1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO
SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 15, 1996
SUMMIT TECHNOLOGY, INC.
MASSACHUSETTS 0-16937 04-2897945
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
21 HICKORY DRIVE
WALTHAM, MASSACHUSETTS 02154
(Address of principal executive offices, including zip code)
(617) 890-1234
(Registrant's telephone number including area code)
2
The undersigned Registrant hereby amends item 7 of its Current Report on Form
8-K dated May 24, 1996 as follows:
Item 7. Financial Statements, Pro-Forma Financial Information and Exhibits
------------------------------------------------------------------
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
AUDITED FINANCIAL STATEMENTS
----------------------------
Combined Financial Statements of Lens Express, Inc. As of June 30,
------------------------------------------------------------------
1995
----
Independent Auditors' Report
Combined Balance Sheets at June 30, 1995 and 1994
Combined Statements of Income and Retained Earnings for the years
ended June 30, 1995 and 1994
Combined Statements of Cash Flows for the years ended June 30,
1995 and 1994
UNAUDITED INTERIM FINANCIAL STATEMENTS
--------------------------------------
Lens Express, Inc. Balance Sheet at March 31, 1996
--------------------------------------------------
Statement of Income for the Nine Month Period Ended March 31, 1996
------------------------------------------------------------------
(unaudited)
-----------
Statement of Income for the Nine Month Period Ended March 31, 1995
------------------------------------------------------------------
(unaudited)
-----------
Statement of Cash Flows for the Nine Month Period Ended March 31,
-----------------------------------------------------------------
1996 (unaudited)
----------------
Statement of Cash Flows for the Nine Month Period Ended March 31,
-----------------------------------------------------------------
1995 (unaudited)
----------------
(b) PROFORMA FINANCIAL INFORMATION
Introduction
Proforma Combined Balance Sheet at March 31, 1996 (unaudited)
Proforma Combined Statement of Operations for March 31, 1996
(unaudited)
Proforma Combined Statement of Operations for December 31, 1995
(unaudited)
Proforma Combined Statement of Operations for December 31, 1994
(unaudited)
Proforma Combined Statement of Operations for December 31, 1993
(unaudited)
Notes to the Unaudited Proforma Combined Financial Statements
3
(c) EXHIBITS
Exhibit Number Title
-------------- -----------------------
2.1 Agreement and Plan of Merger, dated Previously
April 19, 1996 (as amended, the Filed
"Merger Agreement"), among Summit
Technology, Inc. (the "Registrant"),
Summit Acquisition Corporation, a
wholly-owned subsidiary of the
Registrant, Lens Express, Inc.,
Mordechai Golan, Creslin Limited,
Menderes Akdag and Huseyin Kizanlikli,
including a list of exhibits to the
Merger Agreement. The Registrant will
furnish supplementally a copy of any
omitted Exhibit to the Merger Agreement
to the Securities and Exchange
Commission upon request.
2.3 Consent of Coopers & Lybrand
4
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.
SUMMIT TECHNOLOGY, INC.
By /s/ David F. Muller
-------------------------------
David F. Muller, Ph.D.
Chairman of the Board and
Chief Executive Officer
Date: July 29, 1996
5
SUMMIT TECHNOLOGY, INC.
INTRODUCTION TO AUDITED FINANCIAL STATEMENTS
The following are the audited financial statements of Lens Express, Inc. for the
years ended June 30, 1995 and 1994. The audited financial statements for the
year ended June 30, 1995 have been reissued to reflect the accounts of Call
Mart, Inc., a previously reported related party of Lens Express, Inc.
6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Lens Express, Inc.
Deerfield Beach, Florida
We have audited the combined balance sheets of Lens Express, Inc. as of June 30,
1995 and 1994, and the related combined statements of income and retained
earnings, and cash flows for the years the ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Lens Express, Inc.
as of June 30, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Fort Lauderdale, Florida
July 17, 1996
7
LENS EXPRESS, INC.
