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 December 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.)
726 Heartland Trail
Madison, Wisconsin 53717
608-828-2663
(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 January 31, 2000, 8,596,355 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 December 31, 1999
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION
Page
- -------------------------------------------------------------------------------
Item 1. Financial statements
Consolidated Balance Sheets
December 31, 1999, and June 30, 1999. . . . . . . . . . . .
. . . . 3
Consolidated Statements of Income
Three and Six Months Ended December 31, 1999
and 1998. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 5
Consolidated Statements of Cash Flows
Six Months Ended December 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 . . . . . . . . . . . . . . . . . . .
. . . .14
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . .
. . . .14
Item 4. Submission of Matters to a Vote of Security Holders . . . .
. . . .14
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . .
. . . .14
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
- -------------------------------------------------------------------------------
December 31, June 30,
1999 1999
(Unaudited) (Audited)
- -------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 5,860,565 $13,666,163
Marketable securities 8,264,964 4,311,834
Receivables:
Trade, less allowance for doubtful
Accounts of $3,258,000 at
December 31, 1999 and $3,524,000
at June 30, 1999 26,792,195 25,316,044
Short-term financed accounts
receivable 5,134,550 4,848,186
Other 731,737 407,056
- -------------------------------------------------------------------------------
32,658,482 30,571,286
Inventories 12,223,651 13,655,779
Deferred Income Taxes 2,335,000 1,992,000
Other Current Assets 318,021 431,931
- -------------------------------------------------------------------------------
Total Current Assets 61,660,683 64,628,993
Property, Plant and Equipment--At Cost:
Land 1,927,260 2,088,118
Buildings and improvements 9,979,158 2,287,356
Furniture and fixtures 1,376,592 1,055,780
Machinery and other equipment 10,901,578 9,368,111
Construction in progress 0 6,787,950
- -------------------------------------------------------------------------------
24,184,588 21,587,315
Less Accumulated Depreciation and
Amortization 6,663,567 6,354,858
- -------------------------------------------------------------------------------
17,521,021 15,232,457
- -------------------------------------------------------------------------------
Long-term Financed Accounts Receivable 4,183,716 4,488,753
Long-term Marketable Securities 12,205,457 11,233,298
Patents and Other Intangibles, Net of
Accumulated Amortization of $675,000 at
December 31, 1999 and $603,000 at
June 30, 1999 449,991 463,270
Other 362,947 117,390
- -------------------------------------------------------------------------------
$96,383,815 $96,164,161
===============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
- -------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------
December 31, June
30,
1999
1999
(Unaudited)
(Audited)
- -------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 4,851,307 $
9,133,277
Customer advances and deferred income 2,311,961
1,573,523
Income taxes payable 2,755,377
2,682,104
Accrued liabilities:
Commissions payable 1,919,942
2,009,340
Compensation payable 917,023
658,821
Property, payroll, and other taxes 322,462
250,150
Accrued warranty and installation
expenses 2,985,000
3,118,000
Other 416,371
393,537
- -------------------------------------------------------------------------------
Total Current Liabilities 16,479,443
19,818,752
Shareholders' Equity:
Common stock--authorized 25,000,000
shares of $.01 par value; issued
and outstanding 8,573,580 shares
at December 31, 1999 and
8,598,580 at June 30, 1999 85,736
85,986
Capital in excess of par value 23,279,566
23,454,316
Retained Earnings 56,753,676
52,922,982
Accumulated Comprehensive Income (214,606)
(117,875)
- -------------------------------------------------------------------------------
79,904,372
76,345,409
- -------------------------------------------------------------------------------
$96,383,815
$96,164,161
===============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
- -------------------------------------------------------------------------------
Three months ended Six Months
Ended
December 31, December 31, December 31,
December 31,
1999 1998 1999
1998
- -------------------------------------------------------------------------------
Revenues $23,561,208 $23,410,259 $46,474,221
$46,234,802
- -------------------------------------------------------------------------------
Operating Expenses
Cost of sales 13,207,361 13,331,918 26,623,706
25,553,844
Research and development 1,296,318 1,767,573 2,945,871
3,814,193
Selling and marketing 5,396,342 6,654,667 10,702,703
12,348,074
General and
Administrative 1,122,551 1,300,237 2,135,849
2,394,027
- -------------------------------------------------------------------------------
21,022,572 23,054,395 42,408,129
44,110,138
- -------------------------------------------------------------------------------
Income from Operations 2,538,636 355,864 4,066,092
2,124,664
- -------------------------------------------------------------------------------
Other Income (Expense):
Interest income 481,793 346,217 977,263
692,883
Other 239,679 289,580 429,339
378,214
Settlement of lawsuit 0 0 0
(579,555)
- -------------------------------------------------------------------------------
721,472 635,797 1,406,602
491,542
- -------------------------------------------------------------------------------
Income Before Income Taxes 3,260,108 991,661 5,472,694
2,616,206
Income Tax Expense 978,000 256,000 1,642,000
726,000
- -------------------------------------------------------------------------------
Net Income $2,282,108 $735,661 $3,830,694
$1,890,206
===============================================================================
Basic Earnings per Share $0.27 $0.09 $0.45
$0.22
===============================================================================
Diluted Earnings per Share $0.26 $0.08 $0.44
$0.21
===============================================================================
Weighted Average Number of
Common Shares 8,580,917 8,604,509 8,589,749
8,631,728
===============================================================================
Weighted Average Number of
Common and Dilutive
Potential Common Shares 8,715,969 8,813 397 8,740,028
8,843,154
===============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
- -------------------------------------------------------------------------------
Six months
ended
December 31,
