UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
--------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-18643
LUNAR CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 3845 39-1200501
(State of (Primary Standard Industry (IRS Employer
Incorporation) Classification Code Number) Identification No.)
313 West Beltline Highway
Madison, Wisconsin 53713
608-274-2663
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ----
As of April 30, 1999, 8,595,580 shares of the registrant's Common Stock, $0.01
par value, were outstanding.
LUNAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
For the quarterly period ended March 31, 1999
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial statements
Consolidated Balance Sheets
March 31, 1999, and June 30, 1998.......................3
Consolidated Statements of Income
Three and Nine Months Ended March 31, 1999
and 1998................................................5
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1999
and 1998................................................6
Notes to Consolidated Financial Statements..............7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................9
Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................12
PART II - OTHER INFORMATION......................................13
Item 1. Legal Proceedings......................................13
Item 2. Changes in Securities..................................13
Item 3. Defaults Upon Senior Securities........................13
Item 4. Submission of Matters to a Vote of Security Holders....13
Item 5. Other Information......................................13
Item 6. Exhibits and Reports on Form 8-K.......................14
SIGNATURES.......................................................15
EXHIBIT INDEX....................................................16
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
- -------------------------------------------------------------------
Assets
- -------------------------------------------------------------------
March 31, June 30,
1999 1998
(Unaudited) (Audited)
- -------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 7,735,173 $ 4,608,427
Marketable securities 3,460,286 8,117,655
Receivables:
Trade, less allowance for doubtful
Accounts of $4,383,000 at
March 31, 1999 and $3,272,000
At June 30, 1998 28,826,618 24,285,511
Short-term financed accounts
receivable 4,632,096 2,092,164
Other 309,487 929,179
- -------------------------------------------------------------------
33,768,201 27,306,854
Inventories 14,266,905 13,287,887
Deferred Income Taxes 2,051,000 1,618,000
Other Current Assets 414,874 350,360
- -------------------------------------------------------------------
Total Current Assets 61,696,439 55,289,183
Property, Plant and Equipment--At Cost:
Buildings and improvements 2,287,356 2,287,356
Furniture and fixtures 945,927 876,813
Machinery and other equipment 8,524,512 6,630,755
- -------------------------------------------------------------------
11,757,795 9,794,924
Less Accumulated Depreciation and
Amortization 6,137,296 5,086,141
- -------------------------------------------------------------------
5,620,499 4,708,783
Land 2,088,118 2,088,118
Construction in progress 2,543,792 132,702
- -------------------------------------------------------------------
10,252,409 6,929,603
Long-term Financed Accounts Receivable 4,992,543 4,095,565
Long-term Marketable Securities 13,439,198 22,783,003
Patents and Other Intangibles, Net of
Accumulated Amortization of $711,283 at
March 31, 1999 and $1,512,781 at
June 30, 1998 477,466 809,468
Other 169,731 208,136
- -------------------------------------------------------------------
$91,027,786 $90,114,958
===================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
- -------------------------------------------------------------------
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------
March 31, June 30,
1999 1998
(Unaudited) (Audited)
- -------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 5,392,428 $ 4,881,399
Customer advances and deferred income 1,444,510 1,027,872
Income taxes payable 2,378,050 3,494,822
Accrued liabilities:
Commissions payable 2,640,236 2,186,040
Compensation payable 698,051 413,084
Property, payroll, and other taxes 246,697 155,683
Accrued warranty and installation
expenses 2,638,000 2,145,000
Other 350,502 199,324
- -------------------------------------------------------------------
Total Current Liabilities 15,788,474 14,503,224
Shareholders' Equity:
Common stock--authorized 25,000,000
shares of $.01 par value; issued and
outstanding 8,593,405 shares at
March 31, 1999 and 8,701,210 at
June 30, 1998 85,934 87,012
Capital in excess of par value 23,426,055 24,936,811
- -------------------------------------------------------------------
23,511,989 25,023,823
Retained Earnings 51,633,981 50,568,281
Accumulated Other Comprehensive Income 93,342 19,630
- -------------------------------------------------------------------
75,239,312 75,611,734
- -------------------------------------------------------------------
$91,027,786 $90,114,958
===================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
- -----------------------------------------------------------------------------
Three months ended Nine Months Ended
