<PAGE>   1
                                                                    Exhibit 13.2
INDEPENDENT AUDITORS' REPORT

The Board of Directors
Micrion Corporation:

We have audited the accompanying consolidated balance sheets of Micrion
Corporation and subsidiaries as of June 30, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended June 30, 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
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 statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Micrion Corporation
and subsidiaries as of June 30, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 30, 1997, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP
Boston, Massachusetts
July 30, 1997


<PAGE>   2
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                         June 30,
                                                                               ----------------------------
                                                                                  1997             1996
                                                                               -----------     ------------
<S>                                                                            <C>             <C>
ASSETS (note 16) 
Current assets:
         Cash and cash equivalents                                             $ 2,676,500     $  2,081,200
         Accounts receivable (notes 3, 9 and 10)                                18,755,200       11,105,500
         Inventories (note 4)                                                   24,986,200       22,481,400
         Prepaid expenses and other current assets                                 668,200          627,100
         Net deferred income taxes (note 11)                                     1,367,200        1,816,200
                                                                               -----------     ------------
                  Total current assets                                          48,453,300       38,111,400
                                                                               -----------     ------------

Property and equipment, net (notes 5 and 7)                                      5,821,000        3,234,600
Other assets, net                                                                  109,500          224,800
                                                                               -----------     ------------
                  Total assets                                                 $54,383,800     $ 41,570,800
                                                                               ===========     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
         Accounts payable                                                        7,029,900        6,472,700
         Accrued expenses                                                        4,575,100        2,834,900
         Accrued warranty expenses                                               1,211,600        1,253,000
         Current installments of obligations under capital leases (note 7)         658,700          245,100
         Note payable to bank (notes 6 and 16)                                   6,855,000          340,000
         Customer deposits and deferred income                                     251,000          389,200
                                                                               -----------     ------------
                  Total current liabilities                                     20,581,300       11,534,900
                                                                               -----------     ------------

Obligations under capital leases, net of current installments (note 7)           1,354,600          779,100

Commitments and contingencies (notes 7 and 14)

Stockholders' equity (notes 8 and 16):
         Preferred stock, no par value; authorized 5,000,000 shares                     --               --
         Common stock, no par value; authorized 12,300,000 shares               31,551,000       31,426,800
         Retained earnings (accumulated deficit)                                   876,600       (2,172,600)
         Other equity                                                               20,300            2,600
                                                                               -----------     ------------
                  Total stockholders' equity                                    32,447,900       29,256,800
                                                                               -----------     ------------
                  Total liabilities and stockholders' equity                   $54,383,800     $ 41,570,800
                                                                               ===========     ============
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>   3
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                   For the years ended June 30,
                                                                         ------------------------------------------------
                                                                             1997              1996              1995
                                                                         ------------      ------------      ------------
<S>                                                                      <C>               <C>               <C>
Revenues:
         Product revenues (notes 9 and 10)                               $ 54,822,700      $ 38,290,000      $ 26,396,600
         Contract revenues                                                  1,156,600         1,246,200         2,371,600
                                                                         ------------      ------------      ------------
                  Total revenues                                           55,979,300        39,536,200        28,768,200
                                                                         ------------      ------------      ------------

Cost of revenues:
         Cost of product revenues                                          33,782,700        23,270,100        16,036,300
         Cost of contract revenues                                            962,400         1,241,700         2,006,200
                                                                         ------------      ------------      ------------
                  Total cost of revenues                                   34,745,100        24,511,800        18,042,500
                                                                         ------------      ------------      ------------

         Gross profit                                                      21,234,200        15,024,400        10,725,700

Operating expenses:
         Selling, general and administrative expenses                      10,449,500         7,179,000         5,134,100
         Research and development expenses                                  5,775,800         4,234,500         2,925,300
                                                                         ------------      ------------      ------------
                  Total operating expenses                                 16,225,300        11,413,500         8,059,400
                                                                         ------------      ------------      ------------

                  Income from operations                                    5,008,900         3,610,900         2,666,300

Other (expense) income:
         Litigation settlement expense (note 13)                                 --          (2,684,500)             --
         Interest income                                                      158,000           223,300           388,000
         Interest expense                                                    (471,600)          (93,300)          (21,800)
         Other                                                                  2,500            70,400           (30,300)
                                                                         ------------      ------------      ------------
                  Total other (expense) income                               (311,100)       (2,484,100)          335,900
                                                                         ------------      ------------      ------------

                  Income before (provision) benefit for income taxes        4,697,800         1,126,800         3,002,200

