental regulations, and stock price. 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 for the fiscal year ended June30, 2005.

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Zygo Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(Thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	December 31, 2005			December 31, 2004			December 31, 2005			December 31, 2004
Net sales
Products	$	38,212		$	33,530		$	68,833		$	59,413
Development services		5,611			2,477			9,572			4,172
		43,823			36,007			78,405			63,585
Cost of goods sold
Products		22,357			21,024			40,619			36,193
Development services		4,049			1,725			6,954			3,021
		26,406			22,749			47,573			39,214
Gross profit		17,417			13,258			30,832			24,371
Selling, general, and administrative expenses		8,159			5,723			14,570			11,382
Research, development, and engineering expenses		3,428			3,672			6,968			6,880
Operating profit		5,830			3,863			9,294			6,109
Other income:
Interest income		411			175			828			354
Miscellaneous income, net		88			243			216			214
Total other income		499			418			1,044			568
Earnings from continuing operations
before income taxes and minority interest		6,329			4,281			10,338			6,677
Income tax expense		(2,142	)		(1,542	)		(3,665	)		(2,404	)
Minority interest		(360	)		(275	)		(510	)		(397	)
Earnings from continuing operations		3,827			2,464			6,163			3,876
Discontinued TeraOptix operations, net of tax		—			(49	)		—			(110	)
Charges and adjustments on the disposal of
TeraOptix, net of tax		—			(114	)		—			(118	)
Loss from discontinued operations		—			(163	)		—			(228	)
Net earnings	$	3,827		$	2,301		$	6,163		$	3,648
Basic - Earnings (loss) per share:
Continuing operations	$	0.21		$	0.14		$	0.34		$	0.22
Discontinued operations		—			(0.01	)		—			(0.02	)
Net earnings	$	0.21		$	0.13		$	0.34		$	0.20
Diluted - Earnings (loss) per share:
Continuing operations	$	0.21		$	0.14		$	0.34		$	0.21
Discontinued operations		—			(0.01	)		—			(0.01	)
Net earnings	$	0.21		$	0.13		$	0.34		$	0.20

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Zygo Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(Thousands of dollars)	December 31, 2005		June 30, 2005
Assets
Current assets:
Cash and cash equivalents	$	13,457	$	20,949
Marketable securities		20,169		17,242
Receivables, net		30,579		28,125
Inventories		32,980		33,727
Prepaid expenses		2,064		2,140
Deferred income taxes		9,537		8,895
Total current assets		108,786		111,078
Marketable securities		23,915		18,711
Property, plant, and equipment, net		31,540		31,420
Deferred income taxes		18,100		21,476
Intangible assets, net		5,892		5,638
Other assets		884		1,017
Total assets	$	189,117	$	189,340
Liabilities and Stockholders' Equity
Current liabilities:
Payables	$	11,212	$	13,510
Accrued expenses		27,604		32,804
Income taxes payable		1,540		1,510
Total current liabilities		40,356		47,824
Other long-term liabilities		97		96
Minority interest		1,138		1,249
Stockholders' equity		147,526		140,171
Total liabilities and stockholders' equity	$	189,117	$	189,340

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