December 31,
1999
1998
- -------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income $3,830,694
$1,890,206
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,340,394
1,287,804
Deferred income taxes (343,000)
(503,000)
Gain on sale of building (288,900)
0
Changes in assets and liabilities:
Receivables (1,777,716)
(9,109,932)
Inventories 1,432,128
(2,009,086)
Other current assets 113,910
(155,526)
Accounts payable (4,314,078)
1,920,934
Customer advances and deferred income 738,438
284,344
Accrued liabilities 130,950
1,464,464
Income taxes payable 73,273
(404,728)
- -------------------------------------------------------------------------------
Net Cash Provided by (Used in)
Operating Activities 936,093
(5,334,520)
- -------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Purchases of marketable securities (6,371,562)
0
Sales and maturities of marketable securities 1,221,900
12,069,230
Additions to property, plant and equipment (5,023,486)
(2,918,670)
Proceeds from sale of building 1,665,178
0
Additions to patents and other intangibles (58,721)
(69,427)
- -------------------------------------------------------------------------------
Net Cash Provided by (Used in)
Investing Activities (8,566,691)
9,081,133
- -------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from exercise of stock options 0
22,678
Income tax benefit from stock option exercises 0
4,245
Repurchase of common stock (175,000)
(1,436,600)
- -------------------------------------------------------------------------------
Net Cash Used in Financing Activities (175,000)
(1,409,677)
- -------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and
Cash Equivalents (7,805,598)
2,336,936
Cash and Cash Equivalents at Beginning of Period 13,666,163
4,608,427
- -------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 5,860,565
$6,945,363
===============================================================================
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $ 1,712,781
$1,380,401
===============================================================================
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 presented
herein,
without audit except for balance sheet information at June 30, 1999,
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 Lunar's Annual Report on
Form 10-K for
the year ended June 30, 1999.
The consolidated balance sheet as of December 31, 1999, the
consolidated
statements of income for the three and six months ended December 31,
1999 and
1998, and the consolidated statements of cash flows for the six
months ended
December 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.
Lunar has reclassified the presentation of certain prior year
information
to conform with the current presentation format.
The results of operations for the three and six months ended December
31,
1999, are not necessarily indicative of the results to be expected
for the
entire fiscal year ending June 30, 2000.
(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:
- -------------------------------------------------------------------------------
December 31,
June 30,
1999
1999
(Unaudited)
(Audited)
- -------------------------------------------------------------------------------
Finished goods and work in process $ 7,131,882 $
7,125,027
Materials and purchased parts 5,091,769
6,530,752
-----------
- -----------
$12,223,651
$13,655,779
===========
===========
(3) SHAREHOLDERS' EQUITY
On April 22, 1997, Lunar 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. Lunar has
repurchased 369,400 shares under this program as of January 31, 2000.
(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, Lunar 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. Lunar's comprehensive income
was
as follows:
Three Months Ended Six Months
Ended
December 31, December
31,
1999 1998 1999
1998
---------- ---------- ----------
- ----------
Net Income $2,282,108 $ 735,661 $3,830,694
$1,890,206
Other Comprehensive Income:
Unrealized adjustment in
marketable securities (24,327) 53,157 (64,623)
84,867
Foreign currency translation
adjustments (73,967) 2,785 (32,108)
43,208
---------- ---------- ----------
- ----------
Comprehensive income $2,183,814 $ 791,603 $3,733,963
$2,018,281
========== ========== ==========
==========
(6) SETTLEMENT OF LAWSUIT
Lunar settled a lawsuit with Osteometer Meditech A/S and Rapiscan
Security
Systems Inc. during the quarter ended September 30, 1998. Lunar
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 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Equipment sales and other revenue increased 1% to $23,561,000 in the
three
months ended December 31, 1999 from $23,410,000 in the three months
ended
December 31, 1998. For the six months ended December 31, 1999,
equipment sales
and other revenue increased 1% to $46,474,000 from $46,235,000 in the
six months
ended December 31, 1998. Sales by product line are summarized as
follows:
Revenues by Product
(in thousands)
Three Months Ended Six Months
Ended
-------------------------
- -------------------------
December 31, December 31, December 31,
December 31,
1999 1998 1999
1998
------------ ------------ -----------
- ------------
X-ray densitometry $13,445 $14,517 $25,458
$29,902
Ultrasound densitometry 2,993 2,344 6,097
3,759
Orthopedic Imaging 4,499 4,406 9,704
8,486
Service Revenue 2,110 1,745 4,156
3,432
Other 514 398 1,059
656
------------ ------------ ------------
- -----------
$23,561 $23,410 $46,474
$46,235
============ ============ ============
===========
X-ray densitometry sales in the three and six months ended December
31, 1999
were lower compared to the prior periods as a result of a decrease in
the number
of units sold. Average selling prices were also lower due to
competitive pricing
pressures. The increase in ultrasound densitometry revenue is
primarily due to
the introduction of the Achilles Express in May 1999. The increase
in
Orthopedic Imaging sales for the six months ended December 31, 1999
is primarily
due to increased unit sales of the E-Scan 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 56% and
57% in the three and six month periods ended December 31, 1999,
respectively,
compared to 57% and 55% in the three and six month periods ended
December 31,
1998, respectively. The lower margins in the six months ended
December 31,
1999 primarily result from a decrease in densitometry average selling
prices and
a higher mix of orthopedic imaging equipment sales which have lower
gross profit
margins.
Research and development expenditures decreased to $1,296,000 in the
three
months ended December 31, 1999 from $1,768,000 in the three months
ended
December 31, 1998, and decreased to $2,946,000 in the six months
ended December
31, 1999 from $3,814,000 in the six months ended December 31, 1998.
