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, 2000 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 10, 2000
- ------------------------------- -----------------------------
Common stock, $.10 par value 8,660,748
<PAGE>
PART I. FINANCIAL INFORMATION
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(000's)
ASSETS
------
March 31, Sept. 30,
2000 1999
-------- ---------
(Derived from
(Unaudited) audited statements)
Current assets:
Cash and cash equivalents $ 4,275 $ 4,524
Short-term investments 341 321
Accounts receivable, less allowances of
$348,000 at 3/31/00 and $319,000 at 9/30/99 10,654 9,903
Inventories 1,332 1,169
Prepaid expenses 219 176
Prepaid income taxes 794 2,047
Deferred taxes on income 604 604
-------- --------
Total current assets 18,219 18,744
-------- --------
Property, plant and equipment, at cost 30,152 28,399
Less: Accumulated depreciation
and amortization 14,854 13,535
Net property, plant and equipment 15,298 14,864
Cost of purchased businesses in excess of
net assets acquired 4,131 4,192
Equity in joint venture 3,404 3,276
Other assets 3,566 3,548
-------- --------
$ 44,618 $ 44,624
======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Cont'd.)
(000's)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
-----------------------------------------
March 31, Sept. 30,
2000 1999
-------- ---------
(Derived from
(Unaudited) audited statements)
Current liabilities:
Accounts payable $ 489 $ 630
Deferred contract revenue 9,936 10,010
Dividend payable 3,031 3,030
Accrued compensation and related costs 1,113 1,214
Accrued pension costs 1,824 1,637
Accrued expenses 1,698 1,816
--------- ---------
Total current liabilities 18,091 18,337
--------- ---------
Minority interest in subsidiary 65 49
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 - 8,660,748 shares at 3/31/00
and 8,657,957 shares at 9/30/00 866 866
Premium paid in on common stock 8,752 8,711
Cumulative translation adjustments (84) (265)
Retained earnings 16,928 16,926
--------- ---------
Total stockholders' investment 26,462 26,238
$ 44,618 $ 44,624
========= =========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
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, March 31, March 31,
2000 1999 2000 1999
------ ------ ------ ------
Net Revenues $ 12,003 $ 11,432 $ 23,330 $ 22,338
Cost and expenses:
Cost of revenues 4,161 4,103 8,267 7,846
Selling, general and
administrative 2,686 2,483 5,355 4,879
Impairment in value of assets 129 - 520 -
-------- -------- -------- --------
6,976 6,586 14,142 12,725
-------- -------- -------- --------
Operating Income 5,027 4,846 9,188 9,613
Equity in income of joint venture 175 164 350 370
Other income, net 49 97 108 247
-------- -------- -------- --------
Income before income taxes
and minority interest 5,251 5,107 9,646 10,230
Income taxes 1,947 1,917 3,552 3,840
-------- -------- -------- --------
Income before minority interest 3,304 3,190 6,094 6,390
Minority interest therein 11 22 38 39
-------- -------- -------- --------
Net income $ 3,293 $ 3,168 $ 6,056 $ 6,351
======== ======== ======== ========
Net income per common share:
Basic $ 0.38 $ 0.37 $ 0.70 $ 0.74
======== ======== ======== ========
Based on average shares
outstanding 8,661 8,654 8,651 8,640
======== ======== ======== ========
Diluted $ 0.38 $ 0.37 $ 0.70 $ 0.73
======== ======== ======== ========
Based on average shares
outstanding 8,685 8,728 8,695 8,707
======== ======== ======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(000's)
(Unaudited)
Three Months Ended
------------------------
March 31, March 31,
2000 1999
-------- ---------
Cash flow from operating activities:
Net income $6,056 $6,351
Non-cash expenses, revenues, and gains
reported in income
Depreciation and amortization 2,182 1,681
Equity in income of joint venture (350) (370)
Exercise of stock options - net 41 (547)
-------- --------
1,873 764
-------- --------
Net increase in other current assets (957) (998)
Net increase (decrease) in
current liabilities 1,022 (856)
Net increase (decrease)
due to exchange rates 180 (34)
Net increase in net long-term assets (996) (876)
-------- --------
(751) (2,764)
-------- --------
Net cash generated from
operating activities 7,178 4,351
Cash flow from investing activities:
Disposition of investments - 3,986
Investment in Brazilian subsidiary - (3,350)
Acquisition of property, plant
and equipment (1,753) (2,492)
-------- --------
Net cash used by investing activities (1,753) (1,856)
Cash flow from financing activities:
Dividend received from
foreign affiliate 400 1,215
Dividends paid (6,054) (8,856)
-------- -------
Net cash used by financing activities (5,654) (7,641)
-------- --------
Net decrease in cash (229) (5,146)
Opening balance - cash and cash equivalents 4,845 6,501
-------- --------
Ending balance - cash and cash equivalents $4,616 $1,355
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $2,348 $4,480
======== ========
Supplemental Disclosure of Non-cash Financing Activity:
Dividend declared $3,031 $ -
======== ========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - March 31, 2000
(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, 2000 and September 30, 1999, and the consolidated
results of operations for the three-month and six-month periods ended March
31, 2000 and 1999 and consolidated cash flows for the six-month periods
ended March 31, 2000 and 1999. 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, 2000 and September 30, 1999, and the
consolidated results of operations for the three-month and six-month periods
ended March 31, 2000 and 1999, and cash flows for the six-month periods
ended March 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 1999 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, 2000 and 1999 are not necessarily indicative of the results
to be expected for the full year.