(Provision) benefit for income taxes (note 11)                             (1,648,600)          877,300           214,300
                                                                         ------------      ------------      ------------

         Net income                                                      $  3,049,200      $  2,004,100      $  3,216,500
                                                                         ============      ============      ============

Earnings per share:                                                      $        .72      $        .49      $        .91
                                                                         ============      ============      ============

Weighted average common and
         common equivalent shares outstanding                               4,218,800         4,077,200         3,535,000
                                                                         ============      ============      ============
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>   4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                          Retained      
                                             Common stock                 earnings         Other             Total
                                      ---------------------------     (accumulated        equity     stockholders'
                                         Shares            Amount         deficit)     (deficit)            equity  
                                      ---------      ------------     ------------     ---------     -------------
<S>                                   <C>            <C>              <C>              <C>           <C>
Balance, June 30, 1994                2,764,708      $ 17,760,300     $(7,393,200)     $(98,200)     $ 10,268,900

Issuance of common stock
         pursuant to follow-on
         offering, net of costs       1,000,000        11,054,900              --            --        11,054,900

Repurchase of common stock               (3,382)             (800)             --            --              (800)

Conversion of warrants to
         common stock                   140,000                --              --            --                --

Effect of foreign currency
         translation                         --                --              --        36,700            36,700

Decrease in loans to
         shareholders                        --                --              --        19,000            19,000

Amortization of unearned
         compensation (note 8)               --                --              --        41,800            41,800

Net income                                   --                --       3,216,500            --         3,216,500
                                      ---------      ------------     -----------      --------      ------------
Balance, June 30, 1995                3,901,326        28,814,400      (4,176,700)         (700)       24,637,000

Issuance of common stock
         pursuant to employee
         stock purchase plan              6,536            58,800              --            --            58,800

Issuance of common stock
         pursuant to employee
         stock option plan                1,750            19,100              --            --            19,100

Issuance of common stock
         pursuant to settlement
         of litigation (note 13)        119,202         2,534,500              --            --         2,534,500

Effect of foreign currency
         translation                         --                --              --       (45,500)          (45,500)

Decrease in loans to
         shareholders                        --                --              --        33,000            33,000

Amortization of unearned
         compensation (note 8)               --                --              --        15,800            15,800

Net income                                   --                --       2,004,100            --         2,004,100
                                      ---------      ------------     -----------      --------      ------------
Balance, June 30, 1996                4,028,814        31,426,800      (2,172,600)        2,600        29,256,800

Issuance of common stock
         pursuant to employee
         stock purchase plan             10,217           107,400              --            --           107,400

Issuance of common stock
         pursuant to employee
         stock option plan                1,531            16,800              --            --            16,800

Effect of foreign currency
         translation                         --                --              --        13,700            13,700

Amortization of unearned
         compensation (note 8)               --                --              --         4,000             4,000