These
expenses were lower due to the completion of development work
associated with
the Prodigy and Achilles Express bone densitometers. Lunar expects
this trend to
continue and plans to spend less on research and development in
fiscal 2000
compared to fiscal 1999.
Selling and marketing expenses were $5,396,000 in the three months
ended
December 31, 1999, compared to $6,655,000 in the three months ended
December
31, 1998, representing a decrease to 23% from 28% as a percentage of
equipment
sales. For the six months ended December 31, 1999, selling and
marketing
expenses were $10,703,000 compared to $12,348,000 for the six months
ended
December 31, 1998, representing a decrease to 23% from 27% as a
percentage of
equipment sales. These decreases are primarily attributable to
reduced spending
on document translations, advertising, literature creation and a
reduced
headcount in the marketing department.
General and administration expenses decreased to $1,123,000 in the
three months
ended December 31, 1999 from $1,300,000 in the three months ended
December 31,
1998, and decreased to $2,136,000 in the six months ended December
31, 1999
from $2,394,000 in the six months ended December 31, 1998. In May
1999 Lunar
sold the assets of Bona Fide, Ltd. This sale resulted in lower
general and
administrative expenses.
Interest income was $482,000 and $977,000 in the three and six months
ended
December 31, 1999, compared to $346,000 and $693,000 in the three and
six
months ended December 31, 1998. The increase is due to improved
collection
experience on interest associated with financed receivables and
higher amounts
invested in marketable securities.
The effective tax rate averaged 30% in both the three and six month
periods
ended December 31, 1999, compared to the 26% and 28% in the three and
six month
periods ended December 31, 1998. The rate for the three and six
month periods
ended December 31, 1999 and 1998 is below the 34% federal statutory
rate as a
result of tax-exempt interest income and the tax benefit of the
foreign sales
corporation offset by the provision for state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $7,806,000 to $5,861,000 in the
six months
ended December 31, 1999. Lunar has a $20,470,000 laddered portfolio
of
high-grade, readily marketable municipal bonds with various
maturities not
exceeding 48 months. Total cash and marketable securities decreased
by
$2,880,000 during the six months ended December 31, 1999 primarily as
a result
of fixed asset purchases offset by the proceeds from the sale of
Lunar's
former corporate headquarters.
Lunar's trade accounts receivable increased $1,782,000 to $36,842,000
at
December 31, 1999 from $35,060,000 at June 30, 1999. This increase
is primarily
attributable to higher sales for the quarter ended December 31, 1999
as
compared to the quarter ended September 30, 1999 and higher accounts
receivable
from MRI customers which generally have longer payment terms.
Lunar has financed the sale of its equipment to Brazilian customers
for more
than eight years and has approximately $7,909,000 in outstanding
receivables
from Brazilian customers as of December 31, 1999. During fiscal
years 1998 and
1997 Lunar sold approximately $15,000,000 of Brazilian accounts
receivable to
two finance companies of which approximately $3,079,000 is
outstanding as of
December 31, 1999. The two finance companies have maximum recourse of
$1,395,000
against Lunar related to these receivables. 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 which to date has resulted in a 46% devaluation of the
real as
compared to the U.S. dollar. Lunar has incurred some payment delays
from
Brazilian customers and lower sales in Brazil as a result of this
devaluation.
Lunar has renegotiated longer payment terms for a majority of these
Brazilian
customers. As a result, collection activities have recently improved
and total
financed Brazilian accounts receivable have declined to $7,909,000
from
$8,091,000 at June 30,1999.
Inventories decreased 10% to $12,224,000 at December 31, 1999 from
$13,656,000
at June 30, 1999. This decrease is a result of management's focus on
reducing
inventory levels. Management expects inventory levels to decline
further during
fiscal year 2000.
Lunar 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. Lunar moved its assembly operations and warehouse to the new
building in
July 1999 and moved its office personnel in October 1999. Lunar does
not have
any pending material commitments for capital expenditures.
Management believes the current level of cash and short-term
investments is
adequate to finance Lunar'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, 2000. SFAS No. 133 establishes accounting and reporting
standards for
derivative instruments and hedging activities. Lunar does not expect
this
statement to have a material effect on its financial statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Lunar's exposure to market risk for changes in interest rates relate
primarily to Lunar's investment portfolio. Lunar does not use
derivative financial instruments in its investment portfolio. Lunar
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,
Lunar is adverse to principal loss and ensures the safety and
preservation
of its invested funds by limiting default risk, market risk, and
reinvestment
risk. Lunar 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.
Lunar uses forward currency contracts in its management of foreign
currency exposures. The contracts are in the European EURO 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
December 31,
1999. These contracts are with major financial institutions thereby
minimizing
the risk of credit loss.
The table below provides information about Lunar'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 2000 2001 2002
2003
- -------------------------------------------------------------------------------
ASSETS
Cash Equivalents
Variable taxable rate $5,237,615
Average taxable interest rate 4.9%
Variable tax-exempt rate $ 622,950
Average tax-exempt rate 3.83%
Marketable securities
Fixed tax-exempt rate $3,020,000 $9,171,100 $6,950,000
$1,080,000
Average tax-exempt rate 4.31% 4.19% 4.21%
4.41%
Forward contract
EURO denominated $3,134,410
Contracted exchange rate 1.0111:1
(US$ to EUR)
PART II - OTHER INFORMATION
LUNAR CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings
On May 21, 1998 Lunar filed suit in the Federal Court of Canada-Trial
Division
against International Medical Research Ottawa("IMRO") for
infringement of
Lunar's Canadian patent number 1,323,090. 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.
The parties have been involved in settlement discussions but no
definitive
settlement agreement has been reached.
