-----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, DUU84hl8SEBj52DzCuSYhCV02Hmr3bxQULYrDZHellqhAXhlWBGpQ4GRAfk4p26w ACFBfA5dTCC5mCJMk5aKBQ== 0000864906-99-000003.txt : 19991227 0000864906-99-000003.hdr.sgml : 19991227 ACCESSION NUMBER: 0000864906-99-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990927 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-K SEC ACT: SEC FILE NUMBER: 000-18643 FILM NUMBER: 99718070 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-K 1 ANNUAL REPORT FOR YEAR ENDING JUNE 30, 1999 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark one) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 1999 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________ to __________ Commission file number 0-18643 Lunar Corporation ------------------------------ (Exact name of registrant as specified in its charter) Wisconsin 39-1200501 - ------------------------------- ------------------ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 313 West Beltline Highway Madison, Wisconsin 53713 - ------------------------------- ------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number (including area code): (608) 274-2663 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value -------------------------------- (Title of class) 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 / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of September 23, 1999, there were issued and outstanding 8,598,580 shares of Common Stock. The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $39,985,452 as of September 23, 1999 assuming solely for purposes of this calculation that all directors and executive officers of the Registrant are "affiliates." This determination of affiliate status is not necessarily a conclusive determination for other purposes. DOCUMENTS INCORPORATED BY REFERENCE Portions of Lunar Corporation Proxy Statement for its 1999 Shareholders Meeting to be held on November 19, 1999 (Part III) LUNAR CORPORATION INDEX TO ANNUAL REPORT ON FORM 10-K For Year Ended June 30, 1999 Page PART I ---- Item 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . 9 Item 3 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 9 Item 4 Submission of Matters to a Vote of Security Holders. . . . 9 PART II Item 5 Market for Registrant's Common Equity and Related Stockholder Matters. . . . . . . . . . . . . . . . 10 Item 6 Selected Financial Data. . . . . . . . . . . . . . . . . . 10 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . 12 Item 7A Quantitative and Qualitative Disclosures about Market Risk 16 Item 8 Financial Statements and Supplementary Data. . . . . . . . 17 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. . . . . . . . . . . . 33 Part III Item 10 Directors and Executive Officers of the Registrant. . . . . . . . . . . . . . . . . . . . . 33 Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . 35 Item 12 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . 35 Item 13 Certain Relationships and Related Transactions . . . . . . 35 Part IV Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 35 Index to Consolidated Financial Statements and Financial Statement Schedule . . . . . . . . . . . . . . . . . . . . . . 36 Report of Independent Public Accountants on Financial Statement Schedule Arthur Andersen LLP . . . . . . . . . . . . . . . . . . . . . . . . . 31 KPMG LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Schedule II - Valuation and Qualifying Accounts for each of the years ended June 30, 1999, 1998, and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Index to Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 PART I ITEM 1. BUSINESS INTRODUCTION Lunar Corporation develops and sells x-ray and ultrasound bone densitometers for the diagnosis and monitoring of osteoporosis and other metabolic bone diseases. Lunar also develops and sells medical imaging equipment used by orthopedists and radiologists for imaging extremities. Except as the context otherwise requires, as used herein the terms "Lunar" And the "Company" mean Lunar Corporation, its wholly owned subsidiaries Lunar GmbH, Lunar Europe, N.V., Lunar France, Lunar FSC, Inc., Lunar Finance Corporation, Lunar Funding Corporation, and Lunar Capital Corporation. BACKGROUND ON OSTEOPOROSIS Osteoporosis is a disease generally associated with aging and characterized by excessive loss of bone mineral, resulting in decreased bone density over time. Demineralization weakens bone so that minor physical stress can cause debilitating fractures, usually in the wrists, hips, and spine. These fractures can result in disfigurement, decreased mobility, and, in some cases, extensive hospitalization and chronic nursing home care. Osteoporosis is a major and growing public health problem in the United States and worldwide. In the United States, 25% of women over age 60 develop vertebral fractures related to osteoporosis, and as many as 50% of women will develop vertebral fractures by age 75. According to the National Institutes of Health, there are currently more than 10 million adults affected by osteoporosis in the United States. Factors contributing to bone loss include age- and sex-related hormonal changes, low calcium intake, excessive alcohol consumption, and certain drug therapies. An estimated 1.3 million osteoporosis-related fractures occur each year in the United States. A Mayo Clinic study estimated the annual direct costs of osteoporosis-related fractures in the United States in 1995 to be $13.8 billion. Without effective diagnosis and treatment, the medical and social consequences of such fractures will worsen as the population ages. Osteoporosis related fractures are reduced if individuals at the greatest risk are diagnosed and treated in the early stages. DIAGNOSIS AND MONITORING. Most people are not diagnosed in time for effective therapy since there are no obvious symptoms of osteoporosis in the early stages. Often the first symptom is a debilitating fracture. Studies show that bone mineral density is correlated highly with bone strength. Since bone strength is a determinant of an individual's susceptibility to fracture (along with the likelihood of sustaining sufficient trauma), bone mineral density indicates fracture risk. Bone mineral density can be measured with accuracy (referring to how well the scanners measure the actual bone density) and precision (referring to whether the scanners yield the same result upon multiple scans of the same bone) using dual-photon absorptiometry ("DPA") or dual-energy x-ray absorptiometry ("DEXA") techniques. DPA scanners employ a radioactive source; DEXA scanners generate radiation using a conventional x-ray tube. DEXA scanners are accurate, have a low precision error, are safe because they emit low radiation, have scanning times of approximately 5 minutes, and have a low operating cost. Ultrasound technology has also been developed to measure the bone density of certain peripheral sites such as the heel. Ultrasound bone densitometers are less expensive than DEXA bone densitometers, and since they use nonionizing radiation, ultrasound bone densitometers encounter fewer regulatory and licensing requirements as compared to DEXA bone densitometers. REIMBURSEMENT. To achieve broad acceptance and qualify for third-party reimbursement, diagnostic products not only must be safe and efficacious, but also must be deemed cost-effective by public and private health care payors. Sales of bone densitometers are also dependent upon the level of reimbursement provided by public and private health care payors. Reimbursement for DEXA and ultrasound scans has been approved in several countries. In the United States, Medicare pays an average of $131 for axial DEXA tests, and approximately $40 for peripheral DEXA or ultrasound tests. While many private insurance carriers currently provide reimbursement for bone mass measurement, a significant number do not. THERAPIES. The demand for bone densitometers sold by the Company is dependent on the availability of therapies for the treatment of postmenopausal osteoporosis. The Company does not sell any of the therapies discussed in this subsection. Estrogen replacement therapies ("ERT") are approved for marketing and sale in the United States for the treatment of postmenopausal osteoporosis. ERT is currently believed to be an effective means to prevent bone loss and related fractures, but does not stimulate bone formation. In the United States, ERT most often is used to relieve symptoms related to menopause; however, usage for osteoporosis is steadily increasing. The Food and Drug Administration ("FDA") approval of a combined estrogen-progestin pill (Prempro by Wyeth Ayerst) has increased interest in long-term and potential compliance therapy of osteoporosis. Calcitonins are approved for marketing and sale in the United States for the treatment of osteoporosis. Calcitonins seem to prevent further bone loss, but do not stimulate bone formation. Miacalcin nasal spray, by Novartis, is a nasal delivery formulation which was approved for sale by the FDA in the United States in 1995. A bisphosphonate (Fosamax, developed by Merck & Co.) was approved in October 1995 for marketing and sale in the United States for the treatment of osteoporosis. Studies have shown that bisphosphonates appear to inhibit bone resorption without interrupting normal bone formation, thereby increasing bone mass and reducing vertebral fractures. Several other pharmaceutical companies are developing bisphosphonates to treat osteoporosis and expect to market these products within the next few years. Calcium supplements have not been approved for marketing and sale in the United States for the treatment of osteoporosis. Calcium supplements are often recommended for postmenopausal women, but evidence of their efficacy in treatment and prevention of osteoporosis is controversial. Calcium supplements are also recommended for use with bisphosphonates and ERT. Fluoride preparations have not been approved for marketing and sale in the United States for the treatment of osteoporosis. Fluoride preparations are known to increase bone density in the spine (the most common site of osteoporosis fractures), but have little effect on bone density in the hip (the most debilitating site of osteoporosis fractures). A new class of compounds, selective estrogen receptor modulators, have been shown to prevent bone loss. In December 1997, Raloxifene (Evista by Eli Lilly) was approved for treatment of osteoporosis. In Japan and Europe, there is an active market for osteoporosis therapies. In Japan, available therapies include vitamin D-3 compounds, calcitonin, and ipriflavone. In Europe, available therapies include estrogens, calcitonins, vitamin D-3 compounds, ipriflavone, and sodium fluoride. Vitamin D-3 compounds, primarily 1-alpha-D-3, which are available in Japan and Europe, are activated by the body into hormones which help regulate blood levels of calcium required for essential body functions, including normal bone growth. Studies have shown that low dosages of 1-alpha-D-3 have little efficacy as an osteoporosis therapy, but at higher dosages, bone mineral content increased and bone fracture rates decreased. THE COMPANY'S PRODUCTS X-RAY DENSITOMETRY SYSTEMS. Lunar introduced its first x-ray system, the DPX, in 1988. Since that time, the Company has developed numerous enhancements and instrument sizes available within this product line. Some of the more popular models are described below. Lunar introduced the PRODIGY, a fan-beam densitometer, in December 1998. The PRODIGY uses a highly efficient detector to provide rapid throughput, superb image quality, excellent precision and signifiacantly lower radiation dose than competitive fan beam systems. The PRODIGY is priced between the DPX- IQ and the EXPERT, and is targeted to radiologists, gynecologists, rheumatologists, endocrinologists and orthopedists. Lunar introduced the DPX-IQ in 1996. The DPX-IQ includes a broad range of clinical applications, including software for the analysis of the spine, femur, hand, and total body bone density and soft-tissue composition. The DPX-IQ is available in a full-size model for complete clinical utility, and a compact model, which requires less space, but cannot perform total body measurements. Primary customers include radiologists, gynecologists, rheumatologists, endocrinologists and orthopedists. The EXPERT is a high-end imaging fan-beam bone densitometer. The imaging capability of the EXPERT allows determinations of the entire lateral spine to be achieved in less than a minute. Morphometry of individual vertebra can be readily done with standardized, semiautomated algorithms. EXPERT morphometry, compared to conventional radiographs, provides uniformity in geometry; there is no distortion along the axis of the spine, leading to exact values for vertebral height. The EXPERT is sold primarily to research institutions and high-end imaging centers. Lunar introduced the PIXI in 1997. The PIXI is a peripheral x-ray bone densitometer, which utilizes cone-beam geometry to produce high resolution imaging of both the heel and forearm in 5 seconds. While the forearm is an adequate site to assess bone loss due to hyperparathyroidism, it is only a modest predictor of future fractures and a poor site to monitor therapeutic response. In contrast, the heel, as a weight-bearing site with metabolically active bone, has been shown to be both: (1) a good predictor of hip fractures, and (2) responsive to anti-resorptive therapies, much like the spine. Lunar sells the PIXI to medical specialists such as gynecologists, and other primary care physicians. ULTRASOUND DENSITOMETRY SYSTEMS. Lunar introduced the first Achilles ultrasound densitometer in 1991. The Achilles series of products were the first to measure bone using both speed of sound and broadband ultrasound attenuation. Lunar introduced the Achilles+ in 1995, featuring increased ease of operation and reduced patient measurement time. In September 1997, Lunar introduced the Achilles+ Solo, with further improved scan times (40 seconds per measurement) and an internal computer. Lunar introduced the Achilles Express in April 1999. The Achilles Express also operates with an internal computer, but differs from previous models in that the heated water bath is replaced by heated water contained within two compliant membranes. These modifications allow for a smaller, more portable and more user friendly ultrasonometer. The Achilles products are sold to endocrinologists, obstetricians, gynecologists, and family practitioners. ORTHOPEDIC IMAGING SYSTEMS - MAGNETIC RESONANCE IMAGING SYSTEM. In September 1993, the Company signed an exclusive distributor agreement with ESAOTE Biomedica Spa, a medical device manufacturer based in Italy, to distribute the Artoscan dedicated MRI system in the United States. In June 1999, the Company signed a non-exclusive distributor agreement with ESAOTE Biomedica Spa to distribute the E-Scan dedicated MRI system in the United States. These specialized MRI systems are suitable for imaging extremities such as knees, wrists, ankles, and, in the case of the E-Scan, shoulders. The Company sells these devices for less than $450,000, which is significantly below competitive whole body MRI systems. This lower price, coupled with lower installation and siting costs, makes these MRI systems attractive to radiologists, orthopedists, sports medicine specialists, and other MRI users. Under the agreement with ESAOTE Biomedica, Lunar is required to meet certain minimum annual purchase commitments. The distribution agreements with ESAOTE expire on December 31, 2003. There can be no assurance that the agreement will be renewed on terms satisfactory to the Company. FLUOROSCOPIC C-ARM. The Company introduced ORCA, a fluoroscopic C-arm for extremity imaging, in 1996. ORCA utilizes digital imaging capabilities coupled with proprietary processing techniques to produce distortion-free images, particularly of bone. ORCA is designed for the orthopedic surgery market. CUSTOMERS, SALES, AND MARKETING Lunar's products are sold to hospitals, clinics and pharmaceutical companies active in the field of bone mineral metabolism. Specialists such as radiologists, rheumatologists, endocrinologists and orthopedic surgeons typically make the purchase decisions. Recently demand from primary care physicians such as gynecologists and family practitioners has increased. Lunar markets and sells its products in the United States through a 30- person direct sales force and two independent distribution companies. The Company entered into distribution agreements in 1998 with Caligor (a division of Henry Schein Medical) and McKesson HBOC. Both companies have a presence in the primary care and gynecology markets with a combined sales force of over 700 representatives. Lunar markets and sells its products outside of the United States primarily through independent distributors, all of whom offer sales and technical support. Employees of these distributors have undergone product and technical training related to the Company's systems. The Company's wholly owned German, French, and Belgian subsidiaries provide direct sales and service support to German, French, and Belgian customers. The Company also maintains offices in Brussels, Belgium, and Sydney, Australia, to support its distributors with marketing, sales support, and service. Lunar markets and sells the MRI scanners through a 6-person direct sales force and the fluoroscopic C-arm is sold through various radiological and orthopedic surgery equipment dealers. Lunar markets its products by advertising in medical journals, direct mailings of brochures, attendance at medical seminars and trade shows, and personal visits by sales representatives with customers. Lunar products carry a one-year warranty. Extended service contracts are also available. For the years ended June 30, 1999, 1998, and 1997, approximately 30%, 36%, and 37% of sales, respectively, were to customers located in foreign countries. No individual end user accounted for more than 2% of Lunar's sales for the fiscal year ended June 30, 1999, 1998 and 1997. Substantially all of the Company's June 30, 1999 backlog was deliverable within 120 days. Orders included in backlog may generally be canceled or rescheduled by customers, without significant penalty, and therefore cannot be considered firm. Also, the Company's revenues tend to be somewhat seasonal, generally being lower in the first fiscal quarter due primarily to lower activity in Europe and North America. MANUFACTURING Lunar's manufacturing operations consist primarily of assembly, testing, and quality control. Lunar purchases a majority of the parts and peripheral components for its systems and manufactures certain subsystems, such as the x- ray tube head, from basic components. Parts and materials are generally