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------
Revenues $19,749,021 $17,954,160 $65,983,823 $58,052,169
- -----------------------------------------------------------------------------
Operating Expenses
Cost of sales 11,701,195 9,452,563 37,255,038 27,730,232
Research and
development 1,803,950 1,911,251 5,618,143 5,448,947
Selling and
marketing 5,687,570 4,662,742 18,035,645 14,071,746
Provision for loss on
Brazilian
receivables 1,000,000 0 1,000,000 0
General and
administrative 1,131,034 1,057,552 3,525,061 3,010,078
- -----------------------------------------------------------------------------
21,323,749 17,084,108 65,433,887 50,261,003
- -----------------------------------------------------------------------------
(Loss) Income from
Operations (1,574,728) 870,052 549,936 7,791,166
- -----------------------------------------------------------------------------
Other Income (Expense):
Interest income 443,310 400,611 1,136,193 1,356,514
Settlement of lawsuit 0 0 (579,555) 0
Other (8,088) (253,310) 370,126 (1,092,601)
- -----------------------------------------------------------------------------
435,222 147,301 926,764 263,913
- -----------------------------------------------------------------------------
(Loss) Income Before
Income Taxes (1,139,506) 1,017,353 1,476,700 8,055,079
Income Tax Expense (315,000) 325,000 411,000 2,621,000
- -----------------------------------------------------------------------------
Net (Loss) Income $(824,506) $692,353 $1,065,700 $5,434,079
=============================================================================
Basic Earnings
per Share $(0.10) $0.08 $0.12 $0.62
=============================================================================
Diluted Earnings
per Share $(0.10) $0.08 $0.12 $0.60
=============================================================================
Weighted Average Number
Of Common Shares 8,607,330 8,800,035 8,623,714 8,758,201
=============================================================================
Weighted Average
Number Of Common and
Dilutive Potential
Common Shares 8,607,330 9,153,009 8,793,191 9,124,730
=============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
- -----------------------------------------------------------------------------
Nine months ended
March 31, March 31,
1999 1998
- -----------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income $1,065,700 $5,434,079
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,599,603 1 ,621,492
Write-off of patents 159,959 -
Changes in assets and liabilities:
Receivables (7,319,920) (140,610)
Inventories (979,018) (3,894,951)
Other current assets (64,514) (302,962)
Deferred income taxes (433,000) 1,061,000
Accounts payable 524,257 375,720
Customer advances and deferred income 416,638 312,684
Accrued liabilities 1,474,355 118,117
Income taxes payable (1,116,772) 536,738
- -----------------------------------------------------------------------------
Net Cash Provided by (Used in)
Operating Activities (4,672,712) 5,121,307
- -----------------------------------------------------------------------------
Cash Flows from Investing Activities:
Purchases of marketable securities - (14,512,714)
Sales and maturities of marketable securities 13,784,230 4,207,000
Additions to property, plant and equipment (4,373,961) (2,952,592)
Additions to patents and other intangibles (98,978) (138,229)
- -----------------------------------------------------------------------------
Net Cash Provided by (Used in)
Investing Activities 9,311,291 (13,396,535)
- -----------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from exercise of stock options 41,187 766,952
Income tax benefit from stock
option exercises 23,580 885,448
Repurchase of common stock (1,576,600) (1,078,125)
- -----------------------------------------------------------------------------
Net Cash Provided by (Used in)
Financing Activities (1,511,833) 574,275
- -----------------------------------------------------------------------------
Net Increase (Decrease) in Cash and
Cash Equivalents 3,126,746 (7,700,953)
Cash and Cash Equivalents at
Beginning of Period 4,608,427 14,417,155
- -----------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $7,735,173 $6,716,202
=============================================================================
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $1,679,995 $1,037,000
=============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements of Lunar Corporation (the "Company")
presented herein, without audit except for balance sheet information at June 30,
1998, have been prepared pursuant to the rules of the Securities and Exchange
Commission for quarterly reports on Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended June 30, 1998.
The consolidated balance sheet as of March 31, 1999, the consolidated statements
of income for the three and nine months ended March 31, 1999 and 1998, and the
consolidated statements of cash flows for the nine months ended March 31, 1999
and 1998 are unaudited but, in the opinion of management, include all
adjustments (consisting of normal, recurring adjustments) necessary for a fair
presentation of results for these interim periods. The Company has reclassified
the presentation of certain prior year information to conform with the current
presentation format.