COMBINED BALANCE SHEETS
June 30, 1995 and 1994
ASSETS
1995 1994
Current assets:
Cash and cash equivalents $ 22,337 $ 485,912
Restricted cash 300,000 0
Accounts receivable (net of allowance
for doubtful accounts of $6,200 in 1995
and 1994) 630,653 538,110
Inventory 5,163,493 2,949,519
Prepaid expenses 55,120 69,632
Deferred income taxes 37,538 7,735
---------- ----------
Total current assets 6,209,141 4,050,908
Property and equipment, (net of
accumulated depreciation and
amortization of $801,076 and
$469,350) 1,011,722 1,002,404
Deposits 65,833 56,326
---------- ----------
Total assets $7,286,696 $5,109,638
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $2,000,000 $ 0
Account payable and other current
liabilities 2,900,727 2,789,095
Accrued expenses 1,062,036 1,392,746
Current portion of capital lease
obligations 136,612 124,536
Income taxes payable 179,639 117,573
Deferred revenue 14,446 17,696
---------- ----------
Total current liabilities 6,293,460 4,441,646
Capital lease obligations 159,904 229,146
Deferred income taxes 108,317 89,262
---------- ----------
Total liabilities 6,561,681 4,760,054
---------- ----------
Commitments and contingencies
Stockholders' equity:
Common stock; $1 par value; 1,000
shares authorized, issued and
outstanding 1,000 1,000
Common stock; $1 par value; 100 shares
authorized issued and outstanding 100 0
Additional paid-in capital 179,816 179,816
Retained earnings 544,099 168,768
---------- ----------
Total stockholders' equity 725,015 349,584
Total liabilities and
stockholders' equity $7,286,696 $5,109,638
========== ==========
The accompanying notes are an integral part of these financial statements.
8
LENS EXPRESS, INC.
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
for the years ended June 30, 1995 and 1994
1995 1994
Net sales $50,618,729 $45,432,128
Cost of sales 33,586,817 29,113,438
----------- -----------
Gross profit 17,031,912 16,318,690
----------- -----------
Operating expenses:
Selling 11,236,929 10,967,442
General and administrative 4,356,157 4,608,223
Depreciation and amortization 331,726 233,942
----------- -----------
Total operating expenses 15,924,812 15,809,607
----------- -----------
Income from operations 1,107,100 509,083
Other income (expense):
Interest expense (180,197) (76,185)
Other income 121,518 14,644
----------- -----------
Income before provision for income taxes 1,048,421 447,542
Provision for income taxes 673,090 160,148
----------- -----------
Net income 375,331 287,394
Retained earnings, beginning of year 168,768 281,374
Less: dividends paid 0 400,000
----------- -----------
Retained earnings, end of year $ 544,099 $ 168,768
=========== ===========
The accompanying notes are an integral part of these financial statements.
9
LENS EXPRESS, INC.
COMBINED STATEMENTS OF CASH FLOWS
for the years ended June 30, 1995 and 1994
1995 1994
Cash flows from operating activities:
Net income $ 375,331 $ 287,394
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 331,726 233,942
Loss on sale of property and equipment 0 5,399
Deferred income taxes (18,483) 14,456
Change in operating assets and liabilities:
Accounts receivable (92,543) 16,511
Accounts receivable - director 0 75,000
Inventory (2,213,974) (676,957)
Prepaid expenses 22,247 33,129
Deposits (9,507) 22,284
Accounts payable (23,845) 370,949
Accrued expenses (330,710) 996,947
Income taxes payable 62,066 79,509
Deferred revenue (3,250) (7,434)
----------- ----------
Net cash provided by (used in)
operating activities (1,900,942) 1,451,129
----------- ----------
Cash flows from investing activities:
Acquisition of property and equipment (310,726) (318,400)
Proceeds from sales of property and equipment 0 6,000
Restricted cash for line of credit (300,000) 0
----------- ----------
Net cash used in investing activities (610,726) (312,400)
----------- ----------
Cash flows from financing activities:
Bank overdraft 135,477 0
Principal payments on capital lease obligations (87,484) (63,825)
Payment of dividends 0 (475,000)
Principal payments of notes payable 0 (400,000)
Advances under line of credit 2,000,000 0
Proceeds from issuance of common stock 100 0
----------- ----------
Net cash provided by (used in)
financing activities 2,048,093 (938,825)
----------- ----------
Net increase (decrease) in cash (463,575) 199,904
Cash and cash equivalents at beginning of year 485,912 286,008
Cash and cash equivalents at end of year $ 22,337 $ 485,912
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 141,869 $ 64,301
=========== ==========
Income taxes $ 609,030 $ 66,184
=========== ==========
Noncash financing activity:
The Company entered into capital lease obligations for the purchase of
property and equipment in the amount of $30,318 and $190,533 in 1995 and
1994, respectively.
