10-Q 1 lan_603.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 JUNE 30, 2003 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 by check mark whether the registrant is an accelerated filer as defined in Rule 12b.2 of the Exchange Act. 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 August 12, 2003 ------------------------------ ------------------------------ Common stock, $.10 par value 8,839,332 1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LANDAUER, INC. AND SUBSIDIARIES Condensed Consolidated Unaudited Balance Sheets (000's, except share amounts) ASSETS ------ June 30, September 30, 2003 2002 -------- ------------- Current assets: Cash and cash equivalents . . . . . $ 9,419 $ 7,627 Short-term investments. . . . . . . 339 317 Accounts receivable, less allowances of $512 and $482. . . . . . . . . . . . . 15,259 13,620 Inventories . . . . . . . . . . . . 3,293 2,135 Prepaid expenses. . . . . . . . . . 4,991 3,131 -------- -------- Total current assets. . . . . 33,301 26,830 Property, plant and equipment, at cost. . . . . . . . . . . . . . 40,341 37,504 Less: Accumulated depreciation and amortization . . . . . . . . 23,820 19,325 -------- -------- Net property, plant and equipment . . . . . . . . . . . . 16,521 18,179 Goodwill & other intangible assets net of amortization. . . . 8,154 8,601 Equity in joint venture . . . . . . 2,909 2,806 Dosimetry devices, net of amortization. . . . . . . . . . . 4,088 3,546 Other assets. . . . . . . . . . . . 223 295 -------- -------- $ 65,196 $ 60,257 ======== ======== The accompanying notes are an integral part of these financial statements. 2 LANDAUER, INC. AND SUBSIDIARIES Condensed Consolidated Unaudited Balance Sheets (Cont'd.) (000's, except share amounts) LIABILITIES AND STOCKHOLDERS' INVESTMENT ---------------------------------------- June 30, September 30, 2003 2002 -------- ------------- Current liabilities: Accounts payable. . . . . . . . . . $ 1,742 $ 1,789 Deferred contract revenue . . . . . 13,326 11,885 Dividend payable. . . . . . . . . . 3,315 3,071 Accrued compensation and related costs . . . . . . . . . . 1,345 2,505 Accrued pension costs . . . . . . . 2,282 1,922 Accrued taxes on income . . . . . . 2,432 1,753 Accrued expenses. . . . . . . . . . 2,869 2,264 -------- -------- Total current liabilities . . 27,311 25,189 Minority interest in subsidiary . . . 773 462 -------- -------- 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 - 8,839,322 shares at 6/30/03 and 8,775,337 shares at 9/30/02 . . . . . . . 884 878 Premium paid in on common stock . . 12,083 10,946 Cumulative translation adjustments . . . . . . . . . . . (253) (855) Retained earnings . . . . . . . . . 24,398 23,637 -------- -------- Total stockholders' investment. . . . . . . . . 37,112 34,606 -------- -------- $ 65,196 $ 60,257 ======== ======== The accompanying notes are an integral part of these financial statements. 3 LANDAUER, INC. AND SUBSIDIARIES Condensed Consolidated Unaudited Statements of Income (000's, except per share amounts) Three Months Ended Nine Months Ended -------------------- -------------------- June 30, June 30, June 30, June 30, 2003 2002 2003 2002 -------- -------- -------- -------- Net Revenues. . . . . . $ 15,925 $ 14,844 $ 48,162 $ 43,288 Cost and expenses: Cost of revenues. . . 6,097 5,471 17,542 15,208 Selling, general and administrative. . . 3,690 3,544 10,875 10,211 Impairment in value of assets . . . . . -- -- 2,750 -- -------- -------- -------- -------- 9,787 9,015 31,167 25,419 -------- -------- -------- -------- Operating Income. . . . 6,138 5,829 16,995 17,869 Gain recognized on exchange of assets. . -- 786 -- 786 Equity in income of joint venture . . . . 213 231 608 570 Other income, net . . . 42 24 102 99 -------- -------- -------- -------- Income before income taxes and minority interest. . . . . . . 6,393 6,870 17,705 19,324 Income taxes. . . . . . 2,367 2,510 6,550 7,174 -------- -------- -------- -------- Income before minority interest. . . . . . . 4,026 4,360 11,155 12,150 Minority interest therein . . . . . . . 198 126 488 143 -------- -------- -------- -------- Net income. . . . . . . $ 3,828 $ 4,234 $ 10,667 $ 12,007 ======== ======== ======== ======== Net income per common share: Basic . . . . . . . . $ 0.43 $ 0.48 $ 1.21 $ 1.37 ======== ======== ======== ======== Based on average shares outstanding . 8,820 8,774 8,797 8,750 ======== ======== ======== ======== Diluted . . . . . . . $ 0.43 $ 0.48 $ 1.20 $ 1.36 ======== ======== ======== ======== Based on average shares outstanding . 8,910 8,882 8,881 8,855 ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements. 