10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [ X ] QUARTERLY REPORT pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 2000 or [ ] TRANSITION REPORT pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition from __________ to __________ Commission File Number 1-9788 LANDAUER, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 06-1218089 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2 Science Road, Glenwood, Illinois 60425 ----------------------------------------------------- (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code (708) 755-7000 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at February 13, 2001 ---------------------------- -------------------------------- Common stock, $.10 par value 8,680,889 1 PART I. FINANCIAL INFORMATION LANDAUER, INC. AND SUBSIDIARIES Consolidated Balance Sheets (000's) ASSETS ------ December 31, September 30, 2000 2000 ------------ ------------- (Derived from audited (Unaudited) statements) Current assets: Cash and cash equivalents. . . . . . . . . $ 2,345 $ 3,001 Short-term investments . . . . . . . . . . 475 475 Accounts receivable, less allowances of $418,000 at December 31, 2000 and $385,000 at September 30, 2000 . . . 12,280 10,734 Inventories. . . . . . . . . . . . . . . . 1,400 1,587 Prepaid expenses . . . . . . . . . . . . . 434 308 Prepaid income taxes . . . . . . . . . . . -- 849 -------- -------- Total current assets . . . . . . . . 16,934 16,954 Property, plant and equipment, at cost . . . . . . . . . . . . . . . . . 33,255 32,198 Less: Accumulated depreciation and amortization . . . . . . . . . . . 16,908 16,161 -------- -------- Net property, plant and equipment. . . . 16,347 16,037 Cost of purchased businesses in excess of net assets acquired. . . . . 3,972 4,021 Equity in joint venture. . . . . . . . . 3,163 3,550 Other assets . . . . . . . . . . . . . . 6,364 6,499 -------- -------- $ 46,780 $ 47,061 ======== ======== The accompanying notes are an integral part of these financial statements. 2 LANDAUER, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Cont'd.) (000's) LIABILITIES AND STOCKHOLDERS' INVESTMENT ---------------------------------------- December 31, September 30, 2000 2000 ------------ ------------- (Derived from audited (Unaudited) statements) Current liabilities: Accounts payable . . . . . . . . . . . . . $ 509 $ 966 Deferred contract revenue. . . . . . . . . 10,725 10,346 Dividend payable . . . . . . . . . . . . . 3,035 3,031 Accrued compensation and related costs . . 915 1,792 Accrued pension costs. . . . . . . . . . . 1,579 1,531 Accrued taxes on income. . . . . . . . . . 949 535 Accrued expenses . . . . . . . . . . . . . 2,045 1,991 -------- -------- Total current liabilities. . . . . . 19,757 20,192 Minority interest in subsidiary. . . . . . . 58 51 -------- -------- Stockholders' investment: Preferred stock, $.10 par value per share - Authorized - 1,000,000 shares Outstanding - None . . . . . . . . . . . -- -- Common stock, $.10 par value per share - Authorized - 20,000,000 shares Outstanding - 8,671,889 shares at December 31, 2000 and 8,660,748 shares at September 30, 2000 . . . . . . 867 866 Premium paid in on common stock. . . . . . 8,758 8,752 Cumulative translation adjustments . . . . (509) (372) Retained earnings. . . . . . . . . . . . . 17,849 17,572 -------- -------- Total stockholders' investment . . . 26,965 26,818 -------- -------- $ 46,780 $ 47,061 ======== ======== The accompanying notes are an integral part of these financial statements. 3 LANDAUER, INC. AND SUBSIDIARIES Consolidated Statements of Income (000's, except per share amounts) (Unaudited) Three Months Ended ---------------------------- December 31, December 31, 2000 2000 ------------ ------------- Net revenues . . . . . . . . . . . . . . . . $ 12,729 $ 11,327 Costs and expenses: Cost of revenues . . . . . . . . . . . . . 4,773 4,107 Selling, general and administrative. . . . 2,917 2,668 Impairment in value of assets. . . . . . . -- 391 -------- -------- 7,690 7,166 -------- -------- Operating income . . . . . . . . . . . . . . 5,039 4,161 Equity in income of joint venture. . . . . . 181 175 Other income, net. . . . . . . . . . . . . . 25 59 -------- -------- Income before income taxes and minority interest. . . . . . . . . . . . . 5,245 4,395 Income taxes . . . . . . . . . . . . . . . . (1,926) (1,605) -------- -------- Income before minority interest. . . . . . . 3,319 2,790 Minority interest therein. . . . . . . . . . (7) (27) -------- -------- Net income . . . . . . . . . . . . . . . . . $ 3,312 $ 2,763 ======== ======== Net Income per common share: Basic. . . . . . . . . . . . . . . . . . . $ 0.38 $ 0.32 ======== ======== Based on average shares outstanding. . . . 8,664 8,658 ======== ======== Diluted. . . . . . . . . . . . . . . . . . $ 0.38 $ 0.32 ======== ======== Based on average shares outstanding. . . . 