Net income                                   --                --       3,049,200            --         3,049,200
                                      ---------      ------------     -----------      --------      ------------
Balance, June 30, 1997                4,040,562      $ 31,551,000     $   876,600      $ 20,300      $ 32,447,900
                                      =========      ============     ===========      ========      ============
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>   5
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       For the years ended June 30,  
                                                              -----------------------------------------------
                                                                     1997              1996              1995
                                                              -----------      ------------      ------------
<S>                                                           <C>              <C>               <C>
Cash flows from operating activities:
         Net income                                           $ 3,049,200      $  2,004,100      $  3,216,500
         Adjustments to reconcile net income to net cash
           used by operating activities:
             Depreciation and amortization                      1,596,400           795,800           555,800
             Unearned compensation                                  4,000            15,800            41,800
             Decrease (increase) in deferred income taxes         448,800        (1,346,400)         (469,800)
             Litigation settlement                                     --         2,534,500                --
             Changes in operating assets and liabilities:
               Accounts receivable                             (7,653,800)       (1,380,500)       (6,256,400)
               Inventories                                     (2,505,200)      (11,908,000)       (5,584,300)
               Prepaid expenses and other current assets          (41,900)         (361,600)         (133,400)
               Accounts payable                                   557,200         3,198,000         1,691,100
               Accrued expenses                                 1,679,000         1,233,100            46,900
               Accrued warranty expenses                          (34,500)          717,600            84,100
               Customer deposits and deferred income             (138,000)           33,500           177,500
                                                              -----------      ------------      ------------
         Net cash used by operating activities                 (3,038,800)       (4,464,100)       (6,630,200)
                                                              -----------      ------------      ------------
Cash flows from investing activities:
         Purchase of property and equipment                    (2,914,900)       (1,705,000)         (769,200)
         Increase in other assets                                 (42,000)           (1,100)          (35,600)
                                                              -----------      ------------      ------------
         Net cash used by investing activities                 (2,956,900)       (1,706,100)         (804,800)
                                                              -----------      ------------      ------------
Cash flows from financing activities:
         Proceeds from capital lease obligations                  494,400         1,106,600                --
         Repayments of capital lease obligations                 (564,000)         (147,700)          (39,300)
         Net borrowings from line of credit                     6,515,000           340,000                --
         Proceeds from sale of common stock, net                  124,000            77,900        11,054,900
         Repurchase of common stock, net                               --                --              (800)
                                                              -----------      ------------      ------------
         Net cash provided by financing activities              6,569,400         1,376,800        11,014,800
                                                              -----------      ------------      ------------
Effect of exchange rate changes on cash                            21,600            23,500            33,200
                                                              -----------      ------------      ------------
Increase (decrease) in cash and cash equivalents                  595,300        (4,769,900)        3,613,000
                                                              -----------      ------------      ------------
Cash and cash equivalents, beginning of year                    2,081,200         6,851,100         3,238,100
                                                              -----------      ------------      ------------
Cash and cash equivalents, end of year                        $ 2,676,500      $  2,081,200      $  6,851,100
                                                              ===========      ============      ============
Summary of noncash financing transactions:
         Fixed assets acquired under capital lease            $ 1,058,500      $    689,300      $         --
                                                              ===========      ============      ============
Supplemental disclosures of cash flow information:
         Cash paid during the year for:
         Interest                                             $   440,000      $     56,400      $     19,400
                                                              ===========      ============      ============
         Income taxes                                         $   953,000      $    154,100      $    239,700
                                                              ===========      ============      ============
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>   6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                June 30, 1997 and 1996


1) Nature of Business

Micrion Corporation (the 'Company') and its subsidiaries are engaged in the
development, production and marketing of capital equipment used in the
manufacturing and processing of semiconductor and other high technology devices.

2) Summary of Significant Accounting Policies

(a) Principles of Consolidation
The consolidated financial statements include the accounts of Micrion
Corporation and its wholly owned subsidiaries, Micrion Japan Corporation KK,
Micrion GmbH and Micrion Foreign Sales Corporation. All significant intercompany
balances and transactions have been eliminated in consolidation.

(b) Inventories
Inventories are stated at the lower of cost or market (net realizable value).
Cost is determined using the first-in, first-out (FIFO) method.

(c) Revenue
Recognition Product revenues are recorded at the time of factory acceptance by
the customer, with the exception of certain systems with significant engineering
costs, which are accounted for under the percentage-of-completion accounting
method. Sales of spare parts are recorded at the time of shipment and
maintenance service revenues are billed in advance as deferred revenue and are
recognized as the service is performed.

Contract revenues are accounted for under the percentage-of-completion
accounting method. Losses are recognized in full when they become known.

(d) Property and Equipment
Property and equipment is stated at cost. Depreciation and amortization of
property and equipment, leasehold improvements and assets under capital leases
are provided by straight-line or accelerated methods over the estimated useful
lives of the respective assets as follows:

  Furniture and fixtures                                            7 - 10 years
  Computer, engineering and production equipment                    3 - 7 years
  Sales demonstration systems                                       5 years
  Leasehold improvements                                            5 - 10 years
  Property under capital leases                                     3 - 5 years

License fees, which are included in other assets, are amortized using the
straight-line method over their estimated useful life, generally five years.

In accordance with Financial Accounting Standards Board No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," the Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If it is determined that the carrying amount of an asset cannot
be fully recovered, an impairment loss is recognized.
<PAGE>   7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2) Summary of Significant Accounting Policies (continued)

(e) New Accounting Pronouncement
In 1997, the Company adopted Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS 123), which established
financial accounting and reporting standards for stock-based employee
compensation plans. As permitted by SFAS 123, the Company measures compensation
cost in accordance with Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees." Therefore, the adoption of SFAS 123 was not
material to the Company's financial condition or results of operations. However,
the pro forma impact on net income has been disclosed in the Notes to
Consolidated Financial Statements as required by SFAS 123.

(f) Research and Development
Expenditures for research and development are charged against operations as
incurred. For the years ended June 30, 1997, 1996 and 1995, aggregate research
and development costs were $6,439,300, $5,132,100 and $4,531,700, respectively,
including $663,500, $897,600 and $1,606,400, respectively, of costs recovered
under research and development contracts.

