10-Q 1 lan-1201.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, 2001 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, 2002 ---------------------------- -------------------------------- Common stock, $.10 par value 8,742,214 1 PART I. FINANCIAL INFORMATION LANDAUER, INC. CONSOLIDATED BALANCE SHEETS (000's) ASSETS ------ December 30, September 30, 2001 2001 ------------ ------------- (Unaudited) (Derived from audited statements) Current assets: Cash and cash equivalents. . . . . . $ 7,569 $ 7,055 Short-term investments . . . . . . . 387 387 Accounts receivable, less allowances of $354,000 at 12/31/01 and $368,000 at 9/30/01. . . . . . . . . . . . . . 12,270 11,713 Inventories. . . . . . . . . . . . . 1,864 1,693 Prepaid expenses . . . . . . . . . . 443 707 -------- -------- Total current assets . . . . . 22,533 21,555 Property, plant and equipment, at cost. . . . . . . . . . . . . . . 36,213 35,417 Less: Accumulated depreciation and amortization . . . . . . . . . . 19,692 18,917 -------- -------- Net property, plant and equipment. . . . . . . . . . . . . . 16,521 16,500 Goodwill & other intangible assets net of amortization. . . . . . . . . 6,538 6,573 Equity in joint venture. . . . . . . . 2,002 2,331 Dosimetry devices, net of amortization . . . . . . . . . . . . 2,681 2,585 Other assets . . . . . . . . . . . . . 973 1,006 -------- -------- $ 51,248 $ 50,550 ======== ======== The accompanying notes are an integral part of these financial statements. 2 LANDAUER, INC. CONSOLIDATED BALANCE SHEETS (CONT'D.) (000's, except share amounts) LIABILITIES AND STOCKHOLDERS' INVESTMENT ---------------------------------------- December 30, September 30, 2001 2001 ------------ ------------- (Unaudited) (Derived from audited statements) Current liabilities: Accounts payable . . . . . . . . . . $ 532 $ 627 Deferred contract revenue. . . . . . 11,096 10,890 Dividend payable . . . . . . . . . . 3,059 3,055 Accrued compensation and related costs. . . . . . . . . . . 957 2,242 Accrued pension costs. . . . . . . . 1,980 1,831 Accrued taxes on income. . . . . . . 1,120 306 Accrued expenses . . . . . . . . . . 2,007 1,842 -------- -------- Total current liabilities. . . 20,751 20,793 Minority interest in subsidiary. . . . 115 114 -------- -------- 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 - 8,739,333 shares at 12/31/01 and 8,729,031 shares at 9/30/01 . . . . . . . . 874 873 Premium paid in on common stock. . . . . . . . . . . . . . . 10,110 9,876 Cumulative translation adjustments. . . . . . . . . . . . (999) (826) Retained earnings . . . . . . . . . 20,397 19,720 -------- -------- Total stockholders' investment . . . . . . . . . 30,382 29,643 -------- -------- $ 51,248 $ 50,550 ======== ======== The accompanying notes are an integral part of these financial statements. 3 LANDAUER, INC. AND SUBSIDIARIES STATEMENTS OF INCOME (000's, except per share amounts) (Unaudited) Three Months Ended ----------------------------- December 31, December 31, 2001 2000 ------------ ------------ Net revenues . . . . . . . . . . . . . $ 13,741 $ 12,729 Costs and expenses: Cost of revenues . . . . . . . . . . 4,786 4,773 Selling, general and administrative . . . . . . . . . . 3,179 2,917 -------- -------- 7,965 7,690 -------- -------- Operating income . . . . . . . . . . . 5,776 5,039 Equity in income of joint venture. . . 165 181 Other income, net. . . . . . . . . . . 42 25 -------- -------- Income before income taxes and minority interest. . . . . . . . . . 5,983 5,245 Income taxes . . . . . . . . . . . . . (2,246) (1,926) -------- -------- Income before minority interest. . . . 3,737 3,319 Minority interest therein. . . . . . . (1) (7) -------- -------- Net income . . . . . . . . . . . . . . $ 3,736 $ 3,312 ======== ======== Net Income per common share: Basic. . . . . . . . . . . . . . . . $ 0.43 $ 0.38 ======== ======== Based on average shares outstanding. 8,734 8,664 ======== ======== Diluted. . . . . . . . . . . . . . . $ 0.42 $ 0.38 ======== ======== Based on average shares outstanding. 8,829 8,678 ======== ======== The accompanying notes are an integral part of these financial statements. 4 LANDAUER, INC. STATEMENTS OF CASH FLOWS (000's) (Unaudited) Three Months Ended ----------------------------- December 31, December 31, 2001 2000 ------------ ------------ Cash flow from operating activities: Net income . . . . . . . . . . . . . $ 3,736 $ 3,312 Non-cash expenses, revenues, and gains reported in income Depreciation and amortization. . . 1,102 1,117 Equity in income of joint venture. (165) (181) -------- -------- 937 936 -------- -------- Net decrease in other current assets . . . . . . . . . . . . . . (466) (618) Net decrease in current liabilities. (47) (455) Net decrease due to exchange rates. . . . . . . . . . . . . . . (172) (137) Net (decrease) increase in net long-term assets . . . . . . . . . (192) 9 -------- -------- (877) (1,201) -------- -------- Net cash generated from operating activities . . . . . . . . 3,796 3,047 Cash flow from investing activities: Acquisition of property, plant and equipment. . . . . . . . . . . (796) (1,057) -------- -------- Net cash used by investing activities. (796) (1,057) -------- -------- Cash flow from financing activities: Exercise of stock options - net. . . 235 7 Dividend received from foreign affiliate. . . . . . . . . . . . . 334 378 Dividends paid . . . . . . . . . . . (3,055) (3,031) -------- -------- Net cash used by financing activities. (2,486) (2,646) -------- -------- Net increase (decrease) in cash. . . . 514 (656) Opening balance - cash and cash equivalents . . . . . . . . . . 7,055 3,001 -------- -------- Ending balance - cash and cash equivalents . . . . . . . . . . $ 7,569 $ 2,345 ======== ======== Supplemental Disclosure of Cash Flow Information: Cash paid for income taxes . . . . . $ 1,348 $ 648 ======== ======== Supplemental Disclosure of Non-cash Financing Activity: Dividend declared. . . . . . . . . . $ 3,059 $ 3,035 ======== ======== The accompanying notes are an integral part of these financial statements. 5 LANDAUER, INC. NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2001 (Unaudited) (1) BASIS OF PRESENTATION The accompanying consolidated unaudited condensed financial statements reflect the financial position of Landauer, Inc. and subsidiaries ("Landauer" or "the Company) as of December 31, 2001 and September 30, 2001, and the consolidated results of operations and cash flows for the three-month periods ended December 31, 2001 and 2000. 