UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1995
or
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------------------- ---------------------
Commission File Number 0-12944
Zygo Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-0864500
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
Laurel Brook Road, Middlefield, Connecticut 06455
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(860) 347-8506
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
N/A
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
3,933,886 shares of Common Stock, $.10 Par Value, at October 20, 1995
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands, except per share amounts)
For the Three Months
Ended September 30,
----------------------
1995 1994
-------- --------
Net sales $ 11,341 $ 5,858
Cost of goods sold 6,337 3,454
-------- --------
Gross profit 5,004 2,404
Selling, general and administrative
expenses 1,960 1,500
Research, development and engineering expenses 1,426 669
-------- --------
Operating profit 1,618 235
-------- --------
Other income (expense):
Interest income 101 88
Interest expense -- (12)
Miscellaneous expense, net (41) (63)
-------- --------
60 13
-------- --------
Earnings before income taxes 1,678 248
Income tax expense 588 92
-------- --------
Net earnings $ 1,090 $ 156
======== ========
Net earnings per share $ .23 $ .04
======== ========
Weighted average common shares
and dilutive equivalents
outstanding 4,670 3,971
======== ========
<PAGE>
-2-
CONSOLIDATED BALANCE SHEETS
As of September 30, 1995, and June 30, 1995
(Thousands, except share amounts)
September 30, June 30,
ASSETS 1995 1995
-------- --------
Current Assets:
Cash and cash equivalents $ 1,523 $ 2,428
Marketable securities 7,342 7,746
Receivables 7,985 6,296
Inventories:
Raw materials and manufactured parts 2,863 2,863
Work in process 2,689 2,281
Finished goods 522 499
-------- --------
Total inventories 6,074 5,643
-------- --------
Prepaid expenses and taxes 663 581
Deferred income taxes 1,104 1,043
-------- --------
Total current assets 24,691 23,737
-------- --------
Property, plant and equipment, at cost 17,048 16,644
Less accumulated depreciation 11,641 11,381
-------- --------
Net property, plant and equipment 5,407 5,263
Other assets, net 669 666
-------- --------
Total assets $ 30,767 $ 29,666
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,325 $ 2,515
Accrued expenses and customer progress
payments 3,667 3,497
Federal and state income taxes 667 653
-------- --------
Total current liabilities 6,659 6,665
-------- --------
Deferred income taxes 665 668
Stockholders' Equity:
Common stock $.10 par value per share:
10,000,000 shares authorized; 4,037,686
shares issued (4,030,786 at June 30, 1995) 404 403
Additional paid-in capital 10,748 10,726
Retained earnings 12,598 11,508
Net unrealized loss on marketable securities (6) (3)
-------- --------
23,744 22,634
Less treasury stock, at cost; 103,800 shares 301 301
-------- --------
Total stockholders' equity 23,443 22,333
-------- --------
Total liabilities and stockholders' equity $ 30,767 $ 29,666
======== ========
<PAGE>
-3-
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months ended September 30, 1995, and 1994
(Thousands of dollars)
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Cash provided by (used for)
operating activities:
Net earnings $ 1,090 $ 156
Adjustments to reconcile net earnings to cash
provided by (used for) operating activities:
Depreciation and amortization 336 285
Deferred income taxes (63) --
Loss on disposal of assets 2 36
Intangible and other assets -- (103)
Changes in operating accounts:
Receivables (1,669) (22)
Inventories (431) (345)
Prepaid expenses (82) (1)
Accounts payable and accrued expenses (6) (309)
------- -------
Net cash used for operating activities (823) (303)
------- -------
Cash provided by (used for)
investing activities:
Additions to property, plant and equipment (474) (412)
Investment in marketable securities -- (496)
Investment in other assets (31) --
Proceeds from maturity of marketable securities 400 785
------- -------
Net cash used for investing activities (105) (123)
------- -------
Cash provided by (used for)
financing activities:
Repayment of long-term debt -- (44)
Exercise of employee stock options 23 13
------- -------
Net cash provided by (used for) financing activities 23 (31)
------- -------
Net decrease in cash and cash
equivalents (905) (457)
Cash and cash equivalents,
beginning of year 2,428 2,530
------- -------
Cash and cash equivalents,
end of quarter $ 1,523 $ 2,073
======= =======
</TABLE>
The interim financial statements furnished herein reflect all adjustments which
are, in the opinion of management, necessary for a fair statement of the results
for the interim periods presented. All such adjustments are of a normal and
recurring nature. These interim financial statements should be read in
conjunction with the financial statements and notes included in the Company's
June 30, 1995, Annual Report on Form 10-K.
The foregoing interim results are not necessarily indicative of the results of
operations to be achieved for the full fiscal year ending June 30, 1996.
<PAGE>
-4-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Financial Condition
At September 30, 1995, working capital was $18,032,000, an increase of $960,000
from the amount at June 30, 1995. The Company had cash and cash equivalents of
$1,523,000 and marketable securities available-for-sale amounting to $7,342,000
for a total of $8,865,000 at September 30, 1995, a decrease of $1,309,000 from
the amount of cash and cash equivalents and marketable securities at June 30,
1995. Receivables increased by $1,689,000, and inventory increased by $431,000
from the amounts at June 30, 1995. The receivables increase was due primarily to
the growth in net sales in the first quarter of fiscal 1996, which were $781,000
higher than the fourth quarter of fiscal 1995, and by a delay in collecting a
significant amount of receivables until just after the close of the quarter
ended September 30, 1995. Inventory increased primarily to support the growth in
sales of the Company's electro-optical instruments. Accounts payable increased
by $190,000 in the first quarter of 1996 to $2,325,000 principally as a result
of the increase in inventories and other costs associated with the growth of the
business. As of September 30, 1995, there were no borrowings outstanding under
the Company's $3,000,000 bank line of credit. Unused amounts under the line of
credit are available for short-term working capital needs.
