Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
---
Filed by a Party other than the Registrant
---
Check the appropriate box:
Preliminary proxy statement --- Confidential, for use of the
- --- Commission only (as permitted
X Definitive proxy statement by Rule 14a-6(e)(2))
- ---
Definitive additional materials
- ---
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
- ---
Lunar Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
X No fee required.
- ---
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
- ---
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
- -------------------------------------------------------------------------------
- --- Fee paid previously with preliminary materials.
- --- Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Lunar Corporation
313 West Beltline Highway
Madison, Wisconsin 53713
(608) 274-2663
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE HOLDERS OF THE COMMON STOCK OF LUNAR CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of Shareholders
of Lunar Corporation (the "Company") will be held at The Sheraton Madison
Hotel, 706 John Nolen Drive, Madison, Wisconsin, on Friday, November 20, 1998,
at 1:00 p.m., local time, for the following purposes:
(1) To elect two (2) directors to serve until the 2001 Annual Meeting of
Shareholders.
(2) To transact any other business as may properly come before the Meeting or
any adjournments thereof.
Only shareholders of record at the close of business on October 9, 1998, the
record date for the Meeting, shall be entitled to notice of and to vote at the
Meeting or any adjournments thereof.
IMPORTANT
To ensure your representation at the Meeting, please sign and date the
Enclosed proxy, and return it immediately in the enclosed stamped envelope.
Sending in your proxy will not prevent you from personally voting your shares
at the Meeting, since you may revoke your proxy by attending the Meeting and
voting in person or by advising the Secretary of the Company in writing (by
later-dated proxy which is voted at the Meeting or otherwise) of such
revocation at any time before it is voted.
By Order of the Board of Directors,
/s/ Richard B. Mazess, Ph.D.
Richard B. Mazess, Ph.D.
President
Madison, Wisconsin
October 27, 1998
Lunar Corporation
313 West Beltline Highway
Madison, Wisconsin 53713
(608) 274-2663
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of the
accompanying Proxy by the Board of Directors of Lunar Corporation (the
"Company") for use at the Annual Meeting (the "Meeting") of Shareholders to be
held at The Sheraton Madison Hotel, 706 John Nolen Drive, Madison, Wisconsin,
Friday, November 20, 1998, at 1:00 p.m., local time, and at any adjournments
thereof.
At the Meeting, shareholders will consider a proposal to elect two (2)
directors to serve until the 2001 Annual Meeting of Shareholders. The Board of
Directors does not know of any other matters to be brought before the Meeting;
however, if other matters should properly come before the Meeting, it is
intended that the persons named in the accompanying Proxy will vote on such
matters at their discretion.
Shareholders who execute proxies retain the right to revoke them at any time
prior to the voting thereof by attending the Meeting and voting in person or
by advising the Secretary of the Company of such revocation in writing (by
later-dated proxy which is voted at the Meeting or otherwise).
PROXY SOLICITATION
Proxies will be solicited by mail. In addition to solicitation by mail, certain
officers and employees of the Company may solicit by telephone, telegraph, and
personally. The cost of the solicitation will be borne by the Company. The
Notice of the Meeting, this Proxy Statement, the accompanying form of Proxy,
the Report on Form 10-K filed with the Securities and Exchange Commission, and
the Annual Report to Shareholders for the fiscal year ended June 30, 1998, were
first mailed to shareholders on or about October 27, 1998.
SHAREHOLDERS ENTITLED TO VOTE
Only holders of record of the shares of Common Stock, $0.01 par value, of the
Company at the close of business on October 9, 1998, the record date for the
Meeting, are entitled to notice of and to vote at the Meeting and at any
adjournments thereof. Shareholders will be entitled to one vote for each full
share held. On October 9, 1998, there were outstanding 8,604,460 shares of
Common Stock of the Company.
VOTING INFORMATION
A shareholder may, with respect to the election of directors, (i) vote for the
election of both nominees named below to serve until the 2001 Annual Meeting of
Shareholders, (ii) withhold authority to vote for both nominees, or (iii) vote
for the election of one nominee and withhold authority to vote for the other
nominee by striking a line through such other nominee's name on the Proxy.
Proxies in the accompanying form, properly executed and received by the Company
prior to the Meeting and not revoked, will be voted as directed therein. In the
absence of a specific direction from a shareholder, the shareholder's Proxy
will be voted "FOR" the election of the director nominees named in this Proxy
Statement. If a Proxy is marked to indicate that all or a portion of the shares
represented by such Proxy are not being voted with respect to the proposal,
such non-voted shares will not be considered present and entitled to vote on
the proposal.
