UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended DecemberMarch 31, 20132014

 

Commission File Number 1-9788

 

 

 

 

 

 

LANDAUER, INC.

(Exact Name of registrant as specified in its charter)

 

 

 

 

 

 

Delaware

06-1218089

 

 

(State or other jurisdiction of

Incorporation or organization)

(I.R.S. Employer

Identification Number)

 

 

 

 

 

 

2 Science Road, Glenwood, IL  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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [ X ]    No [    ]

��

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

Large accelerated filer

[    ]

 

Accelerated filer

[ X ]

 

 

Non-accelerated filer

[    ]

 

Smaller reporting company

[    ]

 

 

(Do not check if a smaller reporting company)

 

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [     ]    No [  X  ]

 

As of JanuaryApril 28, 2014, 9,537,5449,551,929 shares of common stock, par value $0.10 per share, of the registrant were outstanding.

 

1

 


 

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

PART I    FINANCIAL INFORMATION 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets (Unaudited)

3

 

 

 

 

 

 

 

 

Consolidated Statements of Operations (Unaudited)

4

 

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income (Loss) Income (Unaudited)

5

 

 

 

 

 

 

 

 

Consolidated Statement of Stockholders’ Equity (Unaudited)

6

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited)

7

 

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

8

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1316

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

1924

 

 

 

 

 

 

Item 4.

Controls and Procedures

1924

 

 

 

 

 

 

 

 

 

 

 

PART II    OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

1926

 

 

 

 

 

 

Item 1A.

Risk Factors

1926

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

2027

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

2027

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

2027

 

 

 

 

 

Item 5.

Other Information

2027

 

 

 

 

 

Item 6.

Exhibits

2128

 

 

 

 

 

 

 

 

 

 

 

SIGNATURE 

2229

 

 

 

 

 

 

 

2

 


 

 

PART I  FINANCIAL INFORMATION

  Item 1.Financial Statements

 

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

 

December 31,
2013

 

September 30,
2013

 

March 31,
2014

 

September 30,
2013

ASSETS

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,272 

 

$

11,184 

 

$

10,991 

 

$

11,184 

Receivables, net of allowances of $570 and $600 respectively

 

 

34,178 

 

 

38,419 

Receivables, net of allowances of $630 and $600 respectively

 

35,487 

 

38,419 

Inventories

 

 

8,301 

 

 

9,539 

 

7,509 

 

9,539 

Prepaid income taxes

 

 

2,671 

 

 

3,132 

 

2,411 

 

3,132 

Prepaid expenses and other current assets

 

 

5,220 

 

 

4,019 

 

5,145 

 

4,019 

Current assets

 

 

63,642 

 

 

66,293 

 

61,543 

 

66,293 

Property, plant and equipment, at cost

 

 

104,316 

 

 

107,446 

 

104,822 

 

107,446 

Accumulated depreciation and amortization

 

 

(53,407)

 

 

(55,514)

 

(55,275)

 

(55,514)

Net property, plant and equipment

 

 

50,909 

 

 

51,932 

 

49,547 

 

51,932 

Equity in joint ventures

 

 

22,600 

 

 

23,942 

 

23,356 

 

23,942 

Goodwill

 

 

86,529 

 

 

84,436 

 

86,384 

 

84,436 

Intangible assets, net of accumulated amortization of $14,790 and $13,605, respectively

 

 

37,022 

 

 

37,161 

Dosimetry devices, net of accumulated depreciation of $9,915 and $9,472, respectively

 

 

5,739 

 

 

5,798 

Intangible assets, net of accumulated amortization of $15,826 and $13,604, respectively

 

36,198 

 

37,161 

Dosimetry devices, net of accumulated depreciation of $10,406 and $9,472, respectively

 

5,734 

 

5,798 

Other assets

 

 

7,704 

 

 

7,271 

 

7,621 

 

7,271 

Assets

 

$

274,145 

 

$

276,833 

 

$

270,383 

 

$

276,833 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

6,036 

 

$

6,310 

 

$

6,830 

 

$

6,310 

Dividends payable

 

 

5,433 

 

 

5,419 

 

5,352 

 

5,419 

Deferred contract revenue

 

 

13,572 

 

 

13,181 

 

13,120 

 

13,181 

Accrued compensation and related costs

 

 

6,160 

 

 

8,207 

 

7,176 

 

8,207 

Other accrued expenses

 

 

6,217 

 

 

7,531 

 

6,125 

 

7,531 

Current liabilities

 

 

37,418 

 

 

40,648 

 

38,603 

 

40,648 

Non-current liabilities:

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

143,785 

 

 

142,785 

 

138,285 

 

142,785 

Pension and postretirement obligations

 

 

