UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-18643
LUNAR CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 3845
39-1200501
(State of (Primary Standard Industry (IRS
Employer
Incorporation) Classification Code Number)
Identification No.)
726 Heartland Trail
Madison, Wisconsin 53717
608-828-2663
(Address, including zip code, and telephone number, including
area code,
of Registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all
reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of
1934 during the preceding 12 months (or for such shorter period that
the
registrant was required to file such reports), and (2) has been
subject to
such filing requirements for the past 90 days.
Yes /X/ No
/ /
As of January 31, 2000, 8,596,355 shares of the registrant's Common
Stock,
$0.01 par value, were outstanding.
LUNAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
For the quarterly period ended December 31, 1999
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION
Page
- -------------------------------------------------------------------------------
Item 1. Financial statements
Consolidated Balance Sheets
December 31, 1999, and June 30, 1999. . . . . . . . . . . .
. . . . 3
Consolidated Statements of Income
Three and Six Months Ended December 31, 1999
and 1998. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 5
Consolidated Statements of Cash Flows
Six Months Ended December 31, 1999
and 1998. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 6
Notes to Consolidated Financial Statements. . . . . . . . .
. . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . .
. . . . 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
. . . .12
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . .
. . . .13
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . .
. . . .13
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . .
. . . .14
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . .
. . . .14
Item 4. Submission of Matters to a Vote of Security Holders . . . .
. . . .14
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . .
. . . .14
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . .
. . . .14
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . .15
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . .16
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
- -------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------
December 31, June 30,
1999 1999
(Unaudited) (Audited)
- -------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 5,860,565 $13,666,163
Marketable securities 8,264,964 4,311,834
Receivables:
Trade, less allowance for doubtful
Accounts of $3,258,000 at
December 31, 1999 and $3,524,000
at June 30, 1999 26,792,195 25,316,044
Short-term financed accounts
receivable 5,134,550 4,848,186
Other 731,737 407,056
- -------------------------------------------------------------------------------
32,658,482 30,571,286
Inventories 12,223,651 13,655,779
Deferred Income Taxes 2,335,000 1,992,000
Other Current Assets 318,021 431,931
- -------------------------------------------------------------------------------
Total Current Assets 61,660,683 64,628,993
Property, Plant and Equipment--At Cost:
Land 1,927,260 2,088,118
Buildings and improvements 9,979,158 2,287,356
Furniture and fixtures 1,376,592 1,055,780
Machinery and other equipment 10,901,578 9,368,111
Construction in progress 0 6,787,950
- -------------------------------------------------------------------------------
24,184,588 21,587,315
Less Accumulated Depreciation and
Amortization 6,663,567 6,354,858
- -------------------------------------------------------------------------------
17,521,021 15,232,457
- -------------------------------------------------------------------------------
Long-term Financed Accounts Receivable 4,183,716 4,488,753
Long-term Marketable Securities 12,205,457 11,233,298
Patents and Other Intangibles, Net of
Accumulated Amortization of $675,000 at
December 31, 1999 and $603,000 at
June 30, 1999 449,991 463,270
Other 362,947 117,390
- -------------------------------------------------------------------------------
$96,383,815 $96,164,161
===============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
- -------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------
December 31, June
30,
1999
1999
(Unaudited)
(Audited)
- -------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 4,851,307 $
9,133,277
Customer advances and deferred income 2,311,961
1,573,523
Income taxes payable 2,755,377
2,682,104
Accrued liabilities:
Commissions payable 1,919,942
2,009,340
Compensation payable 917,023
658,821
Property, payroll, and other taxes 322,462
250,150
Accrued warranty and installation
expenses 2,985,000
3,118,000
Other 416,371
393,537
- -------------------------------------------------------------------------------
Total Current Liabilities 16,479,443
19,818,752
Shareholders' Equity:
Common stock--authorized 25,000,000
shares of $.01 par value; issued
and outstanding 8,573,580 shares
at December 31, 1999 and
8,598,580 at June 30, 1999 85,736
85,986
Capital in excess of par value 23,279,566
23,454,316
Retained Earnings 56,753,676
52,922,982
Accumulated Comprehensive Income (214,606)
(117,875)
- -------------------------------------------------------------------------------
