-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lqqj2vIZI6tRDVSn77kFs9D+UvzrDwFRFPmnNZkMq/pLmRovKLZpV6pu6WKuyYG2 B4FDLFY8jBD15PGfKi+Uaw== 0000864906-95-000001.txt : 19950530 0000864906-95-000001.hdr.sgml : 19950530 ACCESSION NUMBER: 0000864906-95-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950516 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUNAR CORP CENTRAL INDEX KEY: 0000864906 STANDARD INDUSTRIAL CLASSIFICATION: 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: 95540097 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 03/31/95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) /x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 -------------- 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, 1995, 5,297,980 shares of the registrant's Common Stock, $0.01 par value, were outstanding. Exhibit index located on page 13 of 15 total pages. 1 2 LUNAR CORPORATION AND SUBSIDIARIES FORM 10-Q For the quarterly period ended March 31, 1995 TABLE OF CONTENTS ----------------- PART I - FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Balance Sheets March 31, 1995, and June 30, 1994 . . . . . . . . . 3 Consolidated Statements of Income Three and Nine Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . 5 Consolidated Statements of Cash Flows Nine Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . 6 Notes to Consolidated Financial Statements . . . . 8 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 2 3 PART 1. FINANCIAL INFORMATION ITEM 1. Financial Statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets
- - - - -------------------------------------------------------------------------------- Assets - - - - -------------------------------------------------------------------------------- March 31, June 30, 1995 1994 (Unaudited) (Audited) - - - - -------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 521,462 $ 702,581 Marketable securities--at cost (which approximates market values) 9,513,033 5,902,838 Accounts receivable: Trade, less allowance for doubtful accounts of $1,100,000 at March 31, 1995 and $900,000 at June 30, 1994 17,468,337 11,204,504 Other 318,815 524,124 - - - - -------------------------------------------------------------------------------- 17,787,152 11,728,628 Inventories 6,025,222 3,289,884 Deferred income taxes 1,151,000 882,000 Other 115,440 123,643 - - - - -------------------------------------------------------------------------------- Total current assets 35,113,309 22,629,574 Property, plant and equipment--at cost: Buildings and improvements 2,208,289 2,020,174 Furniture and fixtures 557,478 428,882 Machinery and other equipment 2,854,676 2,239,970 - - - - -------------------------------------------------------------------------------- 5,620,443 4,689,026 Less accumulated depreciation and amortization 2,342,187 1,927,456 - - - - -------------------------------------------------------------------------------- 3,278,256 2,761,570 Land 138,858 138,858 - - - - -------------------------------------------------------------------------------- 3,417,114 2,900,428 Long-term trade accounts receivable 3,796,531 1,997,535 Long-term marketable securities--at cost 8,059,201 15,208,294 Excess of cost over fair value of net assets of subsidiary acquired, net of accumulated amortization of $441,702 at March 31, 1995 and $374,616 at June 30, 1994 918,215 985,301 Patent fees and other intangibles, net of accumulated amortization of $590,702 at March 31, 1995 and $316,435 at June 30, 1994 1,391,978 1,437,919 Other 347,721 356,366 - - - - -------------------------------------------------------------------------------- $53,044,069 $45,515,417 ================================================================================ See accompanying notes to consolidated financial statements
3 4 LUNAR CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets
- - - - -------------------------------------------------------------------------------- Liabilities and Shareholders' Equity - - - - -------------------------------------------------------------------------------- March 31, June 30, 1995 1994 (Unaudited) (Audited) - - - - -------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 1,221,122 $ 1,042,643 Customer advances and deferred income 387,069 255,969 Income taxes payable 1,661,752 1,198,052 Accrued liabilities: Commissions payable 1,555,904 1,080,071 Compensation payable 305,768 352,460 Property, payroll, and other taxes 95,941 54,452 Accrued warranty and installation expenses 1,482,000 911,000 Other 163,718 131,946 - - - - -------------------------------------------------------------------------------- Total current liabilities 6,873,274 5,026,593 Minority interest in subsidiary 0 38,160 Shareholders' equity: Common stock--authorized 10,000,000 shares of $.01 par value; issued and outstanding 5,296,480 shares at March 31, 1995 and 5,225,380 at June 30, 1994 52,958 52,254 Capital in excess of par value 15,123,981 14,476,602 - - - - -------------------------------------------------------------------------------- 15,176,939 14,528,856 Retained earnings 31,004,290 25,920,978 Cumulative translation adjustment (10,434) 830 - - - - -------------------------------------------------------------------------------- 46,170,795 40,450,664 - - - - -------------------------------------------------------------------------------- $53,044,069 $45,515,417 ================================================================================ See accompanying notes to consolidated financial statements