8,678 8,704 ======== ======== The accompanying notes are an integral part of these financial statements. 4 LANDAUER, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (000's) (Unaudited) Three Months Ended ---------------------------- December 31, December 31, 2000 2000 ------------ ------------- Cash flow from operating activities: Net income . . . . . . . . . . . . . . . . $ 3,312 $ 2,763 Non-cash expenses, revenues, and gains reported in income Depreciation and amortization. . . . . . 1,117 1,293 Equity in income of joint venture. . . . (181) (175) -------- -------- 936 1,118 -------- -------- Net increase (decrease) in other current assets . . . . . . . . . (618) 1,034 Net (decrease) in current liabilities. . . . . . . . . . . . . . (448) (745) Net increase (decrease) due to exchange rates . . . . . . . . . . . . (137) 71 Net increase (decrease) in net long-term assets . . . . . . . . . 2 (631) -------- -------- (1,201) (271) -------- -------- Net cash generated from operating activities . . . . . . . . . 3,047 3,610 Cash flow from investing activities: Disposition of investments . . . . . . . . -- 301 Acquisitions of investments. . . . . . . . -- (321) Investment in Brazilian subsidiary . . . . -- 32 Acquisition of property, plant and equipment. . . . . . . . . . . . . . (1,057) (750) -------- -------- Net cash used (provided) by investing activities . . . . . . . . . (1,057) (738) Cash flow from financing activities: Exercise of stock options - net. . . . . . 7 36 Dividend received from foreign affiliate . 378 360 Dividends paid . . . . . . . . . . . . . . (3,031) (3,023) -------- -------- Net cash used by financing activities. . (2,646) (2,627) -------- -------- Net increase (decrease) in cash. . . . . (656) 245 Opening balance - cash and cash equivalents . . . . . . . . . . . . . 3,001 4,524 -------- -------- Ending balance - cash and cash equivalents . $ 2,345 $ 4,769 ======== ======== Supplemental Disclosure of Cash Flow Information: Cash paid for income taxes . . . . . . . . $ 648 $ 48 ======== ======== Supplemental Disclosure of Non-cash Financing Activity: Dividend declared. . . . . . . . . . . . $ 3,035 $ 3,031 ======== ======== The accompanying notes are an integral part of these financial statements. 5 LANDAUER, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - December 31, 2000 (Unaudited) (1) BASIS OF PRESENTATION The accompanying consolidated unaudited condensed financial statements reflect the financial position of Landauer, Inc. ("Landauer") as of December 31, 2000 and September 30, 2000, and the results of operations and cash flows for the three-month periods ended December 31, 2000 and 1999. In the opinion of management, the accompanying consolidated unaudited condensed financial statements contain all adjustments necessary to present fairly the financial position of Landauer as of December 31, 2000 and September 30, 2000, and the results of operations for the three- month periods ended December 31, 2000 and 1999. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the 2000 Landauer Annual Report on Form 10-K, which is incorporated by reference. Certain reclassifications have been made in the statement for comparative purposes. These reclassifications have no effect on the results of operation or financial position. The results of operations for the three-month periods ended December 31, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. (2) CASH DIVIDENDS On December 22, 2000, the Company declared a regular quarterly cash dividend in the amount of $.35 per share payable on January 18, 2000, to stockholders of record on January 4, 2001. Regular quarterly cash dividends of $.35 per share ($1.40 annually) were declared during fiscal 2000. (3) COMPREHENSIVE INCOME Comprehensive income is the total of net income and all other nonowner changes in equity. The following table sets forth Company' comprehensive income for the three month period ended December 31, 2000 and 1999 (000's): Three Months Ended December 31, -------------------- 2000 1999 ------ ------ Net Income . . . . . . . . . . . . . . . . $3,312 $2,763 Other comprehensive income-foreign currency translation adjustment. . . . . (137) 71 ------ ------ Comprehensive income . . . . . . . . . . . $3,175 $2,834 ====== ====== 6 LANDAUER, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations LIQUIDITY AND CAPITAL RESOURCES Landauer's cash flow from operating activities for the three months ended December 31, 2000 and 1999 amounted to $3,047,000 and $3,610,000, respectively. Investing activities for the three months ended December 31, 1999 included a $32,000 investment in the Brazilian subsidiary. Acquisitions of property, plant and equipment were $1,057,000 and $750,000, respectively for fiscal 2000 and 1999. The Company's financing activities were limited to payments of cash