The affirmative vote of a plurality of the votes cast by the shares present in
person or by proxy at the Meeting and entitled to vote in the election of
directors is required to elect directors. Thus, if a quorum is present, the two
persons receiving the greatest number of votes will be elected to serve as
directors. Accordingly, non-voted shares with respect to the election of
directors will not affect the outcome of the election of directors. In
addition, withholding authority to vote for a director nominee will not prevent
such nominee from being elected.
PURPOSE OF THE MEETING
ELECTION OF DIRECTORS
The Company's By-Laws authorize the Board of Directors to fix the number of
directors, provided that such number shall be not less than six nor more than
twelve. Currently, the number is fixed at six. The By-Laws stagger the Board of
Directors by dividing the number of directors into three classes, with one
class being elected each year for a term of three years. For the 1998 Annual
Meeting, two directors, Samuel E. Bradt and Richard B. Mazess, Ph.D., are
nominees for election to the Board of Directors.
The table below sets forth certain information with respect to the nominees for
election as directors of the Company to serve until the 2001 Annual Meeting of
Shareholders. Unless otherwise specified, the shares of Common Stock
represented by the proxies solicited hereby will be voted "FOR" the election as
directors of the persons named below who have been nominated by the Board of
Directors. If, at or prior to such person's election, either nominee shall be
unwilling or unable to serve, it is presently intended that the proxies
solicited hereby will be voted for a substitute nominee designated by the Board
of Directors. The Board of Directors has no reason to believe either of the
nominees will be unwilling or unable to serve.
Positions Principal Occupations
Name and Age Held During Past 5 Years
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To serve until the 2001 Annual Meeting of Shareholders:
Samuel E. Bradt Director Director since 1984;
Age 60 President of Merganser
Corporation (a business
consulting and venture
capital company) since 1980;
Director and Chief Financial
Officer of Interactive
Buyers Network International
Ltd. (electronic commerce)
since December, 1996;
Director of several
privately held companies.
Mr. Bradt is a cousin
of Dr. Powell, a Director
of the Company.
Richard B. Mazess, Ph.D. Chairman of the Founder of the Company;
Age 59 Board, President and President and Director since
Chief Executive 1974; Chairman of the Board
Officer and Director of Bone Care
International, Inc. since
1986; Professor Emeritus of
Medical Physics at the
University of Wisconsin
-Madison since 1985.
The Board of Directors recommends you vote FOR each of the nominees named above
to serve on the Board of Directors of the Company.
The following table sets forth certain information about the directors of the
Company whose terms of office will continue after the 1998 Annual Meeting.
Positions Principal Occupations
Name and Age Held During Past 5 Years
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Terms expiring at the 1999 Annual Meeting of Shareholders:
John W. Brown Director Director since 1988;
Age 64 Chairman of the Board, Chief
Executive Officer, and
President of Stryker
Corporation (medical
devices) since 1977;
of National City Corporation
since March 1998.
Reed Coleman Director Director since 1985; Chairman
Age 65 of Madison-Kipp Corporation
(precision engineered
components)since 1964;
President and owner of The
Reed Company since 1985;
Director of Regal-Beloit
Corporation since 1975, and
several privately held
companies.
Terms expiring at the 2000 Annual Meeting of Shareholders:
Malcolm R. Powell, M.D. Director Director since 1984;
Age 67 Private investor since July
1998. President of Nuclear
Medicine Consultants from
1973 to June 1998 (nuclear
medicine practice).
Chairman and Director of IS2
Research, Inc. since July
1997 (a medical device
manufacturing and contract
research company). Director
of several privately held
companies. Dr. Powell is a
cousin of Mr. Bradt, a
Director of the Company.
James W. Nellen, II Director Director since December 1997;
Age 50 Attorney in private practice
since January 1998. General
Counsel, Secretary and Vice
President of Fort Howard
Corporation from 1982 to
December 1997.
Directors do not receive cash compensation for their services to the Company.
During the year ended June 30, 1998, non-employee directors were granted
nonqualified options to purchase 4,500 shares of Common Stock at the fair
market value on the grant date. These options expire ten years after their
grant date and vest in one-third increments on the first three anniversaries of
the grant date.