The accompanying notes are an integral part of these financial statements.
10
LENS EXPRESS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS:
The combined financial statements of the Company include the accounts of
Lens Express, Inc. and Call Mart, Inc. Lens Express, Inc. is engaged
primarily in the telemarketing sale of contact lenses to retail customers
nationwide. Call Mart, Inc. provides "800" name and address capture by
using voice response unit technology, and transcription services to Lens
Express, Inc. Call Mart, Inc. commenced operations in November 1994. Lens
Express, Inc. and Call Mart, Inc. have common ownership and accordingly
have been combined.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with a
maturity of three months or less at date of purchase to be cash
equivalents. The Company maintains its cash in bank accounts with highly
rated financed institutions, which may at times, exceed federally insured
limits.
INVENTORY
Inventory, consisting primarily of contact lens merchandise, sunglasses and
solutions, is stated at the lower of cost (principally first-in, first-out)
or market.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed over the
estimated useful lives using the straight-line method. Leasehold
improvements are amortized on a straight-line basis over the lesser of the
lease term or the estimated useful lives of the improvements.
Additions and improvements are capitalized and repairs and maintenance are
expensed when incurred. When assets are retired or otherwise disposed of,
the cost and related accumulated depreciation are removed from their
respective accounts and any related gain or loss is recognized.
REVENUE RECOGNITION
Revenue from the sale of memberships which allow customers to purchase
contact lenses at discount prices for several years is recognized in the
period when such memberships are sold.
11
LENS EXPRESS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
INCOME TAXES
The Company utilizes the liability method of accounting for deferred income
taxes. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax
bases of assets and liabilities using enacted tax rates for the year in
which the differences are expected to reverse.
The liability method of accounting requires a valuation allowance against
deferred tax assets if, based on the weight of available evidence, it is
more likely than not that some or all of the deferred tax assets will not
be realized.
Call Mart, Inc., has elected to be taxed as an S Corporation and
accordingly, is not subject to federal and state income taxes, instead Call
Mart, Inc.'s taxable income and available credits are the responsibility of
its stockholders.
PRINCIPLES OF COMBINED FINANCIAL STATEMENTS
All significant intercompany accounts and transactions have been eliminated
from the combined financial statements.
RECLASSIFICATIONS
Certain amounts previously reported have been reclassified to conform to
the 1995 presentation.
3. RESTRICTED CASH:
As of June 30, 1995, the Company had $300,000 of restricted cash held in a
marginal deposit account as required pursuant to the Company's line of
credit agreement.
4. INVENTORY:
The components of inventory at June 30, 1995 and 1994 are as follows:
1995 1994
Contact lenses $5,017,016 $2,872,318
Solutions 101,474 77,201
Sunglasses 45,003 0
---------- ----------
$5,163,493 $2,949,519
12
LENS EXPRESS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
5. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following at June 30, 1995 and
1994:
1995 1994
Furniture $ 115,545 $ 114,442
Technical equipment 572,161 514,720
Computer equipment 796,321 577,889
Computer software 68,999 46,800
Leasehold improvements 259,772 217,903
---------- ----------
1,812,798 1,471,754
---------- ----------
Less: accumulated depreciation
and amortization 801,076 469,350
---------- ----------
$1,011,722 $1,002,404
========== ==========
Property and equipment under capitalized leases consists of technical
equipment in the amount of $480,973 and $450,654 less accumulated
amortization of $213,222 and $120,059 at June 30, 1995 and 1994,
respectively.
6. CAPITAL LEASES:
The Company has entered into various lease obligations for property and
equipment which have been classified as capital leases.