4 LANDAUER, INC. AND SUBSIDIARIES Condensed Consolidated Unaudited Statements of Cash Flows (000's, except per share amounts) Nine Months Ended -------------------- June 30, June 30, 2003 2002 -------- -------- Cash flows from operating activities: Net income. . . . . . . . . . . . . . . . . $ 10,667 $ 12,007 Adjustments to reconcile net income to net cash provided by operating activities: Non-cash gain from exchange of assets . . . -- (786) Asset impairment charge . . . . . . . . . . 2,750 -- Depreciation. . . . . . . . . . . . . . . . 3,537 3,019 Amortization. . . . . . . . . . . . . . . . 294 177 Bad debt expense. . . . . . . . . . . . . . 196 198 Equity in net income of foreign affiliate . (608) (570) Tax effect of stock options . . . . . . . . 1,144 943 (Increase) decrease in short-term investments (22) 87 Increase in accounts receivable . . . . . . (1,669) (2,311) Increase in allowance for doubtful accounts net of bad debts. . . . . . . . . . . . . (166) (160) Increase in prepaid expenses. . . . . . . . (1,860) (1,678) Increase in inventory . . . . . . . . . . . (1,407) (190) Net increase in other assets. . . . . . . . (1,643) (3,112) (Decrease) increase in accounts payable . . (47) 836 Increase in accrued liabilities . . . . . . 350 377 Increase in deferred revenue. . . . . . . . 1,441 1,634 Increase in minority interest . . . . . . . 311 636 -------- -------- Net cash provided by operating activities. . . . . . . . 13,268 11,107 Cash flows from investing activities: Acquisition of property, plant and equipment (2,950) (3,102) -------- -------- Net cash used by investing activities. . . . . . . . (2,950) (3,102) Cash flows from financing activities: Dividend received from foreign affiliate. . 535 334 Dividend paid . . . . . . . . . . . . . . . (9,663) (9,175) -------- -------- Net cash used by financing activities. . . . . . . . (9,128) (8,841) Effect of foreign currency translation. . . . 602 249 -------- -------- Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . 1,792 (587) Opening balance - cash and cash equivalents . 7,627 7,055 -------- -------- Ending balance - cash and cash equivalents. . $ 9,419 $ 6,468 ======== ======== The accompanying notes are an integral part of these financial statements. 5 LANDAUER, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements - June 30, 2003 (Unaudited) (1) BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements reflect the financial position of Landauer, Inc. and Subsidiaries ("Landauer" or "the Company") as of June 30, 2003 and September 30, 2002, and the condensed consolidated results of operations and cash flows for the three-month and nine-month periods ended June 30, 2003 and 2002. 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 June 30, 2003 and September 30, 2002, and the consolidated results of operations and cash flows for the three-month and nine-month periods ended June 30, 2003 and 2002. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the 2002 Landauer Annual Report on Form 10-K. Prior year amounts have been reclassified to conform to current year presentation. These reclassifications have no effect on the results of operations or financial position. The results of operations for the three-month and nine-month periods ended June 30, 2003 and 2002 are not necessarily indicative of the results to be expected for the full year. (2) CASH DIVIDENDS On June 6, 2003, the Company declared a regular quarterly cash dividend in the amount of $0.375 per share payable on July 11, 2003, to stockholders of record on June 20, 2003. On March 7, 2003, the Company declared a regular quarterly cash dividend in the amount of $ 0.375 per share payable on April 11, 2003, to stockholders of record on March 21, 2003. On December 20, 2002, the Company declared a regular quarterly cash dividend in the amount of $ 0.375 per share payable on January 17, 2003, to stockholders of record on January 3, 2003. Regular quarterly cash dividends of $0.35 per share ($1.40 annually) were declared during fiscal 2002. (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 and nine month periods ended June 30, 2003 and 2002 (000's): Three Months Ended Nine Months Ended -------------------- -------------------- June 30, June 30, June 30, June 30, 2003 2002 2003 2002 -------- -------- -------- -------- Net income. . . . . . . $ 3,828 $ 4,234 $ 10,667 $ 12,007 Other comprehensive income- Foreign currency translation adjustment . . . . . . 317 429 602 249 -------- -------- -------- -------- Comprehensive income. . $ 4,145 $ 4,663 $ 11,269 $ 12,256 ======== ======== ======== ======== 6 LANDAUER, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements - June 30, 2003 (Cont'd.) (4) EARNINGS PER SHARE Earnings per share computations have been made in accordance with the provisions of SFAS No. 128, "Earnings Per Share." Basic earnings per share were computed by dividing net income by the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share were computed by dividing net income by the weighted average number of shares of common stock that would have been outstanding assuming dilution during each period. The following table presents the weighted average number of shares of common stock for the three and nine month periods ended June 30, 2003 and 2002 (000's): Three Months Ended Nine Months Ended -------------------- -------------------- June 30, June 30, June 30, June 30, 2003 2002 2003 2002 -------- -------- -------- -------- Weighted average number of shares of common stock outstanding. . . 