During the year ended June 30, 1998, a total of 4 meetings of the Board of
Directors were held. Each director attended 75% or more of the meetings held
while serving as a director. The Board of Directors has an Audit Committee. The
Audit Committee, composed of non-employee directors, oversees the audit of the
corporate accounts through independent auditors whom it recommends for
selection by the Board of Directors. The Committee reviews the scope of the
audit with such auditors. The Audit Committee held one meeting during the
fiscal year ended June 30, 1998. Its members are Mr. Bradt and Mr. Coleman. The
Company does not have a nominating or compensation committee of the Board of
Directors. However, the Lunar Corporation Amended and Restated Stock Option
Plan is administrated by a committee comprised of two members of the Board of
Directors. Its members are Mr. Coleman and Mr. Brown.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and officers of the Company are required by Section 16 of the
Securities Exchange Act of 1934 to report to the Securities and Exchange
Commission their transactions in, and beneficial ownership of, the Company's
Common Stock, including options to purchase Common Stock. Reports received by
the Company indicate that for the period from July 1, 1997, to June 30, 1998,
all reports were filed on a timely basis except that Mr. Peemans reported one
transaction on one report and Dr. Powell reported two transactions on one
report after the due dates for such reports.
SECURITIES BENEFICIALLY OWNED BY PRINCIPAL SHAREHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company by (i) each director of
the Company, (ii) each executive officer of the Company who is named in the
summary compensation table included in this Proxy Statement, (iii) all
directors and executive officers of the Company as a group, and (iv) each
person known by the Company to be the beneficial owner of more than 5% of the
Common Stock of the Company.
Amount and Nature of Percent
Name Beneficial Ownership of Class(1)
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Samuel E. Bradt 2,500(2) *
John W. Brown 120,000(3) 1.4%
Reed Coleman 186,750(4) 2.2
Richard B. Mazess, Ph.D. 2,845,345(5) 33.1
James W. Nellen, II 2,000(6) *
Malcolm R. Powell, M.D. 32,155(7) *
Robert A. Beckman 51,387(8) *
James A. Hanson, Ph.D. 145,837(9) 1.7
Peter Peemans 16,900(10) *
James V. Pietropaolo 6,000(2) *
All Directors and
Executive Officers as a
Group (12 persons) 3,414,874(11) 38.4
Torchmark Corporation
2001 Third Avenue South
Birmingham, AL 35233 441,500(12) 5.1
* Less than 1 percent (1%)
(1) Except as indicated below, (i) represents shares of Common Stock held of
record and beneficially as of the October 9, 1998 record date and (ii) all
shares of Common Stock are held with sole voting and investment power.
Percentage amounts are based upon an aggregate of 8,604,460 shares issued and
outstanding on October 9, 1998, and shares of Common Stock issuable within 60
days of October 9, 1998 upon exercise of stock options.
(2) Represents shares of common stock issuable within 60 days upon exercise of
stock options.
(3) Includes 30,000 shares of Common Stock issuable within 60 days upon
exercise of stock options.
(4) Includes 156,750 shares of Common Stock held by The Reed Company, of which
Mr. Coleman is sole owner, and 30,000 shares of Common Stock issuable within 60
days upon exercise of stock options.
(5) Includes 1,344,835 shares of Common Stock held by Dr. Mazess in joint
tenancy with his wife and 587,500 shares of Common Stock held by Dr. Mazess as
custodian for his daughters. Dr. Mazess' address is 313 West Beltline Highway,
Madison, Wisconsin, 53713.
(6) Represents shares of Common Stock held in a trust over which Mr. Nellen
serves as trustee.
(7) Represents shares of Common Stock held in a trust over which Dr. Powell
serves as co-trustee.
(8) Includes 51,250 shares of Common Stock issuable within 60 days upon
exercise of stock options, and 37 shares of Common Stock held by Mr. Beckman as
custodian for his children.
(9) Includes 145,500 shares of Common Stock issuable within 60 days upon
exercise of stock options.
(10) Includes 12,400 shares of Common Stock issuable within 60 days upon
exercise of stock options.
(11) Includes 283,650 shares of Common Stock issuable within 60 days upon
exercise of stock options.
