-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VwbSRA/c+Xse2fBsosrH4rjipI2I9FG+q8DTVNu8OWxbwzdGW8pqLYEdth1W9ShC ekG33yIaB9U2mRmtL8zXJg== 0000864906-96-000005.txt : 19960930 0000864906-96-000005.hdr.sgml : 19960930 ACCESSION NUMBER: 0000864906-96-000005 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960927 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUNAR CORP CENTRAL INDEX KEY: 0000864906 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 391200501 STATE OF INCORPORATION: WI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-18643 FILM NUMBER: 96635916 BUSINESS ADDRESS: STREET 1: 313 W BELTLINE HIGHWAY CITY: MADISON STATE: WI ZIP: 53713 BUSINESS PHONE: 6082742663 MAIL ADDRESS: STREET 1: 313 WEST BELTLINE HIGHWAY CITY: MADISON STATE: WI ZIP: 53713 10-Q/A 1 AMENDED QUARTERLY REPORT FOR QUARTER ENDING 03/31/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A AMENDMENT NO. 2 (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, 1996 -------------- 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, 1996, 8,470,540 shares of the registrant's Common Stock, $0.01 par value, were outstanding. LUNAR CORPORATION AND SUBSIDIARIES FORM 10-Q/A AMENDMENT NO. 2 For the quarterly period ended March 31, 1996 TABLE OF CONTENTS ----------------- PART I - FINANCIAL INFORMATION Page ---- Item 1. Financial statements Consolidated Balance Sheets March 31, 1996, and June 30, 1995. . . . . . . . . . . . . .3 Consolidated Statements of Income Three and Nine Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . .5 Consolidated Statements of Cash Flows Nine Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . .6 Notes to Consolidated Financial Statements . . . . . . . . .7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . .9 PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . 11 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 PART 1. FINANCIAL INFORMATION ITEM 1. Financial Statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets - ---------------------------------------------------------------------------- Assets - ---------------------------------------------------------------------------- March 31, June 30, 1996 1995 (Unaudited) (Audited) - ---------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 9,851,222 $ 2,577,655 Marketable securities 6,408,077 11,647,041 Accounts receivable: Trade, less allowance for doubtful accounts of $1,864,000 at March 31, 1996 and $1,150,000 at June 30, 1995 24,700,816 19,109,561 Other 328,360 422,728 - ---------------------------------------------------------------------------- 25,029,176 19,532,289 Inventories 9,729,336 6,650,726 Deferred income taxes 1,629,000 1,180,000 Other 311,526 156,451 - ---------------------------------------------------------------------------- Total current assets 52,958,337 41,744,162 Property, plant and equipment--at cost: Buildings and improvements 2,228,013 2,219,148 Furniture and fixtures 641,784 582,206 Machinery and other equipment 3,472,619 3,043,258 - ---------------------------------------------------------------------------- 6,342,416 5,844,612 Less accumulated depreciation and amortization 3,021,471 2,456,356 - ---------------------------------------------------------------------------- 3,320,945 3,388,256 Land 138,858 138,858 - ---------------------------------------------------------------------------- 3,459,803 3,527,114 Long-term trade accounts receivable 6,377,150 4,496,457 Long-term marketable securities 1,555,050 4,322,629 Excess of cost over fair value of net assets of subsidiary acquired, net of accumulated amortization of $531,150 at March 31, 1996 and $464,064 at June 30, 1995 828,767 895,853 Patent fees and other intangibles, net of accumulated amortization of $983,775 at March 31, 1996 and $682,995 at June 30, 1995 1,305,366 1,371,269 Other 401,070 342,484 - ---------------------------------------------------------------------------- $66,885,543 $56,699,968 ============================================================================ See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets - ----------------------------------------------------------------------------- Liabilities and Shareholders' Equity - ----------------------------------------------------------------------------- March 31, June 30, 1996 1995 (Unaudited) (Audited) - ----------------------------------------------------------------------------- Current liabilities: Accounts payable $ 2,338,037 $ 2,258,695 Customer advances and deferred income 504,407 462,050 Income taxes payable 1,158,454 2,201,898 Accrued liabilities: Commission payable 1,792,577 1,767,139 Compensation payable 383,186 89,532 Property, payroll, and other taxes 112,747 146,219 Accrued warranty and installation expenses 1,975,000 1,555,000 Other 221,090 123,669 - ----------------------------------------------------------------------------- Total current liabilities 8,485,498 8,604,202 Minority interest in subsidiary 87,091 - Shareholders' equity: Common stock--authorized 25,000,000 shares of $.01 par value; issued and outstanding 8,305,085 shares at March 31, 1996 and 7,988,190 at June 30, 1995 83,051 53,255 Capital in excess of par value 19,417,471 15,438,402 - ----------------------------------------------------------------------------- 19,500,522 15,491,657 Retained earnings 