On January 20, 1999 Lunar 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 U.S. patent number 5,841,832 (the 832
patent)
by EG&G's dual-energy baggage scanners. In October 1999, the parties
reached an
agreement to resolve this litigation. Under the terms of the
agreement, EG&G
will pay royalties to Lunar for all sales of products that utilize
the
technology claimed in the 832 patent.
OTHER MATTERS: Lunar is a defendant from time to time in actions
arising out of
its ordinary business operations. There are no other legal
proceedings known to
Lunar at this time, which it believes, would likely have a material
adverse
impact on the results of operations, financial condition or cash
flows of Lunar.
To Lunar's knowledge, there are no material legal proceedings to
which any
director, officer, affiliate or more than 5% shareholder of Lunar (or
any
associate of the foregoing persons) is a party adverse to Lunar or
any of its
subsidiaries or has a material interest adverse to Lunar.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The 1999 Annual Meeting of Shareholders of Lunar was held on November
19, 1999.
There were 8,598,580 shares of Lunar's $0.1 par value common stock
outstanding
as of October 8, 1999, the record date of the annual meeting. Lunar's
management
solicited proxies pursuant to Section 14 of the Securities Exchange
Act of 1934
and Regulation 14A promulgated thereunder for the annual meeting.
Two (2)
directors, John W. Brown and Reed Coleman, were elected to serve
until the 2002
annual meeting of shareholders. The directors were elected by a vote
of
7,761,684 votes "FOR" and 649,370 votes "WITHHELD AUTHORITY."
An amendment to Lunar's stock option plan to increase the number of
shares of
common stock available under the plan and to provide that shares
subject to a
stock option that is replaced by an option with a lower exercise
price will not
become available for future option grants unless shareholder approval
is
obtained was also approved. The amendment was approved by a vote of
5,853,885
votes "FOR", 2,552,784 votes "AGAINST", and 4,385 votes "ABSTAIN".
The
selection of Arthur Andersen LLP as Lunar's independent auditors was
also
approved. The selection was approved by a vote of 8,400,744 votes
"FOR" 8,685
votes "AGAINST" and 1,625 votes "ABSTAIN".
Item 5. Other Information
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS: In addition to the
historical
information presented in this quarterly report, Lunar has made and
will make
certain forward-looking statements in this report, other reports
filed by Lunar
with the Securities and Exchange Commission, reports to stockholders
and in
certain other contexts relating to future net sales, costs of sales,
other
expenses, profitability, financial resources, or products and
production
schedules. Statements relating to the foregoing or that predict or
indicate
future events and trends and which do not relate solely to historical
matters
identify forward-looking statements. Forward-looking statements are
made
pursuant to the safe harbor provisions of Section 27A of the
Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934 and are
based on
management's beliefs as well as assumptions made by and information
currently
available to management. Accordingly, Lunar's actual results may
differ
materially from those expressed or implied in such forward-looking
statements
due to known and unknown risks and uncertainties that exist in
Lunar's
operations and business environment, including, among other factors,
technical
risks associated with the development of new products, regulatory
policies in
the United States and other countries, reimbursement policies of
public and
private health care payors, introduction and acceptance of new drug
therapies,
competition from existing products and from new products or
technologies, the
failure by Lunar to produce anticipated cost savings or improve
productivity,
the timing and magnitude of capital expenditures and acquisitions,
currency
exchange risks, economic and market conditions in the United States,
Europe and
the rest of the world, changes in customer spending levels, the cost
and
availability of raw materials, and other risks associated with
Lunar's
operations. Although Lunar believes that its forward-looking
statements are
based on reasonable assumptions, there can be no assurance that
actual results,
performance or achievements will not differ materially from any
future results,
performance or achievements expressed or implied by such
forward-looking
statements. Readers are cautioned not to place undue reliance on
forward-looking statements. Lunar disclaims any obligation to update
any such
factors or to publicly announce any revisions to any of the
forward-looking
statements contained herein to reflect future events or developments.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits furnished:
(10.1) Lunar Corporation Amended and Restated Stock Option Plan
(10.2) Forms of Stock Option Agreements
(27.1) Financial Data Schedule, December 31, 1999
(27.2) Financial Data Schedule, December 31, 1998
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Lunar during the quarter ended
December 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: February 10, 2000 /s/ Richard B.
Mazess
- ---------------------
Richard B. Mazess
President
(Principal Executive
Officer)
Date: February 10, 2000 /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 December 31, 1999
No. Description
- ---- -----------
10.1 Lunar Corporation Amended and Restated Stock Option Plan
10.2 Forms of Stock Option Agreements
27.1 Financial Data Schedule, December 31, 1999
27.2 Financial Data Schedule, December 31, 1998
LUNAR CORPORATION
AMENDED AND RESTATED
STOCK OPTION PLAN
1. PLAN. To provide incentives to officers, key employees and
consultants
of Lunar Corporation (the "Company"), its subsidiaries, and any other
entity
(collectively "subsidiaries") designated by the Board of Directors of
the
Company(the "Board"), and members of the Board to contribute to the
success and
prosperity of the Company, based upon the ownership of the common
stock, par
value $.01, of the Company ("Common Stock"), the Committee
hereinafter
designated, may grant nonqualified stock options to officers, key
employees,
consultants and eligible members of the Board on the terms and
subject to the
conditions stated in this Plan.
2. ELIGIBILITY. Officers, key employees and consultants of the
Company
and its subsidiaries and members of the Board who are not employees
of the
Company ("non-employee directors") shall be eligible, upon selection
by the
Committee, to receive stock options as the Committee, in its
discretion, shall
determine.