4 5 LUNAR CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (Unaudited)
- - - - -------------------------------------------------------------------------------- Three months ended Nine months ended March 31, March 31, March 31, March 31, 1995 1994 1995 1994 - - - - -------------------------------------------------------------------------------- REVENUES Equipment sales and other revenue $12,230,814 $7,983,999 $31,794,322 $20,747,681 - - - - -------------------------------------------------------------------------------- OPERATING EXPENSES Cost of sales 5,687,011 3,055,355 13,408,128 7,906,030 Research and development 1,085,119 722,786 3,089,721 1,963,864 Selling and marketing 2,613,444 1,678,616 7,160,342 4,911,743 General and administrative 979,877 615,260 2,582,883 1,786,096 - - - - -------------------------------------------------------------------------------- 10,365,451 6,072,017 26,241,074 16,567,733 - - - - -------------------------------------------------------------------------------- Earnings from operations 1,865,363 1,911,982 5,553,248 4,179,948 - - - - -------------------------------------------------------------------------------- OTHER INCOME Interest income 339,997 368,865 964,795 959,643 Other 136,082 145,874 271,249 157,433 - - - - -------------------------------------------------------------------------------- 476,079 514,739 1,236,044 1,117,076 - - - - -------------------------------------------------------------------------------- Earnings before provision for income taxes 2,341,442 2,426,721 6,789,292 5,297,024 Provision for income taxes 574,055 423,734 1,705,980 1,192,846 - - - - -------------------------------------------------------------------------------- NET INCOME $ 1,767,387 $2,002,987 $ 5,083,312 $ 4,104,178 ================================================================================ Net income per common and common equivalent share $0.30 $0.35 $0.87 $0.72 ================================================================================ Weighted average number of common and common equivalent shares 5,893,243 5,715,037 5,848,826 5,673,756 ================================================================================ See accompanying notes to consolidated financial statements
5 6 LUNAR CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
- - - - -------------------------------------------------------------------------------- Nine months ended March 31, March 31, 1995 1994 - - - - -------------------------------------------------------------------------------- Cash flows from operating activities: Net income $5,083,312 $ 4,104,178 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,071,763 769,623 Minority interest in subsidiary (38,160) (29,947) Increase in accounts receivable (7,848,188) (2,567,673) Increase in inventories (2,735,338) (1,287,317) (Increase) decrease in other current assets 8,203 (81,859) (Increase) decrease in deferred income taxes (269,000) 110,000 Increase (decrease) in accounts payable 167,215 (128,127) Increase in customer advances 131,100 28,267 Increase in accrued liabilities 1,073,402 447,496 Increase in income taxes payable 463,700 266,655 - - - - -------------------------------------------------------------------------------- Net cash provided by (used in) operating activities (2,891,991) 1,631,296 - - - - -------------------------------------------------------------------------------- Cash flows from investing activities: Purchases of marketable securities (1,042,910) (4,032,038) Maturities of marketable securities 4,266,129 5,065,652 Additions to property, plant and equipment (931,417) (1,104,578) Patent fees (183,813) (149,312) Distributor Fee (45,200) (1,000,000) - - - - -------------------------------------------------------------------------------- Net cash provided by (used in) investing activities $2,062,789 $(1,220,276) - - - - --------------------------------------------------------------------------------
6 7 LUNAR CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