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, 2001 and September 30, 2001, and the consolidated results of operations for the three-month periods ended December 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 2001 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, 2001 and 2000 are not necessarily indicative of the results to be expected for the full year. (2) CASH DIVIDENDS On December 21, 2001, the Company declared a regular quarterly cash dividend in the amount of $.35 per share payable on January 18, 2002, to stockholders of record on January 4, 2002. Regular quarterly cash dividends of $.35 per share ($1.40 annually) were declared during fiscal 2001. (3) COMPREHENSIVE INCOME Comprehensive income is the total of net income and all other nonowner changes in equity. The following table sets forth the Company's comprehensive income for the three month period ended December 31, 2001 and 2000 (000's): Three Month Ended December 31, -------------------- 2001 2000 -------- -------- Net Income . . . . . . . . . . . . . . . . $ 3,736 $ 3,312 Other comprehensive income- foreign currency translation adjustment. (173) (137) -------- -------- Comprehensive income . . . . . . . . . . . $ 3,563 $ 3,175 ======== ======== 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, 2001 and 2000 amounted to $3,796,000 and $3,047,000, respectively. Acquisitions of property, plant and equipment were $796,000 and $1,057,000, 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 2002 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, 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 $11,096,000 and $10,890,000, respectively, as of December 31, 2001 and September 30, 2001, 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, 2001 were 8.0% 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 65.2% of revenues compared to 62.5% for the same period in fiscal 2001. The increase in margins was primarily attributable to a $225,000 writedown of inventories in the prior year related to Nagase Landauer's more rapid conversion to Luxel. Absent the inventory charge, costs rose 5% and the Company's rate of gross margin improved slightly compared with a year ago. Selling, general and administrative (S, G & A) expenses in the first quarter of fiscal 2002 were 9% greater than a year ago due to expenditures to develop new markets and products as well as higher employee costs. First quarter S, G & A expenses as a percentage of revenue were comparable to the same period last year. Operating income for the first quarter of fiscal 2002 was 42.0% of revenues compared with 39.6% of revenues for the same period last year. Income before income taxes and minority interest was 43.5% of revenues for the quarter just ended compared to 41.2% for the first fiscal quarter of 2001. The effective tax rate for the Company during the first quarter of fiscal 2002 was 37.5% compared with 36.7% for the same period last year. Resulting net income of $3,736,000 for the first fiscal quarter of 2002 compared with $3,312,000 reported in fiscal 2001. Diluted income per share for the current quarter was $0.42 versus $0.38 for the first fiscal quarter of 2001. 7 LANDAUER, INC AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS ----------------------------------------- In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142), which addresses financial accounting and reporting for acquired goodwill and other intangible assets. The Company is required to adopt the provisions of SFAS on October 1, 2002, but has elected to exercise the option of adopting early, as of October 1, 2001. Under SFAS 142, goodwill and certain other intangible assets will no longer be systematically amortized, but instead will be reviewed for impairment each year and written down and charged to results of operations when their carrying amount exceeds their estimated fair value. The Financial Standards Accounting Board recognizes that the fair value based impairment test can be a time consuming process and, as such, SFAS No. 142 allows companies six months from the date of adoption to determine if there is going to be an impairment, and twelve months from the date of adoption to finalize the impairment calculation and disclose the amount of the impairment, if any. Accordingly, the Company has stopped amortization of goodwill effective October 1, 2001. However, goodwill amortization continues to be presented in the December 31, 2000 Statement of Income. Had the provisions of SFAS No. 142 been applied for the three months ended December 31, 2000, the Company's net income would have been $56,000 higher or about $0.006 per diluted share. FORWARD-LOOKING STATEMENTS -------------------------- Certain of the statements made herein constitute forward looking statements that are based on certain assumptions and involve certain risks and uncertainties, including assumptions and risks associated with the Company's introduction of new technology, the adaptability of OSL to new platforms and new formats, the usefulness of older technologies, the cost associated with the Company's business development and research efforts, the anticipated results of operations of the Company, the Company's market position, the Company's business plans, the risks associated with conducting business internationally, other anticipated financial events, the effects of changing economic and competitive conditions, foreign exchange risks, government regulations and changes in postal and delivery practices. Such assumptions may not materialize to the extent assumed and such risks and uncertainties may cause actual results to differ from anticipated results. Additional information may be obtained by reviewing the Company's reports filed from time to time with the SEC. 8 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 None. 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. 9 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: February 13, 2002 /s/ James M. O'Connell ------------------------------ James M. O'Connell Vice President and Treasurer (Principal Financial and Accounting Officer) 10