MIDDLEFIELD, Conn., Feb. 2, 2009 – Zygo Corp., maker of optical systems and components for metrology and end-user applications, has announced net sales of $33.5 million and a net loss of $4 million (loss of $0.24 per diluted share) for the second quarter of fiscal 2009 as compared with net sales of $40.4 million and net income of $1.2 million ($0.07 per diluted share) for the second quarter of fiscal 2008.
The second quarter of fiscal 2009 loss includes an aggregate of $0.15 per share of merger related costs, reserves for possible royalty claims, and allocation adjustments related to the company’s acquisition of Solvision’s assets in fiscal 2008. The second quarter of fiscal 2008 net earnings included a $0.05-per-diluted-share reduction related to the reserve for a promissory note in connection with the Solvision acquisition.
For the first six months of fiscal 2009, the company recorded net sales of $71.8 million and a net loss of $3.5 million (loss of $0.21 per diluted share) as compared with net sales of $72.1 million and net earnings of $0.2 million ($0.01 per diluted share) for the first six months of fiscal 2008. The results for the six months ended Dec. 31, 2008, and 2007, were negatively affected by $0.18 and $0.06 per share, respectively, primarily for the items listed above.
Sales for the second quarter of fiscal 2009 were driven primarily by the instrument product line of Metrology Solutions Div. (73 percent of total revenues). Earnings were unfavorably affected by the overall reduction in sales, lower gross margins and the items listed above as compared with the second quarter of last year.
Orders for the second quarter of fiscal 2009 were $22.3 million as compared with orders of $42.9 million in the second quarter of fiscal 2008. Orders for Metrology Solutions accounted for 77 percent of the orders received, with the Optical Systems Div. contributing the remaining 23 percent. Metrology Solutions orders of $17.2 million were negatively affected by the continued decline in the semiconductor and display markets.
Bruce Robinson, Zygo’s chairman and CEO, said, “There is no indication that a worldwide economic recovery will occur in 2009. To that end we are taking additional actions, across the board, to restructure our business and reduce costs.”
These actions include:
– Pay reductions beginning in January of between 10 and 15 percent for executive officers and 3 and 8 percent for certain other personnel.
– Unpaid furloughs during the first quarter of calendar 2009.
– Reductions in work force of 7 percent.
Robinson added, “Annualized, these actions are expected to save us approximately $9 million, and further accelerated cost reductions will be taken as conditions warrant. We are focusing on liquidity and maintaining a strong balance sheet through the control of inventory, capital expenditures and other expenses. We will continue to strategically invest in our core business in order to maintain market share and be in a position to expand revenue when our customers' capital spending strengthens.”
On Oct. 16, 2008, the company announced that it had entered into an agreement and plan of merger and reorganization with Electro Scientific Industries Inc., under which the its stockholders would receive 1.0233 shares of ESI stock for each share of Zygo stock held. Based on the closing price of ESI stock on the date the merger agreement was executed, this represented a value of $10.30 per share of Zygo stock.
As a result of changes in conditions since the merger agreement was executed, the Zygo board undertook a re-evaluation of the merger transaction with ESI. The board, among other things, reviewed certain revised current and projected longer term financial, operational and customer-related information concerning ESI as well as the assumptions underlying various forecasted results. Based on the re-evaluation, the board submitted a proposal to ESI to modify the terms of the merger agreement to increase the existing merger consideration by $4 per share of Zygo stock, payable in cash, and to increase from three to four the number of ESI board seats held by Zygo designees after the closing of the merger.
On Jan. 20, 2009, ESI informed Zygo that ESI was not prepared to adjust the existing merger consideration and reiterated its belief that it continued to be appropriate. Later that day, the Zygo board announced the withdrawal of its recommendation in favor of the proposed merger.
“The Zygo board, acting in a manner consistent with its fiduciary duties, determined that the terms of the merger agreement, as currently constructed, are no longer in the best interest of the Zygo stockholders,” Robinson said. “We are continuing to evaluate the options under the merger agreement and applicable law resulting from the changed circumstances and the Zygo board’s view of the disproportionate impact of these changes on the current and expected longer term performance and operations of ESI and Zygo. It is Zygo’s belief that our diversified portfolio of products with applications across multiple industries will help to sustain our business during this worldwide recession.”
For more information, visit: www.zygo.com