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, 2000 or
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/ / 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
LANDAUER, INC.
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(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 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 August 1, 2000
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Common stock, $.10 par value 8,660,748
PART I. FINANCIAL INFORMATION
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(000's)
ASSETS
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June 30, Sept. 30,
2000 1999
-------- --------
(Derived from
audited
(Unaudited) statements)
Current assets:
Cash and cash equivalents $ 4,458 $ 4,524
Short-term investments 341 321
Accounts receivable, less allowances of
$373,000 at 6/30/00 and $319,000 at 9/30/00 11,498 9,903
Inventories 1,517 1,169
Prepaid expenses 315 176
Prepaid income taxes 241 2,047
Deferred taxes on income 604 604
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Total current assets 18,974 18,744
Property, plant and equipment, at cost 30,852 28,399
Less: Accumulated depreciation
and amortization 15,399 13,535
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Net property, plant and equipment 15,453 14,864
Cost of purchased businesses in excess of
net assets acquired 4,082 4,192
Equity in joint venture 3,382 3,276
Other assets 3,849 3,548
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$ 45,740 $ 44,624
========== ==========
The accompanying notes are an integral part of these financial
statements.
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Cont'd.)
(000's)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
-----------------------------------------
June 30, Sept. 30,
2000 1999
(Derived from
audited
(Unaudited) statements)
Current liabilities:
Accounts payable $ 656 $ 630
Deferred contract revenue 10,671 10,010
Dividend payable 3,031 3,030
Accrued compensation and related costs 1,256 1,214
Accrued pension costs 1,417 1,637
Other accrued expenses 1,994 1,816
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Total current liabilities 19,025 18,337
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Minority Interest in Subsidiary 75 49
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Stockholders' investment:
Preferred stock, $.10 par value per share -
Authorized - 1,000,000 shares
Outstanding - None
Common stock, $.10 par value per share -
Authorized - 20,000,000 shares
Outstanding - 8,660,748 shares at 6-30-00
and 8,657,957 shares at 9-30-99 866 866
Premium paid in on common stock 8,752 8,711
Cumulative translation adjustments (189) (265)
Retained earnings 17,211 16,926
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Total stockholders' investment 26,640 26,238
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$ 45,740 $ 44,624
========== ==========
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 Nine Months Ended
------------------- ----------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
----- ----- ----- -----
Net Revenues $ 11,598 $ 10,684 $ 34,928 $ 33,022
Cost and expenses:
Cost of revenues 4,401 4,118 12,669 11,965
Selling, general and
administrative 2,132 2,489 7,486 7,367
Impairment in value
of assets - 2,679 520 2,679
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6,533 9,286 20,675 22,011
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Operating Income 5,065 1,398 14,253 11,011
Other income, net 215 195 673 812
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Income before income taxes
and minority interest 5,280 1,593 14,926 11,823
Income taxes 1,956 965 5,508 4,805
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Income before
minority interest 3,324 628 9,418 7,018
Minority interest therein 9 23 47 62
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Net income $ 3,315 $ 605 $ 9,371 $ 6,956
======== ======== ======== ========
Net income per common share:
Basic $ 0.38 $ 0.06 $ 1.08 $ 0.80
======== ======== ======== ========
Based on average shares
outstanding 8,661 8,658 8,660 8,645
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Diluted $ 0.38 $ 0.06 $ 1.08 $ 0.80
========= ======== ======== ========
Based on average shares
outstanding 8,685 8,715 8,691 8,710
======== ======== ======== ========
The accompanying notes are an integral part of these financial
statements.
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(000's)
(Unaudited)
Nine Months Ended
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June 30, June 30,
2000 1999
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Cash flow from operating activities:
Net income $ 9,371 $ 6,956
Non-cash expenses, revenues, and gains
reported in income
Depreciation and amortization 2,979 4,522
Equity in income of joint venture (507) (500)
Exercise of stock options - net 41 (603)
2,513 3,419
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Net increase (decrease) in other
current assets (2,102) 871
Net increase (decrease) in
current liabilities 2,519 (233)
Net increase (decrease) due
to exchange rates 75 (38)
Net increase in net long-term assets (1,304) (1,004)
(812) (404)
Net cash generated from
operating activities 11,072 9,971
Cash flow from investing activities:
Disposition of investments - 1,988
Investment in Brazilian subsidiary - (3,350)
Acquisition of property,
plant and equipment (2,453) (3,852)
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Net cash used by investing activities (2,453) (5,214)
Cash flow from financing activities:
Dividend received from foreign affiliate 400 1,215
Dividends paid (9,085) (8,856)
Net cash used by financing activities (8,685) (7,641)
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Net decrease in cash (66) (2,884)
Opening balance - cash and cash equivalents 4,524 6,501
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Ending balance - cash and cash equivalents $ 4,458 $ 3,617
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Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 3,792 $ 6,106
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Supplemental Disclosure of Non-cash Financing Activity:
Dividend declared $ 3,031 $ 3,029
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The accompanying notes are an integral part of these financial
statements.