The future minimum lease payments under capital leases as of June 30, 1995
are as follows:
Fiscal Year
-----------
1996 $136,613
1997 113,756
1998 72,296
1999 30,172
--------
352,837
Less: amount representing interest 56,321
--------
Present value of net minimum lease
payments under capital leases $296,516
========
13
LENS EXPRESS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
7. OPERATING LEASES:
At June 30, 1995, approximate future minimum rental payments applicable to
noncancellable operating leases for office and warehouse space and
equipment are as follows:
Fiscal Year
-----------
1996 $175,732
1997 159,469
1998 168,919
1999 178,369
2000 22,444
--------
$704,933
========
Rent expense for the years ended June 30, 1995 and 1994 was $121,664 and
$129,531, respectively.
8. LINE OF CREDIT:
The Company has entered into a $3 million line of credit with a financial
institution to fund working capital needs. The line of credit bears
interest at Bank of New York's floating prime plus 1% (approximately 9.75%
as of June 30, 1995) and expires on March 1, 1996. The line of credit is
collateralized by a first lien on inventory and receivables and is
personally guaranteed by the stockholders of the Company. The line of
credit was repaid subsequent to year end (Note 14).
9. COMMITMENTS:
The Company has an one year agreement with a television spokesperson to
provide various promotional services. The Company recognized expense of
$125,000 and $104,000 for services incurred and $30,000 and $17,400 for
royalties paid in fiscal years 1995 and 1994, respectively.
10. INCOME TAXES:
The provision for income taxes consisted of the following for the years
ended June 30, 1995 and 1994:
1995 1994
Current $626,286 $145,692
Deferred 46,804 14,456
-------- --------
$673,090 $160,148
======== ========
14
LENS EXPRESS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
The significant components of the net deferred tax liability as of June 30,
1995 and 1994 were as follows:
1995 1994
Deferred tax assets:
Allowance for doubtful accounts $ 2,341 $ 2,341
Accrued expenses 5,394 5,394
Inventory capitalization 29,803 0
-------- -------
37,538 7,735
Deferred tax liability:
Property and equipment 108,317 89,262
-------- -------
Net deferred tax liability $ 70,779 $81,527
======== =======
During the year ended June 30, 1995, the Company settled an audit of its
1992 tax return with the Internal Revenue Service. As a result, additional
taxes in the amount of $274,024 and $44,106 were paid in 1995 for federal
and state purposes, respectfully.
The Company pays no income tax on the income generated by Call Mart, Inc.
as discussed in Note 2. Call Mart, Inc. has elected to be taxed as an S
Corporation, accordingly, the tax liability on its taxable income is the
responsibility of its stockholders.
11. RELATED PARTY TRANSACTIONS:
The Company paid approximately $561,000 and $456,000 in 1995 and 1994 for
services received from a partnership whose partners are a stockholder and a
director of the Company. In addition, the partnership paid the Company
approximately $68,400 and $17,100 in rent during 1995 and 1994,
respectfully.
12. CONTINGENCIES:
The Company is a party to various lawsuits arising in the ordinary course
of business. In the opinion of management, based on a review of such
litigation with legal counsel, any losses resulting from these lawsuits are
not expected to materially impact the financial condition of the Company.
13. EMPLOYEE BENEFIT PLAN:
Effective January 1, 1995, the Company adopted a 401(k) profit sharing plan
(the "Plan") to provide retirement benefits for its employees. All
employees who meet certain eligibility requirements are able to participate
in the Plan. During 1995, $14,574 was contributed to the Plan.
15
LENS EXPRESS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
14. SUBSEQUENT EVENT:
Dividends of $200,000 were paid to stockholders on September 26, 1995.
Effective May 15, 1996, the Company was acquired in exchange for stock of
an unaffiliated entity, in a transaction accounted for as a pooling of
interests. As a result of this transaction, the line of credit described in
Note 8 was repaid on May 15, 1996.
16
INTRODUCTION TO UNAUDITED INTERIM FINANCIAL STATEMENTS OF LENS EXPRESS, INC.