(2) Cash Dividends
---------------
On March 10, 2000, the Company declared a regular quarterly cash
dividend in the amount of $ .35 per share payable on April 13, 2000, to
stockholders of record on March 24, 2000. 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.
(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, 2000 and
1999:
<PAGE>
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - March 31, 2000 (Cont'd.)
(000's)
Three Month Ended Six Month Ended
March 31, March 31,
------------------ --------------
2000 1999 2000 1999
------ ------ ------ ------
Net income $ 3,293 $ 3,168 $ 6,056 $ 6,351
Other comprehensive income-
Foreign currency
translation adjustment 62 (1,196) 180 (829)
------- ------- ------- -------
Comprehensive income $ 3,355 $ 1,972 $ 6,236 $ 5,522
======= ======= ======= =======
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, 2000 and 1999 amounted to $7,178,000 and $4,351,000,
respectively. Investing activities for the six months ended March 31, 1999
resulted in net maturities of U.S. Treasury securities of $3,986,000. In
the first half of 1999, the Company invested $3,350,000 for the acquisition
of its Brazilian subsidiary, Sapra-Landauer, Ltda. Acquisitions of
property, plant and equipment amounted to $1,753,000 and $2,492,000,
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.
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 $3,500,000 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.
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Cont'd.)
Landauer requires limited working capital for its operations since
many of its customers pay for services in advance. Such advance payments
amounted to $9,936,000 and $10,010,000, respectively, as of March 31, 2000
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 March 31, 2000 were 5% 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 were 65.3% of revenues for the second quarter of
fiscal 2000 versus 64.1% for the same period in 1999. The increase in
margin was primarily associated with Year 2000 remediation efforts and Luxel
start-up costs, both which were incurred in 1999 and are accounted for as
a cost of revenue.
Selling, general and administrative expenses were slightly higher in
the second quarter as a percent of revenues at 22.4% versus 21.7% for the
second quarter of fiscal 1999. Earnings for the quarter just completed 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 2000 was 41.9% of revenues compared to 42.4% for the same
period last year. Income before taxes and minority interest was 43.7% of
the revenues for the quarter just ended compared to 44.7% for the second
fiscal quarter of 1999.
The effective tax rate for the Company during the second quarter of
fiscal 2000 was 37.1% compared with 37.5% for the second quarter of fiscal
1999. Resulting net income of $3,293,000 for the second fiscal quarter of
2000 compared with $3,168,000 reported in fiscal 1999. Diluted income per
share for the current quarter was $ .38 versus $ .37 for fiscal 1999.
Revenues for the six months ended March 31, 2000, were 4.4% higher
compared with the first six months of fiscal 1999. The increase in revenues
was attributable to gains in the Company's traditional radiation dosimetry
business. Gross margins for the first half of fiscal 2000 were 64.6% of
revenues are consistent with 64.9% a year ago.
Selling, general, and administrative expenses were 23.0% of revenues
for the first half of fiscal 2000 compared to 21.8% for the first half of
fiscal 1999. Year-to-date earnings have been impacted by $520,000 of the
asset impairment charges. Operating income (without the asset impairment
charge) for the first half of fiscal 2000 was 41.6% of revenues compared
with 43.0% for the same period last year. Income before income taxes and
minority interest was 41.3% of revenues for the six months just ended
compared to 45.8% of revenues for the same period in fiscal 1999.
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Cont'd.)
The effective tax rate for the Company during the first half of fiscal
2000 was 36.8% compared with 37.5% a year ago. Resulting net income of
$6,056,000 for the first six months of 2000 included $520,000 of asset
impairment charges and thus was slightly lower than $6,351,000 reported in
fiscal 1999. Diluted income per share for the first half of fiscal 2000 was
$ .70, compared to $ .73 in the first fiscal half 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, the costs of computer software modifications
and replacement, 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 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
<PAGE>
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 10, 2000
/s/ James M. O'Connell
-----------------------------
James M. O'Connell
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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