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, 1999 or
/ / TRANSITION REPORT pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the transition from to
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Commission File Number 1-9788
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LANDAUER, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1218089
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2 Science Road, Glenwood, Illinois 60425
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(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
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No.
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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 11, 2000
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Common stock, $.10 par value 8,600,748
PART I. FINANCIAL INFORMATION
LANDAUER, INC.
Balance Sheets
(000's)
ASSETS
Dec. 31, Sept. 30,
1999 1999
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(Derived from
audited
(Unaudited) statements)
Current assets:
Cash and cash equivalents $ 4,769 $ 4,524
Short-term investments 341 321
Accounts receivable, less allowances of
$308,000 at 12/31/99 and
$319,000 at 9/30/99 10,404 9,903
Inventories 1,309 1,169
Prepaid expenses 136 176
Prepaid income taxes 424 2,047
Deferred taxes on income 604 604
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Total current assets 17,987 18,744
Property, plant and equipment, at cost 29,149 28,399
Less: Accumulated depreciation
and amortization 14,286 13,535
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Net property, plant and equipment 14,863 14,864
Cost of purchased businesses in excess of
net assets acquired 4,180 4,192
Equity in joint venture 3,150 3,276
Other assets 3,578 3,548
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$ 43,758 $ 44,624
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The accompanying notes are an integral part of these financial statements.
LANDAUER, INC.
Balance Sheets (Cont'd.)
(000's)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
-----------------------------------------
Dec. 31, Sept. 30,
1999 1999
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(Derived from
audited
(Unaudited) statements)
Current liabilities:
Accounts payable $ 348 $ 630
Deferred contract revenue 9,688 10,010
Dividend payable 3,031 3,030
Accrued compensation and related costs 830 1,214
Accrued pension costs 1,762 1,637
Accrued expenses 1,934 1,816
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Total current liabilities 17,593 18,337
Minority interest in subsidiary 81 49
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Stockholders' investment:
Preferred stock, $.10 par value per share -
Authorized - 1,000,000 shares
Outstanding - None - -
Common stock, $.10 par value per share -
Authorized - 20,000,000 shares
Outstanding - 8,660,504 shares at 12/31/99
and 8,657,957 shares at 9/30/98 866 866
Premium paid in on common stock 8,747 8,711
Cumulative translation adjustments (194) (265)
Retained earnings 16,665 16,926
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Total stockholders' investment 26,084 26,238
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$ 43,758 $ 44,624
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The accompanying notes are an integral part of these financial statements.
LANDAUER, INC.
Statements of Income
(000's, except per share amounts)
(Unaudited)
Three Months Ended
------------------------
Dec. 31, Dec. 31,
1999 1998
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Net revenues $ 11,327 $ 10,906
Costs and expenses:
Cost of revenues 4,107 3,744
Selling, general and administrative 2,668 2,395
Impairment in value of assets 391 -
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7,166 6,139
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Operating income 4,161 4,767
Equity in income of joint venture 175 206
Other income, net 59 150
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Income before income taxes and minority interest 4,395 5,123
Income taxes (1,605) (1,923)
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Income before minority interest 2,790 3,200
Minority interest therein (27) (17)
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Net income $ 2,763 $ 3,183
======== ========
Net Income per common share:
Basic $ .32 $ .37
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Based on average shares outstanding 8,658 8,629
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Diluted $ .32 $ .36
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Based on average shares outstanding 8,704 8,724
======== ========
The accompanying notes are an integral part of these financial statements.
LANDAUER, INC.
Statements of Cash Flows
(000's)
(Unaudited)
Three Months Ended
Dec. 31, Dec. 31,
1999 1998
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Cash flow from operating activities:
Net income $ 2,763 $ 3,183
Non-cash expenses, revenues, and gains
reported in income
Depreciation and amortization 1,293 860
Equity in income of joint venture (175) (206)
Compensatory effect of stock options - (547)
Deferred income taxes - -
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1,118 107
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Net increase (decrease) in
other current assets 1,034 (1,085)
Net increase (decrease) in
current liabilities (745) 1,171
Net increase in net long-term assets (560) (1,382)
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(271) (1,296)
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Net cash generated from
operating activities 3,610 1,994
Cash flow from investing activities:
Disposition of investments 301 -
Acquisitions of investments (321) -
Investment in Brazilian subsidiary 32 (2,319)
(Acquisition) of property,
plant and equipment (750) (1,301)
-------- --------
Net cash used (provided)
by investing activities (738) (3,620)
Cash flow from financing activities:
Exercise of stock options - net 36 -
Dividend received from foreign affiliate 360 1,215
Dividends paid (3,023) (2,798)
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Net cash used by financing activities (2,627) (1,583)
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Net increase (decrease) in cash 245 (3,209)
Opening balance - cash and cash equivalents 4,524 6,501
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Ending balance - cash and cash equivalents $ 4,769 $ 3,292
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 48 $ 441
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Supplemental Disclosure of Non-cash Financing Activity:
Dividend declared $ 3,031 $ 3,029
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Foreign currency translation adjustment $ 71 $ 367
======== ========
The accompanying notes are an integral part of these financial statements.
