10-Q 1 lan_301.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 March 31, 2001 or [ ] TRANSITION REPORT pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition from ____________ to ___________ LANDAUER, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Commission File Number 1-9788 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 May 14, 2001 -------------- --------------------------- Common stock, $.10 par value 8,684,352 PART I. FINANCIAL INFORMATION LANDAUER, INC. AND SUBSIDIARIES Consolidated Balance Sheets (000's) ASSETS ------ March 31, Sept. 30, 2001 2000 ---------- ---------- (Derived (Unaudited) from audited statements) Current assets: Cash and cash equivalents. . . . . . . . . . $ 2,216 $ 3,001 Short-term investments . . . . . . . . . . . 475 475 Accounts receivable, less allowances of $341 at 3/31/01 and $385 at 9/30/00. . . . . 13,021 10,734 Inventories. . . . . . . . . . . . . . . . . 1,571 1,587 Prepaid expenses . . . . . . . . . . . . . . 414 308 Prepaid income taxes . . . . . . . . . . . . 265 849 ---------- ---------- Total current assets . . . . . . . . . . . . 17,962 16,954 Property, plant and equipment, at cost . . . 33,519 32,198 Less: Accumulated depreciation and amortization . . . . . . . . . . . . . 17,663 16,161 ---------- ---------- Net property, plant and equipment. . . . . . 15,856 16,037 Cost of purchased businesses in excess of net assets acquired. . . . . . . . . . . . . 3,924 4,021 Equity in joint venture. . . . . . . . . . . 3,254 3,550 Other assets . . . . . . . . . . . . . . . . 6,428 6,499 ---------- ---------- $ 47,424 $ 47,061 ========== ========== The accompanying notes are an integral part of these financial statements. LANDAUER, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Cont'd.) (000's, except share amounts) LIABILITIES AND STOCKHOLDERS' INVESTMENT ---------------------------------------- March 31, Sept. 30, 2001 2000 ---------- ---------- (Derived (Unaudited) from audited statements) Current liabilities: Accounts payable . . . . . . . . . . . . . . $ 438 $ 966 Deferred contract revenue. . . . . . . . . . 10,392 10,346 Dividend payable . . . . . . . . . . . . . . 3,039 3,031 Accrued compensation and related costs . . . 1,421 1,792 Accrued pension costs. . . . . . . . . . . . 1,691 1,531 Accrued taxes on income. . . . . . . . . . . 552 535 Accrued expenses . . . . . . . . . . . . . . 2,079 1,991 ---------- ---------- Total current liabilities. . . . . . . . . . 19,612 20,192 Minority interest in subsidiary. . . . . . . 171 51 ---------- ---------- Total liabilities. . . . . . . . . . . . . . 19,783 20,243 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 - 8,683,622 shares at 3/31/01 and 8,660,748 shares at 9/30/00. . . . . . . 868 866 Premium paid in on common stock. . . . . . . 8,902 8,752 Cumulative translation adjustments . . . . . (672) (372) Retained earnings. . . . . . . . . . . . . . 18,543 17,572 ---------- ---------- Total stockholders' investment . . . . . . . 27,641 26,818 ---------- ---------- $ 47,424 $ 47,061 ========== ========== The accompanying notes are an integral part of these financial statements. LANDAUER, INC. AND SUBSIDIARIES Consolidated Statements of Income (000's, except per share amounts) (Unaudited) Three Months Ended Six Months Ended March 31, March 31, -------------------- -------------------- 2001 2000 2001 2000 -------- -------- -------- -------- Net Revenues . . . . . . . . $ 13,833 $ 12,003 $ 26,562 $ 23,330 Cost and expenses: Cost of revenues . . . . . . 4,796 4,161 9,568 8,267 Selling, general and administrative . . . . . . 3,358 2,686 6,276 5,355 Impairment in value of assets. . . . . . . . . -- 129 -- 520 -------- -------- -------- -------- 8,154 6,976 15,844 14,142 -------- -------- -------- -------- Operating Income . . . . . . 5,679 5,027 10,718 9,188 Equity in income of joint venture. . . . . . . 153 175 334 350 Other income, net. . . . . . 31 49 56 108 -------- -------- -------- -------- Income before income taxes and minority interest. . . . . . . . . . 5,863 5,251 11,108 9,646 Income taxes . . . . . . . . 2,116 1,947 4,042 3,552 -------- -------- -------- -------- Income before minority interest . . . . . . . . . 3,747 3,304 7,066 6,094 Minority interest therein. . . . . . . . . . 13 11 20 38 -------- -------- -------- -------- Net income . . . . . . . . . $ 3,734 $ 3,293 $ 7,046 $ 6,056 ======== ======== ======== ======== Net income per common share: Basic. . . . . . . . . . . . $ 0.43 $ 0.38 $ 0.81 $ 0.70 ======== ======== ======== ======== Based on average shares outstanding . . . . 