The results of operations for the three and nine months ended March 31, 1999,
are not necessarily indicative of the results to be expected for the entire
fiscal year ending June 30, 1999.
(2) INVENTORIES
Inventories are stated at the lower of cost or market; cost is determined
principally by the first-in, first-out method. Inventories are broken down as
follows:
- --------------------------------------------------------------------------
March 31, June 30,
1999 1998
(Unaudited) (Audited)
- --------------------------------------------------------------------------
Finished goods and work in process $ 6,455,583 $ 4,682,086
Materials and purchased parts 7,811,322 8,605,801
----------- -----------
$14,266,905 $13,287,887
=========== ===========
(3) SHAREHOLDERS' EQUITY
On April 22, 1997, the Company approved a stock repurchase program pursuant to
which it may repurchase up to 1,000,000 shares of its common stock from time to
time based upon market conditions and other factors. The Company has
repurchased 314,400 shares under this program as of April 30, 1999.
(4) EARNINGS PER SHARE
The difference between the weighted average number of common shares and the
weighted average number of common and dilutive potential common shares is due to
the effect of dilutive stock options.
(5) COMPREHENSIVE INCOME / LOSS
Effective July 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" which establishes standards
to report and display comprehensive income and its components in a full set of
general purpose financial statements. The Company's comprehensive income was as
follows:
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
---------- ---------- ---------- ----------
Net Income $(824,506) $692,353 $1,065,700 $5,434,079
Other Comprehensive
Income:
Unrealized adjustment in
marketable securities (24,383) 80,055 60,484 140,621
Foreign currency
Translationadjustments (29,980) (28,320) 13,228 (49,304)
---------- ---------- ---------- ----------
Comprehensive income $(878,869) $ 744,088 $1,139,412 $5,525,396
========== ========== ========== ==========
(6) SETTLEMENT OF LAWSUIT
The Company settled a lawsuit with Osteometer Meditech A/S and Rapiscan Security
Systems Inc. during the quarter ended September 30, 1998. The Company incurred
expenses of $579,555 in the quarter ended September 30, 1998 comprised of legal
expenses, a settlement payment, and a patent write-off related to this
settlement.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Equipment sales and other revenue increased 10% to $19,749,000 in the three
months ended March 31, 1999 from $17,954,000 in the three months ended March 31,
1998. For the nine months ended March 31, 1999, equipment sales and other
revenue increased 14% to $65,984,000 from $58,052,000 in the nine months ended
March 31, 1998. Sales by product line are summarized as follows:
Revenues by Product
(in thousands)
Three Months Ended Nine Months Ended
------------------------ ------------------------
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
X-ray densitometry $12,488 $12,563 $42,390 $41,673
Ultrasound densitometry 2,171 905 5,948 3,613
Orthopedic Imaging 2,716 2,865 11,202 7,739
Service Revenue 1,750 1,382 5,186 4,150
Other 624 239 1,258 877
---------- ----------- ----------- -----------
$19,749 $17,954 $65,984 $58,052
========== =========== =========== ===========
X-ray densitometry sales in the three and nine months ended March 31, 1999 were
relatively flat compared to the prior year in spite of an increase in the number
of units sold. Average selling prices were lower due to competitive pricing
pressures and an increased mix of sales to distributors in the United States at
lower average selling prices than direct sales to end users. The increase in
ultrasound densitometry revenue is primarily due to increased unit sales in the
United States. The increase in Orthopedic Imaging sales for the current fiscal
year is primarily due to increased unit sales of the Artoscan dedicated MRI
system. The increase in service revenue is attributable to a growing installed
base of densitometers in the United States.
Cost of sales as a percentage of equipment sales averaged approximately 59% and
56% in the three and nine month periods ended March 31, 1999, respectively,
compared to 53% and 48% in the three and nine month periods ended March 31,
1998, respectively. These lower margins primarily result from a decrease in
average selling prices. Gross profit margins were also lower for the nine months
ended March 31, 1999 due to a higher mix of orthopedic imaging equipment sales,
which carry lower gross profit margins.
Research and development expenditures decreased to $1,804,000 in the three
months ended March 31, 1999 from $1,911,000 in the three months ended March 31,
1998, and increased to $5,618,000 in the nine months ended March 31, 1999 from
$5,449,000 in the nine months ended March 31, 1998. These expenses were
somewhat lower in the quarter ended March 31, 1999 due to the completion of
development work associated with the Prodigy and Achilles Express bone
densitometers. The Company expects this trend to continue and plans to spend
less on research and development in the next fiscal year.