LANDAUDER, INC.
Notes to Financial Statements - December 31, 1999
(Unaudited)
(1) Basis of Presentation
---------------------
The accompanying consolidated unaudited condensed financial statements
reflect the financial position of Landauer, Inc. ("Landauer") as of December
31, 1999 and September 30, 1999, and the results of operations and cash flows
for the three-month periods ended December 31, 1999 and 1998. 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, 1999 and September 30, 1999, and the
results of operations for the three-month periods ended December 31, 1999 and
1998.
The accounting policies followed by the Company are set forth in Note
1 to the Company's financial statements in the 1999 Landauer Annual Report on
Form 10-K, which is incorporated by reference.
The results of operations for the three-month periods ended December 31,
1999 and 1998 are not necessarily indicative of the results to be expected for
the full year.
(2) Cash Dividends
--------------
On December 10, 1999, the Company declared a regular quarterly cash
dividend in the amount of $.35 per share payable on January 14, 2000, to
stockholders of record on December 24, 1999.
Regular quarterly cash dividends of $.35 per share ($1.40 annually) were
declared during fiscal 1999.
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, 1999 and 1998 amounted to $3,610,000 and $1,994,000,
respectively. Investing activities for the three months ended December 31,
1998 included a $2,319,000 investment in the Brazilian subsidiary.
Acquisitions of property, plant and equipment were $750,000 and $1,301,000,
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.
<PAGE>
LANDAUER, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Cont'd.)
During January, 1999, the Company reached a settlement agreement with
the State of Illinois regarding its income tax liabilities for fiscal years
1988 through 1994. The amount of tax paid in the settlement was fully
reserved.
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 2000 are expected to amount to
approximately $3,100,000, 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 $9,688,000 and $10,010,000, respectively, as of December 31, 1999 and
September 30, 1999, 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, 1999 were 3.9% 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 63.7% of
revenues compared to 65.7% for the same period in fiscal 1999. The decrease
in margins was primarily attributable to higher costs associated with the
Luxel conversion effort.
Selling, general and administrative expenses were moderately higher in
the current quarter as a percent of revenues at 23.6% compared to 22.0% for
the first quarter of fiscal 1999. Additionally, 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 36.7%
of revenues compared to 43.7% for the same period last year. Income before
income taxes was 38.8% of revenues for the quarter just ended compared to
47.0% for the first fiscal quarter of 1999.
The effective tax rate for the Company during the first quarter of
fiscal 2000 was 36.5% compared with 37.5% for the same period last year.
Resulting net income of $2,763,000 for the first fiscal quarter of 2000
compared with $3,183,000 reported in fiscal 1999. Diluted income per share
for the current quarter was $.32 versus $.36 for the first fiscal quarter of
1999.
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
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At its Annual Meeting held on February 2, 2000, the shareholders voted
to elect Thomas M. Fulton and Paul B. Rosenberg as directors for three-year
terms. Voting for all nominees were 7,218,685 shares (representing 83.3% of
total shares outstanding), and votes for 28,433 shares were withheld from all
nominees. Continuing as directors are Robert J. Cronin, Gary D. Eppen, Brent
A. Latta, Richard R. Risk and Michael D. Winfield.
The shareholders voted to reappoint Arthur Andersen LLP as the
Company's auditors for the following year, with 7,214,033 shares (83.3% of
total shares outstanding) voting for, 14,569 shares against, and 18,516 shares
abstaining.
The shareholders also voted to approve incentive compensation plan for
executive officers with 6,141,155 shares (70.0% of total shares outstanding)
voting for, 354,061 shares against and 661,514 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.
<PAGE>
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 11, 2000
/s/ James M. O'Connell
-------------------------------
James M. O'Connell
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
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