- ----------------------------------------------------------------------------
The following unaudited interim financial statements include the accounts of
Lens Express, Inc. and Call Mart, Inc., a previously reported related party of
Lens Express, Inc. Both entities were acquired by Summit Technology, Inc. on May
15, 1996 in a transaction accounted for as a pooling-of-interests. Certain
acquisition related adjustments are reflected in the following unaudited interim
financial statements with material adjustments described in the accompanying
notes.
17
LENS EXPRESS, INC.
BALANCE SHEET AT MARCH 31, 1996
(IN THOUSANDS; UNAUDITED)
- -------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 327
Accounts receivable, net 607
Inventories, net 5,277
Prepaid expenses and other current assets 70
------
Total current assets 6,281
------
Property and equipment, net 815
Other assets, net 66
------
Total assets $7,162
======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,605
Accrued expenses 1,151
Short-term debt 2,000
Deferred revenue 17
------
Total current liabilities 5,773
Long-term debt, less current maturities 220
Deferred taxes 71
------
Stockholders' equity:
Common stock 1
Additional paid-in capital 180
Retained earnings 917
------
Total stockholders' equity 1,098
------
Total liabilities and
stockholders' equity $7,162
======
See accompanying notes to Lens Express, Inc. Unaudited Interim Financial
Statements.
18
LENS EXPRESS, INC.
STATEMENT OF INCOME
FOR THE NINE MONTH PERIOD ENDED MARCH 31, 1996
(IN THOUSANDS; UNAUDITED)
- -------------------------------------------------------------------------------
Net revenues $38,372
Cost of revenues 26,397
-------
Gross profit 11,975
Operating expenses 11,174
-------
Operating income 801
Other expense (136)
-------
Income before provision for income taxes 665
Provision for income taxes 292
-------
Net income $ 373
=======
See accompanying notes to Lens Express, Inc. Unaudited Interim Financial
Statements.
19
LENS EXPRESS, INC.
STATEMENT OF INCOME
FOR THE NINE MONTH PERIOD ENDED MARCH 31, 1995
(IN THOUSANDS; UNAUDITED)
- -------------------------------------------------------------------------------
Net revenues $37,239
Cost of revenues 24,523
-------
Gross profit 12,716
Operating income 11,724
-------
Operating income 992
Other income 30
-------
Income before provision for income taxes 1022
Provision for income taxes 322
-------
Net income $ 700
=======
See accompanying notes to Lens Express, Inc. Unaudited Interim Financial
Statements.
20
LENS EXPRESS, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTH PERIOD ENDED MARCH 31, 1996
(IN THOUSANDS: UNAUDITED)
- ---------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 373
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 240
Changes in operating assets and liabilities:
Accounts receivable, net 24
Inventories, net (114)
Prepaid expenses and other current assets 23
Accounts payable (296)
Accrued expenses 89
Deferred revenue 3
Deferred taxes payable (37)
Other current liabilities (180)
-----
Net cash provided by operating activities 125
-----
Cash flows from investing activities:
Restricted cash for line of credit 300
Additions to property and equipment (43)
-----
Net cash provided by investing activities 257
-----
Cash flows from financing activities:
Net repayments of long-term debt and capital lease obligations (77)
-----
Net cash used by financing activities (77)
-----
Increase in cash and cash equivalents 305
Cash and cash equivalents at beginning of period 22
-----
Cash and cash equivalents at end of period $ 327
=====
Supplemental cash flow information:
Interest paid $ 230
=====
Income taxes paid $ 384
=====
See accompanying notes to Lens Express, Inc. Unaudited Interim Financial
Statements.