Selling and marketing expenses were $6,688,000 in the three months ended
March 31, 1999, compared to $4,663,000 in the three months ended March 31, 1998,
representing an increase to 34% from 26% as a percentage of equipment sales. For
the nine months ended March 31, 1999, selling and marketing expenses were
$19,036,000 compared to $14,072,000 for the nine months ended March 31, 1998,
representing an increase to 29% from 24% as a percentage of equipment sales.
Four key factors account for this increase. First, the Company increased the
allowance for doubtful accounts by $1,000,000 in the quarter ended March 31,
1999 in anticipation of possible losses on it's portfolio of Brazilian
receivables. Second, the Company increased sales and marketing efforts targeted
to primary care physicians to address the expanding market for densitometry in
the United States. Third, the Company incurred substantially higher expenses to
translate product software and user documentation in order to comply with the
new European Medical Device Directive regulations. Fourth, the Company started a
direct sales and service subsidiary in France in March, 1998, which resulted in
both increased revenues and expenses in that country.
General and administration expenses increased to $1,131,000 in the three months
ended March 31, 1999 from $1,058,000 in the three months ended March 31, 1998,
and increased to $3,525,000 in the nine months ended March 31, 1999 from
$3,010,000 in the nine months ended March 31, 1998. The increases were
primarily attributable to an increase in the number of employees and an increase
in property taxes related to the Company's assembly, warehouse and office
building under construction.
Interest income was $443,000 and $1,136,000 in the three and nine months ended
March 31, 1999, compared to $401,000 and $1,357,000 in the three and nine months
ended March 31, 1998. The increase in the three month period is due to an
increase in the amount of interest from financed receivables offset by a
decrease in interest from investments. The decrease in the nine month period is
primarily the result of decreases in the amount of investments.
The effective tax rate averaged 28% in the three and nine month periods ended
March 31, 1999, compared to 32% and 33% in the three and nine month periods
ended March 31, 1998. The effective tax rate is lower in the three and nine
month periods ended March 31, 1999 versus the comparable prior year period due
to an increased proportion of tax-exempt interest income and a higher benefit
from the foreign sales corporation. The rate for the three and nine month
periods ended March 31, 1999 and March 31, 1998 is below the 34% federal
statutory rate as a result of tax-exempt interest income and the benefit of the
foreign sales corporation offset by the provision for state income taxes.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents increased $3,127,000 to $7,735,000 in the nine months
ended March 31, 1999. The increase resulted primarily from the sale or maturity
of approximately $13,784,000 of marketable securities offset by an increase in
accounts receivable of approximately $7,320,000 and additions to property plant
and equipment of approximately $4,374,000. The Company has a $16,899,000
laddered portfolio of high-grade, readily marketable municipal bonds with
various maturities not exceeding 48 months.
The Company's trade accounts receivable increased $7,359,000 to $38,761,000 at
March 31, 1999 from $31,402,000 at June 30, 1998. This increase is primarily
attributable to higher accounts receivable from financed customers in Latin
America as a result of additional financed sales in Brazil and payment delays
by Brazilian customers related to the recent currency devaluation.
The Company has approximately $8,201,000 in financed accounts receivable from
Brazilian customers as of March 31, 1999. Two finance companies also have
recourse against the Company for a maximum of approximately $1,395,000 for
financed Brazilian accounts receivable that have been sold. All of the
Brazilian accounts receivable are denominated in U.S. dollars. In January 1999
the Brazilian government allowed its currency, the real, to freely trade against
the U.S. dollar. As of May 1999, this policy change resulted in approximately a
36% devaluation of the real as compared to the U.S. dollar. The Company has
incurred some payment delays from Brazilian customers and lower sales in Brazil
as a result of this devaluation. The Company is attempting to renegotiate
longer payment terms for these Brazilian accounts receivable.
Inventories increased 7% to $14,267,000 at March 31, 1999 from $13,288,000 at
June 30, 1998. This increase is primarily attributable to an increase in
finished goods in Artoscan and densitometry.
The Company purchased a 25-acre parcel of land in January 1998 for $1,949,000
and began construction of an assembly, warehouse, and office building in October
1998. The Company projects total construction costs will be approximately
$10,750,000, of which $2,543,792 had been paid as of March 31, 1999. The Company
does not have any other pending material commitments for capital expenditures.
