ZIGO » Topics » Introduction

This excerpt taken from the ZIGO 8-K filed Dec 5, 2008.

Introduction

The following unaudited pro forma condensed combined financial statements give effect to the acquisition by Zygo Corporation (“ZYGO”) of certain assets of SolVision, Inc. (“SolVision”) a Canadian-based company. On February 28, 2008, ZYGO acquired certain assets of SolVision, including the shares of its Singapore subsidiary, for $4.1 million in cash (net of cash received). In addition, the Company had also loaned to SolVision $1.5 million, of which $0.7 million was recovered as part of the purchase price allocation based on asset values.

The effects of this transaction have been included in the audited consolidated balance sheet as of June 30, 2008 filed with ZYGO’s Form 10-K, as amended by Form 10-K/A, for the period ended June 30, 2008. As such, a pro forma condensed combined balance sheet is not required or presented in this Form 8-K/A. The effects of this transaction have been included in ZYGO’s results of operations for the four months in the period ended June 30, 2008 as filed with ZYGO’s Form 10-K, as amended by Form 10-K/A, for the period ended June 30, 2008, as well as in ZYGO’s results of operations for the three month period ended September 30, 2008, as filed in ZYGO’s quarterly report on Form 10-Q for the period ended September 30, 2008. As such, pro forma information for a six month period is not required or presented in this Form 8-K/A. The unaudited pro forma condensed combined statement of operations is presented as if the acquisition had occurred on July 1, 2007.

The unaudited pro forma condensed combined financial statements include adjustments that are based on preliminary estimates pending the completion of the allocation of the purchase price to the acquired SolVision net assets as of June 30, 2008. The final purchase accounting adjustments recorded in connection with the acquisition of SolVision may differ from those presented herein. The unaudited pro forma condensed combined financial statements should be read in conjunction with (i) the audited historical consolidated financial statements of ZYGO included in its annual report on Form 10-K for the year ended June 30, 2008 and (ii) other information contained in the statements and reports filed by ZYGO with the Securities and Exchange Commission. The unaudited pro forma condensed combined financial statement is presented for illustrative purposes only and is not necessarily indicative of the financial results that would have occurred if the SolVision acquisition had been consummated on the dates indicated, nor is it necessarily indicative of the results of operations of ZYGO in the future. The pro forma adjustments, as described below, are based upon available information and certain assumptions that ZYGO’s management believes are reasonable. The unaudited pro forma condensed combined financial statements do not give effect to any anticipated cost savings or other financial benefits expected to result from the SolVision acquisition.


This excerpt taken from the ZIGO 10-Q filed Jun 27, 2006.

Introduction

Zygo Corporation designs, develops, and manufactures ultra-high precision measurement solutions and optical components and systems. ZYGO’s measurement solutions are designed to improve quality, increase productivity, and decrease the overall cost of manufacturing and product development for high-technology manufacturing processes. The Company’s optical component and systems products provide high-end solutions for laser fusion research, imaging systems, and measurement system components. We conduct the majority of our manufacturing in our 153,500 square foot facility in Middlefield, Connecticut.

We serve the semiconductor and industrial markets through our three core product lines, metrology, optical systems solutions, and precision positioning systems. Our semiconductor product offerings include OEM solutions and major technology development projects for the semiconductor capital equipment industry and direct supplied in-line automated yield improvement systems for both flat panel displays and advanced semiconductor packaging manufacturing. Our industrial market products serve the automotive, consumer electronics, defense/aerospace, and all markets other than semiconductor. Industrial market products include optical components, optical systems and measurement-based process control systems for defense, aerospace, and medical device customers and measurement-based process control and yield-enhancement systems for automotive and consumer electronics customers.

Our development services have produced a significant amount of our revenue over the past two years. In September 2002, we entered into a contract with Canon Inc. related to the development of certain interferometers. In March 2004, we signed a preliminary agreement to begin further add-on work; the definitive agreement for this additional work was signed in December 2004. In February 2005, we entered into two additional agreements with Canon Inc. related to the development of prototype production tools and accessories. During the three and six months ended December 31, 2005, we recognized $5.6 million and $9.6 million, respectively, of revenue from these development services contracts as compared with $2.5 million and $4.2 million, respectively, in the prior year comparable periods. The development services contracts that were signed in fiscal 2005 were cost plus contracts and were expected to represent approximately $41.0 million in additional revenue through the first six months of fiscal 2007. We currently expect total revenues of approximately $37.0 million, with the reduction due to estimated costs being less than anticipated. To date, a total of $23.8 million of this revenue has been recognized. To the extent that total actual costs on the contracts may be less than currently anticipated, the resulting development services revenue could be less than the currently estimated value of the contract. Additionally, our period over period comparable sales in the future could be adversely affected if we do not continue to provide these development services at similar levels or do not expand our overall business sufficiently to offset the decline in development services revenue.