21
LENS EXPRESS, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTH PERIOD ENDED MARCH 31, 1995
(IN THOUSANDS: UNAUDITED)
- -----------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 700
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation and amortization 227
Changes in operating assets and liabilities:
Accounts receivable, net (177)
Inventories, net (995)
Prepaid expenses and other current assets (97)
Deposits 20
Accounts payable (992)
Accrued expenses 64
Deferred revenue (7)
Other current liabilities (6)
-------
Net cash used by operating activities (1,263)
-------
Cash flows from investing activities:
Additions to property and equipment (283)
-------
Net cash used by investing activities (283)
-------
Cash flows from financing activities:
Net proceeds from long-term debt and capital lease obligations 1,235
-------
Net cash provided by financing activities 1,235
-------
Decrease in cash and cash equivalents (311)
Cash and cash equivalents at beginning of period 486
-------
Cash and cash equivalents at end of period $ 175
=======
Supplemental cash flow information:
Interest paid $ 30
=======
Income taxes paid $ 439
=======
See accompanying notes to Lens Express, Inc. Unaudited Interim Financial
Statements.
22
SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PROFORMA LENS EXPRESS, INC. INTERIM
FINANCIAL STATEMENTS
(1) Certain amounts previously recorded as dividends paid to shareholders by
Lens Express, Inc. and Call Mart, Inc. have been reclassified as salary
expense.
(2) Certain tax-related adjustments were recorded to properly reflect tax
expense in the previously unreported interim periods.
23
INTRODUCTION TO PROFORMA FINANCIAL STATEMENTS
On May 15, 1996, the Company acquired Lens Express, Inc. and Call Mart, Inc. (a
related party of Lens Express, Inc.) in a transaction accounted for as a
pooling-of-interests. The unaudited proforma combined Balance Sheet at March 31,
1996 gives effect to the acquisition as if the transaction occurred at March 31,
1996. The unaudited proforma combined Statements of Operations for the three
month period ended March 31, 1996 and for the years ended December 31, 1995,
1994 and 1993 gives effect to the acquisition made on May 15, 1996 as if it had
occurred at the beginning of the respective fiscal years.
24
SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
PROFORMA COMBINED BALANCE SHEET AT MARCH 31, 1996 PROFORMA
(IN THOUSANDS; UNAUDITED) SUMMIT ADJUSTMENTS(1) COMBINED
- --------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 60,810 $ 327 $ 61,137
Short-term investments 41,128 - 41,128
Accounts receivable, net 16,221 607 16,828
Inventories, net 12,757 5,277 18,034
Prepaid expenses and other current assets 3,417 70 3,487
Due from related party 1,125 - 1,125
Notes receivable from officers 312 - 312
-------- ------ --------
Total current assets 135,770 6,281 142,051
-------- ------ --------
Long-term investments 15,487 - 15,487
Property and equipment, net 11,137 815 11,952
Patents, net 6,642 - 6,642
Other assets, net 1,907 66 1,973
Restricted cash 1,511 - 1,511
-------- ------ --------
Total assets $172,454 $7,162 $179,616
======== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,585 $2,605 $ 6,190
Accrued expenses 10,900 1,151 12,051
Current maturities of long-term debt 5,429 2,000 7,429
Deferred revenue 2,786 17 2,803
Due to related party 1,105 - 1,105
-------- ------ --------
Total current liabilities 23,805 5,773 29,578
Long-term debt, less current maturities 14,639 220 14,859
Deferred Taxes - 71 71
Stockholders' equity:
Common stock 293 17(2) 310
Additional paid-in capital 170,700 164(2) 170,864
Accumulated deficit (36,823) 917(2)(3) (35,906)
-------- ------ --------
134,170 1,098 135,268
Treasury stock (160) - (160)
-------- ------ --------
Total stockholders' equity 134,010 1,098 135,108
-------- ------ --------
Total liabilities and
stockholders' equity $172,454 $7,162 $179,616
======== ====== ========
See accompanying notes to Unaudited Combined Financial Statements.
25
SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
PROFORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1996 PROFORMA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS; UNAUDITED) SUMMIT ADJUSTMENTS(1) COMBINED
- -----------------------------------------------------------------------------------
Net revenues $12,683 $12,761 $25,444
Cost of revenues 8,829 9,002 17,831
------- ------- -------
Gross profit 3,854 3,759 7,613
Operating expenses 8,387 3,848(3) 12,235
------- ------- -------
Operating loss 4,533 89 4,622
Other income (expense) 1,224 (37) 1,187
------- ------- -------
Loss before provision for income taxes 3,309 126 3,435
Provision for income taxes - 117(4) 117
------- ------- -------
Net loss $ 3,309 $ 243 $ 3,552
======= ======= =======
Net loss per share $ .11 $ - $ .11
======= ======= =======
Weighted average number of common
shares and common share
equivalents outstanding 29,236 1,709(5) 30,945
======= ======= =======
See accompanying notes to Unaudited Combined Financial Statements.