79,904,372
76,345,409
- -------------------------------------------------------------------------------
$96,383,815
$96,164,161
===============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
- -------------------------------------------------------------------------------
Three months ended Six Months
Ended
December 31, December 31, December 31,
December 31,
1999 1998 1999
1998
- -------------------------------------------------------------------------------
Revenues $23,561,208 $23,410,259 $46,474,221
$46,234,802
- -------------------------------------------------------------------------------
Operating Expenses
Cost of sales 13,207,361 13,331,918 26,623,706
25,553,844
Research and development 1,296,318 1,767,573 2,945,871
3,814,193
Selling and marketing 5,396,342 6,654,667 10,702,703
12,348,074
General and
Administrative 1,122,551 1,300,237 2,135,849
2,394,027
- -------------------------------------------------------------------------------
21,022,572 23,054,395 42,408,129
44,110,138
- -------------------------------------------------------------------------------
Income from Operations 2,538,636 355,864 4,066,092
2,124,664
- -------------------------------------------------------------------------------
Other Income (Expense):
Interest income 481,793 346,217 977,263
692,883
Other 239,679 289,580 429,339
378,214
Settlement of lawsuit 0 0 0
(579,555)
- -------------------------------------------------------------------------------
721,472 635,797 1,406,602
491,542
- -------------------------------------------------------------------------------
Income Before Income Taxes 3,260,108 991,661 5,472,694
2,616,206
Income Tax Expense 978,000 256,000 1,642,000
726,000
- -------------------------------------------------------------------------------
Net Income $2,282,108 $735,661 $3,830,694
$1,890,206
===============================================================================
Basic Earnings per Share $0.27 $0.09 $0.45
$0.22
===============================================================================
Diluted Earnings per Share $0.26 $0.08 $0.44
$0.21
===============================================================================
Weighted Average Number of
Common Shares 8,580,917 8,604,509 8,589,749
8,631,728
===============================================================================
Weighted Average Number of
Common and Dilutive
Potential Common Shares 8,715,969 8,813 397 8,740,028
8,843,154
===============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
- -------------------------------------------------------------------------------
Six months
ended
December 31,
December 31,
1999
1998
- -------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income $3,830,694
$1,890,206
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,340,394
1,287,804
Deferred income taxes (343,000)
(503,000)
Gain on sale of building (288,900)
0
Changes in assets and liabilities:
Receivables (1,777,716)
(9,109,932)
Inventories 1,432,128
(2,009,086)
Other current assets 113,910
(155,526)
Accounts payable (4,314,078)
1,920,934
Customer advances and deferred income 738,438
284,344
Accrued liabilities 130,950
1,464,464
Income taxes payable 73,273
(404,728)
- -------------------------------------------------------------------------------
Net Cash Provided by (Used in)
Operating Activities 936,093
(5,334,520)
- -------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Purchases of marketable securities (6,371,562)
0
Sales and maturities of marketable securities 1,221,900
12,069,230
Additions to property, plant and equipment (5,023,486)
(2,918,670)
Proceeds from sale of building 1,665,178
0
Additions to patents and other intangibles (58,721)
(69,427)
- -------------------------------------------------------------------------------
Net Cash Provided by (Used in)
Investing Activities (8,566,691)
9,081,133
- -------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from exercise of stock options 0
22,678
Income tax benefit from stock option exercises 0
4,245
Repurchase of common stock (175,000)
(1,436,600)
- -------------------------------------------------------------------------------
Net Cash Used in Financing Activities (175,000)
(1,409,677)
- -------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and
Cash Equivalents (7,805,598)
2,336,936
Cash and Cash Equivalents at Beginning of Period 13,666,163
4,608,427
- -------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 5,860,565
$6,945,363
===============================================================================
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $ 1,712,781
$1,380,401
===============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements of Lunar Corporation presented
herein,
without audit except for balance sheet information at June 30, 1999,
have been
prepared pursuant to the rules of the Securities and Exchange
Commission for
quarterly reports on Form 10-Q and do not include all of the
information and
note disclosures required by generally accepted accounting
principles. These
statements should be read in conjunction with the consolidated
financial
statements and notes thereto included in Lunar's Annual Report on
Form 10-K for
the year ended June 30, 1999.