8,679 8,661 8,672 8,651 ======== ======== ======== ======== Diluted. . . . . . . . . . . $ 0.43 $ 0.38 $ 0.81 $ 0.70 ======== ======== ======== ======== Based on average shares outstanding . . . . 8,708 8,685 8,695 8,695 ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements. LANDAUER, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (000's) (Unaudited) Six Months Ended March 31, ----------------------- 2001 2000 -------- -------- Cash flow from operating activities: Net income . . . . . . . . . . . . . . . . $ 7,046 $ 6,056 Non-cash expenses, revenues, and gains reported in income Depreciation and amortization. . . . . . 2,250 2,182 Equity in income of joint venture. . . . (334) (350) Exercise of stock options - net. . . . . 151 41 -------- -------- 2,067 1,873 -------- -------- Net increase in other current assets . . . . (1,776) (957) Net increase (decrease) in current liabilities. . . . . . . . . . . . . . . . (483) 1,022 Net increase (decrease) due to exchange rates . . . . . . . . . . . . . . (300) 180 Net increase in net long-term assets . . . . (330) (996) -------- -------- (2,889) (751) -------- -------- Net cash generated from operating activities . . . . . . . . . . . . . . . . 6,224 7,178 Cash flow from investing activities: Acquisition of property, plant and equipment. . . . . . . . . . . . . . (1,321) (1,753) -------- -------- Net cash used by investing activities. . . . (1,321) (1,753) Cash flow from financing activities: Dividend received from foreign affiliate. . . . . . . . . . . . . . . . 378 400 Dividends paid . . . . . . . . . . . . . . (6,066) (6,054) -------- -------- Net cash used by financing activities. . . . (5,688) (5,654) -------- -------- Net decrease in cash . . . . . . . . . . . . (785) (229) Opening balance - cash and cash equivalents. . . . . . . . . 3,001 4,845 -------- -------- Ending balance - cash and cash equivalents. . . . . . . . . $ 2,216 $ 4,616 ======== ======== Supplemental Disclosure of Cash Flow Information: Cash paid for income taxes . . . . . . . . $ 3,409 $ 2,348 ======== ======== Supplemental Disclosure of Non-cash Financing Activity: Dividend declared. . . . . . . . . . . . . $ 3,039 $ 3,031 ======== ======== The accompanying notes are an integral part of these financial statements. LANDAUER, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - March 31, 2001 (Unaudited) (1) BASIS OF PRESENTATION The accompanying unaudited condensed financial statements reflect the financial position of Landauer, Inc. and Subsidiaries ("Landauer" or "the Company") as of March 31, 2001 and September 30, 2000, and the consolidated results of operations for the three-month and six-month periods ended March 31, 2001 and 2000 and consolidated cash flows for the six-month periods ended March 31, 2001 and 2000. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of Landauer as of March 31, 2001 and September 30, 2000, and the consolidated results of operations for the three-month and six-month periods ended March 31, 2001 and 2000, and cash flows for the six-month periods ended March 31, 2001 and 2000. 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 statements for comparative purposes. These reclassifications have no effect on the results of operations or financial position. The results of operations for the three-month and six-month periods ended March 31, 2001 and 2000 are not necessarily indicative of the results to be expected for the full year. (2) CASH DIVIDENDS On March 9, 2001, the Company declared a regular quarterly cash dividend in the amount of $ .35 per share payable on April 13, 2001, to stockholders of record on March 23, 2001. On December 22, 2000, the Company declared a regular quarterly cash dividend in the amount of $ .35 per share payable on January 18, 2001, 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's comprehensive income for the three and six month periods ended March 31, 2001 and 2000 (000's): LANDAUER, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - March 31, 2001 (Cont'd.) Three Months Ended Six Months Ended March 31, March 31, -------------------- -------------------- 2001 2000 2001 2000 -------- -------- -------- -------- Net income . . . . . . . . . $ 3,734 $ 3,293 $ 7,046 $ 6,056 Other comprehensive income- Foreign currency translation adjustment . . (163) 62 (300) 180 -------- -------- -------- -------- Comprehensive income . . . . $ 3,571 $ 3,355 $ 6,746 $ 6,236 ======== ======== ======== ======== 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 six months ended March 31, 2001 and 2000 amounted to $6,224,000 and $7,178,000, respectively. Acquisitions of property, plant and equipment amounted to $1,321,000 and $1,753,000, respectively for fiscal 2001 and 2000. 