ITEM 7B UNAUDITED PRO FORMA FINANCIAL INFORMATION
On May 5, 2000, the Company completed its previously announced merger with
Firefly Technologies, Inc. ("Firefly"), a manufacturer of heads and related
products for the optical storage industry as well as metrology, micro optics,
switches and filters for the telecommunications industry located in Holliston,
Mass. The Company issued approximately 2.3 million shares of its common stock in
exchange for all of the outstanding capital stock and options of Firefly, a
privately held company. This merger will be accounted for under the pooling of
interests method of accounting, and accordingly, historical financial
information in future reports will be restated to include Firefly.
The Zygo Corporation Unaudited Pro Forma Financial Statements give effect to the
combination of Zygo Corporation and Firefly through the issuance of Zygo
Corporation Common Shares for the outstanding common stock and stock options of
Firefly. The unaudited pro forma statements of operations presented in this
document for the years ended June 30, 1999 and 1998, and for the nine months
ended March 31, 2000 reflect the combination as if it had taken place on July 1,
1997. The unaudited pro forma consolidated condensed balance sheet gives effect
to the combination as if it had taken place on March 31, 2000. The results of
Firefly which had been a December 31 fiscal year end have been adjusted to
conform to ZYGO's June 30 fiscal year end.
The accompanying Zygo Corporation Unaudited Pro Forma Financial Statements are
not necessarily indicative of what the actual operating results or financial
position would have been had the combination actually taken place on July 1,
1997 and do not purport to indicate ZYGO's future results of operations.
The fiscal June 30, 2000 independent audit is currently being conducted and the
audited results for the years ended June 30, 1999 and 1998 will be included in
the Fiscal Year 2000 Form 10-K, which will be filed on or before September 29,
2000. Audit adjustments, if any, for these periods will be reflected therein.
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<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PROFORMA
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
(Thousands, except per share amounts)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ZYGO FIREFLY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales ............................................... $ 60,836 $ 2,537 -- $ 63,373
Cost of good sold ....................................... 35,538 1,400 -- 36,938
---------- ---------- ----------- ---------
Gross profit ................................... 25,298 1,137 -- 26,435
Selling, general and administrative expenses ............ 12,484 3,957 -- 16,441
Research, development and engineering expenses .......... 6,696 362 -- 7,058
Nonrecurring acquisition and failed merger costs ........ -- -- -- --
Amortization of goodwill and other intangibles .......... 1,205 13 -- 1,218
---------- ---------- ----------- ---------
Operating profit (loss) ........................ 4,913 (3,195) -- 1,718
---------- ---------- ----------- ---------
Other income (expense):
Interest income ................................ 860 -- -- 860
Miscellaneous income (expense), net ............ (209) 36 -- (173)
---------- ---------- ----------- ---------
651 36 -- 687
---------- ---------- ----------- ---------
Earnings (loss) before income taxes and
minority interest .................................... 5,564 (3,159) -- 2,405
Income tax expense ...................................... 1,833 90 -- 1,923
---------- ---------- ----------- ---------
Earnings (loss) before minority interest ................ 3,731 (3,249) -- 482
Minority interest ....................................... (67) -- -- (67)
---------- ---------- ----------- ---------
Net earnings (loss) ..................................... $ 3,664 $ (3,249) $ -- $ 415
========== ========== =========== =========
Earnings (loss) per share:
Basic (1) ...................................... $ .32 $ .03
========== =========
Diluted (1) .................................... $ .30 $ .03
========== =========
Weighted average number of shares:
Basic .......................................... 11,370 12,003
========== =========
Diluted ........................................ 12,346 13,318
========== =========
---------------
(1) The difference between basic shares outstanding and diluted shares
outstanding is the assumed conversion of common stock equivalents (stock
options) of 1,295,000 in the nine months ended March 31, 2000.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PROFORMA
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1999
(Thousands, except per share amounts)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ZYGO FIREFLY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales ............................................... $ 60,838 $ 2,544 -- $ 63,382
Cost of good sold ....................................... 39,331 1,666 -- 40,997
---------- ---------- ----------- ---------
Gross profit ................................... 21,507 878 -- 22,385
Selling, general and administrative expenses ............ 18,966 667 -- 19,633
Research, development and engineering expenses .......... 9,185 -- -- 9,185
Nonrecurring acquisition and failed merger costs ........ -- -- -- --
Amortization of goodwill and other intangibles .......... 1,258 -- -- 1,258
---------- ---------- ----------- ---------
Operating profit (loss) ........................ (7,902) 211 -- (7,691)
---------- ---------- ----------- ---------
Other income (expense):
Interest income ................................ 1,147 1 -- 1,148
Miscellaneous (expense), net ................... (308) -- -- (308)
---------- ---------- ----------- ---------
839 1 -- 840
---------- ---------- ----------- ---------
Earnings (loss) before income taxes and
minority interest .................................... (7,063) 212 -- (6,851)
Income tax expense (benefit) ............................ (3,074) 99 -- (2,975)
---------- ---------- ----------- ---------
Earnings (loss) before minority interest ................ (3,989) 113 -- (3,876)
Minority interest ....................................... -- -- -- --
---------- ---------- ----------- ---------
Net earnings (loss) ..................................... $ (3,989) $ 113 $ -- $ (3,876)
========== ========== =========== =========
Earnings (loss) per share:
Basic (1) ...................................... $ (.36) $ (.33)
========== =========