The consolidated balance sheet as of December 31, 1999, the
consolidated
statements of income for the three and six months ended December 31,
1999 and
1998, and the consolidated statements of cash flows for the six
months ended
December 31, 1999 and 1998 are unaudited but, in the opinion of
management,
include all adjustments (consisting of normal, recurring adjustments)
necessary for a fair presentation of results for these interim
periods.
Lunar has reclassified the presentation of certain prior year
information
to conform with the current presentation format.
The results of operations for the three and six months ended December
31,
1999, are not necessarily indicative of the results to be expected
for the
entire fiscal year ending June 30, 2000.
(2) INVENTORIES
Inventories are stated at the lower of cost or market; cost is
determined
principally by the first-in, first-out method. Inventories are
broken down
as follows:
- -------------------------------------------------------------------------------
December 31,
June 30,
1999
1999
(Unaudited)
(Audited)
- -------------------------------------------------------------------------------
Finished goods and work in process $ 7,131,882 $
7,125,027
Materials and purchased parts 5,091,769
6,530,752
-----------
- -----------
$12,223,651
$13,655,779
===========
===========
(3) SHAREHOLDERS' EQUITY
On April 22, 1997, Lunar approved a stock repurchase program pursuant
to
which it may repurchase up to 1,000,000 shares of its common stock
from time to
time based upon market conditions and other factors. Lunar has
repurchased 369,400 shares under this program as of January 31, 2000.
(4) EARNINGS PER SHARE
The difference between the weighted average number of common
shares and
the weighted average number of common and dilutive potential common
shares is
due to the effect of dilutive stock options.
(5) COMPREHENSIVE INCOME (LOSS)
Effective July 1, 1998, Lunar adopted Statement of Financial
Accounting
Standards No. 130, "Reporting Comprehensive Income" which establishes
standards
to report and display comprehensive income and its components in a
full set of
general purpose financial statements. Lunar's comprehensive income
was
as follows:
Three Months Ended Six Months
Ended
December 31, December
31,
1999 1998 1999
1998
---------- ---------- ----------
- ----------
Net Income $2,282,108 $ 735,661 $3,830,694
$1,890,206
Other Comprehensive Income:
Unrealized adjustment in
marketable securities (24,327) 53,157 (64,623)
84,867
Foreign currency translation
adjustments (73,967) 2,785 (32,108)
43,208
---------- ---------- ----------
- ----------
Comprehensive income $2,183,814 $ 791,603 $3,733,963
$2,018,281
========== ========== ==========
==========
(6) SETTLEMENT OF LAWSUIT
Lunar settled a lawsuit with Osteometer Meditech A/S and Rapiscan
Security
Systems Inc. during the quarter ended September 30, 1998. Lunar
incurred
expenses of $579,555 in the quarter ended September 30, 1998
comprised of legal
expenses, a settlement payment, and a patent write-off related to
this
settlement.
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Equipment sales and other revenue increased 1% to $23,561,000 in the
three
months ended December 31, 1999 from $23,410,000 in the three months
ended
December 31, 1998. For the six months ended December 31, 1999,
equipment sales
and other revenue increased 1% to $46,474,000 from $46,235,000 in the
six months
ended December 31, 1998. Sales by product line are summarized as
follows:
Revenues by Product
(in thousands)
Three Months Ended Six Months
Ended
-------------------------
- -------------------------
December 31, December 31, December 31,
December 31,
1999 1998 1999
1998
------------ ------------ -----------
- ------------
X-ray densitometry $13,445 $14,517 $25,458
$29,902
Ultrasound densitometry 2,993 2,344 6,097
3,759
Orthopedic Imaging 4,499 4,406 9,704
8,486
Service Revenue 2,110 1,745 4,156
3,432
Other 514 398 1,059
656
------------ ------------ ------------
- -----------
$23,561 $23,410 $46,474
$46,235
============ ============ ============
===========
X-ray densitometry sales in the three and six months ended December
31, 1999
were lower compared to the prior periods as a result of a decrease in
the number
of units sold. Average selling prices were also lower due to
competitive pricing
pressures. The increase in ultrasound densitometry revenue is
primarily due to
the introduction of the Achilles Express in May 1999. The increase
in
Orthopedic Imaging sales for the six months ended December 31, 1999
is primarily
due to increased unit sales of the E-Scan dedicated MRI system. The
increase in
service revenue is attributable to a growing installed base of
densitometers in
the United States.