The Company has received a commitment from the State of Wisconsin Investment
Board to provide a 20 year term loan for up to $10,000,000 of the final building
cost. The interest rate will be fixed at the time the loan proceeds are paid.
Management believes the current level of cash and short-term investments is
adequate to finance the Company's operations for the foreseeable future.
New Accounting Pronouncements
- -----------------------------
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" is effective for financial statements for periods beginning after
June 15, 1999. SFAS No. 133 establishes accounting and reporting standards for
derivative instruments and hedging activities. The Company is evaluating the
new Statement's provisions.
Year 2000 Compliance
- --------------------
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field. To distinguish 21st
century from 20th century dates, these date code fields must be able to accept
four-digit entries.
The Company has reviewed its existing financial and other business information
systems and believes that its computer systems will be able to manage and
manipulate all material data involving the transition from 1999 to 2000 without
functional or data abnormality and without inaccurate results related to such
data. During fiscal 1998, the Company replaced its manufacturing and financial
accounting software package at a cost of approximately $230,000. This new
software package will be year 2000 compliant. The Company does not expect to
incur significant additional costs to complete its year 2000 compliance program.
It is possible that third parties, such as suppliers and distributors, may have
noncompliant computer systems or programs, which may not interface properly with
the Company's computer systems or may otherwise result in a disruption of the
Company's operations. The Company is requesting assurances from third parties
with which it has a material relationship that their computers, systems, and
programs be year 2000 compliant.
The Company currently anticipates that the expenses and capital expenditures
associated with its year 2000 compliance program will not have a material effect
on its financial position or results of operations. Because the Company's
software programs are year 2000 compliant, and the Company does not believe any
material problems will arise if a third party is not year 2000 compliant, the
Company has not developed any contingency plan.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
---------------------------------------------------------
The Company's exposure to market risk for changes in interest rates relate
primarily to the Company's investment portfolio. The Company does not use
derivative financial instruments in its investment portfolio. The Company
places its investments with high credit quality issuers and, by policy, limits
the amount of credit exposure to any one issuer. As stated in its policy, the
Company is adverse to principal loss and ensures the safety and preservation of
its invested funds by limiting default risk, market risk, and reinvestment risk.
The Company mitigates default risk by investing in only high credit quality
securities. The portfolio includes only marketable securities with active
secondary or resale markets to ensure portfolio liquidity. All investments
mature, by policy, in 48 months or less.
The Company uses forward currency contracts in its management of foreign
currency exposures. The contracts are in German Deutsche Marks, French Francs
and Belgium Francs and generally have maturities that do not exceed three
months. Realized gains and losses on such contracts are included in other
income at the time the hedged transaction occurs. There were no deferred gains
or losses at March 31, 1999. These contracts are entered into with major
financial institutions thereby minimizing the risk of credit loss.
The table below provides information about the Company's market sensitive
financial instruments and constitutes a "forward-looking statement." All items
described below are non-trading and are stated in U.S. dollars.
During fiscal year ended June 30,
- -----------------------------------------------------------------------------
Maturity Dates 1999 2000 2001 2002
- -----------------------------------------------------------------------------
ASSETS
Cash Equivalents
Variable taxable rate $6,708,104
Average taxable interest rate 4.15%
Variable tax-exempt rate $1,027,069
Average tax-exempt rate 2.79%
Marketable securities
Fixed tax-exempt rate $1,190,000 $4,241,900 $7,663,600 $3,245,000
Average tax-exempt rate 3.94% 4.24% 4.23% 4.19%
Forward contract
German DM denominated $827,221
Contracted exchange rate 1.8133:1
(DM to US$)
French Franc denominated $3,006,901
Contracted exchange rate 6.086:1
(FF to US$)
Belgium Franc denominated $426,212
Contracted exchange rate 37.54:1
(BF to US$)
PART II - OTHER INFORMATION
LUNAR CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings
On May 21, 1998 the Company filed suit against IMRO Medical
Research Ottawa ("IMRO") for infringement of the Company's
Canadian patent number 1,323,090 (the '090 patent). IMRO
manufactures and sells ultrasound bone densitometers in Canada
and has manufactured ultrasound densitometers for Norland
Medical Systems, Inc. for distribution and sales throughout the
world. This suit is pending in the Federal Court of Canada-Trial
Division.