Diluted (1) .................................... $ (.36) $ (.33)
========== =========
Weighted average number of shares:
Basic .......................................... 11,148 11,780
========== =========
Diluted ........................................ 11,148 11,780
========== =========
---------------
(1) As per generally accepted accounting principles, the computation of the net
loss per share is based on the weighted average basic shares outstanding.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PROFORMA
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1998
(Thousands, except per share amounts)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ZYGO FIREFLY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales ............................................... $ 97,871 $ 1,213 -- $ 99,084
Cost of good sold ....................................... 56,729 906 -- 57,635
---------- ---------- ----------- ---------
Gross profit ................................... 41,142 307 -- 41,449
Selling, general and administrative expenses ............ 18,354 370 -- 18,724
Research, development and engineering expenses .......... 9,844 -- -- 9,844
Nonrecurring acquisition and failed merger costs ........ 1,920 -- -- 1,920
Amortization of goodwill and other intangibles .......... 793 -- -- 793
---------- ---------- ----------- ---------
Operating profit (loss) ........................ 10,231 (63) -- 10,168
---------- ---------- ----------- ---------
Other income (expense):
Interest income ................................ 1,100 -- -- 1,100
Miscellaneous income (expense), net ............ (248) -- -- (248)
---------- ---------- ----------- ---------
852 -- -- 852
---------- ---------- ----------- ---------
Earnings (loss) before income taxes and
minority interest .................................... 11,083 (63) -- 11,020
Income tax expense ...................................... 3,969 22 3,991
---------- ---------- ----------- ---------
Earnings (loss) before minority interest ................ 7,114 (85) -- 7,029
Minority interest ....................................... -- -- -- --
---------- ---------- ----------- ---------
Net earnings (loss) ..................................... $ 7,114 $ (85) $ -- $ 7,029
========== ========== =========== =========
Earnings (loss) per share:
Basic (1) ...................................... $ .65 $ .61
========== =========
Diluted (1) .................................... $ .58 $ .55
========== =========
Weighted average number of shares:
Basic .......................................... 10,890 11,480
========== =========
Diluted ........................................ 12,235 12,877
========== =========
---------------
(1) The difference between basic shares outstanding and diluted shares
outstanding is the assumed conversion of common stock equivalents (stock
options) of 1,397,000 in the twelve months ended June 30, 1998.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PROFORMA
CONDENSED CONSOLIDATED BALANCE SHEET
AT MARCH 31, 2000
(Thousands, except per share amounts)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
ZYGO FIREFLY ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents .......................... $ 22,991 $ 151 -- $23,142
Marketable securities .............................. 8,270 -- -- 8,270
Receivables ........................................ 21,525 205 -- 21,730
Inventories ........................................ 11,693 100 -- 11,793
Costs in excess billings ........................... 2,529 -- -- 2,529
Income taxes receivable ............................ 1,633 4 -- 1,637
Prepaid expenses and taxes ......................... 769 22 -- 791
Deferred income taxes .............................. 3,678 28 -- 3,706
---------- ---------- ----------- ---------
Total current assets ........................... 73,088 510 -- 73,598
Property, plant and equipment, net ...................... 16,291 218 -- 16,509
Goodwill and other intangible assets .................... 10,068 300 -- 10,368
---------- ---------- ----------- ---------
Total assets ............................................ $ 99,447 $ 1,028 -- $ 100,475
========== ========== =========== =========
Liabilities and Stockholder's Equity
Current liabilities: --
Accounts payable ................................... $ 9,043 $ 265 -- $ 9,308
Accrued expenses and progress payments ............. 6,699 111 -- 6,810
---------- ---------- ----------- ---------
Total current liabilities ...................... 15,742 376 -- 16,118
Notes Payable ........................................... -- 86 -- 86
Deferred income taxes ................................... 2,213 9 -- 2,222
Minority interest ....................................... 223 -- -- 223
Stockholders' equity .................................... 81,269 557 -- 81,826
---------- ---------- ----------- ---------
Total liabilities and stockholders' equity .............. $ 99,447 $ 1,028 -- $ 100,475
========== ========== =========== =========
</TABLE>
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<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: PRINCIPLES OF CONSOLIDATION
The pro forma consolidated balance sheet at March 31, 2000 and the consolidated
statements of earnings for the nine months ended March 31, 2000 and for the
years ended June 30, 1999 and 1998 are unaudited but, in the opinion of the
Company, include all adjustments, consisting only of normal recurring accruals,
necessary for a fair statement of the results. The consolidated statements
include the accounts of Zygo Corporation and all consolidated subsidiaries,
including a consolidated joint venture, which the Company entered into in
October 1999. The minority interest represents the 40% of the joint venture not
owned by the Company.
The results of operations for the nine-month periods ended March 31, 2000 are
not necessarily indicative of the results to be expected for the full year.
The Pro Forma Statements of Earnings presented herein have been prepared to
reflect the pooling of interests of Zygo Corporation and Firefly Technologies
Inc., as if 100% of the capital stock and stock options of Firefly had been
acquired on July 1, 1997.
The Pro Forma Balance Sheets presented herein have been prepared to reflect the
pooling of interests of Zygo Corporation and Firefly Technologies, Inc., as if
the merger had taken place on March 31, 2000.
NOTE 2: PRO FORMA ADJUSTMENTS
No Pro Forma adjustments were necessary to reflect the combination of Zygo and
Firefly.
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