13,308 

 

 

13,047 

 

13,331 

 

13,047 

Deferred income taxes

 

 

10,324 

 

 

9,817 

 

10,823 

 

9,817 

Other non-current liabilities

 

 

1,890 

 

 

915 

 

1,750 

 

915 

Non-current liabilities

 

 

169,307 

 

 

166,564 

 

164,189 

 

166,564 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

Preferred stock, $.10 par value per share, authorized 1,000,000 shares; none issued

 

 

 -

 

 

 -

 

 -

 

 -

Common stock, $.10 par value per share, authorized 20,000,000 shares; 9,615,711 and 9,575,926 issued and outstanding at December 31, 2013 and September 30, 2013 respectively

 

 

962 

 

 

958 

Common stock, $.10 par value per share, authorized 20,000,000 shares; 9,626,074 and 9,575,926 issued and outstanding at March 31, 2014 and September 30, 2013 respectively

 

963 

 

958 

Additional paid in capital

 

 

39,653 

 

 

39,465 

 

39,755 

 

39,465 

Accumulated other comprehensive loss

 

 

(4,547)

 

 

(4,456)

 

(4,092)

 

(4,456)

Retained earnings

 

 

29,582 

 

 

32,012 

 

29,606 

 

32,012 

Landauer, Inc. stockholders' equity

 

 

65,650 

 

 

67,979 

 

66,232 

 

67,979 

Noncontrolling interest

 

 

1,770 

 

 

1,642 

 

1,359 

 

1,642 

Stockholders' equity

 

 

67,420 

 

 

69,621 

 

67,591 

 

69,621 

Liabilities and Stockholders' Equity

 

$

274,145 

 

$

276,833 

 

$

270,383 

 

$

276,833 

The accompanying notes are an integral part of these financial statements.

3

 


 

 

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Three Months Ended
March 31,

 

 

Six Months Ended
March 31,

(Dollars in Thousands, Except per Share)

 

2013

 

2012

 

2014

 

2013

 

2014

 

2013

Service revenues

 

$

31,894 

 

$

31,469 

 

$

32,983 

 

$

32,533 

 

$

64,877 

 

$

64,002 

Product revenues

 

 

5,811 

 

 

5,212 

 

 

6,571 

 

 

4,549 

 

 

12,382 

 

 

9,761 

Net revenues

 

 

37,705 

 

 

36,681 

 

 

39,554 

 

 

37,082 

 

 

77,259 

 

 

73,763 

 

 

 

 

 

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service costs

 

 

15,049 

 

 

14,308 

 

 

15,195 

 

 

14,863 

 

 

30,244 

 

 

29,171 

Product costs

 

 

3,158 

 

 

2,255 

 

 

3,150 

 

 

2,187 

 

 

6,308 

 

 

4,442 

Total cost of sales

 

 

18,207 

 

 

16,563 

 

 

18,345 

 

 

17,050 

 

 

36,552 

 

 

33,613 

Selling, general and administrative

 

 

14,362 

 

 

13,391 

 

 

13,735 

 

 

12,578 

 

 

28,097 

 

 

25,969 

Acquisition and reorganization costs

 

 

111 

 

 

Acquisition, reorganization and nonrecurring costs

 

 

109 

 

 

300 

 

 

220 

 

 

300 

Costs and expenses

 

 

32,680 

 

 

29,954 

 

 

32,189 

 

 

29,928 

 

 

64,869 

 

 

59,882 

 

 

 

 

 

 

Operating income

 

 

5,025 

 

 

6,727 

 

 

7,365 

 

 

7,154 

 

 

12,390 

 

 

13,881 

Equity in income of joint ventures

 

 

573 

 

 

1,528 

 

 

535 

 

 

556 

 

 

1,108 

 

 

2,084 

Interest expense, net

 

 

(892)

 

 

(1,033)

 

 

(975)

 

 

(1,081)

 

 

(1,867)

 

 

(2,114)

Other income, net

 

 

37 

 

 

95 

 

 

 

 

 

 

Other (loss) income, net

 

 

(8)

 

 

224 

 

 

29 

 

 

319 

Income before taxes

 

 

4,743 

 

 

7,317 

 

 

6,917 

 

 

6,853 

 

 

11,660 

 

 

14,170 

Income taxes

 

 

1,496 

 

 

2,274 

 

 

1,954 

 

 

1,620 

 

 

3,450 

 

 

3,894 

 

 

 

 

 

 

Net income

 

 

3,247 

 

 

5,043 

 

 

4,963 

 

 

5,233 

 

 

8,210 

 

 

10,276 

Less: Net income attributed to
noncontrolling interest

 

 

196 

 

 

166 

 

 

 

 

 

 

Less: Net (loss) income attributed to
noncontrolling interest

 

 

(34)

 

 

80 

 

 

162 

 

 

246 

Net income attributed to Landauer, Inc.