(g) Income Taxes
The Company accounts for income taxes under the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

(h) Foreign Currency Translation
Assets and liabilities of the Company's foreign operations are translated into
U.S. dollars at the exchange rate in effect at the balance sheet date, and
revenue and expenses are translated at average rates in effect during the
period. The resulting translation adjustment is reflected within other equity on
the consolidated balance sheets. Transaction gains and losses are reflected in
the consolidated statements of operations and are immaterial.

(i) Earnings per Share
Earnings per share is computed based on the weighted average number of
equivalent shares of the Company's common stock outstanding during each period,
giving effect to stock options and warrants considered to be dilutive. Fully
diluted earnings per share is not significantly different from primary earnings
per share amounts. In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings
per Share." SFAS 128 establishes a different method of computing earnings per
share than is currently required under the provisions of Accounting Principles
Board Opinion No. 15. Under SFAS 128, the Company will be required to present
both basic earnings per share and diluted earnings per share. Basic earnings per
share is expected to be higher than the currently presented earnings per share
as the effect of dilutive stock options will not be considered in computing
basic earnings per share. The Company plans to adopt SFAS 128 in its fiscal
quarter ending December 31, 1997 and at that time all historical earnings per
share data presented will be restated to conform to the provisions of SFAS 128.

(j) Cash Equivalents
Cash equivalents consist of short-term investments with original maturities of
three months or less.
<PAGE>   8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2) Summary of Significant Accounting Policies (continued)

(k) Fair Value of Financial Instruments 
The carrying value for cash and cash equivalents, accounts receivable, accounts
payable, capital lease obligations and short-term debt approximates fair value
because of the short maturity of these instruments.

(l) Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of
credit risk consist primarily of temporary cash and cash equivalents and
accounts receivable. The Company invests its excess cash primarily in high
quality securities of short duration and limits the amount of credit exposure to
any one financial institution. The Company also provides credit, in the normal
course of business, primarily to large multinational corporations. Credit risk
on trade receivables is minimized as the result of the strong financial position
of the Company's customer base.

(m) Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

3) Accounts Receivable

Accounts receivable consist of:

<TABLE>
<CAPTION>
                                                                           June 30,
                                                                 ---------------------------
                                                                        1997            1996
                                                                 -----------     -----------
<S>                                                              <C>             <C>
Trade accounts                                                   $15,655,400     $ 9,787,600
Billed:
         Product revenues with significant engineering costs              --         180,500
         Research and development contracts in progress              190,700          86,100
Unbilled:
         Product revenues with significant engineering costs       2,791,000         936,400
         Research and development contracts in progress              118,100         114,900
                                                                 -----------     -----------
         Total receivables                                       $18,755,200     $11,105,500
                                                                 ===========     ===========
</TABLE>

4) Inventories

Inventories consist of:

<TABLE>
<CAPTION>
                                                              JUNE 30,
                                                    ----------------------------
                                                           1997             1996
                                                    -----------      -----------
<S>                                                 <C>              <C>
Raw materials and manufactured parts, net           $14,429,800      $10,081,800
Work in process                                       8,863,600       11,157,900
Finished goods                                        1,692,800        1,241,700
                                                    -----------      -----------
         Total inventories                          $24,986,200      $22,481,400
                                                    ===========      ===========
</TABLE>
<PAGE>   9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5) Property and Equipment

Property and equipment consists of:

<TABLE>
<CAPTION>
                                                              June 30,
                                                   -----------------------------
                                                           1997             1996
                                                   ------------      -----------
<S>                                                <C>               <C>
Furniture and fixtures                             $    708,400      $   623,300
Computer, engineering and production equipment        5,872,400        3,822,500
Sales demonstration systems                             345,200          345,200
Leasehold improvements                                  536,900          242,800
Property under capital lease                          3,473,300        1,884,300
                                                   ------------      -----------
                                                     10,936,200        6,918,100
Accumulated depreciation and amortization            (5,115,200)      (3,683,500)
                                                   ------------      -----------

         Net property and equipment                $  5,821,000      $ 3,234,600
                                                   ============      ===========
</TABLE>

At June 30, 1997 and 1996, accumulated amortization for property under capital
lease was $1,494,100 and $878,500 respectively.