38,782,059 32,622,240 Unrealized appreciation in marketable securities 31,569 - Cumulative translation adjustment (1,196) (18,131) - ----------------------------------------------------------------------------- 58,312,954 48,095,766 - ----------------------------------------------------------------------------- $66,885,543 $56,699,968 ============================================================================= 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, 1996 1995 1996 1995 - ----------------------------------------------------------------------------- REVENUES Equipment sales and other revenue $17,287,382 $12,230,814 $46,581,656 $31,794,322 - ---------------------------------------------------------------------------- OPERATING EXPENSES Cost of sales 7,881,762 5,687,011 20,933,828 13,408,128 Research and development 1,489,424 1,085,119 4,360,856 3,089,721 Selling and marketing 3,606,054 2,613,444 9,944,953 7,160,342 General and administrative 835,945 979,877 3,717,517 2,582,883 - ---------------------------------------------------------------------------- 13,813,185 10,365,451 38,957,154 26,241,074 - ---------------------------------------------------------------------------- Earnings from operations 3,474,197 1,865,363 7,624,502 5,553,248 - ---------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest income 409,877 339,997 1,194,127 964,795 Other (121,785) 136,082 (209,654) 271,249 - ---------------------------------------------------------------------------- 288,092 476,079 984,473 1,236,044 - ---------------------------------------------------------------------------- Earnings before provision for income taxes 3,762,289 2,341,442 8,608,975 6,789,292 Provision for income taxes 1,174,000 574,055 2,449,156 1,705,980 - ---------------------------------------------------------------------------- NET INCOME $ 2,588,289 $ 1,767,387 $ 6,159,819 $ 5,083,312 ============================================================================ Net income per common and common-equivalent share $0.29 $0.20 $0.70 $0.58 ============================================================================ Weighted average number of common and common-equivalent shares 8,999,794 8,839,865 8,854,880 8,773,239 ============================================================================ See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) - ----------------------------------------------------------------------------- Nine months ended March 31, March 31, 1996 1995 - ----------------------------------------------------------------------------- Cash flows from operating activities: Net income $6,159,819 $5,083,312 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 1,101,992 1,071,763 Minority interest in subsidiary 87,091 (38,160) Changes in assets and liabilities: Receivables (7,436,166) (7,848,188) Inventories (3,078,610) (2,735,338) Prepaid expenses (155,075) 8,203 Deferred income taxes (449,000) (269,000) Accounts payable 96,277 167,215 Customer advances and deferred income 42,357 131,100 Accrued liabilities 803,041 1,073,402 Income taxes payable (1,043,444) 463,700 - ----------------------------------------------------------------------------- Net cash used in operating activities (3,871,718) (2,891,991) - ----------------------------------------------------------------------------- Cash flows from investing activities: Purchases of marketable securities - (1,042,910) Maturities of marketable securities 7,869,100 4,266,129 Additions to property, plant and equipment (497,804) (931,417) Patent fees (234,877) (183,813) Distributor fee - (45,200) - ----------------------------------------------------------------------------- Net cash provided by investing activities 7,136,419 2,062,789 - ----------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from exercise of stock options 1,105,766 368,572 Income tax benefit from stock option exercises 2,903,100 279,511 - ----------------------------------------------------------------------------- Net cash provided by financing activities 4,008,866 648,083 - ----------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 7,273,567 (181,119) Cash and cash equivalents at beginning of period 2,577,655 702,581 - ----------------------------------------------------------------------------- Cash and cash equivalents at end of period $9,851,222 $ 521,462 ============================================================================= Supplemental disclosure of cash flow information: Income taxes paid $1,033,398 $1,101,038 ============================================================================= 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, 1995, 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 for the year ended June 30, 1995, included in the Company's Form 10-K as filed with the Securities and Exchange Commission on September 27, 1995. The consolidated balance sheet as of March 31, 1996, the consolidated statements of income for the three and nine months ended March 31, 1996 and 1995, and the consolidated statements of cash flows for the nine months ended March 31, 1996 and 1995 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, 1996, are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 1996. (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, 1996 1995 (Unaudited) (Audited) - --------------------------------------------------------------------------- Finished goods and work in progress $5,304,204 $3,661,586 Materials and purchased parts 4,425,132 2,989,140 ---------- ---------- $9,729,336 $6,650,726 ========== ========== (3) MARKETABLE SECURITIES Effective December 31, 1995, the Company reclassified its marketable securities portfolio from held-to-maturity to available-for-sale. (4) STOCK DIVIDEND The Company distributed a 3-for-2 stock split in the form of a stock dividend on December 21, 1995. All share and per-share data has been adjusted to eflect the stock dividend. (5) TECHNOLOGY TRANSFER AND SPIN-OFF OF SUBSIDIARY In October 1995, the Company contributed its ownership of Continental Assays Corporation and certain assets with a book value of $175,867 for 1,698,674 shares of common stock of Bone Care International, Inc. ("Bone Care"), a subsidiary of the Company. In October 1995, the Company also exchanged $634,683 of loans receivable from Bone Care for 107,401 shares of Bone Care common stock. These transactions created a single vitamin D development business owned by Bone Care. On April 18, 1996, the Board of Directors of the Company declared a dividend, payable to holders of record of its common stock at the close of business on April 24, 1996 (the "record date"), of one share of Bone Care common stock for every two shares of the Company's common stock. The distribution occurred on May 8, 1996 (the "distribution date"). Prior to the distribution, the Company made a capital contribution of $10,725,000 in exchange for additional common stock of Bone Care and to pay for federal income tax benefits received from Bone Care. As a result of the distribution, the Company's 97.3% ownership of Bone Care's common stock was distributed to holders of the Company's common stock as of the record date. Bone Care's total assets as of the distribution date were approximately $12,650,000. Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- Equipment sales and other revenue increased 41% to $17,287,000 in the three months ended March 31, 1996 from $12,231,000 in the three months ended March 31, 1995. For the nine months ended March 31, 1996, equipment sales and other revenue increased 47% to $46,582,000 from $31,794,000 in the nine months ended March 31, 1995. Sales by product line are broken down as follows: Revenues by Product (000's Omitted) Three Months Ended Nine Months Ended -------------------------- -------------------------- March 31, March 31, March 31, March 31, 1996 1995 1996 1995 --------- --------- --------- --------- EXPERT $ 2,942 $ 1,531 $ 8,651 $ 3,285 DPX 10,848 6,736 26,690 17,664 Achilles 1,003 1,591 4,003 5,311 Artoscan 1,286 1,745 4,299 3,713 Other 1,208 628 2,939 1,821 ------- ------- ------- ------- $17,287 $12,231 $46,582 $31,794 ======= ======= ======= ======= The increase in DPX sales in the current fiscal year is primarily attributable to increased shipments in the United States, which the Company believes are related to the introduction of Fosamax, a new drug therapy for osteoporosis introduced by Merck in October 1995. Achilles sales decreased in the quarter ended March 31, 1996 as compared to the quarter ended March 31, 1995 due to lower sales in Japan. Cost of sales as a percentage of equipment sales averaged approximately 46% and 45% in the three and nine month periods ended March 31, 1996, compared to 46% and 42% in the three and nine month periods ended March 31, 1995. This increase is primarily a result of increased sales of the lower-margin EXPERT and Artoscan extremity MRI products and proportionately less sales of the higher-margin Achilles. The three and nine month periods ended March 31, 1995 included a special charge of $400,000 to accrue for upgrading the installed base of EXPERT systems. The cost of sales as a percentage of equipment sales would have averaged approximately 43% and 41% in the three and nine month periods ended March 31, 1995 without this special charge. Research and development expenditures increased to $1,489,000 in the three months ended March 31, 1996 from $1,085,000 in the three months ended March 31, 1995, and to $4,361,000 in the nine months ended March 31, 1996 from 3,090,000 in the nine months ended March 31, 1995. These increases are primarily attributable to expenditures related to the development of the DPX- IQ bone densitometer and the ORCA mini C-arm. Bone Care, the Company's 97.3% owned pharmaceutical development subsidiary, also increased expenditures for clinical testing of 1-alpha D2 in the treatment of secondary hyperparathyroidism associated with end-stage renal disease. The Company spun-off Bone Care to its shareholders in a tax-free distribution on May 8, 1996. The future costs of these clinical trials and any other costs related to the research and development of vitamin D compounds will therefore no longer be included in the Company's consolidated net income after the distribution. Bone Care had a net loss of $762,000 through the nine month period ended March 31, 1996. Sales and marketing expenses were $3,606,000 in the three months ended March 31, 1996 and $2,613,000 in the three months ended March 31, 1995, representing 21% of equipment sales for both time periods. For the nine months ended March 31, 1996, sales and