-----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, OEQkheUfbp7Iqnpf3hOBTvWRqcx+rXb9/mIpasl1bGi/gGd9Re3JAYXILCWnvbd9 Yq9oymnk/UguH1iVwekI3Q== 0000864906-96-000009.txt : 19961118 0000864906-96-000009.hdr.sgml : 19961118 ACCESSION NUMBER: 0000864906-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-18643 FILM NUMBER: 96666549 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 1 QUARTERLY REPORT FOR QUARTER ENDING 09/30/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 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 October 31, 1996, 8,544,465 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 September 30, 1996 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page Item 1. Financial statements Consolidated Balance Sheets September 30, 1996, and June 30, 1996. . . . . . . . . . . . . . .3 Consolidated Statements of Income Three Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Consolidated Statements of Cash Flows Three Months Ended September 30, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 PART 1. FINANCIAL INFORMATION ITEM 1. Financial Statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets Assets - ----------------------------------------------------------------------------- September 30, June 30, 1996 1996 (Unaudited) (Audited) - ----------------------------------------------------------------------------- Current assets: Cash and cash equivalents $11,149,014 $ 8,001,582 Marketable securities 1,466,575 2,347,400 Accounts receivable: Trade, less allowance for doubtful accounts of $2,635,000 at September 30, 1996 and $2,235,000 at June 30, 1996 29,349,664 27,966,620 Other 62,728 328,662 - ----------------------------------------------------------------------------- 29,412,392 28,295,282 Inventories 9,965,662 8,675,487 Deferred income taxes 2,322,000 1,984,000 Other 321,351 161,829 - ----------------------------------------------------------------------------- Total current assets 54,636,994 49,465,580 Property, plant and equipment--at cost: Buildings and improvements 2,203,036 2,203,036 Furniture and fixtures 688,541 669,284 Machinery and other equipment 4,255,984 3,554,535 - ----------------------------------------------------------------------------- 7,147,561 6,426,855 Less accumulated depreciation and amortization 3,180,907 2,977,468 - ----------------------------------------------------------------------------- 3,966,654 3,449,387 Land 138,858 138,858 - ----------------------------------------------------------------------------- 4,105,512 3,588,245 Long-term trade accounts receivable 6,077,182 7,658,079 Long-term marketable securities 1,046,100 1,028,088 Patent fees and other intangibles, net of accumulated amortization of $920,833 at September 30, 1996 and $832,573 at June 30, 1996 929,807 990,382 Other 306,640 141,556 - ----------------------------------------------------------------------------- $67,102,235 $62,871,930 ============================================================================== See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets Liabilities and Shareholders' Equity - ----------------------------------------------------------------------------- September 30, June 30, 1996 1996 (Unaudited) (Audited) - ----------------------------------------------------------------------------- Current liabilities: Accounts payable $ 3,126,705 $ 3,508,804 Customer advances and deferred income 555,493 565,364 Income taxes payable 2,056,942 551,852 Accrued liabilities: Commission payable 1,624,731 2,502,323 Compensation payable 433,598 205,236 Property, payroll, and other taxes 126,649 331,139 Accrued warranty and installation expenses 2,910,000 2,570,000 Other 234,764 231,809 - ----------------------------------------------------------------------------- Total current liabilities 11,068,882 10,466,527 Shareholders' equity: Common stock--authorized 25,000,000 shares of $.01 par value; issued and outstanding 8,536,065 shares at September 30, 1996 and 8,486,250 at June 30, 1996 85,361 84,863 Capital in excess of par value 23,504,106 22,802,103 - ----------------------------------------------------------------------------- 23,589,467 22,886,966 Retained earnings 32,321,276 29,420,314 Unrealized appreciation in marketable securities 22,053 29,122 Cumulative translation adjustment 100,557 69,001 - ----------------------------------------------------------------------------- 56,033,353 52,405,403 - ----------------------------------------------------------------------------- $67,102,235 $62,871,930 ============================================================================== See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) - ----------------------------------------------------------------------------- Three months ended September 30, September 30, 1996 1995 - ----------------------------------------------------------------------------- REVENUES Equipment sales and other revenue $18,914,639 $12,359,989 - ----------------------------------------------------------------------------- OPERATING EXPENSES Cost of sales 8,377,478 5,374,713 Research and development 1,160,278 1,306,626 Selling and marketing 3,968,333 2,779,493 General and administrative 1,381,499 1,501,215 - ----------------------------------------------------------------------------- 