3. SHARES ISSUABLE. The maximum number of shares of Common
Stock to be
issued after the effective date of this Plan pursuant to all grants
of stock
options hereunder shall be 2,400,000, subject to adjustment in
accordance with
Section 5. Shares of Common Stock subject to a stock option granted
hereunder,
which are not issued by reason of the expiration, cancellation or
other
termination of such stock option, shall again be available for future
grants of
stock options under this Plan; provided, however, that in the event a
stock
option is granted under this Plan in replacement or cancellation of,
or in
exchange for, an outstanding stock option previously granted under
this Plan or
any other plan of the Company, and the option price per share of the
newly
granted stock option is less than the option price per share of the
stock option
being replaced, canceled or exchanged, then the shares of Common
Stock subject
to the replaced, canceled or exchanged stock option shall not be
available for
future grants of stock options under this plan, except to the extent
a majority
of the outstanding shares of Common Stock approve any such
replacement,
cancellation or exchange.
Shares of Common Stock to be issued may be authorized and
unissued shares
of Common Stock, treasury stock, or a combination thereof.
To the extent required by Section 162(m) of the Internal Revenue
Code of
1986, as amended (the "Code"), and the rules and regulations
thereunder, the
maximum number of shares of Common Stock with respect to which
options may be
granted during any calendar year to any person shall be 100,000,
subject to
adjustment as provided in Section 5.
4. ADMINISTRATION OF THE PLAN. This Plan shall be administered
by a
committee designated by the Board (the "Committee") consisting of two
or more
members of the Board, each of whom shall be a "Non-Employee Director"
within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the
"Exchange Act"), and an "outside director" within the meaning of
Section 162(m)
of the Code.
The Committee shall, subject to the terms of this Plan,
establish
eligibility guidelines, select officers, key employees, consultants
and
non-employee directors for participation in this Plan and determine
the number
of shares of Common Stock subject to a stock option granted
hereunder, the
exercise price for such shares of Common Stock, the time and
conditions of
vesting or exercise and all other terms and conditions of the stock
option,
including, without limitation, the form of the option agreement. The
Committee
may establish rules and regulations for the administration of the
Plan,
interpret the Plan and impose, incidental to the grant of a stock
option,
conditions with respect to the grant or award of stock options or
competitive
employment or other activities not inconsistent with or conflicting
with this
Plan. All such rules, regulations and interpretations relating to
this Plan
adopted by the Committee shall be conclusive and binding on all
parties. All
grants of stock options under this Plan shall be evidenced by written
agreements
between the Company and the optionees, and no such grant shall be
valid until so
evidenced.
5. CHANGES IN CAPITALIZATION. Appropriate adjustments shall be
made by
the Committee in the maximum number of shares to be issued under the
Plan and
the maximum number of shares which are subject to any stock option
granted
hereunder, and the exercise price therefor, to give effect to any
stock splits,
stock dividends and other relevant changes in the capitalization of
the Company
occurring after the effective date of this Plan (which shall not
include the
sale by the Company of shares of Common Stock or securities
convertible into
shares of Common Stock).
6. EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be
submitted to the
shareholders of the Company for approval and, if approved, shall
become
effective on the date thereof. This Plan shall terminate ten years
after it
becomes effective unless terminated prior thereto by action of the
Board. No
further grants shall be made under this Plan after termination, but
termination
shall not affect the rights of any optionee under any grants made
prior to
termination.
7. AMENDMENTS. This Plan may be amended by the Board in any
respect,
except that no amendment may be made without shareholder approval if
such
amendment would (a) increase the maximum number of shares of Common
Stock
available for issuance under this Plan (other than as provided in
Section 5),
(b) amend the first paragraph of Section 3 to permit shares subject
to an
outstanding stock option that is replaced, canceled or exchanged for
a newly
granted stock option with an option price per share lower than the
option price
per share of the outstanding stock option to become available for
future grants,
or (c) otherwise require shareholder approval.
8. EXISTING STOCK OPTIONS. Stock options granted by the
Company prior to
the date of shareholder approval of this Plan shall continue in
effect in
accordance with their terms.
9. GRANTS OF STOCK OPTIONS. Options to purchase shares of
Common Stock
may be granted hereunder to such eligible officers, key employees,
consultants,
and non-employee directors as may be selected by the Committee.
10. OPTION PRICE. The option price per share of Common Stock
purchasable
upon exercise of an option granted hereunder shall be determined by
the
Committee; PROVIDED, HOWEVER, that the option price per share of
Common Stock
purchasable upon exercise of an option granted under this Plan shall
be 100% of
the fair market value of a share of Common Stock on the date of grant
of such
option. For purposes hereof, "fair market value" shall be determined
by the
Committee.
11. STOCK OPTION PERIOD. Each stock option granted hereunder
may be
granted at any time on or after the effective date, and prior to the
termination, of this Plan. The Committee shall determine whether
such stock
option shall become exercisable in cumulative or non-cumulative
installments or
in full at any time. An exercisable stock option may be exercised in
whole or
in part with respect to whole shares of Common Stock only. The
period for the
exercise of each stock option shall be determined by the Committee.
12. EXERCISE OF STOCK OPTIONS. (a) Upon exercise, the option
price may be
paid in cash, in shares of Common Stock having a fair market value on
the date
of exercise equal to the option price, or in a combination thereof.
The Company
may arrange or approve of a cashless option exercise procedure which
complies
with the provisions of Section 16 of the Exchange Act and the rules
and
regulations thereunder.