Cost of sales as a percentage of equipment sales averaged
approximately 56% and
57% in the three and six month periods ended December 31, 1999,
respectively,
compared to 57% and 55% in the three and six month periods ended
December 31,
1998, respectively. The lower margins in the six months ended
December 31,
1999 primarily result from a decrease in densitometry average selling
prices and
a higher mix of orthopedic imaging equipment sales which have lower
gross profit
margins.
Research and development expenditures decreased to $1,296,000 in the
three
months ended December 31, 1999 from $1,768,000 in the three months
ended
December 31, 1998, and decreased to $2,946,000 in the six months
ended December
31, 1999 from $3,814,000 in the six months ended December 31, 1998.
These
expenses were lower due to the completion of development work
associated with
the Prodigy and Achilles Express bone densitometers. Lunar expects
this trend to
continue and plans to spend less on research and development in
fiscal 2000
compared to fiscal 1999.
Selling and marketing expenses were $5,396,000 in the three months
ended
December 31, 1999, compared to $6,655,000 in the three months ended
December
31, 1998, representing a decrease to 23% from 28% as a percentage of
equipment
sales. For the six months ended December 31, 1999, selling and
marketing
expenses were $10,703,000 compared to $12,348,000 for the six months
ended
December 31, 1998, representing a decrease to 23% from 27% as a
percentage of
equipment sales. These decreases are primarily attributable to
reduced spending
on document translations, advertising, literature creation and a
reduced
headcount in the marketing department.
General and administration expenses decreased to $1,123,000 in the
three months
ended December 31, 1999 from $1,300,000 in the three months ended
December 31,
1998, and decreased to $2,136,000 in the six months ended December
31, 1999
from $2,394,000 in the six months ended December 31, 1998. In May
1999 Lunar
sold the assets of Bona Fide, Ltd. This sale resulted in lower
general and
administrative expenses.
Interest income was $482,000 and $977,000 in the three and six months
ended
December 31, 1999, compared to $346,000 and $693,000 in the three and
six
months ended December 31, 1998. The increase is due to improved
collection
experience on interest associated with financed receivables and
higher amounts
invested in marketable securities.
The effective tax rate averaged 30% in both the three and six month
periods
ended December 31, 1999, compared to the 26% and 28% in the three and
six month
periods ended December 31, 1998. The rate for the three and six
month periods
ended December 31, 1999 and 1998 is below the 34% federal statutory
rate as a
result of tax-exempt interest income and the tax benefit of the
foreign sales
corporation offset by the provision for state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $7,806,000 to $5,861,000 in the
six months
ended December 31, 1999. Lunar has a $20,470,000 laddered portfolio
of
high-grade, readily marketable municipal bonds with various
maturities not
exceeding 48 months. Total cash and marketable securities decreased
by
$2,880,000 during the six months ended December 31, 1999 primarily as
a result
of fixed asset purchases offset by the proceeds from the sale of
Lunar's
former corporate headquarters.
Lunar's trade accounts receivable increased $1,782,000 to $36,842,000
at
December 31, 1999 from $35,060,000 at June 30, 1999. This increase
is primarily
attributable to higher sales for the quarter ended December 31, 1999
as
compared to the quarter ended September 30, 1999 and higher accounts
receivable
from MRI customers which generally have longer payment terms.
Lunar has financed the sale of its equipment to Brazilian customers
for more
than eight years and has approximately $7,909,000 in outstanding
receivables
from Brazilian customers as of December 31, 1999. During fiscal
years 1998 and
1997 Lunar sold approximately $15,000,000 of Brazilian accounts
receivable to
two finance companies of which approximately $3,079,000 is
outstanding as of
December 31, 1999. The two finance companies have maximum recourse of
$1,395,000
against Lunar related to these receivables. All of the Brazilian
accounts receivable are denominated in U.S. dollars. In January 1999
the
Brazilian government allowed its currency, the real, to freely trade
against the
U.S. dollar which to date has resulted in a 46% devaluation of the
real as
compared to the U.S. dollar. Lunar has incurred some payment delays
from
Brazilian customers and lower sales in Brazil as a result of this
devaluation.
Lunar has renegotiated longer payment terms for a majority of these
Brazilian
customers. As a result, collection activities have recently improved
and total
financed Brazilian accounts receivable have declined to $7,909,000
from
$8,091,000 at June 30,1999.