14,887,588 10,962,047 - ----------------------------------------------------------------------------- Earnings from operations 4,027,051 1,397,942 - ----------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest income 342,821 399,227 Other 64,090 (11,054) - ----------------------------------------------------------------------------- 406,911 388,173 - ----------------------------------------------------------------------------- Earnings before provision for income taxes 4,433,962 1,786,115 Provision for income taxes 1,533,000 458,373 - ----------------------------------------------------------------------------- NET INCOME $ 2,900,962 $ 1,327,742 ============================================================================== Net income per common and common-equivalent share $0.32 $0.15 ============================================================================== Weighted average number of common and common-equivalent shares 9,072,295 8,724,186 ============================================================================== See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) - ----------------------------------------------------------------------------- Three months ended September 30, September 30, 1996 1995 - ----------------------------------------------------------------------------- Cash flows from operating activities: Net income $2,900,962 $1,327,742 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 295,843 357,072 Changes in assets and liabilities: Receivables 298,703 479,434 Inventories (1,290,175) (1,919,648) Prepaid expenses (159,522) (40,288) Deferred income taxes (338,000) (53,000) Accounts payable (350,543) 15,926 Customer advances and deferred income (9,871) 27,509 Accrued liabilities (510,765) 81,951 Income taxes payable 1,505,090 (29,638) - ----------------------------------------------------------------------------- Net cash provided by operating activities 2,341,722 247,060 - ----------------------------------------------------------------------------- Cash flows from investing activities: Maturities of marketable securities 851,600 2,339,600 Additions to property, plant and equipment (720,706) (94,296) Patent fees (27,685) (64,770) - ----------------------------------------------------------------------------- Net cash provided by investing activities 103,209 2,180,534 - ----------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from exercise of stock options 86,591 72,435 Income tax benefit from stock option exercises 615,910 118,166 - ----------------------------------------------------------------------------- Net cash provided by financing activities 702,501 190,601 - ----------------------------------------------------------------------------- Net increase in cash and cash equivalents 3,147,432 2,618,195 Cash and cash equivalents at beginning of period 8,001,582 2,577,655 - ----------------------------------------------------------------------------- Cash and cash equivalents at end of period $11,149,014 $5,195,850 ============================================================================== Supplemental disclosure of cash flow information: Income taxes paid $ 1,151,000 $ 422,450 ============================================================================== 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, 1996, 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, 1996, included in the Company's Form 10-K as filed with the Securities and Exchange Commission on September 27, 1996. The consolidated balance sheet as of September 30, 1996, the consolidated statements of income for the three months ended September 30, 1996 and 1995, and the consolidated statements of cash flows for the three months ended September 30, 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 ended September 30, 1996, are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 1997. (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: - ----------------------------------------------------------------------------- September 30, June 30, 1996 1996 (Unaudited) (Audited) - ----------------------------------------------------------------------------- Finished goods and work in progress $5,109,697 $3,920,431 Materials and purchased parts 4,855,965 4,755,056 ---------- ---------- $9,965,662 $8,675,487 ========== ========== (3) STOCK DIVIDEND The Company distributed a 3-for-2 stock split in the form of a stock dividend on Decmeber 21, 1995. All share and per-share data has been adjusted to reflect the stock dividend. (4) 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 53% to $18,915,000 in the three months ended September 30, 1996 from $12,360,000 in the three months ended September 30, 1995. Sales by product line are summarized as follows: Revenues by Product (in thousands) Three Months Ended September 30, September 30, 1996 1995 ------------- ------------- DPX $14,465 $ 7,294 EXPERT 820 1,658 Achilles 1,189 1,757 Artoscan 1,091 894 Other 1,350 757 ------- ------- $18,915 $12,360 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 several new drug therapies during the last 12 months. Achilles sales decreased in the quarter ended September 30, 1996 as compared to the quarter ended September 30, 1995 due to lower sales in Japan. Cost of sales as a percentage