(b)Unless otherwise set forth in the Stock Option Agreement, an
option may
be exercised during an optionee's continued employment with the
Company or one
of its subsidiaries, or service on the Board, as the case may be,
and, except in
the event of such optionee's death, within a period of 30 days
following
termination of such employment or service, but only to the extent
exercisable
and within the term of such option at the time of the termination of
such
employment or service; provided, however, that if employment of the
optionee by
the Company or one of its subsidiaries or service on the Board shall
have
terminated by reason of retirement after age 60, then the option may
be
exercised within a period not in excess of one year following such
termination
of employment or service on the Board, but only to the extent
exercisable and
within the term of such option at the time of such termination of
employment or
service.
(c)Unless otherwise set forth in the Stock Option Agreement, no
option
shall be transferable except that (1) in the event of the death of an
optionee
(i) during employment or service on the Board, as the case may be,
(ii) within a
period of one year after termination of employment or service on the
Board, as
the case may be, by reason of retirement after age 60 at a time when
the option
is otherwise exercisable or (iii) within 30 days after termination of
employment
or service on the Board, as the case may be, for any other reason,
outstanding
stock option may be exercised, but only to the extent exercisable and
within the
term of such option prior to the application of this Section 12, by
the
executor, administrator, personal representative, beneficiary or
similar person
of such deceased optionee within one year of the death of such
optionee in the
case of clauses (i) and (ii) or within 90 days of the death of such
optionee in
the case of clause (iii) and (2) the Committee may consent to the
transfer or
transferability of any particular option in the manner approved by
the
Committee.
13. ACCELERATION OF OPTIONS UPON A CHANGE IN CONTROL. The
following
provisions shall apply in the event of a "Change in Control":
(a) In the event of a Change in Control, any stock options not
previously
exercisable in full shall become fully exercisable.
(b) For purposes hereof, "Change in Control" means:
(1) The acquisition by any individual, entity or group (a
"Person"),
including any "person" within the meaning of Section 13(d)(3) or
14(d)(2) of the
Exchange Act, of beneficial ownership within the meaning of Rule
13d-3
promulgated under the Exchange Act, of 50% or more of the then
outstanding
shares of Common Stock (the "Outstanding Common Stock"); PROVIDED,
HOWEVER, that
the following acquisitions shall not constitute a Change in Control:
(A) any
acquisition by the Company, (B) any acquisition by an employee
benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation
controlled by the Company, (C) any acquisition by an underwriter or
underwriters
as part of a BONA FIDE public distribution of securities of the
Company or (D)
any acquisition by any Person which beneficially owned as of the
effective date
of this Plan, 30% or more of the outstanding Common Stock; and
PROVIDED FURTHER
that, for purposes of clause (A), if any Person (other than the
Company or any
employee benefit plan (or related trust) sponsored or maintained by
the Company
or any corporation controlled by the Company) shall become the
beneficial owner
of 50% or more of the outstanding Common Stock by reason of an
acquisition by
the Company and such Person shall, after such acquisition by the
Company, become
the beneficial owner of any additional shares of the Outstanding
Common Stock
and such beneficial ownership is publicly announced, such additional
beneficial
ownership shall constitute a Change in Control;
(2) Individuals who, as of the date hereof, constitute the Board
(the
"Incumbent Board") cease for any reason to constitute at least a
majority of
such Board; PROVIDED, HOWEVER, that any individual who becomes a
director of the
Company subsequent to the date hereof whose election, or nomination
for election
by the Company's shareholders, was approved by the vote of at least a
majority
of the directors then comprising the Incumbent Board shall be deemed
to have
been a member of the Incumbent Board; and PROVIDED FURTHER, that no
individual
who was initially elected as a director of the Company as a result of
an actual
or threatened election contest, as such terms are used in Rule 14a-11
of
Regulation 14A promulgated under the Exchange Act, or any other
actual or
threatened solicitation of proxies or consents by or on behalf of any
Person
other than the Board shall be deemed to have been a member of the
Incumbent
Board;
(3) Approval by the shareholders of the Company of a
reorganization, merger
or consolidation unless, in any such case, immediately after such
reorganization, merger or consolidation, (i) more than 50% of the
then
outstanding shares of common stock of the corporation resulting from
such
reorganization, merger or consolidation and more than 50% of the
combined voting
power of the then outstanding securities of such corporation entitled
to vote
generally in the election of directors is then beneficially owned,
directly or
indirectly, by all or substantially all of the individuals or
entities who were
the beneficial owners, respectively, of the Outstanding Common Stock
immediately
prior to such reorganization, merger or consolidation and in
substantially the
same proportions relative to each other as their ownership,
immediately prior to
such reorganization, merger or consolidation, of the Outstanding
Common Stock,
(ii) no Person (other than the Company, any employee plan (or related
trust)
sponsored or maintained by the Company or the corporation resulting
from such
reorganization, merger or consolidation (or any corporation
controlled by the
Company) and any Person which beneficially owned, immediately prior
to such
reorganization, merger or consolidation, directly or indirectly, 30%
or more of
the Outstanding Common Stock) beneficially owns, directly or
indirectly, 50% or
more of the then outstanding shares of common stock of such
corporation or 50%
or more of the combined voting power of the then outstanding
securities of such
corporation entitled to vote generally in the election of directors
and (iii) at
least a majority of the members of the Board of directors of the
corporation
resulting from such reorganization, merger or consolidation were
members of the
Incumbent Board at the time of the execution of the initial agreement
or action
of the Board providing for such reorganization, merger or
consolidation; or
(4) Approval by the shareholders of the Company of (i) a plan of
complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition
of all or substantially all of the assets of the Company other than
to a
corporation with respect to which, immediately after such sale or
other
disposition, (A) more than 50% of the then outstanding shares of
common stock
thereof and more than 50% of the combined voting power of the then
outstanding
securities thereof entitled to vote generally in the election of
directors is
then beneficially owned, directly or indirectly, by all or
substantially all of
the individuals and entities who were the beneficial owners,
respectively, of
the Outstanding Common Stock immediately prior to such sale or other
disposition
and in substantially the same proportions relative to each other as
their
ownership, immediately prior to such sale or other disposition, of
the
Outstanding Common Stock, (B) no Person (other than the Company, any
employee
benefit plan (or related trust) sponsored or maintained by the
Company or such
corporation (or any corporation controlled by the Company) and any
Person which
beneficially owned, immediately prior to such sale or other
disposition,
directly or indirectly, 30% or more of the Outstanding Company Common
Stock)
beneficially owns, directly or indirectly, 50% or more of the then
outstanding
shares of common stock thereof or 50% or more of the combined voting
power of
the then outstanding securities thereof entitled to vote generally in
the
election of directors and (C) at least a majority of the members of
the Board of
directors thereof were members of the Incumbent Board at the time of
the
execution of the initial agreement or action of the Board providing
for such
sale or other disposition.