We achieved an order level for the second quarter of fiscal 2006 of $50.1 million as compared with $38.3 million for the first quarter of fiscal 2006 and $39.4 million for the second quarter of fiscal 2005. This order flow increased backlog at December 31, 2005 to $77.0 million. Orders in the semiconductor segment of $25.9 million increased $6.1 million, or 31%, as compared with the first quarter of fiscal 2006; and increased $5.9 million, or 30%, as compared with the second quarter of fiscal 2005. We continue to receive orders from the flat panel market of the semiconductor segment and expect orders from that market to continue for the immediate future. We also experienced an increase in lithography orders over the prior year period, which continued a strengthening in that market area over the last six months. Orders in the industrial segment of $24.2 million increased by $5.6 million, or 30%, as compared with the first quarter of fiscal 2006 and $4.8 million, or 25%, as compared with the second quarter of fiscal 2005. Orders in the industrial segment were fueled primarily by government contracts for the National Ignition Facility in both our Tucson and Middlefield facilities.

Beginning in the first quarter of fiscal 2006, we were required to record the expense of share-based payment transactions. Under the modified prospective method, we were not required to restate the prior year financial statements or include in the current year any expenses related to stock option grants vested as of June 30, 2005. In the quarter ended December 31, 2005, operating income was reduced by $0.8 million of share-based payment compensation expense, affecting cost of goods sold by $0.2 million, selling, general, and administrative expenses (“SG&A”) by $0.5 million, and research, development, and engineering expenses (“RD&E”) by $0.1 million. Share-based compensation expense reduced our quarterly diluted earnings per share by $0.03. For the six months ended December 31, 2005, operating income was reduced by $1.2 million of share-based payment compensation expense, affecting cost of goods sold by $0.3 million, SG&A by $0.7 million, and RD&E expenses by $0.2 million. Share-based compensation expense reduced our six month diluted earnings per share by $0.04. The share-based compensation expense related to current outstanding stock options and restricted shares and to future issuances of stock options which are presently known to us is estimated to be approximately $0.4 million in each of the third and fourth quarters of fiscal 2006.

21


This excerpt taken from the ZIGO 10-Q filed Jun 27, 2006.

Introduction

Zygo Corporation designs, develops, and manufactures ultra-high precision measurement solutions and optical components and systems. ZYGO’s measurement solutions are designed to improve quality, increase productivity, and decrease the overall cost of manufacturing and product development for high-technology manufacturing processes. The Company’s optical component and systems products provide high-end solutions for laser fusion research, imaging systems, and measurement system components. We conduct the majority of our manufacturing in our 153,500 square foot facility in Middlefield, Connecticut.

We serve the semiconductor and industrial markets through our three core product lines: metrology, optical systems solutions, and precision positioning systems. Our semiconductor product offerings include OEM solutions and major technology development projects for the semiconductor capital equipment industry and direct supplied in-line automated yield improvement systems for both flat panel displays and advanced semiconductor packaging manufacturing. Our industrial market products serve the automotive, consumer electronics, defense/aerospace, and all markets other than semiconductor. Industrial market products include optical components, optical systems and measurement-based process control systems for defense, aerospace, and medical device customers and measurement-based process control and yield-enhancement systems for automotive and consumer electronics customers.

Our development services have produced a significant amount of our revenue over the past two years. In September 2002, we entered into a contract with Canon Inc. related to the development of certain interferometers. In March 2004, we signed a preliminary agreement to begin further add-on work; the definitive agreement for this additional work was signed in December 2004. In February 2005, we entered into two additional agreements with Canon Inc. related to the development of prototype production tools and accessories. During the three and nine months ended March 31, 2006, we recognized $5.2 million and $14.8 million, respectively, of revenue from these development services contracts as compared with $5.4 million and $9.6 million, respectively, in the prior year comparable periods. The development services contracts that were signed in fiscal 2005 were cost plus contracts. We currently expect the remaining revenues on those contracts to be approximately $7.5 million which should be recognized over the next three to four quarters. To the extent that total actual costs on the contracts may be less than currently anticipated, the resulting development services revenue could be less than the currently estimated value of the contract. Additionally, our period over period comparable sales in the future could be adversely affected if we do not expand our overall business sufficiently to offset the decline in development services revenue.