marketing expenses were $9,945,000 as compared to $7,160,000 for the nine months ended March 31, 1995, representing a decrease to 21% from 23% as a percentage of equipment sales. General and administrative expenses decreased to $836,000 in the three months ended March 31, 1996 from $980,000 in the three months ended March 31, 1995, and increased to $3,718,000 in the nine months ended March 31, 1996 from $2,583,000 in the nine months ended March 31, 1995. The increase during the first six months of fiscal 1996 is primarily attributable to higher legal expenses. Lunar had been involved in several patent lawsuits initiated in September 1994 with Hologic, Inc., a Massachusetts-based competitor, related to x-ray and ultrasound densitometers. These lawsuits were settled on November 22, 1995, resulting in a decrease in general and administration expenses during the three months ended March 31, 1996. Interest income was $410,000 in the three months ended March 31, 1996 compared to $340,000 in the three months ended March 31, 1995, and $1,194,000 in the nine months ended March 31, 1996, as compared to $965,000 in the nine months ended March 31, 1995. These increases are primarily the result of increases in the amount of financed receivables. The Company expects after- tax interest income to decline by approximately $96,000 per quarter after the spinoff of Bone Care, which will include Bone Care's projected cash balances of approximately $11,400,000. The effective tax rate averaged 31% and 28% in the three and nine month periods ended March 31, 1996 compared to 25% in the three and nine month periods ended March 31, 1995. These rates are below the 34% federal statutory rate as a result of the tax benefit from the Company's foreign sales corporation, Lunar FSC, Inc., and tax-exempt interest income, but offset by the provision for state income taxes. The effective tax rate has been trending higher in the current fiscal year due to increased profits from sales within the United States, which do not benefit from foreign sales corporation treatment. Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents increased $7,274,000 to $9,851,000 in the nine months ended March 31, 1996. The Company also has a laddered portfolio of high-grade municipal bonds with various maturities not exceeding 48 months. The Company owned approximately $7,963,000 in municipal securities as of March 31, 1996, which are readily marketable. On May 8, 1996, the Company contributed $10,725,000 in cash to Bone Care in exchange for additional common stock of Bone Care and to pay for federal income tax benefits received from Bone Care. The Company's accounts receivable increased 31% to $31,406,000 at March 31, 1996 from $24,029,000 at June 30, 1995. This increase is primarily due to a 35% increase in sales in the third quarter of fiscal year 1996 as compared to the fourth quarter of fiscal year 1995. Inventories increased 46% to $9,729,000 at March 31, 1996 from $6,651,000 at June 30, 1995. The increase in finished goods and work in progress is primarily attributable to increases in Artoscan MRI units. The increase in materials and purchased parts is primarily due to an increase in production of EXPERT and DPX systems. The Company 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 the Company's operations for the foreseeable future. PART II - OTHER INFORMATION LUNAR CORPORATION AND SUBSIDIARIES Item 6. Exhibits and Reports on Form 8-K (a) Exhibits furnished: (11) Statement Re: Computation of Earnings Per Share (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended March 31, 1996. 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: June 5, 1996 Richard B. Mazess - ------------------ ------------------------------------- Richard B. Mazess President (Principal Executive Officer) Date: June 5, 1996 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, 1996 No. Description Page - --- ----------- ---- 11 Statement Regarding Computation of Earnings Per Share . . . . . . . 15 27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . 16 EX-11 2 COMPUTATION OF PER-SHARE EARNINGS Exhibit 11 LUNAR CORPORATION AND SUBSIDIARIES Statement Regarding Computation of Earnings Per Share (Unaudited) Three months ended Nine months ended March 31, March 31, March 31, March 31, 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Net income $2,588,289 $1,767,387 $6,159,819 $5,083,312 ========== ========== ========== ========== Weighted average shares outstanding 8,234,035 7,925,123 8,108,387 7,884,878 Stock options calculated according to the treasury stock method 765,759 914,742 746,493 888,362 Weighted average number of common and common-equivalent shares outstanding 8,999,794 8,839,865 8,854,880 8,773,239 ========= ========= ========= ========= Net income per common and common-equivalent shares $0.29 $0.20 $0.70 $0.58 ===== ===== ===== ===== EX-27 3 ART.5 FDS FOR 3RD QUARTER 10-Q
5 This schedule contains summary financial information extracted from Form 10-Q for the nine months ended March 31, 1996, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS JUN-30-1996 MAR-31-1996 9,851 7,963 33,270 1,864 9,729 52,958 6,481 3,021 66,886 8,485 0 83 0 0 58,230 66,886 46,582 46,582 20,934 38,957 0 0 0 8,609 2,449 6,160 0 0 0 6,160 .70 .70
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