Inventories decreased 10% to $12,224,000 at December 31, 1999 from
$13,656,000
at June 30, 1999. This decrease is a result of management's focus on
reducing
inventory levels. Management expects inventory levels to decline
further during
fiscal year 2000.
Lunar purchased a 25-acre parcel of land in January 1998 for
$1,949,000 and
began construction of an assembly, warehouse, and office building in
October
1998. Lunar moved its assembly operations and warehouse to the new
building in
July 1999 and moved its office personnel in October 1999. Lunar does
not have
any pending material commitments for capital expenditures.
Management believes the current level of cash and short-term
investments is
adequate to finance Lunar's operations for the foreseeable future.
NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" is effective for financial statements for periods
beginning after
June 15, 2000. SFAS No. 133 establishes accounting and reporting
standards for
derivative instruments and hedging activities. Lunar does not expect
this
statement to have a material effect on its financial statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Lunar's exposure to market risk for changes in interest rates relate
primarily to Lunar's investment portfolio. Lunar does not use
derivative financial instruments in its investment portfolio. Lunar
places its investments with high credit quality issuers and, by
policy, limits
the amount of credit exposure to any one issuer. As stated in its
policy,
Lunar is adverse to principal loss and ensures the safety and
preservation
of its invested funds by limiting default risk, market risk, and
reinvestment
risk. Lunar mitigates default risk by investing in only high credit
quality securities. The portfolio includes only marketable
securities with
active secondary or resale markets to ensure portfolio liquidity.
All
investments mature, by policy, in 48 months or less.
Lunar uses forward currency contracts in its management of foreign
currency exposures. The contracts are in the European EURO and
generally
have maturities that do not exceed three months. Realized gains and
losses
on such contracts are included in other income at the time the hedged
transaction occurs. There were no deferred gains or losses at
December 31,
1999. These contracts are with major financial institutions thereby
minimizing
the risk of credit loss.
The table below provides information about Lunar's market sensitive
financial instruments and constitutes a "forward-looking statement."
All
items described below are non-trading and are stated in U.S. dollars.
During fiscal year ended June
30,
- ----------------------------------------
Maturity Dates 2000 2001 2002
2003
- -------------------------------------------------------------------------------
ASSETS
Cash Equivalents
Variable taxable rate $5,237,615
Average taxable interest rate 4.9%
Variable tax-exempt rate $ 622,950
Average tax-exempt rate 3.83%
Marketable securities
Fixed tax-exempt rate $3,020,000 $9,171,100 $6,950,000
$1,080,000
Average tax-exempt rate 4.31% 4.19% 4.21%
4.41%
Forward contract
EURO denominated $3,134,410
Contracted exchange rate 1.0111:1
(US$ to EUR)
PART II - OTHER INFORMATION
LUNAR CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings
On May 21, 1998 Lunar filed suit in the Federal Court of Canada-Trial
Division
against International Medical Research Ottawa("IMRO") for
infringement of
Lunar's Canadian patent number 1,323,090. IMRO manufactures and sells
ultrasound
bone densitometers in Canada and has manufactured ultrasound
densitometers for
Norland Medical Systems, Inc. for distribution and sales throughout
the world.
The parties have been involved in settlement discussions but no
definitive
settlement agreement has been reached.
On January 20, 1999 Lunar brought suit against EG&G Astrophysics
Research
Corporation and its parent company EG&G, Inc. (collectively referred
to as
"EG&G") in the United States District Court for the Western District
of
Wisconsin for infringement of U.S. patent number 5,841,832 (the 832
patent)
by EG&G's dual-energy baggage scanners. In October 1999, the parties
reached an
agreement to resolve this litigation. Under the terms of the
agreement, EG&G
will pay royalties to Lunar for all sales of products that utilize
the
technology claimed in the 832 patent.
OTHER MATTERS: Lunar is a defendant from time to time in actions
arising out of
its ordinary business operations. There are no other legal
proceedings known to
Lunar at this time, which it believes, would likely have a material
adverse
impact on the results of operations, financial condition or cash
flows of Lunar.
To Lunar's knowledge, there are no material legal proceedings to
which any
director, officer, affiliate or more than 5% shareholder of Lunar (or
any
associate of the foregoing persons) is a party adverse to Lunar or
any of its
subsidiaries or has a material interest adverse to Lunar.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The 1999 Annual Meeting of Shareholders of Lunar was held on November
19, 1999.