readily available from several supply sources. PATENTS AND PROPRIETARY RIGHTS Lunar relies in part upon know-how, trade secrets, trademarks and copyrights, and patents to protect technology which it considers important to the development of its business. Although the Company believes patents are not critical in protecting its competitive advantage in bone densitometry, it has obtained a number of United States patents relating to its technology. The Company owns a number of issued United States and foreign patents and patent applications related to various aspects of x-ray and ultrasound bone densitometry. The Company continues to file United States and foreign patent applications covering its developments in the bone densitometry and imaging technologies. In addition to patents and patent applications concerning technology developed by the Company, the Company has licensed patented technology developed at various universities. The Company has obtained United States and foreign trademark registrations for "LUNAR," "DPX," "Achilles," "EXPERT," "LUNAR Expert," "PIXI," "DPX-IQ," and "ORCA." Applications for various trademark registrations continue to be pursued worldwide. The Company claims international copyright in its software, user's manuals, customer brochures, and advertising materials. The Company also relies on unpatented trade secrets. The Company requires its employees, consultants, and advisors to execute confidentiality agreements upon the commencement of an employment or a consulting relationship with the Company. The agreements provide that all confidential information developed or made known to the individual during the course of the relationship shall be kept confidential and not disclosed to third parties except in specified circumstances. The agreements also provide that all inventions conceived by the individual during his employment and relating to the business of the Company shall be the exclusive property of the Company. There can be no assurance, however, that these agreements will provide meaningful protection for the Company's trade secrets in the event of unauthorized use or disclosure of such information. Additionally, others may independently develop substantially equivalent proprietary information and techniques, or otherwise gain access to the Company's trade secrets or disclose such technology. For information regarding patent litigation, see Item 3 below. COMPETITION Lunar product sales are dependent on competition, reimbursement levels, and availability of therapies on a country-by-country basis. The medical instrumentation industry is highly competitive and characterized by continual change and improvement in technology. Many of the companies in the medical instrumentation industry have significantly greater research, manufacturing, marketing, and financial resources than the Company. To date, the market for bone densitometer systems has been characterized by companies such as Lunar which specialize in instruments for bone density measurement. Hologic, Inc., based in Massachusetts, and Norland Medical Systems, Inc., based in White Plains, New York, sell bone densitometer scanners which compete directly with the Prodigy, DPX series and the EXPERT. In 1997, Schick Technologies, Inc., based in Long Island City, New York, introduced a low-cost x-ray based peripheral bone densitometer which competes with the Company's peripheral bone densitometers. Two Japanese companies, an Italian company and a French company are developing or have introduced x-ray bone densitometers in their respective countries. Lunar expects additional competitors to enter the bone densitometry market, both in the United States and foreign countries. Competition has intensified as new models have been introduced by competitors. The Company believes it is the world's largest seller of ultrasound bone densitometry instruments. Hologic and at least five other companies have commercially introduced devices which compete with the Achilles ultrasound product line. Lunar is aware of several other companies developing ultrasound bone densitometers. In addition to competition from other medical equipment manufacturers and devices, biochemical markers have gained increased interest among researchers for the detection of high bone turnover which can lead to osteoporosis. Such markers could be used as an adjunct to bone densitometry. The primary competitors to the ORCA C-arm include OEC Medical Systems, Inc., Fluoroscan (a subsidiary of Hologic), and Xitec. Siemens sells an extremity MRI device competitive to the E-Scan. REGULATION The Company's products and manufacturing systems are subject to regulation by the FDA and by many foreign governments. Under the United States Food, Drug, and Cosmetic Act ("FDA Act"), manufacturers of medical devices must comply with certain regulations governing the manufacturing, testing, packaging, and marketing of medical devices. The Company's x-ray bone densitometry products are also subject to the Radiation Control for Health and Safety Act, administered by the FDA, which imposes performance standards and record keeping, reporting, product testing, and product labeling requirements for devices using radiation, such as x-rays. Lunar believes it is in compliance in all material respects with these various laws and regulations. The FDA generally must authorize the commercial sale of new medical devices. Commercial sales of the Company's bone densitometry devices within the United States must be preceded by either a premarket notification filing pursuant to Section 510(k) of the FDA Act or the granting of premarket approval for a particular medical device. The Section 510(k) notification filing must contain information which establishes that the device is substantially equivalent to a legally marketed device or to a device which was marketed prior to May 28, 1976. The FDA may either deny the Section 510(k) submission or require further information within 90 days of submission. Commercial marketing of the device cannot begin until the 510(k) submission is cleared by the FDA. The premarket approval (PMA) procedure involves a more complex and lengthy review process by the FDA than the Section 510(k) premarket notification procedure. The following table summarizes FDA Section 510(k) clearances and Pre- Market Approvals received by Lunar during the last 10 years: 510(k)Clearances DPX Bone Densitometer June 1988 DPX Total Body Software June 1989 DPX Population Reference Data April 1990 DPX-L/DPX-alpha Bone Densitometers December 1990 Lateral Spine Software August 1991 DPX Forearm Software February 1992 DPX Orthopedics Software February 1992 EXPERT Bone Densitometer April 1995 EXPERT Morphometry Software April 1995 Morphometry Software May 1995 DPX Tissue Quantitation Software October 1995 DPX Hand Software October 1995 ORCA Orthopedic C-arm May 1996 EXPERT Morphometry Reference Value Software July 1996 EXPERT Forearm and Hand Software November 1996 EXPERT Total Body Software April 1997 DPX Expanded Reference Value Software April 1997 PIXI Densitometer April 1997 PIXI Reference Data August 1997 Prodigy Bone Densitometer August 1998 Prodigy Total Body Software December 1998 Pre-Market Approvals Achilles+ Ultrasonometer June 1998 Achiles Express Ultrasonometer April 1999 LUNAR believes new products being developed in the x-ray densitometry and imaging product lines will be eligible for a Section 510(k) marketing clearance. As a manufacturer of medical devices, Lunar is subject to certain FDA regulations which relate to its processes for product design, development, manufacturing, selling and service as well as its facilities. These process and facility requirements are subject to continuing review by the FDA, and as such, the Company's quality management system has been established to meet these FDA requirements. Lunar has had several FDA on-site inspections and has complied with FDA regulations. The Company's quality management system is also certified as meeting the internationally recognized ISO 9001 standard as well as the specific requirements of the European Medical Devices Directive. The Company is subject to routine follow-up inspections by independent quality system auditors. Lunar has complied with these quality system requirements. Export clearance for the Company's products varies by country. Generally if FDA 510(k) or premarket approval is received in the United States, there are no other export clearances required. However, the Company's product line may be subject to approval by certain foreign regulatory and safety agencies as well. An increasing number of countries are implementing regulations requiring their own pre-market review of new medical devices prior to the Company exporting newly introduced devices to that country. Other countries require only that the Company comply with product safety and ISO 9001 quality system standards. Lunar believes it is currently in compliance with all regulations in foreign countries applicable to its business. Most states and certain foreign countries monitor and require licensing of x-ray devices such as bone densitometers and fluoroscopic devices either by the user or by the manufacturer. Lunar believes that it is currently in compliance with relevant registration and/or licensing requirements for x-ray devices. Federal, state, and foreign regulations regarding the manufacture and sale of medical devices are subject to future change. Lunar cannot predict what impact, if any, such changes might have on its business. Lunar is also subject to regulation by the Nuclear Regulatory Commission ("NRC") as a result of its storage and handling of radioactive materials used in the design and development of its medical devices. Lunar holds a license from the NRC which regulates the type, amount, form, storage, use, disposal, and handling of such radioactive materials. Licenses from the NRC must be renewed every five years. Lunar has in place a Radiation Safety Program, and it has recently been inspected by the NRC and complies with the relevant regulations. The Company is subject to various federal, state, and local laws and regulations relating to the protection of the environment. Lunar believes its current operations comply with all currently applicable environmental laws and regulations. Lunar's expenditures for environmental compliance have not had, nor are they expected to have, a material adverse effect on the results of operations or financial condition of the Company. RESEARCH AND DEVELOPMENT As of June 30, 1999, the Company had 52 employees engaged in research and development. During fiscal 1999, 1998, and 1997, Lunar's research and development expenses were $7.1 million, $7.6 million, and $5.9 million, respectively. PRODUCT LIABILITY INSURANCE The Company maintains product liability insurance and considers its current level of product liability insurance coverage to be adequate. While the Company has not experienced any material product liability claims to date, if such claims arise in the future, they could have a material adverse effect on the results of operations or financial condition of the Company. EMPLOYEES As of June 30, 1999, Lunar had 317 full-time employees, including 63 in manufacturing operations; 52 in research and development; 171 in marketing, sales support, and service; and 31 in finance and administration. None of the Company's employees is represented by a union. The Company considers its employee relations to be good. GLOSSARY OF DEFINED TERMS DEXA - dual-energy x-ray absorptiometry DPA - dual-photon absorptiometry ERT - estrogen replacement therapies FDA - Food and Drug Administration FDA Act - United States Food, Drug, and Cosmetic Act HCFA - Health Care Finance Administration Hologic - Hologic, Inc. MRI - magnetic resonance imaging NRC - Nuclear Regulatory Commission SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS In addition to the historical information presented in this annual report, the Company has made and will make certain forward-looking statements in this report, other reports filed by the Company 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, the Company'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 the Company'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 the Company 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 the Company's operations. Although the Company 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. The Company 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 2. PROPERTIES The Company owns and occupies a building of approximately 70,000 square feet on approximately 3 acres in Madison, Wisconsin. The Company's facilities were originally acquired in 1986 and expanded by approximately 30,000 square feet in 1994. The Company also leases a warehouse in Madison, Wisconsin of approximately 10,000 square feet, and office facilities in Germany, Belgium, and France. The Company purchased a 25-acre parcel of land in January 1998 for $1,949,000 and began construction of an assembly, warehouse and office building in October 1998. The Company projects total construction costs will be approximately $10,750,000 of which $6,787,950 had been paid as of June 30, 1999. The Company moved its assembly operations and warehouse to the new building in July 1999. The Company will move its office personnel to the new building in October 1999. ITEM 3. LEGAL PROCEEDINGS PATENT LITIGATION: On May 21, 1998 the Company filed suit against International Medical Research Ottawa (IMRO) for infringement of the Company's Canadian Patent 1,323,090 (the '090 Patent). IMRO manufactures and sells ultrasound bone densitometers in Canada and has manufactured ultrasound densitometers for Norland Medical Systems, Inc. for distribution and sale throughout the world. This suit is pending in the Federal Court of Canada-Trial Division. On September 10, 1999, the parties reached an agreement in principle to resolve this litigation. Under the terms of the agreement, IMRO will terminate its operations in Canada within three months and pay the Company a royalty for each system manufactured or sold during that period. On November 24, 1998 the Company was issued U.S. patent number 5,841,832 (the `832 patent). On January 20, 1999 the Company brought suit against EG&G Astrophysics Research Corporation and its parent company EG&G, Inc. (collectively referred to as "EG&G") in the United States District Court for the Western District of Wisconsin for infringement of the `832 patent by EG&G's dual-energy baggage scanners. The parties have reached an agreement in principle to resolve this litigation. Under the terms of the agreement, EG&G will pay a future royalty to the Company for all sales of products that utilize the technology claimed in the `832 patent. OTHER MATTERS: The Company is a defendant from time to time in actions arising out of its ordinary business operations. There are no other legal proceedings known to the Company at this time which it believes would likely have a material adverse impact on the results of operations, financial condition or cash flows of the Company. To the Company's knowledge, there are no material legal proceedings to which any director, officer, affiliate or more than 5% shareholder of the Company (or any associate of the foregoing persons) is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS None. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The following table sets forth high and low sales prices as reported on the National Market System of The Nasdaq Stock Market for fiscal years 1999 and 1998. First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- 1999 ---- High $18.00 $11.81 $10.75 $ 8.44 Low $10.69 $ 9.25 $ 6.38 $ 5.38 1998 ---- High $24.50 $22.88 $24.50 $20.00 Low $19.00 $18.50 $19.75 $16.25 On September 23, 1999, the Company's common stock was held by approximately 3,500 stockholders of record or through nominee or street name accounts with brokers. The Company has not paid any cash dividends on its shares of common stock since its initial public offering on August 14, 1990, and does not expect to pay any cash dividends in the foreseeable future. Lunar intends to reinvest its earnings on the continued development and operation of its business. Any payment of dividends would depend upon Lunar's pattern of growth, profitability, financial condition, and such other factors as the Board of Directors may deem relevant. ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data for each of the five years in the period ended June 30, 1999 have been derived from the audited consolidated financial statements of LUNAR. The consolidated financial statements for the fiscal years ended June 30, 1995 through 1998 have been audited by KPMG LLP, independent auditors. The financial statements for fiscal year ended June 30, 1999 have been audited by Arthur Anderson LLP, independent auditors. References to a year are to Lunar's fiscal year ended June 30, unless otherwise designated. The following data should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report and "Management's Discussion and Analysis of Financial Condition and Results of Operations." STATEMENTS OF INCOME DATA (in thousands, except per-share data) Year Ended June 30, 1999 1998 1997 1996 1995 ------------------------------------------ REVENUES Equipment sales and other revenue $88,062 $79,177 $80,891 $66,426 $44,349 OPERATING EXPENSES Cost of sales 50,562 38,020 35,242 29,739 18,583 Research and development 7,100 7,577 5,922 5,812 4,495 Sales and marketing 24,394 19,995 17,697 14,729 10,057 General and administrative 4,655 4,097 4,051 4,311 4,002 - ----------------------------------------------------------------------------- 86,711 69,689 62,912 54,591 37,137 - ----------------------------------------------------------------------------- Income from operations 1,351 9,488 17,979 11,835 7,212 OTHER INCOME (EXPENSE) Interest income 1,600 1,813 1,533 1,549 1,312 Settlement of lawsuit (580) - 1,829 - - Other 660 (1,115) 186 (238) 328 - ----------------------------------------------------------------------------- 1,680 698 3,548 1,311 1,640 - ----------------------------------------------------------------------------- Income before income taxes 3,031 10,186 21,527 13,146 8,852 Income tax expense 676 3,324 7,241 3,910 2,151 - ----------------------------------------------------------------------------- NET INCOME $2,355 $6,862 $14,286 $9,236 $6,701 ============================================================================= Basic Earnings Per Share $.27 $0.78 $1.66 $1.13 $0.85 ============================================================================= Diluted Earnings Per Share $.27 $0.75 $1.57 $1.04 $0.76 ============================================================================= Weighted average number of common shares 8,617 8,774 8,615 8,195 7,905 ============================================================================= Weighted average number of common and dilutive potential common shares 8,779 9,112 9,106 8,908 8,824 ============================================================================= BALANCE SHEET DATA (in thousands) As of June 30, 1999 1998 1997 1996 1995 -------------------------------------------------- Working capital $44,810 $40,606 $45,535 $38,987 $33,140 Total assets $96,164 $90,060 $83,269 $62,860 $56,700 Long-term liabilities - - - - - Shareholders' equity $76,345 $75,557 $70,229 $52,393 $48,096 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS STATEMENTS OF INCOME (percent of sales) Year Ended June 30, 1999 1998 1997 ---- ---- ---- REVENUES 100% 100% 100% OPERATING EXPENSES Cost of sales 57 48 44 Research and development 8 10 7 Sales and marketing 28 25 22 General and administrative 5 5 5 - ----------------------------------------------------------------------------- 98 88 78 - ----------------------------------------------------------------------------- Income from operations 2 12 22 OTHER INCOME (EXPENSE) Interest income 2 2 2 Other, net - (1) 3 - ----------------------------------------------------------------------------- 2 1 5 - ----------------------------------------------------------------------------- Income before income taxes 4 13 27 Income tax expense 1 4 9 - ----------------------------------------------------------------------------- NET INCOME 3% 9% 18% ============================================================================= YEAR ENDED JUNE 30, 1999 VERSUS 1998 - Equipment sales and other revenue increased 11% to $88,062,000 in fiscal 1999, from $79,177,000 in fiscal 1998. Sales by product line are summarized as follows: Revenues by Product (in thousands) Fiscal Year Fiscal Year 1999 1998 ----------- ----------- X-ray densitometry $55,533 $56,611 Ultrasound densitometry 8,551 4,118 Orthopedic imaging 15,543 12,223 Service 6,790 5,193 Other 1,645 1,032 ----------- ----------- $88,062 $79,177 =========== =========== X-ray densitometry sales in fiscal year 1999 were relatively flat compared to the prior year in spite of an increase in the number of units sold. Average selling prices were lower due to competitive pricing pressures and an increased mix of sales to distributors in the United States at lower average selling prices than direct sales to end users. The increase in ultrasound densitometry revenue is primarily due to increased unit sales in the United States. The increase in Orthopedic Imaging sales for the current fiscal year is primarily due to the introduction of the E-SCAN and increased unit sales of the ORCA mini C-arm. 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 57% in fiscal 1999 compared to 48% in fiscal 1998. These lower margins primarily result from a decrease in average selling prices. Gross profit margins were also lower in fiscal year 1999 due to a higher mix of orthopedic imaging equipment which have lower gross profit margins. Research and development expenditures decreased to $7,100,000 in fiscal 1999 compared to $7,577,000 in fiscal 1998. These expenses were lower in fiscal year 1999 due to the completion of development work associated with the Prodigy and Achilles Express bone densitometers. The Company expects this trend to continue and plans to spend less on research and development in the next fiscal year. Sales and marketing expenses increased 22% to $24,394,000 (28% of product sales) in fiscal 1999 from $19,995,000 (25% of product sales) in fiscal 1998. Four key factors account for this increase. First, the Company increased the allowance for doubtful accounts by $1,000,000 in the quarter ended March 31, 1999 in anticipation of possible losses on it's portfolio of Brazilian receivables. Second, the Company increased sales and marketing efforts targeted to primary care physicians to address the expanding market for densitometry in the United States. Third, the Company incurred substantially higher expenses to translate product software and user documentation in order to comply with the new European Medical Device Directive regulations. Fourth, the Company started a direct sales and service subsidiary in France in March, 1998, which resulted in both increased revenues and expenses in that country. General and administrative expenses increased to $4,655,000 in fiscal 1999 from $4,097,000 in fiscal 1998. The increase is primarily attributable to an increase in the number of employees and an increase in property taxes related to the Company's assembly, warehouse and office building under construction. Interest income of $1,600,000 in fiscal 1999 compared to interest income of $1,813,000 in fiscal 1998. This decrease is primarily the result of decreases in the amount of investments partially offset by an increase in the amount of interest from financed receivables. The Company settled a lawsuit with Osteometer Meditech A/S and Rapiscan Security Systems Inc. during the quarter ended September 30, 1998. As a result of the settlement, the Company incurred expenses of approximately $580,000 in that quarter comprised of legal expenses, a settlement payment, and a patent write-off related to this settlement. Other income included royalty income, income from the sale of Bona Fide Ltd., and foreign currency gains. The effective tax rate averaged 22% in fiscal 1999 and 33% in fiscal 1998. The Company's effective rate is lower in fiscal year 1999 than in fiscal year 1998 due to an increased proportion of tax-exempt interest income and a higher benefit from the foreign sales corporation. The rate for both years is below the 34% federal statutory rate as a result of tax-exempt interest income and the benefit from the foreign sales corporation offset by the provision for state income taxes. YEAR ENDED JUNE 30, 1998 VERSUS 1997 - Equipment sales and other revenue decreased 2% to $79,177,000 in fiscal year 1998, from $80,891,000 in fiscal year 1997. Sales by product line are summarized as follows: Revenues by Product (in thousands) Fiscal Year Fiscal Year 1998 1997 ----------- ----------- X-ray densitometry $56,611 $61,827 Ultrasound densitometry 4,118 5,528 Orthopedic Imaging 12,223 9,121 Service 5,193 3,546 Other 1,032 869 ----------- ----------- $79,177 $80,891 =========== =========== The Company's sales of bone densitometers in the United States have been negatively impacted by a shift away from traditional hospital buyers toward physician clinical practices, which tend to favor the lowest priced densitometers. In fiscal year 1998, the Company announced two new distributor agreements to better address this market segment. Bone densitometry sales were also negatively affected by the economic problems in Asian markets. The increase in Orthopedic Imaging sales for fiscal year 1998 is primarily due to increased unit sales of the Artoscan dedicated MRI system. The increase in service revenue is primarily due to the growing installed base of densitometers in the United States. Cost of sales as a percentage of equipment sales averaged 48% in the year ended June 30, 1998 compared to 44% in the year ended June 30, 1997. The increase is primarily the result of lower gross profit margins on sales of densitometry equipment as a result of competitive pricing pressures and a higher mix of orthopedic imaging equipment which have lower gross profit margins. Research and development expenditures increased to $7,577,000 in fiscal year 1998 compared to $5,922,000 in fiscal year 1997. The Company increased research and development expenditures for ultrasound and x-ray densitometry products during fiscal year 1998. Sales and marketing expenses increased 14% to $19,995,000 (25% of product sales) in fiscal year 1998 from $17,697,000 (22% of product sales) in fiscal year 1997. This increase is primarily the result of increased sales and marketing efforts to address the expanding primary care market for densitometry. General and administrative expenses increased to $4,097,000 in fiscal year 1998 from $4,051,000 in fiscal year 1997. Interest income of $1,813,000 in fiscal year 1998 compared to interest income of $1,533,000 in fiscal year 1997. This increase is primarily the result of increased investments in marketable securities partially offset by decreases in the amount of financed receivables. The effective tax rate averaged 33% in fiscal year 1998 and 34% in fiscal year 1997. The Company's effective rate has been 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 offset by the effect of state income taxes. LIQUIDITY AND CAPITAL RESOURCES - Cash and cash equivalents increased $9,058,000 to $13,666,000 at June 30, 1999 from $4,608,000 at June 30, 1998. Marketable securities decreased $15,356,000 to $15,545,000 at June 30, 1999 from $30,901,000 at June 30, 1998. Marketable securities consist of a laddered portfolio of readily marketable high-grade municipal bonds with various maturities not exceeding 48 months. The Company's accounts receivable increased $3,658,000 to $35,060,000 at June 30, 1999 from $31,402,000 at June 30, 1998. The increase is primarily attributable to higher accounts receivable from MRI customers which generally have longer payment terms, higher accounts receivable from financed Brazilian customers and payment delays by Brazilian customers related to the recent currency devaluation. The Company has approximately $8,091,000 in financed accounts receivable from Brazilian customers as of June 30, 1999. Two finance companies also have recourse against the Company for a maximum of approximately $1,395,000 for financed Brazilian accounts receivable that have been sold. All the Brazilian accounts receivable are denominated in U.S. dollars. In January 1999 the Brazilian government allowed its currency, the real, to freely trade against the U.S. dollar. As of September 1999, this policy change resulted in approximately a 56% devaluation of the real as compared to the U.S. dollar. The Company has incurred some payment delays from Brazilian customers and lower sales in Brazil as a result of this devaluation. The Company has renegotiated longer payment terms for these Brazilian accounts receivable. Inventories increased 4% to $13,656,000 on June 30, 1999 from $13,163,000 on June 30, 1998. The increase in finished goods is primarily attributable to increases in Artoscan MRI and densitometry units. The decrease in materials and purchased parts is primarily attributable to decreased service inventories. The Company purchased a 25-acre parcel of land in January 1998 for $1,949,000 and began construction of an assembly, warehouse and office building in October 1998. The Company projects total construction costs will be approximately $10,750,000 of which $6,787,950 had been paid as of June 30, 1999. The Company moved its assembly operations and warehouse to the new building in July 1999. The Company will move its office personnel to the new building in October 1999. The Company does not have any other pending material commitments for capital expenditures. The Company has received a commitment from the State of Wisconsin Investment Board to provide a 20 year term loan for up to $10,000,000 of the final building cost. The interest rate will be fixed at the time the loan proceeds are paid. On April 22, 1998, the Company approved a stock repurchase program pursuant to which it may repurchase up to 1,000,000 shares of its common stock from time to time based upon market conditions and other factors. The Company has repurchased 314,400 shares under this program as of September 23, 1999. Management believes the current level of cash and short-term marketable securities is adequate to finance the Company's operations for the foreseeable future. NEW ACCOUNTING PRONOUNCEMENTS - SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" is effective for financial statements for periods beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. The Company is evaluating the new Statement's provisions and does not expect this Statement to have a material effect on its financial statements. YEAR 2000 COMPLIANCE - Many currently installed computer systems and software products are coded to accept only two-digit entries in the date code field. To distinguish 21st century from 20th century dates, these date code fields must be able to accept four-digit entries. The Company has reviewed its existing financial and other business information systems and believes that its computer systems will be able to manage and manipulate all material data involving the transition from 1999 to 2000 without functional or data abnormality and without inaccurate results related to such data. During fiscal 1998, the Company replaced its manufacturing and financial accounting software package at a cost of approximately $230,000. This new software package is year 2000 compliant. The Company does not expect to incur significant additional costs to complete its year 2000 compliance program. It is possible that third parties, such as suppliers and distributors, may have noncompliant computer systems or programs which may not interface properly with the Company's computer systems or may otherwise result in a disruption of the Company's operations. The Company is requesting assurances from third parties with which it has a material relationship that their computers, systems, and programs be year 2000 compliant. The Company currently anticipates that the expenses and capital expenditures associated with its year 2000 compliance program will not have a material effect on its financial position, results of operations or cash flows. Because the Company's software programs are year 2000 compliant, and the Company does not believe any material problems will arise if a third party is not year 2000 compliant, the Company has not developed any contingency plan. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's exposure to market risk for changes in interest rates relates primarily to the Company's investment portfolio. The Company does not use derivative financial instruments in its investment portfolio. The Company places its investments with high credit quality issuers and, by policy, limits the amount of credit exposure to any one issuer. As stated in its policy, the Company is adverse to principal loss and ensures the safety and preservation of its invested funds by limiting default risk, market risk, and reinvestment risk. The Company mitigates default risk by investing in only high credit quality securities. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity. All investments mature, by policy, in 48 months or less. The Company uses forward currency contracts in its management of foreign currency exposures. The contracts are in German Deutsche Marks, French Francs, and Belgian Francs and generally have maturities which 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 June 30, 1999. These contracts are entered into with major financial institutions thereby minimizing the risk of credit loss. The table below provides information about the Company's market sensitive financial instruments and constitutes a "forward-looking statement." All items described below are non-trading and are stated in U.S. dollars. During fiscal year ended June 30, ----------------------------------------------- Maturity dates 2000 2001 2002 2003 - ----------------------------------------------------------------------------- ASSETS Cash equivalents Variable taxable rate $7,614,682 Average taxable interest rate 4.15% Variable tax-exempt rate $6,051,481 Average tax-exempt rate 3.1% Marketable securities Fixed tax-exempt rate $4,241,900 $7,663,600 $3,245,000 Average tax-exempt rate 4.24% 4.23% 4.19% Forward contract German DM denominated $ 691,048 Contracted exchange rate 1.8812:1 (DM to US$) French Franc denominated $1,742,988 Contracted exchange rate 6.311:1 (FF to US$) Belgian Franc denominated $ 514,668 Contracted exchange rate 38.86:1 (BF to US$) ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Statements of Income Years ended June 30, 1999, 1998, and 1997 - ----------------------------------------------------------------------------- 1999 1998 1997 - ----------------------------------------------------------------------------- Revenues $ 88,062,189 $ 79,177,098 $ 80,890,757 Operating expenses: Cost of sales 50,562,087 38,020,371 35,241,705 Research and development 7,100,078 7,576,796 5,922,409 Sales and marketing 24,394,129 19,994,408 17,697,195 General and administrative 4,655,190 4,097,413 4,050,713 - ----------------------------------------------------------------------------- 86,711,484 69,688,988 62,912,022 - ----------------------------------------------------------------------------- Income from operations 1,350,705 9,488,110 17,978,735 - ----------------------------------------------------------------------------- Other income (expense): Interest income 1,599,972 1,813,153 1,533,127 Settlement of lawsuit (579,555) - 1,828,905 Other 659,579 (1,115,121) 186,058 - ----------------------------------------------------------------------------- 1,679,996 698,032 3,548,090 - ----------------------------------------------------------------------------- Income before income taxes 3,030,701 10,186,142 21,526,825 - ----------------------------------------------------------------------------- Income tax expense 676,000 3,324,000 7,241,000 - ----------------------------------------------------------------------------- Net income $ 2,354,701 $ 6,862,142 $ 14,285,825 ============================================================================= Basic earnings per share $ .27 $ 0.78 $ 1.66 ============================================================================= Diluted earnings per share $ .27 $ 0.75 $ 1.57 ============================================================================= See accompanying notes to consolidated financial statements. Consolidated Balance Sheets June 30, 1999 and 1998 - ----------------------------------------------------------------------------- Assets 1999 1998 - ----------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 13,666,163 $ 4,608,427 Marketable securities 4,311,834 8,117,655 Receivables: Trade, less allowance for doubtful accounts of $3,524,000 in 1999 and $3,272,000 in 1998 25,316,044 24,285,511 Short-term financed 4,848,186 2,092,164 Other 407,056 929,179 - ----------------------------------------------------------------------------- 30,571,286 27,306,854 - ----------------------------------------------------------------------------- Inventories: Finished goods and work in process 7,125,027 4,557,400 Materials and purchased parts 6,530,752 8,605,801 - ----------------------------------------------------------------------------- 13,655,779 13,163,201 - ----------------------------------------------------------------------------- Other current assets 431,931 350,360 Deferred income taxes 1,992,000 1,563,000 - ----------------------------------------------------------------------------- Total current assets 64,628,993 55,109,497 - ----------------------------------------------------------------------------- Property, plant, and equipment - at cost: Land 2,088,118 2,088,118 Buildings and improvements 2,287,356 2,287,356 Furniture and fixtures 1,055,780 876,813 Machinery and other equipment 9,368,111 6,755,441 Construction in progress 6,787,950 132,702 - ----------------------------------------------------------------------------- 21,587,315 12,140,430 Less accumulated depreciation and amortization 6,354,858 5,086,141 - ----------------------------------------------------------------------------- 15,232,457 7,054,289 Long-term trade accounts receivable 4,488,753 4,095,565 Long-term marketable securities 11,233,298 22,783,003 Patents and other intangibles, net of accumulated amortization of $764,000 in 1999 and $1,513,000 in 1998 463,270 809,468 Other 117,390 208,136 - ----------------------------------------------------------------------------- $ 96,164,161 $ 90,059,958 ============================================================================= See accompanying notes to consolidated financial statements. Consolidated Balance Sheets June 30, 1999 and 1998 - ----------------------------------------------------------------------------- Liabilities and Shareholders' Equity 1999 1998 - ----------------------------------------------------------------------------- Current liabilities: Accounts payable $ 9,133,277 $ 4,881,399 Customer advances and deferred income 1,573,523 1,027,872 Income taxes payable 2,682,104 3,494,822 Accrued liabilities: Commissions payable 2,009,340 2,186,040 Compensation payable 658,821 413,084 Property, payroll, and other taxes 250,150 155,683 Accrued warranty and installation expenses 3,118,000 2,145,000 Other 393,537 199,324 - ----------------------------------------------------------------------------- Total current liabilities 19,818,752 14,503,224 - ----------------------------------------------------------------------------- Shareholders' equity: Common stock - authorized 25,000,000 shares of $.01 par value; issued and outstanding, 8,598,580 shares in 1999 and 8,701,210 shares in 1998 85,986 87,012 Capital in excess of par value 23,454,316 24,936,811 Retained earnings 52,922,982 50,568,281 Accumulated other comprehensive loss (117,875) (35,370) ----------------------------------------------------------------------------- 76,345,409 75,556,734 - ----------------------------------------------------------------------------- $ 96,164,161 $ 90,059,958 =============================================================================