Results of Operations
Net sales for the three months ended September 30, 1995, amounted to
$11,341,000, an increase from net sales in the comparable period in 1994 by
$5,483,000 or 93.6%. The increase was primarily attributable to an increase of
134.8% in the net sales of the Company's electro-optical instruments in the
three months ended September 30, 1995 from the comparable prior year period,
principally as a result of demand from manufacturers of data storage and
semiconductor products. The increase in net sales was also positively impacted
by higher service revenues, partially offset by lower sales of precision optical
components.
Gross profit for the three months ended September 30, 1995, amounted to
$5,004,000, an increase of $2,600,000 from gross profit of $2,404,000 for the
comparable prior year period. For the three months ended September 30, 1995,
gross profit as a percentage of sales amounted to 44.1%, an increase of 3.1
percentage points from gross profit as a percentage of sales of 41.0% for the
comparable prior year period. These increases primarily resulted from
substantially higher sales volumes of the Company's electro-optical instrument
products, which have higher average gross profit margins than the Company's
precision optical components, as well as volume-related manufacturing
efficiencies.
Selling, general and administrative expenses in the three months ended September
30, 1995, amounted to $1,960,000, an increase of $460,000 from $1,500,000 in the
three months ended September 30, 1994. This increase was primarily due to an
increase in volume-related expenses, such as commissions paid to the Company's
direct sales personnel and external sales agents. As a percentage of sales,
selling, general and administrative expenses declined in the three months ended
September 30, 1995, to 17.3% as compared to 25.6% in the comparable prior year
period.
Research, development, and engineering ("R&D") expenses in the three months
ended September 30, 1995, totaled $1,426,000 or 12.6% of sales as compared to
$669,000 or 11.4% of sales in the comparable prior year period. The significant
increase in R&D expenses primarily resulted from spending on personnel and
materials at the Company's R&D facility in Simi Valley, California, which was
formed in the quarter ended March 31, 1995. This R&D facility, in conjunction
with the Company's Middlefield, Connecticut, personnel, introduced the Pegasus
2000 Flying Height Tester in September 1995.
Operating profit in the three months ended September 30, 1995, was $1,618,000
and increased by $1,383,000 or 588.5% from the comparable three-month period in
the year earlier. Higher sales volume coupled with improved gross profit
margins, partially offset by higher selling expenses and higher R&D expenses
were the primary factors leading to the record operating profitability in the
three-month period ended September 30, 1995.
<PAGE>
-5-
The Company's backlog increased by 151.7% in the quarter ended September 30,
1995, to $13,994,000 from $5,560,000 at September 30, 1994. This record level of
backlog was an increase of $1,001,000 or 7.7% from the backlog at June 30, 1995.
Significant new orders for the Company's electro-optical instrument systems and
accessories was the principal reason for the increase in the backlog from the
year earlier period.
<PAGE>
-6-
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27. Financial Data Schedule.
(b) 1. On July 20, 1995, the Company filed a Current Report on Form 8-K,
dated July 20, 1995, reporting that its Board of Directors voted
to effect a 3-for-2 stock split in the form of a 50% stock
dividend, payable on August 21, 1995, to stockholders of record on
August 1, 1995. [Item 5 reporting]
2. On August 23, 1995, the Company filed a Current Report on Form
8-K, dated August 22, 1995, reporting the press release issued by
the Company on August 22, 1995, relating to its fourth quarter and
full fiscal year 1995 results. [Item 5 reporting]
<PAGE>
-7-
SIGNATURE
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 thereunto duly authorized.
Zygo Corporation
-----------------------------------------
(Registrant)
/s/GARY K. WILLIS
-----------------------------------------
Gary K. Willis
President and Chief Executive Officer
/s/MARK J. BONNEY
-----------------------------------------
Mark J. Bonney
Vice President, Finance and Administration,
Treasurer, and Chief Financial Officer
Date: October 27, 1995
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
27 Financial Data Schedule for the quarterly report,
on Form 10-Q, period ended September 30, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of earnings and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-END> Sep-30-1995
<CASH> 1,523
<SECURITIES> 7,342
<RECEIVABLES> 7,906
<ALLOWANCES> 138
<INVENTORY> 6,074
<CURRENT-ASSETS> 24,691
<PP&E> 17,048
<DEPRECIATION> 11,641
<TOTAL-ASSETS> 30,767
<CURRENT-LIABILITIES> 6,659
<BONDS> 0
<COMMON> 404
0
0
<OTHER-SE> 23,039
<TOTAL-LIABILITY-AND-EQUITY> 30,767
<SALES> 11,341
<TOTAL-REVENUES> 11,341
<CGS> 6,337
<TOTAL-COSTS> 9,723
<OTHER-EXPENSES> 41
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,678
<INCOME-TAX> 588
<INCOME-CONTINUING> 1,090
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,090
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