There were 8,598,580 shares of Lunar's $0.1 par value common stock
outstanding
as of October 8, 1999, the record date of the annual meeting. Lunar's
management
solicited proxies pursuant to Section 14 of the Securities Exchange
Act of 1934
and Regulation 14A promulgated thereunder for the annual meeting.
Two (2)
directors, John W. Brown and Reed Coleman, were elected to serve
until the 2002
annual meeting of shareholders. The directors were elected by a vote
of
7,761,684 votes "FOR" and 649,370 votes "WITHHELD AUTHORITY."
An amendment to Lunar's stock option plan to increase the number of
shares of
common stock available under the plan and to provide that shares
subject to a
stock option that is replaced by an option with a lower exercise
price will not
become available for future option grants unless shareholder approval
is
obtained was also approved. The amendment was approved by a vote of
5,853,885
votes "FOR", 2,552,784 votes "AGAINST", and 4,385 votes "ABSTAIN".
The
selection of Arthur Andersen LLP as Lunar's independent auditors was
also
approved. The selection was approved by a vote of 8,400,744 votes
"FOR" 8,685
votes "AGAINST" and 1,625 votes "ABSTAIN".
Item 5. Other Information
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS: In addition to the
historical
information presented in this quarterly report, Lunar has made and
will make
certain forward-looking statements in this report, other reports
filed by Lunar
with the Securities and Exchange Commission, reports to stockholders
and in
certain other contexts relating to future net sales, costs of sales,
other
expenses, profitability, financial resources, or products and
production
schedules. Statements relating to the foregoing or that predict or
indicate
future events and trends and which do not relate solely to historical
matters
identify forward-looking statements. Forward-looking statements are
made
pursuant to the safe harbor provisions of Section 27A of the
Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934 and are
based on
management's beliefs as well as assumptions made by and information
currently
available to management. Accordingly, Lunar's actual results may
differ
materially from those expressed or implied in such forward-looking
statements
due to known and unknown risks and uncertainties that exist in
Lunar's
operations and business environment, including, among other factors,
technical
risks associated with the development of new products, regulatory
policies in
the United States and other countries, reimbursement policies of
public and
private health care payors, introduction and acceptance of new drug
therapies,
competition from existing products and from new products or
technologies, the
failure by Lunar to produce anticipated cost savings or improve
productivity,
the timing and magnitude of capital expenditures and acquisitions,
currency
exchange risks, economic and market conditions in the United States,
Europe and
the rest of the world, changes in customer spending levels, the cost
and
availability of raw materials, and other risks associated with
Lunar's
operations. Although Lunar believes that its forward-looking
statements are
based on reasonable assumptions, there can be no assurance that
actual results,
performance or achievements will not differ materially from any
future results,
performance or achievements expressed or implied by such
forward-looking
statements. Readers are cautioned not to place undue reliance on
forward-looking statements. Lunar disclaims any obligation to update
any such
factors or to publicly announce any revisions to any of the
forward-looking
statements contained herein to reflect future events or developments.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits furnished:
(10.1) Lunar Corporation Amended and Restated Stock Option Plan
(10.2) Forms of Stock Option Agreements
(27.1) Financial Data Schedule, December 31, 1999
(27.2) Financial Data Schedule, December 31, 1998
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Lunar during the quarter ended
December 31,
1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the
registrant has duly caused this report to be signed on its behalf by
the
undersigned thereunto duly authorized.
LUNAR CORPORATION
(Registrant)
Date: February 10, 2000 /s/ Richard B.
Mazess
- ---------------------
Richard B. Mazess
President
(Principal Executive
Officer)
Date: February 10, 2000 /s/ Robert A.
Beckman
- ---------------------
Robert A. Beckman
Vice President of
Finance
and Treasurer
(Principal Financial
and
Accounting Officer)
LUNAR CORPORATION AND SUBSIDIARIES
Exhibit Index
For the Quarterly Period Ended December 31, 1999
No. Description
- ---- -----------
10.1 Lunar Corporation Amended and Restated Stock Option Plan
10.2 Forms of Stock Option Agreements
27.1 Financial Data Schedule, December 31, 1999
27.2 Financial Data Schedule, December 31, 1998