Consolidated Statements of Shareholders' Equity Years ended June 30, 1999, 1998, and 1997 - -------------------------------------------------------------------------------- - -------------------- Accumulated Number Capital in Other of Common excess of Retained Comprehensive shares stock par value earnings Income (Loss) Total - -------------------------------------------------------------------------------- - -------------------- Balance at June 30, 1996 8,486,250 $84,863 $22,802,103 $29,420,314 $ 86,123 $52,393,403 Comprehensive income: Net income - - - 14,285,825 - - 14,285,825 Unrealized appreciation in marketable securities - net of tax expense of $ 2,000 - - - - 3,098 3,098 Translation adjustment - - - - (154,124) (154,124) - ---------- Total comprehensive income 14,134,799 Issuance of shares under stock option plans 233,200 2,332 1,121,254 - - - 1,123,586 Tax benefit from issuance of shares under stock option plans - - 2,504,036 - - - 2,504,036 Issuance of stock awards 1,975 19 73,549 - - - 73,568 - -------------------------------------------------------------------------------- - -------------------- Balance at June 30, 1997 8,721,425 87,214 26,500,942 43,706,139 (64,903) 70,229,392 - -------------------------------------------------------------------------------- - -------------------- Comprehensive income: Net income - - - 6,862,142 - - 6,862,142 Unrealized appreciation in marketable securities - net of tax expense of $ 41,000 - - - - 61,712 61,712 Translation adjustment - - - - (32,179) (32,179) - --------- Total comprehensive income 6,891,675 Issuance of shares under stock option plans 174,210 1,742 885,963 - - - 887,705 Tax benefit from issuance of shares under stock option plans - - 947,521 - - - 947,521 Issuance of stock awards 575 6 13,435 - - - 13,441 Repurchase of common stock (195,000) (1,950) (3,411,050) - - - (3,413,000) - -------------------------------------------------------------------------------- - -------------------- Balance at June 30, 1998 8,701,210 87,012 24,936,811 50,568,281 (35,370) 75,556,734 - -------------------------------------------------------------------------------- - -------------------- Comprehensive income: Net income - - - 2,354,701 - - 2,354,701 Unrealized depreciation in marketable securities - net of tax credit of $ 18,000 - - - - (26,277) (26,277) Translation adjustment - - - - (56,228) (56,228) - --------- Total comprehensive income 2,272,196 Issuance of shares under stock option plans 15,770 158 54,908 - - - 55,066 Tax benefit from issuance of shares under stock option plans - - 28,513 - - - 28,513 Issuance of stock awards 1,000 10 9,490 - - - 9,500 Repurchase of common stock (119,400) (1,194) (1,575,406) - - - (1,576,600) - -------------------------------------------------------------------------------- - -------------------- Balance at June 30, 1999 8,598,580 $85,986 $23,454,316 $52,922,982 $(117,875) $76,345,409 ================================================================================ ==================== See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows Years ended June 30, 1999, 1998, and 1997 - ------------------------------------------------------------------------------- 1999 1998 1997 - ------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 2,354,701 $ 6,862,142 $14,285,825 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,118,248 2,025,514 1,444,929 Deferred income taxes (429,000) 714,000 (305,000) Changes in assets and liabilities: Receivables (3,566,874) (2,411,140) 6,895,502 Inventories (492,578) (3,789,711) (698,003) Other current assets (81,571) (265,570) 77,039 Accounts payable 4,195,650 639,735 546,557 Customer advances and deferred income 545,651 388,165 74,343 Accrued liabilities 1,330,717 (714,913) (26,463) Income taxes payable (812,718) 1,118,867 1,824,103 - ------------------------------------------------------------------------------- Net cash provided by operating activities 5,162,226 4,567,089 24,118,832 - ------------------------------------------------------------------------------- Cash flows from investing activities: Purchases of marketable securities - (14,512,714) (20,885,936) Sales and maturities of marketable securities 14,974,230 5,717,000 1,601,600 Additions to property, plant, and equipment (9,446,885) (3,668,129) (1,906,588) Patents and other intangibles (148,314) (347,641) (213,525) - ------------------------------------------------------------------------------- Net cash provided by (used in) investing activities 5,379,031 (12,811,484) (21,404,449) - ------------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from exercise of stock options 64,566 901,146 1,197,154 Income tax benefit from stock option exercises 28,513 947,521 2,504,036 Repurchase of common stock (1,576,600) (3,413,000) - - ------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (1,483,521) (1,564,333) 3,701,190 - ------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 9,057,736 (9,808,728) 6,415,573 Cash and cash equivalents at beginning of year 4,608,427 14,417,155 8,001,582 - ------------------------------------------------------------------------------- Cash and cash equivalents at end of year $13,666,163 $ 4,608,427 $14,417,155 =============================================================================== Supplemental disclosure of cash flow information- income taxes paid net of refunds $ 2,185,872 $ 337,531 $ 3,237,541 =============================================================================== See accompanying notes to consolidated financial statements. (1) SUMMARY OF ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Lunar Corporation (the Company) and its wholly owned subsidiaries, Lunar Finance Corporation, Lunar Funding Corporation, Lunar Capital Corporation, Lunar FSC, Inc., Lunar GmbH, Lunar Europe, N.V., and Lunar France. In May 1999 the Company sold the assets of Bona Fide Ltd. a former 100% owned subsidiary. The accompanying consolidated financial statements reflect the results of operations of Bona Fide Ltd. prior to the date of the sale. The gain on the sale was not material. All significant intercompany accounts and transactions have been eliminated in consolidation. DESCRIPTION OF BUSINESS The Company develops, manufactures, and sells x-ray and ultrasound bone densitometers for the diagnosis and monitoring of osteoporosis and other metabolic bone diseases. The Company also develops and sells medical imaging equipment used by orthopedists and radiologists for imaging extremities. The Company operates as a single segment. Lunar GmbH supports customers and sells Lunar's products in Germany. Lunar Europe, N.V. supports customers and sells Lunar's products in Belgium and supports customers in other European countries. Lunar France supports customers and sells Lunar's products in France. Lunar FSC, Inc. is a foreign sales corporation responsible for the sale of Lunar's products outside of the United States. Lunar Finance Corporation, Lunar Funding Corporation, and Lunar Capital Corporation manage and sell Latin American receivables to third-party finance companies. REVENUE RECOGNITION Revenue is recognized from sales when a product is shipped. Amounts billed for service contracts are recognized as revenue when earned. CASH AND CASH EQUIVALENTS For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments purchased with original maturities of three months or less to be cash equivalents. MARKETABLE SECURITIES Marketable securities generally consist of state and municipal bonds with original maturities generally ranging from less than one year to four years. The Company classifies its investment securities as available-for-sale. Available-for-sale securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of accumulated other comprehensive income. Realized gains and losses are included in other income. Interest income is recognized when earned. INVENTORIES Inventories are stated at the lower of cost or market; cost is determined by the first-in, first-out method. DEPRECIATION AND AMORTIZATION Depreciation and amortization are provided for in amounts sufficient to recognize the cost of depreciable assets to operations over their estimated service lives. A combination of straight-line and accelerated methods of depreciation are used for financial and income tax reporting purposes. The cost of property and equipment are depreciated over the following estimated useful lives: Asset classification Estimated useful life - ----------------------------------------------------------------------------- Machinery, furniture, and fixtures 5-7 years Buildings and improvements 19-39 years - ----------------------------------------------------------------------------- Legal costs incurred to register patents are amortized over periods not exceeding ten years. RESEARCH AND DEVELOPMENT COSTS Materials, labor, and overhead expenses related to research and development projects are charged to operations as incurred. PROVISION FOR WARRANTIES The Company makes certain initial warranties as to material and workmanship. The estimated costs associated with these warranties are accrued at the time of sale. STOCK-BASED COMPENSATION Stock-based compensation related to employees is recognized using the intrinsic value method and thus recognizes no compensation expense for options granted with exercise prices equal to the fair value of the Company's common stock on the date of the grant. INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FOREIGN CURRENCY TRANSLATION For each of the Company's foreign subsidiaries, the functional currency is its local currency. Accordingly, assets and liabilities are translated into U.S. dollars using current exchange rates. Revenue and expense accounts are translated at average exchange rates prevailing during the year. The resulting translation gains and losses are included as a separate component of accumulated other comprehensive income. The Company uses forward currency contracts in its management of foreign currency exposures. Realized gains and losses on such contracts are included in other income at the time the hedged transaction occurs and are not material. Unrealized gains and losses, which were not significant at June 30, 1999 and 1998, are not recognized. USE OF ESTIMATES In preparing the consolidated financial statements, the Company's management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of financial instruments, which consisted of cash and cash equivalents, marketable securities, receivables, accounts payable, customer advances, and accrued liabilities, approximated their carrying values at June 30, 1999 and 1998. ACCUMULATED OTHER COMPREHENSIVE INCOME Tax Effect Unrealized of Unrealized Accumulated Cumulative Gain/(Loss) on (Gain)/Loss on Other Translation Marketable Marketable Comprehensive Adjustments Securities Securities Income (Loss) ----------- ---------- ---------- ------------- Beginning balance $ (117,302) $ 136,932 $ (55,000) $ (35,370) Current period change (56,228) (44,277) 18,000 (82,505) ----------- ---------- ---------- ---------- Ending balance $ (173,530) $ 92,655 $ (37,000) $(117,875) =========== ========== ========== =========== 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. The Company is evaluating the new Statement's provisions and does not expect this Statement to have a material effect on its financial statements. RECLASSIFICATION The Company has reclassified the presentation of certain prior year information to conform with the current presentation. (2) MARKETABLE SECURITIES The Company's marketable securities are all classified as available-for- sale and consist of investments in state and municipal bonds. As of June 30, 1999 and 1998 there were no gross unrealized holding losses for any of the Company's marketable securities. The amortized cost, gross unrealized holding gains, and fair value for marketable securities at June 30, 1999 and 1998 were as follows: - ----------------------------------------------------------------------------- Gross unrealized Amortized holding 1999 cost gains Fair value - ----------------------------------------------------------------------------- Current $ 4,284,488 $ 27,346 $ 4,311,834 Due after one year 11,167,989 65,309 11,233,298 - ----------------------------------------------------------------------------- $ 15,452,477 $ 92,655 $15,545,132 ============================================================================= 1998 - ----------------------------------------------------------------------------- Current $ 8,102,063 $ 15,592 $ 8,117,655 Due after one year 22,661,663 121,340 22,783,003 - ----------------------------------------------------------------------------- $ 30,763,726 $136,932 $30,900,658 ============================================================================= The gross realized gains and losses on the sale of available-for-sale marketable securities for the year ended June 30, 1999 were not material. (3) INCENTIVE COMPENSATION PROGRAMS Lunar Corporation grants options to key employees, directors, and consultants under two separate programs. Under a September 1, 1984 agreement with an employee/officer, options to purchase 138,000 shares at $0.16 per share are outstanding and exercisable and will expire in the event of termination of employment. Under the second option program, titled the Non-Qualified Stock Option program, a total of 3,000,000 shares of common stock were made available, of which 223,340 remain available. Options granted under this program vest over a three-year or five-year period. The options will expire ten years from the granting date, or upon termination of employment. The option price under both option programs was based on 100% of estimated fair market value of the Company's stock on the dates the options were granted. A summary of the Company's stock option activity, and related information are summarized as follows: ============================================================================= Year ending June 30, 1999 1998 1997 ---------------- ---------------- ---------------- Weighted Weighted Weighted average average average exercise exercise exercise Options price Options price Options price - ------------------------------------------------------------------------------ Outstanding - beginning of year 1,139,995 $11.79 1,071,615 $ 9.20 1,131,115 $ 8.21 Granted 959,930 8.09 286,150 17.91 531,480 20.31 Exercised (15,770) 3.50 (174,210) 5.10 (233,200) 4.82 Expired/canceled (638,670) 16.70 (43,560) 15.11 (357,780) 25.43 - ------------------------------------------------------------------------------ Outstanding - end of year 1,445,485 $ 7.25 1,139,995 $11.79 1,071,615 $ 9.20 ============================================================================== Exercisable at end of year 483,875 $ 5.49 521,531 $ 6.66 486,290 $ 4.38 ============================================================================== Weighted average fair value of options granted during year $ 3.98 $10.11 $ 7.74 ============================================================================== The options outstanding at June 30, 1999 have been segregated into five ranges for additional disclosure as follows: Options Outstanding Options Exercisable ------------------------------------ --------------------- Weighted Weighted Options Weighted Range of Options average average currently average exercise outstanding remaining exercise exercisable exercise prices at June 30, contractual price at June 30, price 1999 life 1999 - ----------------------------------------------------------------------------- $ 0.16 138,000 - $ .16 138,000 $ 0.16 5.37 - 7.83 613,165 6.8 6.22 305,415 6.96 9.25 - 14.33 681,520 9.1 9.39 35,040 11.60 16.50 - 25.50 12,800 6.7 18.70 5,420 19.07 The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related Interpretations in accounting for its employee stock options. Pro forma information regarding net income and net income per share is required by FASB Statement No. 123, which also requires that the information be determined as if the Company has accounted for its employee stock options granted subsequent to June 30, 1995 under the fair market value method of that statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 1999, 1998, and 1997; risk free interest rate of 5.75% for 1999, 5.5% for 1998, and 6.0% for 1997, volatility factors of the expected market price of the Company's common stock of .52 for 1999 and 1998, and .53 for 1997, and no expected dividends. Based on an analysis of historical optionee exercise behavior, the option grants exercised have aggregated weighted average lives of five years for 1999, six years for 1998, and four years for 1997. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows: - ------------------------------------------------------------------------------- 1999 1998 1997 - ------------------------------------------------------------------------------- Pro forma net income $2,618,830 $6,278,188 $14,327,467 Pro forma diluted net income per share $ 0.30 $ 0.69 $ 1.57 - ------------------------------------------------------------------------------- Since Statement 123 is applicable only to options granted subsequent to June 30, 1995, its pro forma effect will not be fully reflective until 2000. The Company has a longevity stock award program whereby 25 shares of common stock are issued to employees with five years of service, and 100 shares are issued for ten years of service. The Company issued 1,000, 575, and 1,975 shares under this program in the years ended June 30, 1999, 1998, and 1997, respectively. The Company has a program which provides for bonuses to all employees contingent upon achieving certain financial goals. Total expense under the program was $74,360, $206,273, and $315,165 for the years ended June 30, 1999, 1998, and 1997, respectively. (4) PROFIT-SHARING PLAN The Company has established a 401(k) profit-sharing plan covering substantially all employees. Employer contributions to the plan are at the discretion of the Board of Directors. The Company's policy is to fund profit- sharing plan contributions as they accrue. Profit-sharing expense amounted to $429,806, $298,273, and $199,322, for the years ended June 30, 1999, 1998, and 1997 respectively. (5) SETTLEMENT OF LAWSUIT Expenses were incurred in the quarter ended September 30, 1998 associated with the settlement of a lawsuit between the Company and Osteometer MeditechA/S and Rapiscan Security Systems Inc. During that quarter, the Company incurred expenses of $579,555 related to legal expenses, a settlement payment, and a patent write-off as a result of the settlement of this lawsuit. In December 1996, a court awarded the Company and the University of Alabama-Birmingham (the co-plaintiffs) $4,200,000 in a patent infringement case against EG&G Astrophysics (EG&G). The co-plaintiffs split the award after deducting legal expenses. The Company's resulting $1,828,905 share of the award is reflected in other income and represents $0.12 per share after tax. The co-plaintiffs entered into a Settlement and License Agreement with EG&G providing for future royalty payments based on the volume of EG&G equipment sales utilizing the technology subject to the license. (6) INCOME TAXES Income taxes consist of the following: - ----------------------------------------------------------------------------- 1999 1998 1997 - ----------------------------------------------------------------------------- Current: Federal $ 1,477,000 $ 3,054,000 $ 7,048,000 State 120,000 172,000 500,000 - ----------------------------------------------------------------------------- 1,597,000 3,226,000 7,548,000 - ----------------------------------------------------------------------------- Deferred: Federal (783,000) 83,000 (287,000) State (138,000) 15,000 (20,000) - ----------------------------------------------------------------------------- (921,000) 98,000 (307,000) - ----------------------------------------------------------------------------- $ 676,000 $ 3,324,000 $ 7,241,000 ============================================================================= A reconciliation of the provision for income taxes with the applicable Federal income tax rate is presented below: - ------------------------------------------------------------------------------- 1999 1998 1997 ---------------- ---------------- ---------------- Percent Percent Percent of pretax of pretax of pretax Amount income Amount income Amount income - ------------------------------------------------------------------------------- Provision computed at normal rate $1,046,278 34% $3,463,288 34% $7,319,121 34% Increases (reductions) in taxes resulting from: State income taxes, net of federal benefit 79,200 3 113,520 1 330,000 2 Tax benefit of exempt foreign trade income (329,778)(11) (510,193) (5) (596,010) (3) Tax exempt interest (313,346)(10) (442,434 (4) (216,661) (1) Other 193,646 6 699,819 7 404,550 2 - ------------------------------------------------------------------------------- Provision for income taxes $ 676,000 22% $3,324,000 33% $7,241,000 34% =============================================================================== The tax effect of temporary differences that give rise to deferred tax assets at June 30, 1999 and 1998 are as follows: - ----------------------------------------------------------------------------- 1999 1998 - ----------------------------------------------------------------------------- Accrued warranty $ 952,000 $ 747,000 Inventory valuation 271,000 86,000 Allowance for doubtful accounts 696,000 680,000 Other 73,000 50,000 - ----------------------------------------------------------------------------- $1,992,000 $1,563,000 ============================================================================= (7) EARNINGS PER SHARE Reconciliations of the numerators and denominators of the basic and diluted earnings per share computations for the years ended June 30, 1999, 1998, and 1997 are as follows: - ------------------------------------------------------------------------------ 1999 ------------------------------- Per Share Income Shares Amount - ------------------------------------------------------------------------------ Basic earnings per share $ 2,354,701 8,616,764 $ 0.27 ====== Effect of dilutive stock options - 161,979 ---------- --------- Dilutive earnings per share $ 2,354,701 8,778,743 $ 0.27 ========== ========= ====== ============================================================================== 1998 ------------------------------- Per Share Income Shares Amount - ------------------------------------------------------------------------------ Basic earnings per share $ 6,862,142 8,773,516 $ 0.78 ====== Effect of dilutive stock options - 338,979 ---------- --------- Dilutive earnings per share $ 6,862,142 9,112,495 $ 0.75 ========== ========= ====== ============================================================================== 1997 ------------------------------- Per Share Income Shares Amount - ------------------------------------------------------------------------------ Basic earnings per share $14,285,825 8,614,567 $ 1.66 ====== Effect of dilutive stock options - 491,481 ---------- --------- Dilutive earnings per share $14,285,825 9,106,048 $ 1.57 ========== ========= ====== ============================================================================== The number of anti-dilutive options were 74,756, 90, and 111 in fiscal year 1999, 1998, and 1997, respectively. (8) SUPPLEMENTAL SALES AND CUSTOMER INFORMATION The Company's approximate revenues by geographic regions are as follows (in thousands): - ----------------------------------------------------------------------------- June 30, June 30, June 30, 1999 1998 1997 - ----------------------------------------------------------------------------- United States and Canada $ 61,716 $ 50,852 $ 50,696 Europe 15,635 13,241 13,353 Asia 4,174 3,838 6,215 Latin America 6,537 11,246 10,627 - ----------------------------------------------------------------------------- $ 88,062 $ 79,177 $ 80,891 ============================================================================= The Company sells its products to end-user customers or its distributors in Latin America on financed terms. Generally, the financing is over a two- or three-year time period and denominated in U.S. dollars. As of June 30, 1999, 1998, and 1997, the Company had approximately $9,337,000, $6,188,000, and $4,614,000, respectively, of financed trade accounts receivable from Latin American customers. The collateral for these receivables is generally the equipment sold. During fiscal 1998 and 1997, the Company sold approximately $4,200,000 and $10,800,000, respectively of accounts receivable from selected customers in Latin America. The income statement effect of these transactions was not material. The Company continues to have recourse of 7.5% or approximately $315,000 to one finance company and 10% or approximately $1,080,000 to a second finance company. (9) FEE PER PATIENT PROGRAM The Company has entered into an agreement with a finance company whereby the Company sells its systems to the finance company, which, in turn, leases the systems to third parties on a fee-per-patient basis. Under the terms of the agreement, the Company is contingently liable to three finance companies for approximately $840,000 as of June 30, 1999 and approximately $378,000 as of June 30, 1998. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Lunar Corporation: We have audited the accompanying consolidated balance sheet of Lunar Corporation and subsidiaries (a Wisconsin Corporation) as of June 30, 1999 and the related consolidated statements of income, shareholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The consolidated financial statements of Lunar Corporation and subsidiaries as of June 30, 1998, and for each of the years in the two-year period ended June 30, 1998, were audited by other auditors' whose report dated July 24, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lunar Corporation and subsidiaries as of June 30, 1999, and the results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The supplemental schedule listed in the index to Item 14 is presented for purposes of complying with the Securities and Exchange Commission's rules and is not a required part of the basic financial statements. This information for the year ended June 30, 1999, has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Milwaukee, Wisconsin July 30, 1999 INDEPENDENT AUDITORS' REPORT THE BOARD OF DIRECTORS AND SHAREHOLDERS LUNAR CORPORATION: We have audited the accompanying consolidated balance sheet of Lunar Corporation and subsidiaries as of June 30, 1998, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the two-year period ended June 30, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lunar Corporation and subsidiaries as of June 30, 1998, and the results of their operations and their cash flows for each of the years in the two-year period ended June 30, 1998, in conformity with generally accepted accounting principles. KPMG LLP Chicago, Illinois July 24, 1998 QUARTERLY FINANCIAL INFORMATION (unaudited) The following table sets forth unaudited selected quarterly financial information for each of the two most recent fiscal years. First Second Third Fourth Quarter Quarter Quarter Quarter --------- --------- --------- --------- (in thousands except per-share data) 1999 - ---- Revenues $22,825 $23,410 $19,749 $22,078 Income from operations 1,769 356 (1,575) 801 Net income 1,155 736 (825) 1,289 Net income per share .13 .08 (.10) .15 1998 - ---- Revenues $18,663 $21,436 $17,953 $21,125 Income from operations 2,747 4,174 870 1,697 Net income 2,013 2,729 692 1,428 Net income per share 0.22 0.30 0.08 0.16 Lunar is unable to predict the timing of purchase orders and the related product shipments and is unable to predict demand for Lunar's products in specific foreign markets. Therefore, quarterly sales and earnings fluctuations can be expected. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On December 16, 1998, the Company engaged the accounting firm of Arthur Andersen LLP as Company's independent accountants. The Company, on that same date, also informed KPMG LLP (formerly KPMG Peat Marwick LLP) of their dismissal effective December 16, 1998. The decision to change independent accountants was made upon the recommendation of the Audit Committee of the Company's Board of Directors. During the two most recent fiscal years ended June 30, 1998 and 1997 and interim periods subsequent to June 30, 1998, there were no disagreements with KPMG LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. KPMG LLP's report on the Company's financial statements for the past two fiscal years did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the two most recent fiscal years and interim periods subsequent to June 30, 1998 there were no reportable events [as defined in Regulation S-K Item 304(a)(1)(v)]. The Company has requested that KPMG LLP furnish it with a letter addressed to the SEC stating whether it agrees with the above statements. A copy of the letter dated December 21, 1998 is filed. During the two most recent fiscal years and interim periods subsequent to June 30, 1998 and prior to employing Arthur Andersen LLP, neither the Company nor anyone on its behalf consulted Arthur Andersen LLP regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements or any matter that was either the subject of a disagreement [as defined in Regulation S-K Item 304(a)(1)(14)] or a reportable event. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Company incorporates by reference the information included in the Company's definitive Proxy Statement for its 1999 Shareholders Meeting to be held on November 20, 1999 ("Proxy Statement") under the captions "Purposes of the Meeting - Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance," which will be filed with the Securities and Exchange Commission separately pursuant to Rule 14a-6 under the Securities Exchange Act of 1934 and in accordance with General Instruction G(3) to Form 10-K, not later than 120 days after the end of the Company's fiscal year. EXECUTIVE OFFICERS OF THE REGISTRANT As of September 23, 1999, the executive officers of the Registrant are as follows: Name Age Title - ----------------------------------------------------------------------------- Richard B. Mazess, Ph.D. 60 President James A. Hanson, Ph.D. 49 Vice President - Marketing Robert A. Beckman 45 Vice President - Finance John A. Comerford, J.D. 37 Corporate General Counsel and Secretary James V. Pietropaolo 45 Vice President - Domestic Sales Peter Peemans 40 Vice President - International Sales Dr. Richard B. Mazess, the founder of the Company, has been President and a director of the Company since its inception. Dr. Mazess became Professor Emeritus of Medical Physics at the University of Wisconsin - Madison in 1985, and has been on the faculty of the Department of Medical Physics since 1968. Dr. Mazess has authored over 100 scientific publications on bone, bone measurement, and body composition; he also has edited several books and has served on the editorial boards of several medical journals. Dr. Mazess has organized various international scientific meetings on bone measurement and osteoporosis. Dr. James A. Hanson, Vice President of Marketing, joined the Company in September 1984. From July 1980 to August 1984, Dr. Hanson was on the faculty of the Department of Radiology at the University of Washington, Seattle, Washington, and from 1979 to 1980, he was a Researcher at the University of Wisconsin - Madison, Department of Medical Physics. Robert A. Beckman joined the Company in 1986 as Controller and has been Vice President of Finance since 1987. Mr. Beckman is a Certified Public Accountant. John A. Comerford, J.D., joined the Company in January 1998 as Corporate General Counsel and Secretary. From 1990 through 1997, Mr. Comerford was Associate Resident Counsel with National Presto Industries, Inc., in Eau Claire, Wisconsin. From 1988 until 1990, Mr. Comerford was a Staff Attorney with Fort Howard Corporation in Green Bay, Wisconsin. He received his J.D. degree in 1988 from Marquette University Law School and his B.A. degree in Business Administration from St. Norbert College in 1985. James V. Pietropaolo joined the Company in September 1996 as Vice President of Domestic Sales. From March 1990 to September 1996, Mr. Pietropaolo was Vice President of Sales and Marketing for Aloka Co., Ltd's United States operations. Peter Peemans joined the Company in January 1994 as a Director of European Sales. Mr. Peemans became Director of European Operations in June 1996 and was appointed Vice President of European Operations in January 1998. In July 1999, Mr. Peemans was appointed Vice President of International Sales. From January 1990 until December 1993, Mr. Peemans served as European Sales and Marketing Manager for Ferno Washington. ITEM 11. EXECUTIVE COMPENSATION The Company incorporates by reference the information included in the Proxy Statement under the caption "Executive Compensation," other than the information included in the Proxy Statement under the sub-captions "Board of Directors Report on Executive Compensation" and "Performance Graph." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The Company incorporates by reference the information included in the Proxy Statement under the caption "Securities Beneficially Owned by Principal Shareholders, Directors, and Executive Officers." ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company incorporates by reference the information included in the Proxy Statement under the caption "Executive Compensation - Compensation Committee Interlocks and Insider Participation." PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1 and 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Reference is made to the separate index to the Company's consolidated financial statements and schedule contained on page 36 hereof. 3. Exhibits Reference is made to the separate exhibit index contained on page 40 hereof. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the fourth quarter ended June 30, 1999. LUNAR CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE The following documents are filed Page(s) in as part of this report: Form 10-K ---------- (1) Financial Statements: Report of Independent Public Accountants and Report of Independent Public Accountants on Financial Statement Schedule Arthur Andersen LLP . . . . . . . . . . . . . . . . . . . 31 Independent Auditors' Report KPMG LLP . . . . . . . . . . . . . . . . . . . . . . . . 32 Consolidated Balance Sheets at June 30, 1999 and 1998 . . . . . . . . . . . . . . . . . . .18-19 Consolidated Statements of Income for the years ended June 30, 1999, 1998, and 1997 . . . . . . . . . . . . . . . . . . . . . . . . 17 Consolidated Statements of Shareholders' Equity for the years ended June 30, 1999, 1998, and 1997 . . . . . . . . . . . . . . . . . . . . . . . . 20 Consolidated Statements of Cash Flows for the years ended June 30, 1999, 1998, and 1997 . . . . . . . . . . . . . . . . . . . . . . . . 21 Notes to Consolidated Financial Statements . . . . . . . . 