LANDAUER, INC. AND SUBSIDIARIES
Notes to Financial Statements - June 30, 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 June 30, 2000 and September 30, 1999, and the consolidated
results of operations and consolidated cash flows for the three-month and
nine-month periods ended June 30, 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 June 30, 2000 and
September 30, 1999, and the consolidated results of operations for the
three-month and nine-month periods ended June 30, 2000 and 1999, and
consolidated cash flows for the nine-month periods ended June 30, 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 operation or financial position.
The results of operations for the three-month and nine-month periods
ended June 30, 2000 and 1999 are not necessarily indicative of the results
to be expected for the full year.
(2) Cash Dividends
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On June 9, 2000, the Company declared a regular quarterly cash
dividend in the amount of $.35 per share payable on July 13, 2000, to
stockholders of record on June 30, 2000. 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 nine month periods ended June 30, 2000 and 1999:
Three Month Ended Nine Month Ended
June 30, June 31,
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2000 1999 2000 1999
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Net income $ 3,315 $ 605 $ 9,371 $ 6,956
Other comprehensive income-
Foreign currency
translation adjustment (105) 19 75 (810)
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Comprehensive income $ 3,210 $ 624 $ 9,446 $ 6,146
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Liquidity and Capital Resources
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Landauer's cash flow from operating activities for the nine months
ended June 30, 2000 and 1999 amounted to $11,072,000 and $9,971,000,
respectively. Investing activities for the nine months ended June 30, 1999
resulted in net maturities of U.S. Treasury securities of $1,988,000. 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 $2,453,000 and $3,852,000,
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.
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 $1,700,000 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 $10,671,000 and $10,010,000, respectively, as of June 30, 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 June 30, 2000 were 8.6% 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 62.0% of revenues for the third quarter of
fiscal 2000 versus 61.5% 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 decreased significantly
in the third quarter as a percent of revenues at 18.4% versus 48.4% for the
third quarter of fiscal 1999. Earnings for the quarter included a one-time
$500,000 technology cost reimbursement from our 50%-owned Japanese
subsidiary, Nagase-Landauer. The payment reimburses a portion of costs
incurred by the parent company in developing and implementing the Luxel
technology. The impact of the cost reimbursement to Landauer's third
quarter earnings is partially mitigated by the parent company's recognition
of earnings from the Japanese joint ventures, which reflect the expense of
the cost reimbursement.
Earnings for the third quarter of fiscal 1999 were impacted by the
non-cash asset impairment charge in the amount of $2,679,000 related to the
Company's discontinuation of older radiation measurement technologies.
Absent the technology cost reimbursement and non-cash impairment charge,
selling and general expenses were 22.7% of revenues for the third quarter
vs. 23.3% of revenues for the third quarter of fiscal 1999.
Operating income for the third quarter of 2000 was 43.7% of revenues
compared to 13.1% for the same period last year. Income before taxes and
minority interest was 45.5% of the revenues for the quarter just ended
compared to 14.9% for the second fiscal quarter of 1999.
The effective tax rate for the Company during the third quarter of
fiscal 2000 was 37.0% compared with 60.6% for the third quarter of fiscal
1999. The effective tax rate for the third quarter of fiscal 1999 was
unusually high due to the non-deductibility of certain intangible assets
that were included with the impairment charge. Resulting net income of
$3,315,000 for the third fiscal quarter of 2000 was significantly higher
than the $605,000 reported in fiscal 1999. Diluted income per share for the
current quarter was $ .38 versus $ .06 for fiscal 1999.
Revenues for the nine months ended June 30, 2000, were 5.8% higher
compared with the first nine 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 nine months of fiscal 2000
were 63.7% of revenues and are consistent with 63.8% a year ago.
Selling, general, and administrative expenses were 22.9% of revenues for
the first nine months of fiscal 2000 compared to 30.4% for the first nine
months of fiscal 1999. Year-to-date earnings include $520,000 of the asset
impairment charge which is effectively offset by the technology cost
reimbursement. Fiscal 1999 earnings were impacted by $2,679,000 of the
asset impairment charge. Operating income (without the asset impairment
charge and technology cost reimbursement) for the first nine months of
fiscal 2000 was 40.9% of revenues compared with 41.5% for the same period
last year. Income before income taxes and minority interest was 42.7% of
revenues for the nine months just ended compared to 35.8% of revenues for
the same period in fiscal 1999.
The effective tax rate for the Company during the first nine months
of fiscal 2000 was 36.9% compared with 40.6% a year ago. Resulting net
income of $9,371,000 for the first nine months of 2000 is substantially
ahead of the prior year due to the increased asset impairment cost
recognized in the prior year, the technology cost reimbursement and the
realization of productivity gains in operating income. Diluted income per
share for the first nine months of fiscal 2000 was $ 1.08, compared to $ .80
in the first nine months 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 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: August 11, 2000
/s/ James M. O'Connell
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James M. O'Connell
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