(12) Based on a Schedule 13G dated January 30, 1998 furnished to the Company,
Torchmark Corporation had sole voting and dispositive power with respect to
441,500 shares of Common Stock. Torchmark Corporation also filed the Schedule
13G jointly with Waddell & Reed, Inc., a broker-dealer registered under the
Securities Exchange Act of 1934; Waddell & Reed Financial Services, Inc., a
parent holding company; United Investors Management Company, a parent holding
company; and Liberty National Life Insurance Company. Each entity that filed
the Schedule 13G indicated that it had sole voting and dispositive power with
respect to 441,500 shares of Common Stock.
EXECUTIVE COMPENSATION
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The following is a report submitted by the Board of Directors addressing the
Company's compensation policy as it related to the Company's executive officers
for fiscal year 1998.
This report by the Board of Directors and the Performance Graph contained in
this Proxy Statement shall not be deemed to be incorporated by reference by any
general statement which incorporates by reference this Proxy Statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
and they shall not otherwise be deemed filed under such Acts.
COMPENSATION POLICY. Due to the Chief Executive Officer's significant holdings
of Common Stock, the Chief Executive Officer has elected to receive a base
salary which is lower than the salary he would otherwise receive given his
duties and responsibilities and the comparative base salaries of the chief
executive officer of companies of similar size. In July 1995, the Chief
Executive Officer requested that the Company reduce his salary and eliminate
his bonus and future commissions. In October 1996, the Chief Executive Officer
resumed his salary at an annual rate of $130,000. Effective July 1997, in
connection with the scheduled annual salary review, his salary was increased to
$145,000. Currently, no bonus or commissions are paid. In accordance with past
practice, the Chief Executive Officer is not granted any options to purchase
Common Stock due to his already significant holdings of Common Stock.
With respect to all executive officers other than the Chief Executive Officer,
the goal of the Company's executive compensation policy is to ensure that an
appropriate relationship exists between executive pay and the creation of
shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policy
integrates annual base salary with cash bonuses, commissions, and stock options
based upon corporate performance and individual initiatives and performance.
Measurement of corporate performance is primarily based on Company goals and
industry performance levels. Accordingly, in years in which performance goals
and industry levels are achieved or exceeded, executive compensation would be
higher than in years in which performance is below expectations. Companies used
in comparative analyses for the purpose of determining each executive officer's
compensation are selected by the Board of Directors and include some of the
companies in the Standard & Poor's Medical Products and Supplies Index included
in the Performance Graph set forth in this Proxy Statement. The selection of
such companies is based on various factors, including industry classification
and market capitalization.
Annual base salary is designed to attract and retain qualified executives. In
addition, executive officers are eligible to be granted stock options under the
Amended and Restated Stock Option Plan (the "Plan"). The Board of Directors
believes that stock options ensure that executives have a continuing stake in
the long-term success of the Company and are an effective incentive for
executives to create value for shareholders since the value of a stock option
bears a direct relationship to the Company's stock price. The Plan was
administered in fiscal year 1998 by Mr. Coleman and Mr. Brown.
PERFORMANCE MEASURES. In evaluating annual executive compensation, the Board
of Directors considers both long- and short-term objectives. Specific measures
of short-term goals include earnings per share, sales growth, market share, and
overall profitability in comparison to other companies in competition with the
Company. Longer-term objectives include strategic planning and alliances which
may not immediately impact sales and earnings growth. The Board of Directors
does not assign any specific weights to the foregoing performance measures and
does not use a fixed formula for determining base salary, bonuses, or long-term
compensation.
FISCAL YEAR 1998 COMPENSATION. For fiscal year 1998, the Company's executive
compensation program consisted of base salary, adjusted from the prior year,
and a cash bonus based upon the performance measurements described above. In
addition, four executive officers included in the Summary Compensation Table
received commissions, and three executive officers included in the Summary
Compensation Table were granted options to purchase shares of Common Stock of
the Company. Commissions are paid to more directly compensate executive
officers for changes in the Company's performance. Stock options are granted
from time to time to members of management, based primarily on such person's
potential contribution to the Company's growth and profitability.
The Chief Executive Officer's compensation for fiscal year 1998 consisted of a
base salary of $145,000. As described above, in July 1997, the Chief Executive
Officer resumed his salary at an annual rate of $145,000. In accordance with
past practice, the Chief Executive Officer was not granted stock options under
the Plan during fiscal year 1998 due to his already significant holdings of
Common Stock.