22-30 Page(s) in (2) Financial Statement Schedule: Form 10-K ---------- Report of Independent Public Accountants on Financial Statement Schedule Arthur Andersen LLP . . . . . . . . . . . . . . . . . . . 31 KPMG LLP . . . . . . . . . . . . . . . . . . . . . . . . 37 Schedule II - Valuation and Qualifying Accounts for each of the years ended June 30, 1999, 1998, and 1997. . . . . . . . . . . . . . . . . 38 All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Lunar Corporation: Under date of July 24, 1998, we reported on the consolidated balance sheet of Lunar Corporation and subsidiaries as of June 30, 1998, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the two-year period ended June 30, 1998, which are included herein. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedule as listed in the accompanying index. The financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits. In our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Chicago, Illinois July 24, 1998 Schedule II LUNAR CORPORATION AND SUBSIDIARIES Valuation and Qualifying Accounts - ------------------------------------------------------------------------------- Additions -------------------- Balance Charged Other at to Charged Charges Balance Beginning Costs and to Other Add at End Description of Year Expenses Account (Deduct) of Year - ------------------------------------------------------------------------------- For the year ended June 30, 1999: Allowance for Doubtful accounts $3,272,000 $1,292,000 - $(1,040,000) $3,524,000 For the year ended June 30, 1998: Allowance for doubtful accounts $2,602,000 $ 949,000 - $ (279,000) $3,272,000 For the year ended June 30, 1997: Allowance for doubtful accounts $2,235,000 $ 650,000 - $ (283,000) $2,602,000 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 Date: September 23, 1999 By: /s/ Richard B. Mazess --------------------------- Richard B. Mazess, Ph.D. President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name - ---- /s/ Richard B. Mazess President and September 23, 1999 - --------------------------- Director (Principal Richard B. Mazess, Ph.D. Executive Officer) /s/ Robert A. Beckman Vice President of September 23, 1999 - --------------------------- Finance (Principal Robert A. Beckman Financial and Accounting Officer) /s/ Samuel E. Bradt Director September 23, 1999 - --------------------------- Samuel E. Bradt /s/ John W. Brown Director September 23, 1999 - --------------------------- John W. Brown /s/ Reed Coleman Director September 23, 1999 - --------------------------- Reed Coleman /s/ James W. Nellen II Director September 23, 1999 - --------------------------- James W. Nellen II /s/ Malcolm R. Powell Director September 23, 1999 - --------------------------- Malcolm R. Powell, M.D. LUNAR CORPORATION INDEX TO EXHIBITS Exhibit Number Document Description - ------- -------------------- 3.1 Articles of Amendment and Restated Articles of Incorporation of Registrant(1) (Exhibit 3.1) 3.2 By-Laws of Registrant 10.1* Lunar Corporation Amended and Restated Stock Option Plan(2) (Exhibit 99.1) and Forms of Stock Option Agreements 10.2* Forms of Stock Option Agreements(2) (Exhibit 99.2) 16 Letter from KPMG LLP dated December 21, 1998(3) 21 List of Subsidiaries of Registrant 23.1 Consent of Arthur Andersen LLP 23.2 Consent of KPMG LLP 27.1 Financial Data Schedule, June 30, 1999 27.2 Financial Data Schedule, June 30, 1998 (1) Incorporated by reference to exhibits filed with Registrant's Annual Report on Form 10-K for the year ended June 30, 1996 (File No. 0-18643). Parenthetical references to exhibit numbers are to the exhibit numbers on the Form 10-K. (2) Incorporated by reference to exhibits filed with Registrant's Registration Statement on Form S-3 (File No. 333-40469). Parenthetical references to exhibit numbers are to the exhibit numbers on the Form S-3. (3) Incorporated by reference to exhibit 16 filed with Registrant's Current Report on Form 8-K dated December 16, 1998 (File No. 0-18643). *Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K. EX-3.2 2 BY-LAWS OF REGISTRANT EXHIBIT 3.2 LUNAR CORPORATION AND SUBSIDIARIES BY-LAWS OF LUNAR CORPORATION (A Wisconsin Corporation) BY-LAWS OF LUNAR CORPORATION (A Wisconsin Corporation) Introduction - Variable References 0.01. Date of annual shareholders' meeting (See Section 2.01): 1:00 p.m. Third Friday November 1997 (HOUR) (WEEK) (DAY) (MONTH) (FIRST YEAR) 0.02. Required notice of shareholders' meeting (See Section 2.04): not less than 10 days. 0.03. Authorized number of Directors (see Section 3.01): 6. 0.04. Required notice of Directors' meeting (see Section 3.05): (a) Not less than 72 hours if by mail, and (b) Not less than 36 hours if by telegram or personal delivery. 0.05. Authorized number of Vice Presidents (see Section 4.01): 5. TABLE OF CONTENTS ARTICLE I. OFFICES 1.01 Principal and Business Offices 1 1.02 Registered Office 1 ARTICLE II. SHAREHOLDERS 2.01 Annual Meeting 1 2.02 Special Meeting 1 2.03 Place of Meeting 1 2.04 Notice of Meeting 2 2.05 Closing of Transfer Books or Fixing of Record Date 2 2.06 Voting Records 2 2.07 Quorum 3 2.08 Conduct of Meetings 3 2.09 Proxies 3 2.10 Voting of Shares 3 2.11 Voting of Shares by Certain Holders 4 (a) Other Corporations 4 (b) Legal Representatives and Fiduciaries 4 (c) Pledgees 4 (d) Treasury Stock and Subsidiaries 4 (e) Minors 4 (f) Incompetents and Spendthrifts 4 (g) Joint Tenants 5 2.12 Waiver of Notice by Shareholders 5 2.13 Unanimous Consent Without Meeting 5 2.14 Shareholder Proposals and Board Nominations 5 ARTICLE III. BOARD OF DIRECTORS 3.01 General Powers and Number 7 3.02 Tenure and Qualifications 7 3.03 Regular Meetings 7 3.04 Special Meetings 7 3.05 Notice; Waiver 8 3.06 Quorum 8 3.07 Manner of Acting 8 3.08 Conduct of Meetings 8 3.09 Vacancies 8 3.10 Compensation 9 3.11 Presumption of Assent 9 3.12 Committees 9 3.13 Unanimous Consent Without Meeting 9 3.14 Meetings by Telephone or by Other Communication Technology 9 ARTICLE IV. OFFICERS 4.01 Number 10 4.02 Election and Term of Office 10 4.03 Removal 10 4.04 Vacancies 10 4.05 Chairman of the Board 10 4.06 President 10 4.07 The Executive Vice President 11 4.08 The Vice Presidents 11 4.09 The Secretary 11 4.10 The Treasurer 11 4.11 Assistant Secretaries and Assistant Treasurers 12 4.12 Other Assistants and Acting Officers 12 4.13 Salaries 12 ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS 5.01 Contracts 12 5.02 Loans 13 5.03 Checks, Drafts, etc. 13 5.04 Deposits 13 5.05 Voting of Securities Owned by this Corporation 13 ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 6.01 Certificates for Shares 13 6.02 Facsimile Signatures and Seal 14 6.03 Signature by Former Officers 14 6.04 Transfer of Shares 14 6.05 Restrictions on Transfer 14 6.06 Lost, Destroyed or Stolen Certificates 14 6.07 Consideration for Shares 14 6.08 Stock Regulations 15 ARTICLE VII. WAIVER OF NOTICE ARTICLE VIII. UNANIMOUS CONSENT WITHOUT A MEETING ARTICLE IX. INDEMNIFICATION 9.01 Indemnification for Successful Defense 15 9.02 Other Indemnification 15 9.03 Written Request 16 9.04 Nonduplication 16 9.05 Determination of Right to Indemnification 16 9.06 Advance Expenses 17 9.07 Nonexclusivity 18 9.08 Court-Ordered Indemnification 18 9.09 Insurance 19 9.10 Securities Law Claim 19 9.11 Liberal Construction 19 9.12 Definitions Applicable to This Article 19 ARTICLE X. SEAL ARTICLE XI. AMENDMENTS 11.01 By Shareholders 22 11.02 By Directors 22 11.03 Implied Amendments 22 ARTICLE I. OFFICES 1.01 Principal and Business Offices. The Corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the Corporation may require from time to time. 1.02 Registered Office. The registered office of the Corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the Corporation shall be identical to such registered office. ARTICLE II. SHAREHOLDERS 2.01 Annual Meeting. The annual meeting of the shareholders shall be held at the date and hour in each year set forth in Section 0.01, or at such other time and date within thirty days before or after said date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing Directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. If the election of Directors shall not be held on the day designated herein, or fixed as herein provided, for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as conveniently may be. 2.02 Special Meeting. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Chairman of the Board (if one be designated), or the President or the Board of Directors or by the person designated in the written request of the holders of not less than one-tenth of all shares of the Corporation entitled to vote at the meeting. Upon request in writing sent by registered mail to the Secretary of the Corporation by any shareholder or shareholders entitled to call a special meeting of shareholders pursuant to this Section 2.02, the Board of Directors shall determine (i) a place and time for such meeting, which time shall be not less than 90 nor more than 120 days after the receipt and determination of the validity of such request, and (ii) a record date for the determination of shareholders entitled to vote at such meeting in the manner set forth in Section 2.05 hereof. Following such receipt and determination, it shall be the duty of the Secretary to cause notice to be given to the shareholders entitled to vote at such meeting, in the manner set forth in Section 2.04 hereof, that a meeting will be held at the time and place so determined. 2.03 Place of Meeting. The Board of Directors may designate any place, either within or without the State of Wisconsin, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Wisconsin, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal business office of the Corporation in the State of Wisconsin or such other suitable place in the county of such principal office as may be designated by the person calling such meeting, but any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat. 2.04 Notice of Meeting. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than the number of days set forth in Section 0.02 (unless a longer period is required by law or the articles of incorporation) nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman of the Board (if one be designated), or the President, or the Secretary, or other Officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock record books of the Corporation, with postage thereon prepaid. 2.05 Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case seventy days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the close of business on the date on which notice of the meeting is mailed or on the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall be applied to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. 2.06 Voting Record. The Officer or agent having charge of the stock transfer books for shares of the Corporation shall, before each meeting of shareholders, make a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, with the address of and the number of shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes of the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such record or transfer books or to vote at any meeting of shareholders. Failure to comply with the requirements of this section shall not affect the validity of any action taken at such meeting. 2.07 Quorum and Voting Requirements. Except as otherwise provided in the articles of incorporation or the Wisconsin Business Corporation Law, a majority of the votes entitled to be cast on a matter, represented in person or by proxy, shall constitute a quorum for action on that matter. Once a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. If a quorum is present, action on a matter, other than the election of directors, is approved if the votes cast favoring the action exceed the votes cast opposing the action. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. In the preceding sentence, ?plurality? means that the individuals with the largest number of votes are elected as directors up to the maximum number of directors to be chosen at the election. Though less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. 2.08 Conduct of Meetings. The Chairman of the Board (if one be designated), or in the Chairman's absence, the President, or in the President's absence, the Executive Vice President (if one be designated), or in the Executive Vice President's absence, a Vice President in the order provided under Section 4.08, and in their absence, any person chosen by the shareholders present shall call the meeting of the shareholders to order and shall act as chairman of the meeting, and the Secretary of the Corporation shall act as Secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding Officer may appoint any other person to act as Secretary of the meeting. 2.09 Proxies. At all meetings of shareholders, a shareholder entitled to vote may vote in person or by proxy appointed in writing by the shareholder or by his or her duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. Unless otherwise provided in the proxy, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting Secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting. The presence of a shareholder who has filed his or her proxy shall not of itself constitute a revocation. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies. 2.10 Voting of Shares. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the articles of incorporation. 2.11 Voting of Shares by Certain Holders. (a) Other Corporations. Shares standing in the name of another corporation may be voted either in person or by proxy, by the president of such corporation or any other officer appointed by such president. A proxy executed by any principal officer of such other corporation or assistant thereto shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, or the designation of some other person by the Board of Directors or by the by-laws of such other corporation. (b) Legal Representatives and Fiduciaries. Shares held by an administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors may be voted by him, either in person or by proxy, without a transfer of such shares into his or her name, provided that there is filed with the Secretary before or at the time of meeting proper evidence of his or her incumbency and the number of shares held or her. Shares standing in the name of a fiduciary may be voted by him, either in person or by proxy. A proxy executed by a fiduciary shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, that such manner of voting is expressly prohibited or otherwise directed by the document creating the fiduciary relationship. (c) Pledgees. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. (d) Treasury Stock and Subsidiaries. Neither treasury shares, nor shares held by another corporation if a majority of the shares entitled to vote for the election of Directors of such other corporation is held by this Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this Corporation in a fiduciary capacity, or held by such other corporation in a fiduciary capacity, may be voted and shall be counted in determining the total number of outstanding shares entitled to vote. (e) Minors. Shares held by a minor may be voted by such minor in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has received written notice or has actual knowledge that such shareholder is a minor. (f) Incompetents and Spendthrifts. Shares held by an incompetent or spendthrift may be voted by such incompetent or spendthrift in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has actual knowledge that such shareholder has been adjudicated an incompetent or spendthrift or actual knowledge of filing of judicial proceedings for appointment of a guardian. (g) Joint Tenants. Shares registered in the names of two or more individuals who are named in the registration as joint tenants may be voted in person or by proxy signed by any one or more of such individuals if either (I) no other such individual or his or her legal representative is present and claims the right to participate in the voting of such shares or prior to the vote files with the Secretary of the Corporation a contrary written voting authorization or direction or written denial or authority of the individual present or signing the proxy proposed to be voted or (ii) all such other individuals are deceased and the Secretary of the Corporation has no actual knowledge that the survivor has been adjudicated not to be the successor to the interests of those deceased. 2.12 Waiver of Notice by Shareholders. Whenever any notice whatever is required to be given to any shareholder of the Corporation under the articles of incorporation or by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the shareholder entitled to such notice, shall be deemed equivalent to the giving of such notice; provided that such waiver in respect to any matter of which notice is required under any provision of the Wisconsin Business Corporation Law, shall contain the same information as would have been required to be included in such notice, except the time and place of meeting. 2.13 Unanimous Consent Without Meeting. Any action required or permitted by the articles of incorporation or by-laws or any provision of law to be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. 2.14 Shareholder Proposals and Board Nominations. (a) At any annual meeting of the Corporation's shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors; (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors; or (iii) otherwise properly brought before the meeting by a shareholder of record entitled to vote at such meeting who has complied with the provisions of this Section 2.14. Business may be properly brought before an annual meeting by a shareholder only if written notice of the shareholder's intent to propose such business has been delivered to the Secretary of the Corporation not less than 90 nor more than 120 calendar days in advance of the anniversary date of the preceding year's annual meeting of shareholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the anniversary of the preceding year's annual meeting date, written notice of a shareholder proposal shall be delivered to the Secretary of the Corporation not later than the close of business on the 10th day following the first public announcement of the date of such annual meeting. Delivery shall be by hand or by certified or registered mail, return receipt requested. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of shareholder's notice as described above. (b) Each notice of new business must set forth: (i) the name and address of the shareholder who intends to raise the new business; (ii) the business desired to be brought forth at the meeting and the reasons for conducting such business at the meeting; (iii) a representation that the shareholder is a holder of record of stock of the Corporation, entitled to vote with respect to such business, and intends to appear in person or by proxy at the meeting to move the consideration of such business; (iv) such shareholder's total beneficial ownership of the Corporation's voting stock; and (v) such shareholder's interest in such business. The Chairman of the meeting may refuse to acknowledge a motion to consider any business that he determines was not made in compliance with the foregoing procedures. (c) For purposes of these by-laws, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service, or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15 (d) of the Securities Exchange Act of 1934, as amended. (d) Nominations for the election of directors may be made by the Board of Directors or a committee appointed by the Board of Directors or by any shareholder entitled to vote in the election of directors generally. However, any shareholder entitled to vote in the election of directors may nominate one or more persons for election as director at a meeting only if written notice of such shareholder's intent to make such nomination or nominations has been delivered to the Secretary of the Corporation: (i) with respect to an election to be held at an annual meeting of shareholders, not less than 90 days nor more than 120 days in advance of the anniversary date of the preceding year's annual meeting of shareholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the anniversary of the preceding year's annual meeting date, written notice of a nominee proposal shall be delivered to the Secretary of the Corporation not later than the close of business on the 10th day following the first public announcement of the date of such annual meeting and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, not later than the close of business on the 10th day following the first public announcement of the date of such meeting. Delivery shall be by hand, or by certified or registered mail, return receipt requested. In no event shall the public announcement of an adjournment of any annual or special meeting commence a new time period for the giving of a shareholder's notice as described above. (e) Each such notice shall set forth: (i) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (ii) such shareholder's total beneficial ownership of the Corporation's voting stock; (iii) a representation that the shareholder is a holder of record of stock of the Corporation, entitled to vote at such meeting, and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iv) a description of all agreements, arrangements or understanding between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (v) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (vi) the written consent of each nominee to serve as a director of the Corporation if so elected. The Chairman of the meeting my refuse to acknowledge a motion to consider any nomination that he determines was not made in compliance with the foregoing procedures. ARTICLE III. BOARD OF DIRECTORS 3.01 General Powers and Number. The business and affairs of the Corporation shall be managed by its Board of Directors. The number of Directors of the Corporation shall be as provided in Section 0.03, but shall not be less than six (6), nor more than twelve (12). The Board of Directors shall be divided into three (3) classes of not less than two (2) nor more than four (4) Directors each. The term of office of the first class of Directors shall expire at the first annual meeting after their initial election and until their successors are elected and qualified, the term of office of the second class shall expire at the second annual meeting after their initial election and until their successors are elected and qualified, and the term of office of the third class shall expire at the third annual meeting after the initial election and until their successors are elected and qualified. At each annual meeting after the initial classification of the Board of Directors, the class of Directors whose term expires at the time of such election shall be elected to hold office until the third succeeding annual meeting and until their successors are elected and qualified. 3.02 Tenure and Qualifications. Each Director shall hold office until the next annual meeting of shareholders in the year in which such Director's term expires and until his successor shall have been elected, or until his prior death, resignation or removal. A Director may be removed from office by affirmative vote of 80% of the outstanding shares entitled to vote for the election of such Director, taken at an annual meeting or a special meeting of shareholders called for that purpose, and any vacancy so created may be filled by the affirmative vote of 80% of such shares. A Director may resign at any time by filing his written resignation with the Secretary of the Corporation. Directors need not be residents of the State of Wisconsin or shareholders of the Corporation. 3.03 Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the annual meeting of shareholders, and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings without other notice than such resolution. 3.04 Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President, Secretary or any two Directors. The President or Secretary calling any special meeting of the Board of Directors may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors called by them, and if no other place is fixed, the place of meeting shall be the principal business office of the Corporation in the State of Wisconsin. 3.05 Notice; Waiver. Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 3.03) shall be given by written notice delivered personally or mailed or given by telegram to each Director at his or her business address or at such other address as such Director shall have designated in writing filed with the Secretary, in each case not less than that number of hours prior thereto as set forth in Section 0.04. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Whenever any notice whatever is required to be given to any Director of the Corporation under the articles of incorporation or by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the Director entitled to such notice, shall be deemed equivalent to the giving of such notice. The attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. 3.06 Quorum. Except as otherwise provided by law or by the articles of incorporation or these by-laws, a majority of the number of Directors as provided in Section 0.03 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, by a majority of the Directors present (though less than such quorum) may adjourn the meeting from time to time without further notice. 3.07 Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law or by the articles of incorporation of these by-laws. 3.08 Conduct of Meetings. The Chairman of the Board (if one be designated), or in the Chairman's absence, the President, or in the President's absence, the Executive Vice President (if one be designated), or in the Executive Vice President's absence, a Vice President in the order provided under Section 4.06, and in their absence, any Director chosen by the Directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the Corporation shall act as Secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding Officer may appoint any Assistant Secretary or any Director or other person present to act as Secretary of the meeting. 3.09 Vacancies. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of Directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the Directors then in office, though less than a quorum of the Board of Directors, provided that in case of a vacancy created by the removal of a Director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof by the affirmative vote of 80% of the outstanding shares entitled to vote for the election of such Directors. 3.10 Compensation. The Board of Directors, by affirmative vote of a majority of the Directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all Directors for services to the Corporation as Directors, Officers or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits of payments, to Directors, Officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such Directors, Officers and employees to the Corporation. 3.11 Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof of which he or she is a member, at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless his or her dissent shall be entered in to the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. 3.12 Committees. The Board of Directors, by resolution adopted by the affirmative vote of a majority of the number of Directors as provided in Section 0.03, may designate one or more committees, each committee to consist of three or more Directors elected by the Board of Directors, which to the extent provided in said resolution as initially adopted, and as thereafter supplemented or amended by further resolution adopted by a like vote, shall have and may exercise, when the Board of Directors is not in session, the powers of the Board of Directors in the management of the business and affairs of the corporation, except action in respect to dividends to shareholders, election of the principal officers or the filling of vacancies in the Board of Directors or committees created pursuant to this section. The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any meeting of such committee, upon request by the President or upon request by the chairman of such meeting. Each such committee shall fix its own rules governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request. 3.13 Unanimous Consent Without Meeting. Any action required or permitted by the articles of incorporation or by-laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors then in office. 3.14 Meetings by Telephone or by Other Communication Technology. Meetings of the Board of Directors or committees may be conducted by telephone or by other communication technology in accordance with Section 180.0820 of the Wisconsin Business Corporation Law. At any such meeting, all participating directors shall be informed that a meeting is taking place at which official business may be transacted. ARTICLE IV. OFFICERS 4.01 Number. The principal Officers of the Corporation shall be a President, the number of Vice Presidents as provided in Section 0.05, a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other Officers and Assistant Officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary and the offices of President and Vice President. 4.02 Election and Term of Office. The Officers of the Corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of Officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each Officer shall hold office until his or her successor shall have been duly elected or until his or her prior to death, resignation or removal. 4.03 Removal. Any Officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. 4.04 Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification, or otherwise shall be filled by the Board of Directors for the unexpired portion of the term. 4.05 Chairman of the Board. The Board of Directors may at their discretion elect a Chairman of the Board. The Chairman of the Board shall preside at all meetings of the shareholders and Board of Directors, and shall carry out such other duties and have such responsibilities as may be specified by the Board of Directors. 4.06 President. The President shall be the Chief Executive Officer of the Corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the Corporation. He or she shall, when present, preside at all meetings of the shareholders and of the Board of Directors. He or she shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the Corporation as he or she shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the President. He or she shall have authority to sign, execute and acknowledge, on behalf of the Corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary r proper to be executed in the course of the Corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he or she may authorize any Vice President or other Officer or agent of the Corporation to sign, execute and acknowledge such documents or instruments in his or her place and stead. In general, he or she shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time. 4.07 The Executive Vice President. The Executive Vice President, if one be designated, shall assist the President in the discharge of supervisory, managerial and executive duties and functions. In the absence of the President or in the event of his or her death, inability or refusal to act, the Executive Vice President shall perform the duties of the President, and when so acting shall have all the powers and duties of the President. He or she shall perform such other duties as from time to time may be assigned to him or her by the Board of Directors or the President. 4.08 The Vice Presidents. In the absence of the President and the Executive Vice President or in the event of their death, inability or refusal to act, or in the event for any reason it shall be impracticable for them to act personally, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the Corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him or her by the President, the Executive Vice President or by the Board of Directors. The execution of any instrument of the Corporation by any Vice President shall be conclusive evidence, as to third parties, of his or her authority to act in the stead of the President. 4.09 The Secretary. The Secretary shall: (a) keep the minutes of the meetings of the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized; (d) keep or arrange for the keeping of a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the Corporation; and (g) in general, perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned to him or her by the President or by the Board of Directors. 4.10 The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; (b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Section 5.04; and (c) in general, perform all of the duties incident to the office of Treasurer and have such other duties and exercise such other authority as from time to time may be delegated or assigned to him or her by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. 4.11 Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the President or a Vice President certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall, respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary of the Treasurer, respectively, or by the President or the Board of Directors. 4.12 Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint any person to act as assistant to any Officer, or as agent for the Corporation in his or her stead, or to perform the duties of such Officer whenever for any reason it is impracticable for such Officer to act personally and such assistant or acting Officer or other agent so appointed by the Board of Directors shall have the power to perform all the duties of the office to which he or she is so appointed to be assistant, or as to which he or she is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors. 4.13 Salaries. The salaries of the principal Officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no Officer shall be prevented from receiving such salary by reason of the fact that he or she is also a Director of the Corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS: SPECIAL CORPORATE ACTS 5.01 Contracts. The Board of Directors may authorize any Officer or Officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the Corporation, and such authorization may be general or confined in specific instances. No contract or other transaction between the Corporation and one or more of its Directors of any other corporation, firm, association, or entity in which one or more of its Directors of Officers are financially interested, shall be either void or voidable because of such relationship or interest or because such Director or Directors are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction or because his, or her, or their votes are counted for such purpose, if (a) the fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested Directors; or (b) the fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such contract or transaction by vote or written consent; or (c) the contract or transaction is fair and reasonable to the Corporation. Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transactions. 5.02 Loans. No indebtedness for borrowed money shall be contracted on behalf of the Corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03 Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such Officer or Officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as may be selected by or under the authority of a resolution of the Board of Directors. 5.05 Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this Corporation may be voted at any meeting of security holders of such other corporation by the President of this Corporation if he or she be present, or in the President's absence by the Executive Vice President (if one be designated), or in the Executive Vice President's absence, by any Vice President of this Corporation who may be present, and (b) whenever, in the judgment of the President, or in his absence, of the Executive Vice President (if one be designated), or in the Executive Vice President's absence, of any Vice President, it is desirable for this Corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the President, Executive Vice President or one of the Vice Presidents of this Corporation in the order as provided in clause (a) of this Section, without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this Corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this Corporation the same as such shares or other securities might be voted by this Corporation. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 6.01 Certificates for Shares. Certificates representing shares of the Corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors. Such Certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in Section 6.06. 6.02 Facsimile Signatures and Seals. The seal of the Corporation, if the Corporation has elected to have a seal, on any certificates for shares may be a facsimile. The signatures of the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the Corporation itself or an employee of the Corporation. 6.03 Signature by Former Officers. In case any Officer, who has signed or whose facsimile signature has been placed upon, any certificate for shares, shall have ceased to be such Officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such Officer at the date of its issue. 