6) Indebtedness

On October 21, 1994, the Company entered into a line of credit agreement with
Fleet Bank, N.A. which provided for borrowings up to $3.0 million. Amounts
borrowed bore interest at the bank's prime rate. On November 17, 1995, the
Company modified the line of credit to provide borrowings up to $5.0 million.
Amounts borrowed bore interest at the bank's prime rate. On May 16, 1996, the
Company entered into a second modification of the line of credit agreement to
provide borrowings up to $10.0 million. Amounts borrowed bear interest at the
bank's prime rate (8.5% at June 30, 1997). The line of credit expires on
December 1, 1997 (See Note 16 of the Notes to Consolidated Financial
Statements). At June 30, 1997 and 1996, $6,855,000 and $340,000, respectively,
were outstanding against the line of credit.

7) Leases

The Company occupies facilities under operating leases. During fiscal 1995, the
Company's headquarters lease was renegotiated with the expiration date extended
to February 2005. During fiscal 1997, the Company entered into a second
operating lease, expiring in July 2001, to expand its manufacturing capacity.
Rent expense was approximately $832,500, $592,900 and $347,000 for the years
ended June 30, 1997, 1996 and 1995, respectively. Capital lease obligations
consist of amounts due under equipment leases expiring in fiscal 2001. Property
under capital lease consists primarily of computers, engineering equipment,
marketing demonstration systems and related software.
<PAGE>   10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7) Leases (continued)

At June 30, 1997, future minimum lease payments under these noncancelable
agreements are as follows:

<TABLE>
<CAPTION>
                                                                              Capital       Operating
Year ending June 30:                                                            lease          leases
--------------------                                                      -----------      ----------
<S>                                                                       <C>              <C>
         1998                                                             $   770,600      $  803,400
         1999                                                                 731,800         775,500
         2000                                                                 583,100         775,500
         2001                                                                 116,300         531,100
         2002-2005                                                                 --       1,846,000
                                                                          -----------      ----------
         Minimum future lease payments                                      2,201,800      $4,731,500
Less amounts representing interest                                           (188,500)     ==========
                                                                          -----------
         Present value of minimum future lease payments                     2,013,300
Less current installments                                                    (658,700)
                                                                          -----------
         Obligations under capital lease, net of current installments     $ 1,354,600
                                                                          ===========
</TABLE>

In addition, the Company is responsible for additional operating expenses
incurred by the lessor under the operating lease. Such expenses are
approximately $185,000, annually.

8) Stockholders' Equity

(a) Preferred Stock 
On March 31, 1994, the stockholders approved the creation of
a new undesignated class of preferred stock consisting of 5,000,000 shares, no
par value. No shares of this class of preferred stock have been issued as of
June 30, 1997.

(b) Common Stock
In August 1993, the Board of Directors voted to adopt the 1993 Common Stock
Incentive Plan which provides for the award of up to 500,000 shares of common
stock to key employees and consultants. As of June 30, 1997, 429,698 shares of
stock have been awarded. The shares vest over a period of two to five years
depending on the employee's years of service with the Company. For the years
ended June 30, 1997, 1996 and 1995, the Company recorded $4,000, $15,800 and
$41,800 respectively, as compensation expense in connection with this award.

On May 18, 1994, the Company completed its initial public offering ('IPO') by
issuing 1,000,000 shares of common stock at $5.50 per share, and proceeds, net
of underwriters' commissions and other expenses, amounted to $4,679,400. In
conjunction with the IPO, the Company issued warrants to the underwriters for
the purchase of an aggregate of 100,000 shares of common stock at a price of
$6.60 per share. The warrants are exercisable beginning May 10, 1995 through May
10, 1999.

On December 7, 1994, the Company completed a follow-on public offering of
1,000,000 shares of common stock at $12.00 per share, and proceeds, net of
underwriters' commissions and other expenses, amounted to $11,054,900.
Concurrent with completion of this offering, 160,000 warrants issued in July
1993 were exercised on a net issue basis.

(c) Stock Options
On May 8, 1990, the Company adopted the 1990 Nonqualified Stock Option Plan.
Four hundred eighty-five (485) shares of common stock are reserved for issuance
under this plan. At June 30, 1997, 390 options to purchase common stock at $30
per share were outstanding, all of which are exercisable. There has been no
activity under the plan in fiscal 1997, 1996 and 1995.
<PAGE>   11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8) Stockholders' Equity (continued)

On March 31, 1994, the Company's stockholders approved the 1994 Omnibus Stock
Plan which initially provided for the issuance of up to 200,000 shares of common
stock pursuant to the grant of incentive stock options to employees and the
grant of nonqualified options or restricted stock to employees, consultants,
directors and officers of the Company. The stockholders also approved the 1994
Employee Stock Purchase Plan which provides for the sale of up to 100,000 shares
of common stock to eligible employees at a price at the lesser of 85% of fair
market value at either the date of grant or the date of exercise. On November 3,
1995, the Company's shareholders approved an amendment to the Company's 1994
Omnibus Stock Plan increasing the aggregate number of shares issuable under such
plan from 200,000 to 500,000 shares.