The Board of Directors believes that linking executive compensation to
corporate performance results in a better alignment of compensation with the
Company's goals and shareholder interest. As performance goals are met or
exceeded, shareholder value should increase through increases in the market
value of the Company's Common Stock, and the executives will be rewarded
commensurately. The Board of Directors believes that compensation levels during
fiscal year 1998 adequately reflect the Company's compensation goals and
policies.
Respectfully submitted,
Samuel E. Bradt
John W. Brown
Reed Coleman
Richard B. Mazess, Ph.D.
James W. Nellen, II
Malcolm R. Powell, M.D.
SUMMARY COMPENSATION TABLE
The table below sets forth the compensation of the Company's Chief Executive
Officer and the four other most highly compensated executive officers of the
Company as of the end of fiscal year 1998.
Long-Term
Annual Compensation Compensation
------------------------ ------------
Other Annual Securities All Other
Name and Fiscal Compensation Underlying Compensation
Principal Position Year Salary($) Bonus($) ($) Options (#) ($)(6)
Richard B.
Mazess, Ph.D.(1) 1998 145,000 -- -- -- 4,000
Chairman of the 1997 105,846 -- -- -- 750
Board, President, 1996 36,356 -- -- -- 1,578
and Chief Executive
Officer
Robert A.
Beckman(2) 1998 254,033 1,125 -- 30,000 4,000
Vice President 1997 196,693 30,975 -- 35,000 2,250
of Finance 1996 166,853 2,250 -- 79,000(7) 2,250
James A.
Hanson, Ph.D.(3) 1998 194,206 1,125 -- -- 4,000
Vice President 1997 195,439 2,250 -- -- 2,250
of Marketing 1996 178,217 2,250 -- -- 2,250
Peter
Peemans(4) 1998 190,396 19,375 -- 18,000 --
Vice President 1997 181,336 10,925 -- 14,000 --
of European 1996 162,142 5,750 -- 4,000 --
Operations
James V.
Pietropaolo(5) 1998 189,573 10,125 -- 15,000 4,000
Vice President 1997 136,908 750 55,000 50,000 --
of Domestic Sales 1996 -- -- -- -- --
(1) Dr. Mazess' salary includes sales-based commissions of $6,548 for fiscal
year 1996.
(2) Mr. Beckman's salary includes sales-based commissions of $84,033, $47,078,
and $33,006 for fiscal years 1998, 1997 and 1996, respectively.
(3) Dr. Hanson's salary includes sales-based commissions of $64,206, $70,440,
and $55,411 for fiscal years 1998, 1997 and 1996, respectively.
(4) Mr. Peemans' salary includes sales-based commissions of $69,238, $51,026,
and $29,739 for fiscal years 1998, 1997 and 1996, respectively.
(5) Mr. Pietropaolo's salary includes sales-based commissions of $54,573 and
$38,408 for fiscal years 1998 and 1997, respectively.
(6) Amounts consist of Company contributions to a defined contribution plan.
(7) Represents stock options for 15,000 shares of Lunar Corporation and stock
options for 64,000 shares of Bone Care International, Inc., which was a
subsidiary of Lunar Corporation until May 8, 1996. See "Compensation Committee
Interlocks and Insider Participation" below.
AGGREGATED STOCK OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR END STOCK OPTION VALUES
The following table sets forth information on the value of unexercised stock
options as of June 30, 1998 held by the Company's executive officers named in
the Summary Compensation Table. Such officers did not exercise any stock
options during fiscal year 1998.
Number of Securities
Underlying Unexercised Value of Unexercised In-the
Stock Options at Fiscal Money Stock Options at
Year End (#) Fiscal Year End ($)(1)
Name ----------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
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Richard B.
Mazess -- -- -- --
Robert A.
Beckman 39,050 59,900 406,901 167,377
James A.
Hanson 144,000 1,500 2,580,660 16,575
Peter
Peemans 10,800 29,700 100,344 83,316
James V.
Pietropaolo 5,000 35,000 9,400 58,900
(1) Based upon the closing price of the Company's Common Stock of $18.38 on
June 30, 1998, as reported by The Nasdaq Stock Market minus the exercise price.
STOCK OPTION GRANTS IN FISCAL YEAR 1998
The following table sets forth information with respect to individual stock
option grants during fiscal 1998 to the Company's executive officers named in
the Summary Compensation Table.
Number of % of Total Potential Realizable Value
Securities Options at Assumed Annual Rates of
Underlying Granted Stock Price Appreciation for
Options During Exercise Option Term(3),(4)
Granted(1) Fiscal Year Price(2) Expiration 0% 5% 10%
Name (#) 1998 ($/Share) Date ($) ($) ($)
- -------------------------------------------------------------------------------
Richard B.