6.04 Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer, the Corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and powers of an owner. Where a certificate for shares is presented to the Corporation with a request to register for transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The Corporation may require reasonable assurance that said endorsements are genuine and effective and in compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. 6.05 Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the Corporation upon the transfer of such shares. 6.06 Lost, Destroyed or Stolen Certificates. Where the owner claims that his or her certificate for shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the Corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the Corporation a sufficient indemnity bond, and (c) satisfies such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors. 6.07 Consideration for Shares. The shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration to be paid for shares may be paid in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the Corporation. When payment of the consideration for which shares are to be issued shall have been received by the Corporation, such shares shall be deemed to be fully paid and nonassessable by the Corporation. No certificate shall be issued for any share until such share is fully paid. 6.08 Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation. ARTICLE VII. WAIVER OF NOTICE Whenever any notice whatever is required to be given under the provisions of the Wisconsin Business Corporation Law or under the provisions of the articles of incorporation or by-laws a waiver thereof in writing signed at any time, whether before or after the time of the meeting, by the person or persons entitled to such notice shall be deemed equivalent to the giving of such notice. Such waiver by a shareholder in respect of any matter of which notice is required under any provision of the Wisconsin Business Corporation Law shall contain the same information as would have been required to be included in such notice under any applicable provisions of said Law, except that the time and place of meeting need not be stated. ARTICLE VIII. UNANIMOUS CONSENT WITHOUT A MEETING Any action required by the articles of incorporation or by-laws or any provision of the Wisconsin Business Corporation Law to be taken at a meeting or any other action which may be taken at a meeting may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the shareholders, Directors or members of a committee thereof entitled to vote with respect to the subject matter thereof and such consent shall have the same force and effect as a unanimous vote. ARTICLE IX. INDEMNIFICATION 9.01 Indemnification for Successful Defense. Within 20 days after receipt of a written request pursuant to Section 9.03, the Corporation shall indemnify a Director, Officer, Employee or Agent, to the extent he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the Director, Officer, Employee or Agent was a party because he or she is a Director, Officer, Employee or Agent of the Corporation. 9.02 Other Indemnification. (a) In cases not included under Section 9.01, the Corporation shall indemnify a Director, Officer, Employee or Agent against all liabilities and expenses incurred by the Director, Officer, Employee or Agent in a proceeding to which the Director, Officer, Employee or Agent was a party because he or she is a Director, Officer, Employee, or Agent of the Corporation, unless liability was incurred because the Director, Officer, Employee or Agent breached or failed to perform a duty he or she owes to the Corporation and the breach or failure to perform constitutes any of the following: (1) A willful failure to deal fairly with the Corporation or its shareholders in connection with a matter in which the Director, Officer, Employee or Agent has a material conflict of interest. (2) A violation of criminal law, unless the Director, Officer, Employee or Agent had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful. (3) A transaction from which the Director, Officer, Employee or Agent derived an improper personal profit. (4) Willful misconduct. (b) Determination of whether indemnification is required under this Section shall be made pursuant to Section 9.05. (c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the Director, Officer, Employee or Agent is not required under this Section. 9.03 Written Request. A Director, Officer, Employee or Agent who seeks indemnification under Sections 9.01 or 9.02 shall make a written request to the Corporation. 9.04 Nonduplication. The Corporation shall not indemnify a Director, Officer, Employee or Agent under Sections 9.01 or 9.02 if the Director, Officer, Employee or Agent has previously received indemnification or allowance of expenses from any person, including the Corporation, in connection with the same proceeding. However, the Director, Officer, Employee or Agent has no affirmative duty to look to any other person for indemnification nor to first exhaust his remedies to seek indemnification from such other person. 9.05 Determination of Right to Indemnification. (a) Unless otherwise provided by the articles of incorporation or by written agreement between the Director, Officer, Employee or Agent, and the Corporation, the Director, Officer, Employee or Agent seeking indemnification under Section 9.02 shall select one of the following means for determining his or her right to indemnification: (1) By a majority vote of a quorum of the Board of Directors consisting of Directors not at the time parties to the same or related proceedings. If a quorum of disinterested Directors cannot be obtained, by majority vote of a committee duly appointed by the Board of Directors and consisting solely of 2 or more Directors not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in the designation of members of the committee. (2) By independent legal counsel selected by a quorum of the Board of Directors or its committee in the manner prescribed in sub. (1) or, if unable to obtain such a quorum or committee, by a majority vote of the full Board of Directors, including Directors who are parties to the same or related proceedings. (3) By a panel of 3 arbitrators consisting of one arbitrator selected by those Directors entitled under sub. (2) to select independent legal counsel, one arbitrator selected by the Director or Officer seeking indemnification and one arbitrator selected by the 2 arbitrators previously selected. (4) By an affirmative vote of the majority of shares represented at a meeting of shareholders at which a quorum is present. Shares owned by, or voted under the control of, persons who are at the time parties to the same or related proceedings, whether as plaintiffs or defendants or in any other capacity, may not be voted in making the determination. (5) By a court under Section 9.08. (6) By any other method provided for in any additional right to indemnification permitted under Section 9.07. (b) In any determination under (a), the burden of proof is on the Corporation to prove by clear and convincing evidence that indemnification under Section 9.02 should not be allowed. (c) A written determination as to a Director, Officer, Employee or Agent's indemnification under Section 9.02 shall be submitted to both the Corporation and the Director, Officer, Employee or Agent within 60 days of the selection made under (a). (d) If it is determined that indemnification is required under Section 9.02, the Corporation shall pay all liabilities and expenses not prohibited by Section 9.04 within 10 days after receipt of the written determination under (c). The Corporation shall also pay all expenses incurred by the Director, Officer, Employee or Agent, in the determination process under (a). 9.06 Advance Expenses. Within 10 days after receipt of a written request by a Director, Officer, Employee or Agent who is a party to a proceeding, the Corporation shall pay or reimburse his or her reasonable expenses as incurred if the Director, Officer, Employee or Agent provides the Corporation with all of the following: (1) A written affirmation of his or her good faith belief that he or she has not breached or failed to perform his or her duties to the Corporation. (2) A written undertaking, executed personally or on his or her behalf, to repay the allowance (together with reasonable interest thereon) to the extent that it is ultimately determined under Section 9.05 that indemnification under Section 9.02 is not required and that indemnification is not ordered by a court under Section 9.08(b)(2). The undertaking under this subsection shall be an unlimited general obligation of the Director, Officer, Employee or Agent, and may be accepted without reference to his or her ability to repay the allowance. The undertaking may be secured or unsecured. 9.07 Nonexclusivity. (a) Except as provided in (b), Sections 9.01, 9.02 and 9.06 do not preclude any additional right to indemnification or allowance of expenses that a Director, Officer, Employee or Agent may have under any of the following: (1) The articles of incorporation. (2) A written agreement between the Director, Officer, Employee or Agent, and the Corporation. (3) A resolution of the Board of Directors. (4) A resolution, after notice, adopted by a majority vote of all of the Corporation's voting shares then issued and outstanding. (b) Regardless of the existence of an additional right under (a), the Corporation shall not indemnify a Director, Officer, Employee or Agent, or permit a Director, Officer, Employee or Agent to retain any allowance of expenses, unless it is determined by or on behalf of the Corporation that the Director, Officer, Employee or Agent did not breach or fail to perform a duty he or she owes to the Corporation which constitutes conduct under Section 9.02(a)(1), (2), (3) or (4). A Director, Officer, Employee or Agent who is a party to the same or related proceeding for which indemnification or an allowance of expenses is sought may not participate in a determination under this subsection. (c) Sections 9.01 to 9.12 do not affect the Corporation's power to pay or reimburse expenses incurred by a Director, Officer, Employee or Agent in any of the following circumstances: (1) As a witness in a proceeding to which he or she is not a party. (2) As a plaintiff or petitioner in a proceeding because he or she is or was a Director, Officer, Employee or Agent of the Corporation. 9.08 Court-Ordered Indemnification. (a) Except as provided otherwise by written agreement between the Director, Officer, Employee, or Agent and the Corporation, a Director, Officer, Employee, or Agent who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. Application may be made for an initial determination by the court under Section 9.05(a)(5) or for review by the court of an adverse determination under Section 9.05(a) (1), (2), (3), (4) or (6). After receipt of an application, the court shall give any notice it considers necessary. (b) The court shall order indemnification if it determines any of the following: (1) That the Director, Officer, Employee or Agent is entitled to indemnification under Sections 9.01 or 9.02. (2) That the Director, Officer, Employee or Agent is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, regardless of whether indemnification is required under Section 9.02. (c) If the court determines under (b) that the Director, Officer, Employee or Agent is entitled to indemnification, the Corporation shall pay the Director, Officer, Employee or Agent's expenses incurred to obtain the court- ordered indemnification. 9.09 Insurance. The Corporation may purchase and maintain insurance on behalf of an individual who is a Director, Officer, Employee or Agent of the Corporation against liability asserted against or incurred by the individual in his or her capacity as a Director, Officer, Employee or Agent, regardless of whether the Corporation is required or authorized to indemnify or allow expenses to the individual against the same liability under Sections 9.01, 9.02, or 9.06. 9.10 Securities Law Claims. (a) Pursuant to the public policy of the State of Wisconsin, the Corporation shall provide indemnification, allowance of expenses and insurance for any liability incurred in connection with a proceeding involving securities regulation described under (b) to the extent required or permitted under Sections 9.01 to 9.09. (b) Sections 9.01 to 9.09 apply, to the extent applicable to any other proceeding, to any proceeding involving a federal or state statute, rule or regulation regulating the offer, sale or purchase of securities, securities brokers or dealers, or investment companies or investment advisers. 9.11 Liberal Construction. In order for the corporation to obtain and retain qualified Directors, Officers, Employees, and Agents, the foregoing provisions shall be liberally administered in order to afford maximum indemnification of Directors, Officers, Employees, or Agents, and accordingly, the indemnification above provided for shall be granted in all cases unless to do so would clearly contravene applicable law, controlling precedent or public policy. 9.12 Definitions Applicable to This Article. (a) "Affiliate" shall include, without limitation, any corporation, partnership, joint venture, employee benefit plan, trust or other enterprise that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation. (b) "Corporation" means this Corporation and any domestic or foreign predecessor of this Corporation where the predecessor corporation's existence ceased upon the consummation of a merger or other transaction. (c) "Director, Officer, Employee or Agent" means any of the following: (1) A natural person who is or was a director, officer, employee or agent (including attorneys) of this Corporation, provided, however, that no attorney of the Corporation shall be considered an agent with respect to those actions taken by such attorney solely in his capacity as an independent contractor to the Corporation. (2) A natural person who, while a Director, Officer, Employee or Agent, of this Corporation, is or was serving at the Corporation's request as a Director, Officer, Employee, Agent, Partner, trustee, member of any governing or decision-making committee of another Corporation or foreign corporation, partnership, joint venture, trust or other enterprise. (3) A natural person who, while a Director, Officer, Employee or Agent of this Corporation, is or was serving an employee benefit plan because his or her duties to the Corporation also impose duties on, or otherwise involve services by, the person to the plan or to participants or beneficiaries of the plan. (4) Unless the context requires otherwise, the estate or personal representative of a Director, Officer, Employee or Agent. For purposes of this Article, it shall be conclusively presumed that any Director, Officer, Employee or Agent serving as a Director, Officer, Employee, Agent, partner, trustee, member of any governing or decision-making committee of an affiliate shall be so serving at the request of the Corporation. (d) "Expenses" include fees, costs, charges, disbursements, attorney fees and other expenses incurred in connection with a proceeding. (e) "Liability" includes the obligation to pay a judgment, settlement, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employee benefit plan, and reasonable expenses. (f) "Party" includes a natural person who was or is, or who is threatened to be made, a named defendant or respondent in a proceeding. (g) "Proceeding" means any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves foreign, federal, state or local law and which is brought by or in the right of the Corporation or by any other person. ARTICLE X. SEAL There shall be no corporate seal. ARTICLE XI. AMENDMENTS 11.01 By Shareholders. These by-laws may be altered, amended or repealed and new by-laws may be adopted by the shareholders by affirmative vote of not less than a majority of the shares present or represented at an annual or special meeting of the shareholders at which a quorum is in attendance. 11.02. By Directors. These by-laws may also be altered, amended or repealed and new by-laws may be adopted by the board of Directors by affirmative vote of a majority of the number of Directors present at any meeting at which a quorum is in attendance, but no by-law adopted by the shareholders or subscribers shall be amended or repealed by the Board of Directors if the by-law so adopted so provides. 11.03 Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the by-laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of Directors required to amend the by-laws so that the by-laws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. EX-21 3 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 LUNAR CORPORATION AND SUBSIDIARIES Name of Subsidiary Jurisdiction of Incorporation - ------------------------- ----------------------------- Lunar FSC, Inc. U.S. Virgin Islands Lunar Finance Corporation Delaware Lunar Funding Corporation Delaware Lunar Capital Corporation Delaware Lunar GmbH Germany Lunar Europe, N.V. Belgium Lunar France France EX-23.1 4 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report, included in this Form 10-K, into the Company's previously filed registration statements, File No. 33-63891 and File No. 333-40469. ARTHUR ANDERSEN LLP Milwaukee, Wisconsin September 23, 1999 EX-23.2 5 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.2 CONSENT OF KPMG LLP The Board of Directors Lunar Corporation: We consent to incorporation by reference in the registration statements on Form S-8 (File No. 33-63891) and Form S-3 (File No. 333-40469) of Lunar Corporation of our reports dated July 24, 1998 relating to the consolidated balance sheet of Lunar Corporation and subsidiaries as of June 30, 1998, and the related consolidated statements of income, shareholders' equity, and cash flows and the related financial statement schedule for each of the years in the two-year period ended June 30, 1998, which reports appear in the June 30, 1999 annual report on Form 10-K of Lunar Corporation. KPMG LLP Chicago, Illinois September 23, 1999 EX-27.1 6 ARTICLE 5 FDS FOR 10-K
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K FOR THE YEAR ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR JUN-30-1999 JUN-30-1999 13,666 15,545 38,584 3,524 13,656 64,629 21,587 6,355 96,164 19,819 0 86 0 0 76,259 96,164 88,062 88,062 50,562 86,711 0 0 0 3,031 676 2,355 0 0 0 2,355 0.27 0.27
EX-27.2 7 ARTICLE 5 FDS FOR 10-K
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K FOR THE YEAR ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR JUN-30-1998 JUN-30-1998 4,608 30,901 34,674 3,272 13,163 55,109 12,140 5,086 90,060 14,503 0 87 0 0 75,470 90,060 79,177 79,177 38,020 69,689 0 0 0 10,186 3,324 6,862 0 0 0 6,862 0.78 0.75
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