LUNAR CORPORATION
NON-QUALIFIED STOCK OPTION
Lunar Corporation (the "Company") hereby irrevocably grants to ? (the
"Employee") an option to purchase from time to time all or any part
of a total
of ? common shares of the Company, at a price of $? per share, upon
the terms
and conditions set forth below.
This option is granted as of ? under the Lunar Corporation Amended
and
Restated Stock Option Plan (herein called the "Plan") in
consideration for
employee's agreement that any dispute with the company will be
submitted
exclusively to arbitration according to the procedure described in
Attachment
A hereto; and for the purpose of furnishing to the Employee an
appropriate
incentive to improve operations and increase profits, and encourage
the
Employee to continue employment with the Company and its
subsidiaries.
The terms and conditions of the option are as follows:
1. This option may, but need not, be exercised in installments,
but may
be exercised only to the extent, and within the time periods,
described
below. During the lifetime of the Employee, it may be exercised
only by
the Employee and (except as provided below) only while in the
employ of
the Company or any of its subsidiaries.
2. The option may be exercised only after one year following
the
granting date. Termination of employment in this one-year
period will
terminate all rights under the option. After one year from the
granting
date, one-fifth of the total number of shares covered by this
option may
be exercised; after two years from the granting date, two-fifths
of the
total number of shares covered by this option may be exercised;
after
three years from the granting date, three-fifths of the total
number of
shares covered by this option may be exercised; after four years
from the
granting date, four-fifths of the total number of shares covered
by this
option may be exercised; and after five years, this option shall
be
exercisable in full. The right to purchase shall cumulate so
that shares
may be purchased at any time after becoming eligible for
purchase until
termination of the option.
3. Notwithstanding the foregoing provisions of this paragraph
2, this
option shall become fully exercisable in the event of a "Change
in
Control" of the Company. A Change in Control is more fully
defined in
the Plan Document, but includes:
(i) The sale or other disposition by the Company of all or
substantially
all of its assets to a person, firm or other entity not
controlling,
controlled by or under common control with the Company;
(ii) The sale or other disposition (including a merger or
consolidation)
of capital stock of the Company if, as a consequence
thereof,
capital stock representing more than 50% of the Company's
total
voting power is sold or disposed of, in one or a series of
related
transactions, to a person, firm or other entity not
controlling,
controlled by, or under common control with the Company.
4. If employment with the Company terminates at a time when the
Employee
is entitled to exercise all or a part of the option, for any
reason other
than death, the option shall expire as of thirty (30) days after
written
notice of termination; provided that if the termination of
employment is
by reason of retirement (under a pension or retirement plan of
the
Company or subsidiary), this option may be exercised by the
Employee
within twelve months after the date of retirement but only to
the extent
exercisable on said date of retirement. A leave of absence
approved in
writing by the Human Resources Manager and the President shall
not be
termination of employment for purposes of the Plan.
5. In the event of death of the Employee during employment or
after
retirement at a time when this option is otherwise exercisable,
the
option may be exercised within twelve months after such death,
and only:
a. By the executor or administrator of the estate of the
Employee
or the person or persons to whom rights under the
option have
passed by will or the laws of descent and
distribution; and
b. To the extent that the Employee was entitled to do so
at the
date of death.
6. The option may not, under any circumstances, be exercised
after
expiration of ten (10) years from the granting date.
7. No fractional share may be purchased under this option
except in
combination with a fraction or fractions under another option or
options
granted under the Program, and then only to the extent that such
combination equals a full share.
8. Nothing herein confers upon the Employee any right to
continue in the
employ of the Company or of any subsidiary.
9. This option shall not be transferable or assignable, in
whole or in
part, except (a) by will or by the laws of descent and
distribution or
(b) as may be approved by the Committee. Subject to the
foregoing, this
option may not be assigned, transferred (except as aforesaid),
pledged,
or hypothecated in any way, whether by operation of law or
otherwise, and
shall not be subject to execution, attachment, or similar
process. Any
attempt at assignment, transfer, pledge, hypothecation, or other
disposition of this option contrary to the provisions hereof,
and the
levy of any attachment or similar process upon this option,
shall be null
and void and without effect.
10. The shares of common stock issuable to Optionee upon
exercise of
this option ("Option Stock") are expressly subject to the terms
of the
Bylaws of the corporation as may be amended by the Shareholders
from time
to time. No transfer of Option Stock may be made except in
accordance
with the provisions of the Bylaws. By accepting this option,
Optionee
hereby agrees that, as an express condition to receiving shares
of common
stock issuable upon exercise of this option, Optionee and his
spouse will
execute whatever documents the Company requires so as to bind
the
Optionee and his spouse, and the shares of common stock issuable
upon
exercise of this option, to the terms of the Bylaws.