We achieved an order level for the third quarter of fiscal 2006 of $45.3 million as compared with $50.3 million for the second quarter of fiscal 2006 and $37.7 million for the third quarter of fiscal 2005. This order flow increased backlog at March 31, 2006 to $79.3 million. Orders in the semiconductor segment of $30.4 million increased $4.3 million, or 16%, as compared with the second quarter of fiscal 2006; and increased $6.8 million, or 29%, as compared with the third quarter of fiscal 2005. We continue to receive orders from the flat panel market of the semiconductor segment and expect orders from that market to continue for the immediate future. We also experienced an increase in lithography orders over the prior year period, which continued a strengthening in that market area over the last nine months. Orders in the industrial segment of $14.9 million decreased by $9.3 million, or 38%, as compared with the second quarter of fiscal 2006 but increased by $0.8 million, or 6%, as compared with the third quarter of fiscal 2005. The decrease in industrial orders from the second quarter of fiscal 2006 was primarily due to the large government orders received in the second quarter which were not expected to be repeated in this quarter.

Beginning in the first quarter of fiscal 2006, we are required to record the expense of share-based payment transactions. Under the modified prospective method, we were not required to restate the prior year financial statements or include in the current year any expenses related to stock option grants vested as of June 30, 2005. In the quarter ended March 31, 2006, operating income was reduced by $0.2 million for share-based payment compensation expense, which reduced our quarterly diluted earnings per share by $0.01. For the nine months ended March 31, 2006, operating income was reduced by $1.4 million for share-based payment compensation expense, which reduced our nine month diluted earnings per share by $0.05. The share-based compensation expense related to current outstanding stock options and restricted shares and to future issuances of stock options which are presently known to us is estimated to be approximately $0.4 million in the fourth quarter of fiscal 2006.

This excerpt taken from the ZIGO 10-Q filed Feb 7, 2006.

Introduction

Zygo Corporation designs, develops, and manufactures ultra-high precision measurement solutions and optical components and systems. ZYGO’s measurement solutions are designed to improve quality, increase productivity, and decrease the overall cost of manufacturing and product development for high-technology manufacturing processes. The Company’s optical component and systems products provide high-end solutions for laser fusion research, imaging systems, and measurement system components. We conduct the majority of our manufacturing in our 153,500 square foot facility in Middlefield, Connecticut.

We serve the semiconductor and industrial markets through our three core product lines, metrology, optical systems solutions, and precision positioning systems. Our semiconductor product offerings include OEM solutions and major technology development projects for the semiconductor capital equipment industry and direct supplied in-line automated yield improvement systems for both flat panel displays and advanced semiconductor packaging manufacturing. Our industrial market products serve the automotive, consumer electronics, defense/aerospace, and all markets other than semiconductor. Industrial market products include optical components, optical systems and measurement-based process control systems for defense, aerospace, and medical device customers and measurement-based process control and yield-enhancement systems for automotive and consumer electronics customers.

Our development services have produced a significant amount of our revenue over the past two years. In September 2002, we entered into a contract with Canon Inc. related to the development of certain interferometers. In March 2004, we signed a preliminary agreement to begin further add-on work; the definitive agreement for this additional work was signed in December 2004. In February 2005, we entered into two additional agreements with Canon Inc. related to the development of prototype production tools and accessories. During the three and six months ended December 31, 2005, we recognized $5.6 million and $9.6 million, respectively, of revenue from these development services contracts as compared with $2.5 million and $4.2 million, respectively, in the prior year comparable periods. The development services contracts that were signed in fiscal 2005 were cost plus contracts and were expected to represent approximately $41.0 million in additional revenue through the first six months of fiscal 2007. We currently expect total revenues of approximately $37.0 million, with the reduction due to estimated costs being less than anticipated. To date, a total of $23.8 million of this revenue has been recognized. To the extent that total actual costs on the contracts may be less than currently anticipated, the resulting development services revenue could be less than the currently estimated value of the contract. Additionally, our period over period comparable sales in the future could be adversely affected if we do not continue to provide these development services at similar levels or do not expand our overall business sufficiently to offset the decline in development services revenue.

We achieved an order level for the second quarter of fiscal 2006 of $50.3 million as compared with $38.6 million for the first quarter of fiscal 2006 and $39.6 million for the second quarter of fiscal 2005. This order flow increased backlog at December 31, 2005 to $77.0 million. Orders in the semiconductor segment of $26.1 million increased $6.1 million, or 31%, as compared with the first quarter of fiscal 2006; and increased $5.9 million, or 29%, as compared with the second quarter of fiscal 2005. We continue to receive orders from the flat panel market of the semiconductor segment and expect orders from that market to continue for the immediate future. We also experienced an increase in lithography orders over the prior year period, which continued a strengthening in that market area over the last six months. Orders in the industrial segment of $24.2 million increased by $5.6 million, or 30%, as compared with the first quarter of fiscal 2006 and $4.8 million, or 25%, as compared with the second quarter of fiscal 2005. Orders in the industrial segment were fueled primarily by government contracts for the National Ignition Facility in both our Tucson and Middlefield facilities.