8,820 8,774 8,797 8,750 Options issued to executives . . . . . . 90 108 84 105 -------- -------- -------- -------- Weighted average number of shares of common stock assuming dilution. . . . . . . 8,910 8,882 8,881 8,855 ======== ======== ======== ======== (5) STOCK-BASED COMPENSATION The Company maintains stock option plans for key employees ("Employees' Plan"). It also maintains a stock option plan for its non- employee directors. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations. In December 2002, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standard ("FAS") No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123." FAS No. 148 requires disclosure in both annual and quarterly financial statements about the method of accounting for stock-based employee compensation, and the effect of the method used on reported results. Had compensation cost for these plans been determined consistent with FASB Statements No. 123, "Accounting for Stock-Based Compensation," the Company's net income and earnings per share in each period would have been as follows (000's except per share data): 7 LANDAUER, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements - June 30, 2003 (Cont'd.) Three Months Ended Nine Months Ended -------------------- -------------------- June 30, June 30, June 30, June 30, 2003 2002 2003 2002 -------- -------- -------- -------- Net income, as reported. . . . . . . $ 3,828 $ 4,234 $ 10,667 $ 12,007 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects . . . . . . . 56 27 167 81 -------- -------- -------- -------- Pro forma net income. . $ 3,772 $ 4,207 $ 10,500 $ 11,926 ======== ======== ======== ======== Earnings per share: Basic - As Reported . $ 0.43 $ 0.48 $ 1.21 $ 1.37 ======== ======== ======== ======== Basic - Pro Forma . . $ 0.43 $ 0.48 $ 1.19 $ 1.36 ======== ======== ======== ======== Diluted - As Reported $ 0.43 $ 0.48 $ 1.20 $ 1.36 ======== ======== ======== ======== Diluted - Pro Forma . $ 0.42 $ 0.47 $ 1.18 $ 1.35 ======== ======== ======== ======== Because the FASB Statement No. 123 method of accounting has not been applied to options granted prior to October 1, 1996, the resulting pro forma compensation cost may not be representative of that to be expected in future years. (6) ASSET IMPAIRMENT The Company recorded a non-cash pre-tax charge of $2,750,000, or $0.19 per diluted share (with income taxes calculated at a marginal rate of 39.7%) for the fiscal quarter ended March 31, 2003, to recognize an impairment in the value of assets for the Aurion product line. The financial results for Aurion have not been significant for any period presented. Based on the estimated identifiable cash flows from this service offering the impairment charge represents the Company's entire investment in the Aurion-related assets and includes software and other fixed assets, licenses, and badge components. Following a period of product introduction, marketing efforts and an analysis of second quarter results, it was determined that spending constraints placed on targeted customers by health care cost pressures and state and local government budget deficits had significantly reduced the future net cash flows expected to be realized from Aurion. The Company will continue servicing current customers through the term of their agreement and will discontinue marketing to new customers. The Company will consider alternative uses, if any, for the technology. 8 ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Landauer's cash flow from operating activities for the nine months ended June 30, 2003 and 2002 amounted to $13,268,000 and $11,107,000, respectively. Acquisitions of property, plant and equipment amounted to $2,950,000 and $3,102,000, respectively, for fiscal 2003 and 2002. 