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 $2,500,000 principally for the acquisition of equipment to support the Company's Luxel product line, introduction of new products, 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 $10,392,000 and $10,346,000, respectively, as of March 31, 2001 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 March 31, 2001 were 15.2% higher compared with the same quarter a year ago. The increase in revenues was primarily attributable to higher pricing for the Company's products and services, increased unit demand principally resulting from the recent acquisition of another dosimetry service provider, and stronger demand in the Company's Homebuyer's Preferred unit. Gross margins were 65.3% of revenues for the second quarter of fiscal 2001, which was comparable with the same period in 2000. Selling, general and administrative expenses were slightly higher in the second quarter as a percent of revenues at 24.3% versus 23.5% for the second quarter of fiscal 2000 as a result of consulting fees related to the Company's technology and business development initiatives, and higher employee and amortization costs. Prior year selling, general and administrative expenses were impacted by the final portion of the non-cash asset impairment charge in the amount of $129,000 related to the Company's discontinuation of older radiation measurement technologies. As a result, operating income for the second quarter of 2001 was 41.1% of revenues compared to 41.9% for the same period last year. Income before taxes and minority interest was 42.4% of the revenues for the quarter just ended compared to 43.7% for the second fiscal quarter of 2000. The effective tax rate for the Company during the second quarter of fiscal 2001 was 36.1% compared with 37.1% for the second quarter of fiscal 2000. Resulting net income of $3,734,000 for the second fiscal quarter of 2001 compared with $3,293,000 reported in fiscal 2000. Diluted income per share for the current quarter was $ .43 versus $ .38 for fiscal 2000. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D) Revenues for the six months ended March 31, 2001, were 13.9% higher compared with the first six months of fiscal 2000. The increase in revenues was attributable to higher pricing for the Company's products and services, increased unit demand principally resulting from the recent acquisition of better dosimetry service provider, and stronger demand in the Company's Homebuyer's Preferred unit. Gross margins for the first half of fiscal 2000 were 64.0% of revenues, consistent with 64.6% a year ago. Selling, general, and administrative expenses were 23.6% of revenues for the first half of fiscal 2001 compared to 23.0% for the first half of fiscal 2000. The prior year-to-date earnings were impacted by $520,000 of the asset impairment charges. Operating income for the first half of fiscal 2001 was 40.4% of revenues compared with 39.4% for the same period last year; absent the asset impairment charges operating income was 41.6% of revenues in the prior year. Income before income taxes and minority interest was 41.8% of revenues for the six months just ended compared to 41.3% of revenues for the same period in fiscal 2000. The effective tax rate for the Company during the first half of fiscal 2000 was 36.4% compared with 36.8% a year ago. Resulting net income of $7,046,000 for the first six months of 2001 exceeded earnings of $6,056,000 reported in fiscal 2000. Diluted income per share for the first half of fiscal 2001 was $ .81, compared to $ .70 in the first fiscal half of 2000; absent the asset impairment charges, fiscal 2000 earnings would have been $.74 per diluted share. 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 re-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. 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. LANDAUER, INC. Date: May 14, 2001 /s/ James M. O'Connell -------------------------------- James M. O'Connell Vice President and Treasurer (Principal Financial and Accounting Officer)