Beginning in the first quarter of fiscal 2006, we were required to record the expense of share-based payment transactions. Under the modified prospective method, we were not required to restate the prior year financial statements or include in the current year any expenses related to stock option grants vested as of June 30, 2005. In the quarter ended December 31, 2005, operating income was reduced by $0.8 million of share-based payment compensation expense, affecting cost of goods sold by $0.2 million, selling, general, and administrative expenses (“SG&A”) by $0.5 million, and research, development, and engineering expenses (“RD&E”) by $0.1 million. Share-based compensation expense reduced our quarterly diluted earnings per share by $0.03. For the six months ended December 31, 2005, operating income was reduced by $1.2 million of share-based payment compensation expense, affecting cost of goods sold by $0.3 million, SG&A by $0.7 million, and RD&E expenses by $0.2 million. Share-based compensation expense reduced our six month diluted earnings per share by $0.04. The share-based compensation expense related to current outstanding stock options and restricted shares and to future issuances of stock options which are presently known to us is estimated to be approximately $0.4 million in each of the third and fourth quarters of fiscal 2006.

14


This excerpt taken from the ZIGO 10-Q filed May 6, 2005.

Introduction

Zygo Corporation is a worldwide supplier of optical metrology instruments, precision optics, and electro-optical design and manufacturing services for customers in the semiconductor capital equipment and industrial markets. Optical instruments products encompass non-contact optical measurement instruments. Optics products consist of high performance macro-optics components, optical coatings, and optical system assemblies. We conduct the majority of our manufacturing in our 153,500 square foot facility in Middlefield, Connecticut.

We also perform development services for our largest customer, Canon, a related party, which have produced a significant amount of our revenue over the past two years. In September 2002, we entered into a development services agreement with Canon for work on the development of certain interferometers. In March 2004, we signed a preliminary agreement to begin further add-on work, with an amendment to the original contract signed in December 2004. In February 2005, we entered into two additional agreements with Canon related to the development of prototype production tools and accessories. In the third quarter of fiscal 2005, we recognized $5.4 million of revenue from these development services agreements as compared with $5.0 million in the prior year comparable quarter. We anticipate revenues of approximately $29.5 million from these follow-on agreements over the next 12 to 18 months. To the extent that we do not receive additional development agreements from any customers for services beyond that period, future period over period comparable sales would be significantly affected. The Canon development services revenues have historically carried a lower gross profit as a percentage of sales than our product sales.

Semiconductor manufacturers have become more cautious in their capital spending outlooks for the remainder of the 2005 calendar year. In the third quarter of fiscal 2005, we experienced a decline in product sales to Canon; however, this effect was offset by development services revenue returning to expected levels and by increasing sales to other semiconductor customers. We expect certain product sales to Canon to be below historical levels in the near term. While this decline in product sales to Canon was marginal, Canon sales as a percent of total net sales was significantly lower on a year over year basis. Canon represented 38% and 56% of total net sales for the third quarter of fiscal 2005 and 2004, respectively, and for the first nine months of fiscal 2005 and 2004, sales to Canon represented 39% and 51%, respectively. These year over year decreases were the primary result of increased sales in other areas of our business, including new initiatives in the flat panel market and growth in optical business systems.

We achieved an order level for the third quarter of fiscal 2005 of $37.7 million, as compared with $31.6 million for third quarter of fiscal 2004.  Orders in the semiconductor segment were $23.6 million, an increase of $4.7 million, or 25%, as compared with the third quarter of fiscal 2004, primarily due to increases in flat panel display metrology and stage optics orders of $2.5 million and $3.0 million, respectively.  In the third quarter of fiscal 2005, we continued a strong order rate in the industrial segment, with aggregate orders of $14.1 million. Orders in this business segment increased by $1.4 million, or 11%, as compared with the third quarter of fiscal 2004. The industrial orders were highlighted by continued orders of $2.1 for the production of optics used in laser surgery systems. The order flow boosted backlog to $68.9 million as of March 31, 2005, up $4.0 million, or 6%, from the second quarter of fiscal 2005, and up $19.9 million, or 41%, from the third quarter of fiscal 2004.