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 2003 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 service offerings, 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 are invoiced for services in advance. Such advance billings amounted to $13,326,000 and $11,885,000, respectively, as of June 30, 2003 and September 30, 2002, and are included in the balance sheet under the caption deferred contract revenue. While these amounts included in deferred contract revenue represent almost one-half of current liabilities, such amounts generally do not represent a cash requirement. The services provided by the Company to its Customers are ongoing and are of a subscription nature. As such, revenues are recognized in the periods in which such services are rendered irrespective of whether invoiced in advance or in arrears. All customers are invoiced in accordance with the Company's standard terms, with payment due thirty days from date of invoice. Inasmuch as the majority of the Company's revenues are realized from the health care industry, the average days of sales outstanding range from 43 to 80 days. RESULTS OF OPERATIONS QUARTERLY RESULTS Revenues for the quarter ended June 30, 2003 were 7.3% higher compared with the same quarter a year ago. Revenue growth for the current quarter occurred as a result of currency gains and higher volume from LCIE- Landauer's operations in France and the U.K., higher domestic pricing for the Company's products and services and slightly higher unit demand. Cost of revenues for the current quarter was 11% higher than for the same period a year ago. Higher costs resulted from a weaker U.S. dollar compared with currencies in most countries where the Company operates, increased costs associated with LCIE-Landauer, higher insurance costs for property/casualty coverage and medical claims. Gross margins were 61.7% of revenues for the third quarter of fiscal 2003, compared to 63.1% for the same period in 2002; the decreased gross margin is primarily attributable to higher cost of revenues in France as well as increased domestic employee benefit costs, particularly pension and medical. 9 Selling, general and administrative expenses were slightly lower in the second quarter as a percent of revenues at 23.2% versus 23.9% for the third quarter of fiscal 2002. While expenses related to LCIE-Landauer increased, and selling and research and development expenses were higher, these were largely offset by lower incentive compensation expenses. Operating income was 38.5 % of revenues compared to 39.3% for the same period last year. During the third quarter of fiscal 2002, the Company recognized a $786,000 pre-tax gain arising from the exchange of a portion of its U.K. business for a controlling interest in LCIE-Landauer; this gain was included in the other income section of the income statement. Income before taxes and minority interest was 40.1% of the revenues for the quarter just ended compared to 46.3% for the third fiscal quarter of 2002. The effective tax rate for the Company during the second quarter of fiscal 2003 was 37.0% compared with 36.5% for the third quarter of fiscal 2002. Resulting net income was $3,828,000 for the third fiscal quarter of 2003, compared with $4,234,000 in the same quarter reported in fiscal 2002. Diluted income per share for the current quarter was $ 0.43 versus $ 0.48 for fiscal 2002. NINE MONTHS RESULTS Revenues for the nine months ended June 30, 2003, were $48,162,000 or 11.3% greater than $43,288,000 reported for the same period in fiscal 2002. Revenue growth resulted from the consolidation of the European operations and from core radiation dosimetry services where the Company realized higher pricing and slightly increased unit volume. Gross margins for the first half of fiscal 2003 were 63.6% of revenues, or slightly lower than the 64.9% reported a year ago as a result of lower margins for LCIE- Landauer. Selling, general, and administrative expenses in the first nine months of fiscal 2003 were 6.5% higher than a year ago, due to higher European operating expenses and domestic selling and research and development costs, offset by lower incentive compensation expenses. Selling, general, and administrative expenses were 22.6% of revenues for the first nine months of fiscal 2003 compared to 23.6% for the first nine months of fiscal 2002. Operating income for the first nine months of fiscal 2003 was 35.3% of revenues compared with 41.3% for the same period last year; operating income was impacted by the $2,750,000 non-cash impairment charge that was reported in the second fiscal quarter. Income before taxes and minority interest was 36.8% of revenues for the nine months just ended compared to 44.6% of revenues for the same period in fiscal 2002. The effective tax rate for the Company during the first nine months of fiscal 2003 was 37.0% compared with 37.1% a year ago. Resulting net income of $10,667,000 for the first nine months of 2003 compares with net income of $12,007,000 reported in fiscal 2002. Diluted income per share for the first nine months of fiscal 2003 was $1.20, compared to $1.36 in the first nine months of 2002. 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 10 extent assumed and such risks and uncertainties may cause actual results to differ from anticipated results. Such risks and uncertainties may also result in changes to the Company's business plan and prospects and could create the need from time to time to write down the value of the assets or otherwise cause the Company to incur unanticipated expenses. Additional information may be obtained by reviewing the Company's reports filed from time to time with the SEC. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin ("ARB") No. 51," ("FIN 46"). FIN 46 clarifies the application of ARB No. 51, "Consolidated Financial Statements," to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003, and to existing variable interest entities in the interim period beginning after June 15, 2003. The Company believes it has no material interests in variable interest entities that will require disclosure or consolidation under FIN 46. The FASB's Emerging Issues Task Force (EITF) Issue No. 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables," provides guidance for the accounting treatment by a vendor for arrangements under which the vendor will perform multiple revenue-generating activities (i.e., revenue-generating activities that involve more than one deliverable - or unit of accounting - in circumstances where the delivery of those units takes place in different accounting periods). The EITF concluded that revenue arrangements with multiple deliverables should be divided into separate units of accounting if the deliverables in the arrangement meet the separation criteria set forth in Issue No. 00-21. The arrangement's consideration should be allocated among the separate units of accounting based on their relative fair values (or as otherwise provided, allocated using the "residual method"). The amount allocable to a delivered unit(s) is limited to the amount that is not contingent upon the delivery of additional units or meeting other specified performance conditions. Finally, applicable revenue recognition criteria should be considered separately for separate units of accounting. The guidance in this Issue is applicable to all revenue arrangements entered into in fiscal periods beginning after June 15, 2003, with early adoption permitted, due to implementation and timing concerns. The Company is reviewing the EITF Issue No. 00-21 to determine its impact, if any on future reporting periods. In April 2003, FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under Statement 133. The implementation of FAS No. 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30. The Company is reviewing SFAS No. 149 to determine its impact, if any, on future reporting periods. In May 2003, FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," which changes the accounting for mandatorily redeemable shares, put options, forward purchase contracts and obligations that can be settled with shares. FAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company is reviewing SFAS No. 150 to determine its impact, if any, on any future reporting periods. 11 ITEM 3. QUANTITATIVE & QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company is exposed to market risk, including changes in foreign currency exchange rates and interest rates. As discussed in Note 1 to the financial statements in the Annual Report on Form 10-K, "Summary of Significant Accounting Policies" to the consolidated financial statements, the financial statements of the Company's non-U.S. subsidiaries are remeasured into U.S. dollars using the U.S. dollar as the functional currency. The market risk associated with foreign currency exchange rates is not material in relation to the Company's financial position, results of operations, or cash flows. The Company does not have any significant trade accounts receivable, trade accounts payable, commitments or borrowings in a currency other than that of the reporting units functional currency. As such, the Company does not use derivative financial instruments to manage the exposure in its non-U.S. operations. ITEM 4. CONTROLS AND PROCEDURES As of June 30, 2003, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO and CFO, concluded the Company's disclosure controls and procedures as of June 30, 2003 were effective in ensuring information required to be disclosed in this Quarterly Report on Form 10-Q was recorded, processed, summarized and reported on a timely basis. There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended June 30, 2003 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 12 PART II. OTHER INFORMATION ITEM 1. 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 Exhibit 31.1 Rule 13a-14(a)/15d-14(a), Certification of Chief Executive Officer Exhibit 31.2 Rule 13a-14(a)/15d-14(a), Certification of Chief Financial Officer Exhibit 32.1 Section 1350 Certification of Chief Executive Officer Exhibit 32.2 Section 1350 Certification of Chief Financial Officer 13 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: August 12, 2003 /s/ James M. O'Connell ---------------------------- James M. O'Connell Vice President and Treasurer (Principal Financial and Accounting Officer) 14