Stock option transactions for the Omnibus Stock Plan were as follows:

<TABLE>
<CAPTION>
                                                                   Weighted average
                                                Shares of         exercise price of
                                             common stock         shares under plan   
                                             ------------         -----------------
<S>                                          <C>                  <C>
Outstanding at June 30, 1994                          390                  $  30.00
                                                  -------                  --------
Granted                                           163,000                     11.05
Exercised                                              --                        --
Canceled                                               --                        --
                                                  -------                  --------
Outstanding at June 30, 1995                      163,390                     11.09
                                                  -------                  --------
Granted                                           240,000                     10.65
Exercised                                          (1,750)                    10.91
Canceled                                             (875)                    10.75
                                                  -------                  --------
Outstanding at June 30, 1996                      400,765                     10.83
                                                  -------                  --------
Granted                                            63,000                     10.00
Exercised                                          (1,531)                    10.95
Canceled                                           (1,219)                    10.93
                                                  -------                  --------
Outstanding at June 30, 1997                      461,015                  $   9.35
                                                  -------                  --------
</TABLE>

The following statement summarizes information concerning currently outstanding
and exercisable options as of June 30, 1997:

<TABLE>
<CAPTION>
                        OPTIONS OUTSTANDING                             OPTIONS EXERCISABLE
-----------------------------------------------------------------   ----------------------------
                                Weighted average   
                                       remaining         Weighted                       Weighted   
       Range of        Number   contractual life          average        Number          average  
exercise prices   outstanding            (years)   exercise price   exercisable   exercise price 
---------------   -----------   ----------------   --------------   -----------   --------------
<S>               <C>           <C>                <C>              <C>           <C>
  $09.50-$10.75     295,875                 8.55        $  10.42       115,375         $  10.51
  $10.76-$20.00     164,750                 7.52           11.19       110,125            11.07
  $20.01-$30.00         390                 2.80           30.00           390            30.00
                    -------                                            -------
                    461,015                                            225,890
                    -------                                            -------
</TABLE>

On November 17, 1994, the Company's stockholders approved the 1994 Non-Employee
Director Stock Option Plan (the 'Director Plan'). The Director Plan provides for
the issuance of a maximum amount of 50,000 shares of common stock pursuant to
the grant of stock options to eligible directors of the Company at an exercise
price equal to the fair market value of the common stock on the date of grant.
As of June 30, 1997, 30,000 options have been granted under this plan at a
weighted average exercise price of $14.46 per share, of which 18,125 shares were
exercisable and none of which have been exercised.
<PAGE>   12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations in accounting for its
stock option and employee stock purchase plans. Accordingly, no compensation
expense has been recognized in the consolidated financial statements for such
plans. Had compensation cost for the Company's stock option plans been
determined based upon the fair value at the grant date for awards under these
plans consistent with the methodology prescribed under SFAS 123, "Accounting for
Stock-based Compensation," the Company's net income would have been reduced to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                       1997                 1996
                                                 ----------           ----------
<S>                                              <C>                  <C>
Net income:
     As reported                                 $3,049,200           $2,004,100
     Pro forma                                    2,571,900            1,712,500
</TABLE>

The following assumptions were used in the calculation of these values for
fiscal 1997 and 1996: volatility of 177.3%, risk free interest rate of 5.89% and
expected life of 4.0 years. The effect of applying SFAS 123 as shown in the
above pro forma disclosure is not representative of the pro forma effect on net
income in future years because it does not take into consideration pro forma
compensation expense related to grants made prior to fiscal 1996.

(d) Warrants

The following is a summary of all outstanding warrants to purchase common stock
at June 30, 1997:

<TABLE>
<CAPTION>
            Allowable shares            Price           Expiration
              under warrants        per share                 Date
            ----------------       ----------        -------------
            <S>                    <C>               <C>
                          83       $ 9,000.00        June 30, 1998
                     100,000       $     6.60         May 10, 1999
</TABLE>

9) Marketing Agreement

In March 1988, the Company entered into a marketing agreement with a Japanese
distributor, Tokyo Electron Limited ("TEL"). The agreement grants TEL the right
to market, distribute, sell and service in Japan the Company's focused ion beam
wafer modification equipment and flat panel display laser repair equipment. The
agreement will remain in force unless terminated by mutual written agreement or
60 days written notice by either party. For the years ended June 30, 1997, 1996
and 1995, sales of $8,321,500, $8,044,700 and $7,010,600, respectively, were
made to TEL. At June 30, 1997 and 1996, receivables of $2,151,000 and $818,100,
respectively, were due.