11. All terms and conditions of this option agreement are
subject to and
shall be interpreted according to the terms of the Lunar
Corporation
Amended and Restated Stock Option Plan (attached hereto).
12. Prior to the exercise of this option and as a condition to
the
Company's obligation to deliver shares upon such exercise, the
Optionee
shall make arrangements satisfactory to the Company for the
payment of
any applicable federal or other withholding taxes payable as a
result
thereof.
13. The option may be exercised only by delivering to the
Secretary or
other designated employee of the Company a written notice of
exercise,
specifying the number of common shares with respect to which the
option
is then being exercised, and accompanied by payment of the full
purchase
price of the shares being purchased in cash, or by the surrender
of other
common shares of the Company held by the Employee having a then
fair
market value equal to the purchase price, or a combination
thereof, plus
payment in cash of the full amount of any taxes which the
Company
believes are required to be withheld and paid with respect to
such
exercise, and in the event the option is being exercised by a
person or
persons other than the Employee, such appropriate tax clearance,
proof of
the right of such person or persons to exercise the option, and
other
pertinent data as the Company may deem necessary.
14. The Company shall issue a certificate or certificates for
shares
purchased upon exercise of the option; however, the Company
shall not be
required to issue or deliver any certificate for shares
purchased pending
compliance with all applicable federal and state securities and
other
laws (including any registration requirements) and compliance
with rules
and practices of any stock exchange upon which the Company's
common
shares are listed.
15. In the event that there is any change in the number of
issued common
shares of the Company without new consideration to the Company
(such as
by stock dividends or stock split-ups), then (i) the number of
shares at
the time unexercised under this option shall be changed in
proportion to
such change in issued shares; and (ii) the option price for the
unexercised portion of the option granted shall be adjusted so
that the
aggregate consideration payable to the Company upon the purchase
of all
shares not theretofore purchased shall not be changed.
If the outstanding common shares of the Company shall be
combined, or be
changed into another kind of stock of the Company or into
securities of
another corporation, whether through recapitalization,
reorganization,
sale, merger, consolidation, etc., the Company shall cause
adequate
provision to be made whereby the person or persons entitled to
exercise
this option shall thereafter be entitled to receive, upon due
exercise of
any portion of the option, the securities equivalent to those
which that
person would have been entitled to receive for common shares
acquired
through exercise of the same portion of such option immediately
prior to
the effective date of such recapitalization, reorganization,
sale,
merger, consolidation, etc. If appropriate, due adjustment
shall be made
in the per-share or per-unit price of the securities purchased
on
exercise of this option following said recapitalization,
reorganization,
sale, merger, consolidation, etc.
16. Upon written request, the Company agrees to furnish the
Optionee a
copy of its annual financial statements within 120 days after
the end of
each fiscal year.
17. Neither this option, shares issued upon its exercise, any
excess of
market value over option price, nor any other rights, benefits,
values,
or interest resulting from the granting of this option shall be
considered as compensation for purposes of any pension or
retirement
plan, insurance plan, investment or stock purchase plan, or any
other
employee benefit plan of the Company or any of its subsidiaries.
18. Every notice or other communication relating to this
Agreement shall
be in writing and shall be mailed to or delivered to the party
for whom
it is intended in each case properly addressed, if to the
Company at its
principal place of business, Attention: Corporate President, or
if
mailed or delivered to the Optionee at his address set forth
below his
signature to this Agreement (or to such other address as may
hereafter be
designated in writing by either party to this Agreement to the
other).
IN WITNESS WHEREOF, the Company has caused this option to be
executed by its duly authorized officers as of the granting date
above set forth.
_________________________________________________
President and Date
Chief Executive Officer
_________________________________________________
Attest
_________________________________________________
Secretary Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information
extracted from Form 10-Q for the six months ended
December 31, 1999, and is qualified in its
entirety by
reference to such financial statements.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 5,861
<SECURITIES> 20,470
<RECEIVABLES> 40,100
<ALLOWANCES> 3,258
<INVENTORY> 12,224
<CURRENT-ASSETS> 61,661
<PP&E> 24,185
<DEPRECIATION> 6,664
<TOTAL-ASSETS> 96,384
<CURRENT-LIABILITIES> 16,479
<BONDS> 0
<COMMON> 86
0
0
<OTHER-SE> 79,819
<TOTAL-LIABILITY-AND-EQUITY> 96,384
<SALES> 46,474
<TOTAL-REVENUES> 46,474
<CGS> 26,624
<TOTAL-COSTS> 42,408
<OTHER-EXPENSES> (429)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,473
<INCOME-TAX> 1,642
<INCOME-CONTINUING> 3,831
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,831
<EPS-BASIC> .45
<EPS-DILUTED> .44
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information
extracted from Form 10-Q for the six months ended
December 31, 1998, and is qualified in its
entirety by
reference to such financial statements.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 6,945
<SECURITIES> 18,703
<RECEIVABLES> 43,962
<ALLOWANCES> 3,414
<INVENTORY> 15,172
<CURRENT-ASSETS> 63,827
<PP&E> 15,059
<DEPRECIATION> 5,785
<TOTAL-ASSETS> 93,945
<CURRENT-LIABILITIES> 17,725
<BONDS> 0
<COMMON> 86
0
0
<OTHER-SE> 76,134
<TOTAL-LIABILITY-AND-EQUITY> 93,945
<SALES> 46,235
<TOTAL-REVENUES> 46,235
<CGS> 25,554
<TOTAL-COSTS> 44,110
<OTHER-EXPENSES> 201
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,616
<INCOME-TAX> 726
<INCOME-CONTINUING> 1,890
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,890
<EPS-BASIC> .22
<EPS-DILUTED> .21
</TABLE>