of equipment sales averaged approximately 44% in the three month period ended September 30, 1996, compared to 43% in the three month period ended September 30, 1995. Research and development expenditures decreased to $1,160,000 in the three months ended September 30, 1996 from $1,307,000 in the three months ended September 30, 1995. The Company spun-off Bone Care to its shareholders on May 8, 1996 in a transaction intended to qualify as a tax-free distribution. The costs of these clinical trials and any other costs related to the research and development of vitamin D compounds are no longer included in the Company's consolidated net income. Vitamin D-related expenses were $259,000 in the three months ended September 30, 1995. Sales and marketing expenses were $3,968,000 in the three months ended September 30, 1996 and $2,779,000 in the three months ended September 30, 1995, representing a decrease to 21% from 22% as a percentage of equipment sales. General and administrative expenses decreased to $1,381,000 in the three months ended September 30, 1996 from $1,501,000 in the three months ended September 30, 1995. The decrease is primarily attributable to lower 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. Interest income was $343,000 in the three months ended September 30, 1996 compared to $399,000 in the three months ended September 30, 1995. This decrease is primarily the result of decreased cash balances partially offset by increases in the amount of financed receivables. The Company had contributed $10,725,000 to Bone Care prior to the spinoff of Bone Care in May 1996. The effective tax rate averaged 35% in the three month period ended September 30, 1996 compared to 26% in the three month period ended September 30, 1995. 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 the Company's foreign sales corporation, Lunar FSC, Inc. The rate for the three month period ended September 30, 1995 is below the 34% federal statutory rate as a result of the tax benefit from foreign sales corporation treatment and tax-exempt interest income, but offset by the provision for state income taxes. Liquidity and Capital Resources Cash and cash equivalents increased $3,147,000 to $11,149,000 in the three months ended September 30, 1996. The Company also has a laddered portfolio of high-grade municipal bonds with various maturities not exceeding 48 months. The Company owned approximately $2,513,000 in municipal securities as of September 30, 1996, which are readily marketable. The Company's accounts receivable decreased 1% to $35,490,000 at September 30, 1996 from $35,953,000 at June 30, 1996. Inventories increased 15% to $9,966,000 at September 30, 1996 from $8,675,000 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 1. Legal Proceedings Patent Litigation: During fiscal 1995 and part of fiscal year 1996, the Company was involved in patent litigation with Hologic, Inc., a Massachusetts-based competitor. On November 22, 1995, the Company announced the signing of a definitive agreement with Hologic settling all disputes between the parties. The agreement provides for certain continuing payments between the companies related to future sales, the net effect of which Lunar does not believe will be material to its revenues or earnings. The agreement also provides that the companies will not engage each other in patent litigation in the area of x-ray densitometry and ultrasound for a ten-year period. 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 Statement Under the Private Securities Litigation Reform Act of 1995: 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 the Private Securities Litigation Reform Act of 1995. 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 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, and market and general economic factors. 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 September 30, 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: November 13, 1996 Richard B. Mazess ----------------- Richard B. Mazess President (Principal Executive Officer) Date: November 13, 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 September 30, 1996 No. Description Page 11 Statement Regarding Computation of Earnings Per Share. . . . . .14 27 Financial Data Schedule. . . . . . . . . . . . . . . . . . . . .15 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 September 30, September 30, 1996 1995 ------------- ------------- Net income $2,900,962 $1,327,742 ========== ========== Weighted average shares outstanding 8,513,892 7,998,513 Stock options calculated according to the treasury stock method 558,403 725,673 Weighted average number of common and common-equivalent shares outstanding 9,072,295 8,724,186 ========== ========== Net income per common and common-equivalent shares $0.32 $0.15 ===== ===== EX-27 3 ART.5 FDS FOR 1ST QUARTER 10-Q
5 This schedule contains summary financial information extracted from Form 10-Q for the three months ended September 30, 1996, and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS JUN-30-1997 SEP-30-1996 11,149 2,513 38,125 2,635 9,966 54,637 7,286 3,181 67,102 11,069 0 85 0 0 55,948 67,102 18,915 18,915 8,377 14,888 0 0 0 4,434 1,533 2,901 0 0 0 2,901 .32 .32
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