10) Geographic and Customer Information

The following summarizes the geographic distribution of the Company's revenues:

<TABLE>
<CAPTION>
                                           For the years ended June 30,  
                                   ---------------------------------------------
TOTAL REVENUE:                            1997             1996             1995
                                   -----------      -----------      -----------
<S>                                <C>              <C>              <C>
North America                      $20,363,600      $12,402,200      $10,731,900
Far East exports                    29,158,300       23,260,800       16,215,700
Other foreign exports                6,457,400        3,873,200        1,820,600
                                   -----------      -----------      -----------
         Total revenues            $55,979,300      $39,536,200      $28,768,200
                                   ===========      ===========      ===========
</TABLE>

For the years ended June 30, 1997, 1996 and 1995, three, two and three
customers, respectively, accounted for 50%, 55% and 55%, respectively, of total
revenues. At June 30, 1997, the three customers accounted for 31% of total
accounts receivable.
<PAGE>   13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11) Income Taxes

The components of the net deferred tax assets recognized in the consolidated
balance sheets are as follows:

<TABLE>
<CAPTION>
                                                            June 30,
                                                 ------------------------------
                                                        1997               1996
                                                 -----------        -----------
<S>                                              <C>                <C>
Deferred tax assets                              $ 1,583,300        $ 1,834,500
Deferred tax liabilities                            (216,100)           (18,300)
                                                 -----------        -----------
         Net deferred tax assets                 $ 1,367,200        $ 1,816,200
                                                 ===========        ===========
</TABLE>

The approximate tax effect of temporary differences and tax credit carryforwards
is as follows:

<TABLE>
<CAPTION>
                                                              June 30,
                                                   -----------------------------
DEFERRED TAX ASSETS                                      1997               1996
                                                   ----------         ----------
<S>                                                <C>                <C>
Net operating loss carryforwards                   $       --         $  218,700
Reserves                                            1,098,600          1,063,500
Tax credit carryforwards                              484,700            552,300
                                                   ----------         ----------
         Deferred tax assets                       $1,583,300         $1,834,500
                                                   ==========         ==========
</TABLE>

The deferred tax liabilities relate to property, plant and equipment,
principally the difference between book and tax depreciation expense.

The amount recorded as net deferred tax assets as of June 30, 1997 represents
the amount of tax benefits of existing deductible temporary differences or
carryforwards that are more likely than not to be realized through the
generation of sufficient future taxable income within the carryforward period.
The Company believes that the net deferred tax asset of $1,367,200 at June 30,
1997 will more likely than not be realized in the carryforward period using
anticipated results from operations. The Company continually re-evaluates the
recoverability of deferred tax assets.

The components of the (provision) benefit for income taxes are as follows:

<TABLE>
<CAPTION>
                                                For the years ended June 30,
                                         -------------------------------------------
                                                1997             1996           1995
                                         -----------      -----------      ---------
<S>                                      <C>              <C>              <C>
Federal:
    Current                              $(1,065,000)     $  (360,700)     $ (68,100)
    Deferred                                (266,700)       1,067,800        469,800
State:
    Current                                 (120,000)         (74,900)      (180,000)
    Deferred                                (182,300)         278,600             --
Foreign:                        
    Current                                 (14,600)          (33,500)        (7,400)
    Deferred                                      --               --             --
                                         -----------      -----------      ---------
(Provision) benefit for income taxes     $(1,648,600)     $   877,300      $ 214,300
                                         ===========      ===========      =========
</TABLE>

<PAGE>   14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11) Income Taxes (continued)

The actual income tax (provision) benefit differs from the "expected" income tax
expense computed by applying the U.S. Federal corporate tax rate of 34% to
income before (provision) benefit for income taxes as follows:

<TABLE>
<CAPTION>
                                                                     For the years ended June 30,
                                                            ---------------------------------------------
                                                                   1997             1996             1995
                                                            -----------      -----------      -----------
<S>                                                         <C>              <C>              <C>
Computed "expected" income tax expense                      $(1,597,300)     $  (383,100)     $(1,020,800)
(Increase) reduction in income taxes resulting from:
         State taxes, net of federal income tax benefit        (153,800)         (46,200)        (114,700)
         Foreign taxes                                          (16,400)         (66,900)          (7,400)