- - - - -------------------------------------------------------------------------------- Nine months ended March 31, March 31, 1995 1994 - - - - -------------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from exercise of stock options 368,572 45,469 Income tax benefit from stock option exercises 279,511 47,619 - - - - -------------------------------------------------------------------------------- Net cash provided by financing activities 648,083 93,088 - - - - -------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (181,119) 504,108 Cash and cash equivalents at beginning of period 702,581 2,262,081 - - - - -------------------------------------------------------------------------------- Cash and cash equivalents at end of period $521,462 $2,766,189 ================================================================================ Supplemental disclosure of cash flow information: Incomes taxes paid $1,101,038 $705,178 ================================================================================ See accompanying notes to consolidated financial statements
7 8 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, 1994, 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, 1994, included in the Company's Form 10-K as filed with the Securities and Exchange Commission on September 23, 1994. The consolidated balance sheet as of March 31, 1995, the consolidated statements of income for the three and nine months ended March 31, 1995 and 1994, and the consolidated statements of cash flows for the nine months ended March 31, 1995 and 1994 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 results of operations for the three and nine months ended March 31, 1995, are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 1995. (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, 1995 1994 (Unaudited) (Audited) - - - - -------------------------------------------------------------------------------- Finished goods and work in progress $1,865,857 $ 871,258 Materials and purchased parts 4,159,365 2,418,626 - - - - -------------------------------------------------------------------------------- $6,025,222 $3,289,884 ================================================================================
8 9 Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - - - - --------------------- Equipment sales and other revenue increased 53% to $12,231,000 in the three months ended March 31, 1995 from $7,984,000 in the three months ended March 31, 1994. For the nine months ended March 31, 1995, equipment sales and other revenue increased 53% to $31,794,000 from $20,748,000 in the nine months ended March 31, 1994. The increase for the three-month period is primarily due to increased sales of the DPX densitometer, initial commercial shipments of the EXPERT high-end densitometer, and increasing demand for the Artoscan extremity MRI. These same factors, plus an increase in sales of the Achilles ultrasound device, contributed to the increase in revenues for the nine-month period. Gross profit margins averaged approximately 54% and 58% of equipment sales in the three- and nine-month periods ended March 31, 1995, respectively, and 62% in the three- and nine-month periods ended March 31, 1994. The Company's gross profit margins were lower in the current period due to increased competition in its DPX product line, increased sales of lower margin EXPERT and Artoscan extremity MRI products, and a special charge of $400,000 to accrue for upgrading the installed base of EXPERT systems. These lower margins were partially offset by increased sales of the higher margin Achilles. Research and development expenditures increased to $1,085,000 in the three months ended March 31, 1995 from $723,000 in the three months ended March 31, 1994, and to $3,090,000 in the nine months ended March 31, 1995, from $1,964,000 in the nine months ended March 31, 1994. This increase is primarily attributable to expenditures related to the EXPERT (Trademark) bone densitometer. The EXPERT is a high-end imaging densitometer which has faster scan times and better spatial resolution than current bone densitometers. The Company also incurred increased research and development costs to develop the Achilles Plus, an improved version of the Achilles ultrasound bone densitometer. Sales and marketing expenses were $2,613,000 in the three months ended March 31, 1995 and $1,679,000 in the three months ended March 31, 1994, representing 21% of equipment sales. For the nine months ended March 31, 1995, sales and marketing expenses were $7,160,000 as compared to $4,912,000 for the nine months ended March 31, 1994, representing a decrease to 23% from 24% as a percentage of equipment sales. This decrease for the nine-month period is attributable to lower average selling costs associated with sales of Achilles densitometers. General and administrative expenses increased to $980,000 in the three months ended March 31, 1995 from $615,000 in the three months ended March 31, 1994, and