26
SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
PROFORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 PROFORMA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS; UNAUDITED) SUMMIT ADJUSTMENTS(1) COMBINED
- -----------------------------------------------------------------------------------
Net revenues $45,134 $51,601 $96,735
Cost of revenues 28,181 34,794 62,975
------- ------- -------
Gross profit 16,953 16,807 33,760
Operating expenses 21,981 15,287(3) 37,268
------- ------- -------
Operating loss (5,028) 1,520 (3,508)
Other income (expense) 1,516 (192) 1,324
------- ------- -------
Income (loss) before provision for income taxes (3,512) 1,328 (2,184)
Provision for income taxes - 772(4) 772
------- ------- -------
Net income (loss) $(3,512) $ 556 $(2,956)
======= ======= =======
Net loss per share $ (.14) $ - $ (.10)
======= ======= =======
Weighted average number of common
shares and common share
equivalents outstanding 25,965 1,709(5) 27,674
======= ======= =======
See accompanying notes to Unaudited Combined Financial Statements.
27
SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
PROFORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994 PROFORMA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS; UNAUDITED) SUMMIT ADJUSTMENTS(1) COMBINED
- ------------------------------------------------------------------------------------
Net revenues $ 24,210 $ 48,098 $ 72,308
Cost of revenues 19,363 30,887 50,250
-------- -------- --------
Gross profit 4,847 17,211 22,058
Operating expenses 20,331 18,314(3) 38,645
-------- -------- --------
Operating loss (15,484) (1,103) (16,587)
Other income (expense) 103 (60) 43
-------- -------- --------
Loss before provision for income taxes (15,381) (1,163)(4) (16,544)
Provision for income taxes - 255 255
-------- -------- --------
Net loss $(15,381) $ (1,418) $(16,799)
======== ======== ========
Net loss per share $ (.62) $ - $ (.64)
======== ======== ========
Weighted average number of common
shares and common share
equivalents outstanding 24,666 1,709(5) 26,375
======== ======== ========
See accompanying notes to Unaudited Combined Financial Statements.
28
SUMMIT TECHNOLOGY, INC. AND SUBSIDIARIES
PROFORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993 PROFORMA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS; UNAUDITED) SUMMIT ADJUSTMENTS(1) COMBINED
- ------------------------------------------------------------------------------------
Net revenues $26,801 $41,809 $68,610
Cost of revenues 16,480 27,232 43,712
------- ------- -------
Gross profit 10,321 14,577 24,898
Operating expenses 19,503 13,566(3) 33,069
------- ------- -------
Operating income (loss) (9,182) 1,011 (8,171)
Other income (expense) 28 (79) (51)
------- ------- -------
Net loss $(9,154) $ 932 $(8,222)
======= ======= =======
Net loss per share $ (.39) $ - $ (.33)
======= ======= =======
Weighted average number of common
shares and common share
equivalents outstanding 23,379 1,709(5) 25,088
======= ======= =======
See accompanying notes to Unaudited Combined Financial Statements.
29
SUMMIT TECHNOLOGY, INC.
NOTES TO THE UNAUDITED PROFORMA COMBINED FINANCIAL STATEMENTS
(1) To include the accounts of Lens Express, Inc. as if the acquisition
occurred.
(2) To combine Lens Express, Inc.'s stockholders' equity with Summit
Technology, Inc.'s stockholders' equity and to reflect 1,708,500 shares
issued in connection with the pooling-of-interests.
(3) To reflect certain amounts previously recorded as dividends to shareholders
by Lens Express, Inc. as salary expense.
(4) To properly reflect income tax expense of the combined reporting entity.
(5) To reflect the issuance of 1,708,500 shares issued in connection with the
pooling-of-interests and to adjust net loss per share accordingly.