dividends, offset by foreign dividends received from Nagase-Landauer, Ltd., our Japanese joint venture. The Company has no long-term liabilities and its requirement for cash flow to support investing activities is generally limited. Capital expenditures for the balance of fiscal 2001 are expected to amount to approximately $4,100,000, principally for the acquisition of equipment to support the Company's introduction of the Luxel product line, the development of supporting software systems, and computer hardware. The Company anticipates that funds for these capital improvements will be provided from operations. The Company presently maintains external sources of liquidity in the form of a $5 million line of credit with its bank. In the opinion of management, resources are adequate for projected operations and capital spending programs, as well as continuation of the regular cash dividend program. Landauer requires limited working capital for its operations since many of its customers pay for services in advance. Such advance payments amounted to $10,725,000 and $10,346,000, respectively, as of December 31, 2000 and September 30, 2000, and are included in deferred contract revenue. While these amounts represent more than one-half of current liabilities, such amounts generally do not represent a cash requirement. RESULTS OF OPERATIONS Revenues for the quarter ended December 31, 2000 were 12.4% higher compared with the same quarter a year ago. The increase in revenues was primarily attributable to gains in the Company's traditional radiation dosimetry business. Gross margins for the first fiscal quarter were 62.5% of revenues compared to 63.7% for the same period in fiscal 2000. The decrease in margins was primarily attributable to a $225,000 writedown of inventories related to a more rapid conversion to Luxel, especially in Japan where Nagase-Landauer expects to complete its changeover six months early. Selling, general and administrative expenses were moderately lower in the current quarter as a percent of revenues at 22.9% compared to 23.6% for the first quarter of fiscal 2000. Additionally, at December 31, 1999, the Company recognized $391,000 of expenses in the quarter related to technologies replaced by Luxel. As a result, operating income for the first fiscal quarter of 2000 was 39.6% of revenues compared to 36.7% for the same period last year. Income before income taxes and minority interest was 41.2% of revenues for the quarter just ended compared to 38.8% for the first fiscal quarter of 2000. 7 LANDAUER, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd.) The effective tax rate for the Company during the first quarter of fiscal 2001 was 36.7% compared with 36.5% for the same period last year. Resulting net income of $3,312,000 for the first fiscal quarter of 2001 compared with $2,763,000 reported in fiscal 2000. Diluted income per share for the current quarter was $.38 versus $.32 for the first fiscal quarter of 2000. FORWARD-LOOKING STATEMENTS Certain matters contained in this report are forward-looking statements, including, without limitation, statements concerning the development and introduction of new technologies, pending accounting announcements and competitive conditions. The word "believe", "expect", "anticipate", and "estimate" and other similar expressions generally identify forward-looking statements. All forward-looking statements contained herein are based largely on the Company's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. PART II. OTHER INFORMATION ITEM 2. LEGAL PROCEEDINGS Landauer is involved in various legal proceedings but believes that these matters will be resolved without a material effect on its financial position. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At its Annual Meeting held on February 7, 2001, the shareholders voted to elect Dr. Gary D. Eppen and Michael D. Winfield as directors for three-year terms. Voting for all nominees were 7,442,469 shares (representing 85.9% of total shares outstanding), and votes for 63,779 shares were withheld from all nominees. Continuing as directors are Robert J. Cronin, Thomas M. Fulton, Brent A. Latta, Richard R. Risk and Paul B. Rosenberg. The shareholders voted to reappoint Arthur Andersen LLP as the Company's auditors for the following year, with 7,239,223 shares (83.5% of total shares outstanding) voting for, 20,786 shares against, and 246,358 shares abstaining. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) No exhibits are filed with this report. (b) There were no reports on Form 8-K during the quarter for which this report is filed. 8 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. Date: February 13, 2001 LANDAUER, INC. /s/ James M. O'Connell ---------------------------- James M. O'Connell Vice President and Treasurer (Principal Financial and Accounting Officer) 10