Mazess -- -- -- -- -- -- --
Robert A.
Beckman 10,000 3.5 16.25 6/24/2008 0 102,200 59,000
20,000 7.0 18.50 10/3/2007 0 232,600 89,600
James A.
Hanson -- -- -- -- -- -- --
Peter
Peemans 10,000 3.5 16.25 6/24/2008 0 102,200 59,000
8,000 2.8 18.50 10/3/2007 0 93,040 35,840
James V.
Pietropaolo 10,000 3.5 16.25 6/24/2008 0 102,200 59,000
5,000 1.7 18.50 10/3/2007 0 58,150 47,400
(1) All stock options were granted under the Company's Amended and Restated
Stock Option Plan. These options are nonqualified and vest 20% each year on the
first five anniversaries of the grant date.
(2) All grants were made at 100% of fair market value as of the grant date.
(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% assumed annual growth rates mandated by the Securities and
Exchange Commission and, therefore, are not intended to forecast possible
future appreciation, if any, in the Company's Common Stock price. The
calculations were based on the exercise prices and the 10-year term of the
options. No gain to the optionees is possible without an increase in stock
price, which will benefit all shareholders proportionately.
(4) The "Potential Realizable Value" to all shareholders of the Company as a
group which would result from the application of the same assumptions to the
8,701,210 shares of Common Stock outstanding at June 30, 1998, at the closing
price of $18.38 per share of Common Stock on June 30, 1998, as reported by The
Nasdaq Stock Market is an incremental gain of $0, $100,585,988, and
$254,858,441 for 0%, 5%, and 10%, respectively.
PERFORMANCE GRAPH
The following table compares the cumulative total shareholder return on the
Company's Common Stock for the five-year period ended June 30, 1998, with the
cumulative total shareholder return of Standard & Poor's 500 Stock Index (the
"S&P 500") and Standard and Poor's Medical Products and Supplies Index (the
"S&P Med Products").
6/30/93 06/30/94 06/30/95 6/30/96 6/30/97 6/30/98
S&P 500 $100 $102 $128 $161 $217 $282
S&P Med Products $100 $107 $154 $188 $223 $294
Lunar Corporation $100 $113 $240 $473 $298 $252
The Performance Graph assumes $100 invested on June 30, 1993 in each of the
Company's Common Stock, the S&P 500 Index and the S&P Med Products Index. The
graph also assumes the reinvestment of dividends.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 1998, the Company did not have a
compensation or similar committee. Dr. Mazess, the Chairman of the Board,
President and Chief Executive Officer of the Company, participated in decisions
concerning executive officer compensation.
Distribution of Common Stock of Bone Care - On May 8, 1996, the Company, which
then held 97.3% of the issued and outstanding shares of the common stock of
Bone Care International, Inc. (Bone Care), distributed to its shareholders of
record as of April 24, 1996, all of the shares of Bone Care common stock then
owned by the Company in a transaction intended to qualify as a tax-free
distribution (the "Distribution"). As a result of the Distribution, Bone Care
became a separate publicly owned company.
Prior to the Distribution, the Company entered into a transition agreement (the
"Transition Agreement") with Bone Care pursuant to which Dr. Mazess, Mr Beckman
and other employees of the Company would perform certain services and provide
certain assistance to Bone Care. Such services in fiscal 1998 included legal,
treasury, financial, accounting, insurance administration, employee benefits
and other services. As compensation for services provided to Bone Care by the
Company, Bone Care paid the Company fees and reimbursed certain expenses
aggregating $58,200 for fiscal 1998. Bone Care also leased from the Company
approximately 3,000 square feet in the Company's principal offices in Madison,
Wisconsin. Those lease obligations terminated upon Bone Care's relocation to
other facilities in February 1998. The Company received $16,000 in rental
payments from Bone Care during fiscal 1998. The Transition Agreement runs until
May 8, 1999; however the Company may terminate the Transition Agreement by
giving Bone Care 90 days written notice.
Dr. Mazess, the Chairman of the Board, President and Chief Executive Officer of
the Company, is also the Chairman of the Board of Bone Care and is the
beneficial owner of approximately 34% of the outstanding capital stock of Bone
Care. Mr. Beckman, Vice President of Finance of the Company, is also a director
of Bone Care and served as the Vice President of Finance of Bone Care until
November 14, 1996.