to $2,583,000 in the nine months ended March 31, 1995 from $1,786,000 in the nine months ended March 31, 1994. This increase is primarily attributable to higher legal expenses. Lunar is engaged in two separate patent lawsuits with Hologic, Inc. These lawsuits are expected to result in substantially higher legal expenses for at least the next two quarters. Interest income was $340,000 in the three months ended March 31, 1995 compared to $369,000 in the three months ended March 31, 1994, and $965,000 in the nine months ended March 31, 1995, as compared to $960,000 in the nine months ended March 31, 1994. Interest income for the three- and nine-month periods ended March 31, 1994 included $65,000 of non-recurring interest income related to an income tax recovery related to the final settlement of a prior year tax issue with the Internal Revenue Service. 9 10 The effective tax rate in the three- and nine-month periods ended March 31, 1995 averaged 25% compared to 17% and 23% in the three- and nine-month periods ended March 31, 1994. The provision for income taxes for the three- and nine-month periods ended March 31, 1994 is net of a $235,000 income tax recovery related to the final settlement of a prior year tax issue with the Internal Revenue Service. These rates are also below the 34% federal statutory rate as a result of the benefit of Lunar FSC, Inc., and tax-exempt interest income, but offset by the provision for state income taxes. Liquidity and Capital Resources - - - - ------------------------------- Cash and cash equivalents decreased $181,000 to $521,000 in the nine months ended March 31, 1995. The Company also has a $17,572,000 portfolio of marketable securities which management intends to hold to maturity but which is readily marketable. The Company's accounts receivable increased 57% to $21,584,000 at March 31, 1995 from $13,726,000 at June 30, 1994. Inventories increased 83% to $6,025,000 at March 31, 1995 from $3,290,000 at June 30, 1994. These increases are primarily attributable to higher sales for the nine-month period ended March 31, 1995 and new product lines offered by the Company. 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. 10 11 PART II - OTHER INFORMATION LUNAR CORPORATION AND SUBSIDIARIES Item 1. Legal Proceedings None 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 None 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, 1995. 11 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LUNAR CORPORATION (Registrant) Date: May 12, 1995 Richard B. Mazess - - - - ------------------- --------------------------------- Richard B. Mazess President (Principal Executive Officer) Date: May 12, 1995 Robert A. Beckman - - - - ------------------- ---------------------------------- Robert A. Beckman Vice President of Finance and Treasurer (Principal Financial and Accounting Officer)
12 13 LUNAR CORPORATION AND SUBSIDIARIES Exhibit Index For the quarterly period ended March 31, 1995 No. Description Page ----- ----------- ---- 11 Statement Regarding Computation of Earnings Per Share . . . . . . . . . 14 27 Financial Data Schedule . . . . . . . . 15 13 14 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, 1995 1994 1995 1994 - - - - -------------------------------------------------------------------------------- Net income $1,767,387 $2,002,987 $5,083,312 $4,104,178 ================================================================================ Weighted average shares outstanding 5,283,415 5,208,802 5,256,585 5,202,055 Stock options calculated according to the treasury stock method 609,828 506,235 592,241 471,701 Weighted average number of common and common-equivalent shares outstanding 5,893,243 5,715,037 5,848,826 5,673,756 ================================================================================ Earnings per share $0.30 $0.35 $0.87 $0.72 ================================================================================
14 15 [TYPE] EX-27 [DESCRIPTION] ART. 5 FDS FOR 3RD QUARTER 10-Q [ARTICLE] 5 [LEGEND] THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. [MULTIPLIER] 1,000 [PERIOD-TYPE] 9-MOS [FISCAL-YEAR-END] JUN-30-1995 [PERIOD-END] MAR-31-1995 [CASH] 521 [SECURITIES] 17,572 [RECEIVABLES] 22,684 [ALLOWANCES] 1,100 [INVENTORY] 6,025 [CURRENT-ASSETS] 35,113 [PP&E] 5,759 [DEPRECIATION] 2,342 [TOTAL-ASSETS] 53,044 [CURRENT-LIABILITIES] 6,873 [BONDS] 0 [COMMON] 53 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [OTHER-SE] 46,118 [TOTAL-LIABILITY-AND-EQUITY] 53,044 [SALES] 31,794 [TOTAL-REVENUES] 31,794 [CGS] 13,408 [TOTAL-COSTS] 26,241 [OTHER-EXPENSES] 0 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 0 [INCOME-PRETAX] 6,789 [INCOME-TAX] 1,706 [INCOME-CONTINUING] 5,083 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 5,083 [EPS-PRIMARY] .87 [EPS-DILUTED] .87
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