         Foreign sales corporation benefit                      298,500          204,900               --
         Litigation settlement                                       --         (861,800)              --
         Other                                                 (179,600)         174,000          278,900
         Change in valuation allowance                               --        1,856,400        1,078,300
                                                            -----------      -----------      -----------
                  (Provision) benefit for income taxes      $(1,648,600)     $   877,300      $   214,300
                                                            ===========      ===========      ===========
</TABLE>

For income tax purposes, the Company has tax credit carryforwards of
approximately $485,000 at June 30, 1997. The tax credit carryforwards expire in
varying amounts in the years 2002 through 2007. The Company expects to utilize
the full amount of its tax credit carryforwards.

12) Employee Benefit Plan

The Company has a tax-qualified employee savings and retirement plan under
Internal Revenue Code Section 401(k) ('Plan'), covering all of the Company's
employees following three months of service and attainment of the age of 18.
Participants may elect to contribute to the Plan up to the lesser of the
statutorily prescribed annual limit or 20% of their pre-tax compensation. The
Plan permits, but does not require, additional matching contributions by the
Company on behalf of all participants in the Plan. Effective January 1, 1996 the
Company began matching one half of each employee's contribution up to 3% of
their salary. For fiscal 1997 and 1996, the Company made matching contributions
of $272,000 and $102,800, respectively, to the plan.

13) Settlement of Litigation

On May 7, 1996, the Company reached settlement with KLA Instruments Corporation
of litigation initiated by KLA in December, 1993, which alleged that the Company
had failed to abide with the Massachusetts Business Corporation Law and its
Articles of Organization in connection with the refinancing and recapitalization
of the Company during the period June through August 1993. Under the terms of
the noncash settlement, the Company issued 119,202 shares of Micrion common
stock in exchange for the release of all claims in the litigation, and recorded
the related expense of $2,684,500 in the fiscal 1996 fourth quarter.
<PAGE>   15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


14) Litigation

During fiscal 1997, two complaints were filed in the U.S. District Court for the
District of Massachusetts against the Company and certain of its officers, which
complaints were subsequently amended and consolidated. The consolidated
complaint purports to be brought on behalf of a class of purchasers of the
Company's common stock from April 26, 1996 through June 21, 1996. It asserts
claims for violations under the federal securities laws, alleging that the
Company made false and misleading statements to the public concerning the nature
of its sales agreement with a customer. The Company filed a motion to dismiss
the consolidated complaint for failure to state a claim. This motion was denied
on April 30, 1997. The Company believes the consolidated complaint to be without
merit and intends vigorously to defend itself against the claims. There can be
no assurance, however, that the Company will be successful in defending this
lawsuit or that money damages, if awarded, would not have a material adverse
effect on the Company.

15) Unaudited Interim Financial Information

Quarterly financial information is as follows: 
(in thousands, except per share data)

<TABLE>
<CAPTION>
For the quarters ended         September 30,   December 31,    March 31,    June 30,
----------------------         -------------   ------------    ---------    --------
<S>                            <C>             <C>             <C>          <C>
Year ended June 30, 1997
    Revenues                         $13,241        $13,394      $14,123     $15,221
    Gross profit                       5,269          5,550        5,217       5,198
    Net income                           982            993          542         532
    Net income per share                 .24            .24          .13         .13
Year ended June 30, 1996
    Revenues                         $ 8,570        $ 8,872      $ 9,715     $12,379
    Gross profit                       2,904          3,291        3,679       5,150
    Net income                           486            580          446         492
    Net income per share                 .12            .15          .11         .11
</TABLE>

Note: Due to rounding, some totals may not add.

16) Subsequent Events

In July 1997, the Company entered into a secured long-term debt loan agreement
with Fleet Bank, N.A. for $8,000,000. The loan is secured by the Company's
assets and intellectual property. The term loan bears interest at the bank's
prime rate plus 1.5% (10% at June 30, 1997). The agreement with the bank calls
for eight quarterly payments of $1,000,000 starting in the quarter ended
September 30, 1998 through the quarter ended June 30, 2000. The proceeds were
used to pay down a portion of the then outstanding balance on the line of
credit. Also, the bank extended the expiration of the current line of credit to
December 1, 1998.

On July 23, 1997, the Company's Board of Directors adopted a Shareholders Rights
Plan which is intended to protect shareholders against abusive or coercive
tactics, such as partial tender offers and acquisition of control without paying
all shareholders a fair value for their shares. The adoption of this plan was
not a response by the Company to any takeover offer, either real or anticipated.