On November 24, 1998 Lunar was issued U.S. patent number
5,841,832 (the '832 patent). On January 20, 1999 the Company
brought suit against EG&G Astrophysics Research Corporation and
its parent company EG&G, Inc. (collectively referred to as
"EG&G") in the United States District Court for the Western
District of Wisconsin for infringement of the '832 patent by
EG&G's dual- energy baggage scanners.
OTHER MATTERS: The Company is a defendant from time to time
in actions arising out of its ordinary business operations.
There are no other legal proceedings known to the Company at
this time, which it believes, would likely have a material
adverse impact on the results of operations or financial
condition of the Company. To the Company's knowledge, there are
no material legal proceedings to which any director, officer,
affiliate or more than 5% shareholder of the Company (or any
associate of the foregoing persons) is a party adverse to the
Company or any of its subsidiaries or has a material interest
adverse to the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS: Certain statements in
this filing, and elsewhere (such as in other filings by the Company
with the Securities and Exchange Commission, press releases,
presentations by the Company or its management, and oral statements)
constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements involve known
and unknown risks, uncertainties, and other factors which may cause
the actual results, performance, or achievements of the Company to be
materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements.
Such factors include, among other things, regulation, technical risks
associated with the development of new products, regulatory policies
and approvals in the United States and other countries, reimbursement
policies of public and private health care payors, introduction and
acceptance of new drug therapies, currency exchange risks,
competition from existing products and from new products or
technologies, the uncertainty of the Company's patent positions and
proprietary rights, and market and general economic factors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits furnished:
(27.1) Financial Data Schedule, March 31, 1999
(27.2) Financial Data Schedule, March 31, 1998
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LUNAR CORPORATION
(Registrant)
Date: May 14, 1999 /s/ Richard B. Mazess
- ------------------- ------------------------------
Richard B. Mazess
President
(Principal Executive Officer)
Date: May 14, 1999 /s/ Robert A. Beckman
- ------------------ ------------------------------
Robert A. Beckman
Vice President of Finance
and Treasurer
(Principal Financial and
Accounting Officer)
LUNAR CORPORATION AND SUBSIDIARIES
Exhibit Index
For the Quarterly Period Ended March 31, 1999
No. Description
- --- -----------
27.1 Financial Data Schedule, March 31, 1999
27.2 Financial Data Schedule, March 31, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from Form 10-Q for the nine months ended
March 31, 1999, and is qualified in its entirety by
reference to such financial statements.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 7,735
<SECURITIES> 16,899
<RECEIVABLES> 43,144
<ALLOWANCES> 4,383
<INVENTORY> 14,267
<CURRENT-ASSETS> 61,696
<PP&E> 16,390
<DEPRECIATION> 6,137
<TOTAL-ASSETS> 91,028
<CURRENT-LIABILITIES> 15,788
<BONDS> 0
<COMMON> 86
0
0
<OTHER-SE> 75,153
<TOTAL-LIABILITY-AND-EQUITY> 91,028
<SALES> 65,984
<TOTAL-REVENUES> 65,984
<CGS> 37,255
<TOTAL-COSTS> 65,434
<OTHER-EXPENSES> 209
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,477
<INCOME-TAX> 411
<INCOME-CONTINUING> 1,066
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,066
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from Form 10-Q for the nine months ended
March 31, 1998, and is qualified in its entirety by
reference to such financial statements.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 6,716
<SECURITIES> 32,580
<RECEIVABLES> 31,839
<ALLOWANCES> 2,684
<INVENTORY> 13,268
<CURRENT-ASSETS> 55,330
<PP&E> 11,425
<DEPRECIATION> 4,870
<TOTAL-ASSETS> 90,775
<CURRENT-LIABILITIES> 14,432
<BONDS> 0
<COMMON> 88
0
0
<OTHER-SE> 76,255
<TOTAL-LIABILITY-AND-EQUITY> 90,775
<SALES> 58,052
<TOTAL-REVENUES> 58,052
<CGS> 27,730
<TOTAL-COSTS> 50,261
<OTHER-EXPENSES> 1,093
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,055
<INCOME-TAX> 2,621
<INCOME-CONTINUING> 5,434
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,434
<EPS-PRIMARY> .62
<EPS-DILUTED> .60
</TABLE>