We discontinued our telecommunications TeraOptix business unit during fiscal 2003. Accordingly, the results of TeraOptix have been presented as a separate line item on the Consolidated Statements of Operations as “Discontinued TeraOptix operations, net of tax”, for all periods presented. In addition, the charges on the disposal of TeraOptix, net of tax, have been recorded as a separate line item for all periods presented. All continuing operations line items presented exclude TeraOptix results. In August 2004, we entered into an agreement to sell our former telecommunications facility located in Westborough, Massachusetts. In the second quarter of fiscal 2005, we recorded an additional impairment charge and adjustments of $0.2 million to reflect the fair value based on final negotiations. The sales transaction was completed in the third quarter of fiscal year 2005 and generated approximately $1.9 million of cash, net of selling expenses. We do not expect any additional charges for discontinued operations related to the TeraOptix business unit.

This excerpt taken from the ZIGO 10-Q filed Feb 9, 2005.

Introduction

Zygo Corporation is a worldwide supplier of optical metrology instruments, precision optics, and electro-optical design and manufacturing services for customers in the semiconductor capital equipment and industrial markets. Optical instruments products encompass non-contact optical measurement instruments. Optics products consist of high performance macro-optics components, optical coatings, and optical system assemblies. We conduct the majority of our manufacturing in our 135,500 square foot facility in Middlefield, Connecticut. We are currently constructing an 18,000 square foot addition to our Middlefield, Connecticut, facility to increase our overall manufacturing space.

We also perform several development services, which have produced a significant amount of our revenue over the past two years. In September 2002, we entered into a development services agreement with Canon Inc. In March 2004, we signed a preliminary agreement to begin further add-on work, with an amendment to the original contract signed on December 20, 2004. The amendment is for work on the development of certain interferometers. In the second quarter of fiscal 2005, we recognized $2.5 million of revenue from these developmental services contracts as compared with $3.9 million in the prior year comparable quarter. We anticipate significant revenues from this follow-on contract over the next two year period.

Sales to Canon, a related party, represented 35% and 45% of total net sales for the second quarter of fiscal 2005 and 2004, respectively. For the first six months of fiscal 2005 and 2004, sales to Canon represented 40% and 48%, respectively, of net sales. Overall, the Canon sales volume remained relatively stable between periods. The decrease in Canon sales as a percentage of total sales reflects the growth in other areas of our business, including new initiatives in the flat panel market and growth in optical business systems. We expect product sales to Canon to decrease in the fourth quarter, but believe this decrease will be offset by an increase in development services revenues. The Canon development services revenues have historically carried a lower gross profit as a percentage of sales than product sales to Canon.

We achieved an order level for the second quarter of fiscal 2005 of $39.6 million as compared with $34.1 million for the first quarter of fiscal 2005 and $36.4 million for the second quarter of fiscal 2004. Orders in the semiconductor segment were $20.2 million an increase of $9.2 million, or 84%, as compared with the first quarter of fiscal 2005, and $0.1 million as compared with the second quarter of fiscal 2004, primarily due to flat panel display metrology. In the second quarter of fiscal 2005, we continued a strong order rate in the industrial segment, with aggregate orders of $19.4 million. While orders in this business segment decreased by $3.7 million, or 16%, as compared with the first quarter of fiscal 2005, industrial segment orders increased $3.1 million, or 19%, as compared with the second quarter of fiscal 2004. The continued strong industrial orders were highlighted by the annual release of orders from the Lawrence Livermore National Laboratory and orders for the production of a laser surgery system. The strong order flow boosted backlog to a record $64.9 million in the second quarter of fiscal 2005, up $3.5 million, or 6%, from the first quarter of fiscal 2005, and up $19.1 million, or 42%, from the second quarter of fiscal 2004.

We discontinued our telecommunications TeraOptix business unit during fiscal 2003. Accordingly, the results of TeraOptix have been presented as a separate line item on the Consolidated Statements of Operations as “Discontinued TeraOptix operations, net of tax”, for all periods presented. In addition, the charges on the disposal of TeraOptix, net of tax, have been recorded as a separate line item for all periods presented. All continuing operations line items presented exclude TeraOptix results. During fiscal 2003 and 2004, we marketed for sale our former telecommunications facility located in Westborough, Massachusetts. In August 2004, we entered into an agreement to sell the facility. The sales transaction is expected to be completed in the second half of fiscal year 2005 and is now expected to generate approximately $1.8 million of cash, net of selling expenses. In the second quarter of fiscal 2005, we recorded an additional impairment charge of $0.2 million to reflect anticipated changes to the sales price based on final negotiations.

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