LOANS TO EXECUTIVE OFFICERS
In connection with Dr. Karam's commencement of employment as Vice President of
Operations, in August 1997 the Company provided a bridge loan in the amount of
$100,000. The loan was outstanding for a total of 26 days and was repaid in
full with interest of $418 computed at the annual rate of 5.87%.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy materials for
the 1999 Annual Meeting of Shareholders, written notice of any shareholder
proposal must be received by the Company by June 30, 1999. In addition,
pursuant to rules of the Securities and Exchange Commission, at the 1998 Annual
Meeting the Company may exercise discretionary authority when voting on a
shareholder proposal that is not described in this Proxy Statement if the
proposal was received by the Company after September 14, 1998 and the proposal
is properly presented at the 1998 Annual Meeting. The Company has not received
notice of any shareholder proposal or nomination relating to the 1998 Annual
Meeting. The 1999 Annual Meeting of Shareholders is expected to be held on
November 19, 1999. If notice of a shareholder proposal is received by the
Company after September 13, 1999 and the proposal is properly presented at the
1999 Annual Meeting, the Company will be able to exercise discretionary
authority when voting on the proposal. If notice of a shareholder proposal is
received on or prior to September 13, 1999, the proposal is not included in the
1999 Proxy Statement and proxy card, and the proposal is properly presented at
the 1999 Annual Meeting, the Company may exercise discretionary authority when
voting on the proposal if in the 1999 Proxy Statement the Company advises
shareholders on the nature of the proposal and how the Company intends to vote
on the proposal, unless the shareholder satisfies certain requirements of the
Securities and Exchange Commission, including mailing a separate proxy
statement to the Company's shareholders. All proposals and nominations should
be directed to the Company's principal executive offices at 313 West Beltline
Highway, Madison, Wisconsin, 53713, Attention: Vice President of Finance.
FINANCIAL STATEMENTS
A copy of the Annual Report to Shareholders of the Company, and the Report on
Form 10-K filed with the Securities and Exchange Commission containing audited
consolidated financial statements for the fiscal year ended June 30, 1998, is
enclosed herewith.
OTHER
KPMG Peat Marwick LLP served as the Company's independent accountants for the
year ended June 30, 1998. A decision regarding the selection of independent
accountants to audit the consolidated financial statements of the Company for
the year ending June 30, 1999 has not yet been made. It is expected that a
representative of KPMG Peat Marwick LLP will attend the 1998 Annual Meeting,
with the opportunity to make a statement if he should desire, and will be
available to respond to appropriate questions.
By Order of the Board of Directors,
/s/ Richard B. Mazess, Ph.D.
Richard B. Mazess, Ph.D.
President
Madison, Wisconsin
October 27, 1998
Proxy for
Lunar Corporation
Annual Meeting of Shareholders
November 20, 1998
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY.
The undersigned hereby appoints ROBERT A. BECKMAN and JOHN A. COMERFORD, and
each of them, as proxies, with full power of substitution, to vote for the
undersigned all shares of the Common Stock of LUNAR CORPORATION (the
"Company"), which the undersigned, as designated below, would be entitled to
vote if personally present at the Annual Meeting of Shareholders to be held at
The Sheraton Madison Hotel, 706 John Nolen Drive, Madison, Wisconsin, on
Friday, November 20, 1998, at 1:00 p.m., local time, and at any adjournments
thereof.
(1) Elect Directors
/ / GRANT AUTHORITY / / WITHHOLD AUTHORITY
to vote for nominees to vote for nominees
listed below listed below
Instructions: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.
Samuel E. Bradt Richard B. Mazess, Ph.D.
(2) In their discretion, upon such other matters as may properly come before
the meeting or any adjournments thereof.
This proxy will be voted as specified. IF NO CONTRARY SPECIFICATION IS MADE, IT
WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED ABOVE AND, IN THE
DISCRETION OF THE PERSONS DESIGNATED HEREIN AS PROXIES, UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
Please date this proxy and sign exactly as your name or names appear therein.
If shares are jointly owned, one or more joint owners should sign.
Administrators, executors, trustees and others signing in representative
capacity should indicate the capacity in which they sign. The undersigned
hereby revokes all proxies heretofore given to vote at the aforesaid meeting.
Dated , 1998
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Co-Owner Sign Here Shareholder Sign Here