 

$

3,051 

 

$

4,877 

 

$

4,997 

 

$

5,153 

 

$

8,048 

 

$

10,030 

 

 

 

 

 

 

Net income per share attributable to
Landauer, Inc. shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.32 

 

$

0.52 

 

$

0.52 

 

$

0.54 

 

$

0.84 

 

$

1.06 

Weighted average basic shares
outstanding

 

 

9,422 

 

 

9,336 

 

 

9,460 

 

 

9,417 

 

 

9,441 

 

 

9,391 

 

 

 

 

 

 

Diluted

 

$

0.32 

 

$

0.52 

 

$

0.52 

 

$

0.54 

 

$

0.84 

 

$

1.05 

Weighted average diluted shares
outstanding

 

 

9,467 

 

 

9,385 

 

 

9,501 

 

 

9,462 

 

 

9,485 

 

 

9,438 

 

The accompanying notes are an integral part of these financial statements.

4

 


 

 

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31, 2014

(Dollars in Thousands)

 

Landauer, Inc.

 

Noncontrolling
Interest

 

Total

Net income (loss)

 

$

4,997 

 

$

(34)

 

$

4,963 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Defined benefit pension and postretirement plans activity, net of tax

 

 

46 

 

 

 -

 

 

46 

Foreign currency translation adjustment

 

 

409 

 

 

19 

 

 

428 

Comprehensive income (loss)

 

$

5,452 

 

$

(15)

 

$

5,437 

 

Three Months Ended
December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31, 2013

(Dollars in Thousands)

Landauer, Inc.

 

Noncontrolling
Interest

 

Total

 

Landauer, Inc.

 

Noncontrolling
Interest

 

Total

Net income

 

$

3,051 

 

$

196 

 

$

3,247 

 

$

5,153 

 

$

80 

 

$

5,233 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit pension and postretirement plans activity, net of tax

 

 

165 

 

 

 -

 

 

165 

 

 

28 

 

 

 -

 

 

28 

Foreign currency translation adjustment

 

 

(256)

 

 

(68)

 

 

(324)

 

 

(1,564)

 

 

 

 

(1,557)

Comprehensive income

 

$

2,960 

 

$

128 

 

$

3,088 

 

$

3,617 

 

$

87 

 

$

3,704 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31, 2012

 

Six Months Ended
March 31, 2014

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

 

Landauer, Inc.

 

Noncontrolling
Interest

 

Total

 

Landauer, Inc.

 

Noncontrolling
Interest

 

Total

Net income

 

$

4,877 

 

$

166 

 

$

5,043 

 

$

8,048 

 

$

162 

 

$

8,210 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit pension and postretirement plans activity, net of tax

 

 

108 

 

 

 -

 

 

108 

 

 

211 

 

 

 -

 

 

211 

Foreign currency translation adjustment

 

 

(624)

 

 

 

 

(622)

 

 

153 

 

 

(49)

 

 

104 

Comprehensive income

 

$

4,361 

 

$

168 

 

$

4,529 

 

$

8,412 

 

$

113 

 

$

8,525 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended
March 31, 2013

(Dollars in Thousands)

 

Landauer, Inc.

 

Noncontrolling
Interest

 

Total

Net income

 

$

10,030 

 

$

246 

 

$

10,276 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Defined benefit pension and postretirement plans activity, net of tax

 

 

136 

 

 

 -

 

 

136 

Foreign currency translation adjustment

 

 

(2,188)

 

 

 

 

(2,179)

Comprehensive income

 

$

7,978 

 

$

255 

 

$

8,233 

The accompanying notes are an integral part of these financial statements.

5

 


 

 

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Landauer, Inc. Stockholders' Equity

 

 

 

 

 

 

Landauer, Inc. Stockholders' Equity

 

 

 

 

 

 

(Dollars in Thousands)

Common
Stock
Shares

 

Common
Stock

 

Addi-
tional
Paid in
Capital

 

Accumulated Other Compre-hensive (Loss) Income

 

Retained
Earnings

 

Non-
Controlling
Interest

 

Total
Stock-
holders'
Equity

Common
Stock
Shares

 

Common
Stock

 

Addi-
tional
Paid in
Capital

 

Accumulated Other Compre-hensive (Loss) Income

 

Retained
Earnings

 

Non-
Controlling
Interest

 

Total
Stock-
holders'
Equity

Balance September 30, 2013

 

9,575,926 

 

$

958 

 

$

39,465 

 

$

(4,456)

 

$

32,012 

 

$

1,642 

 

$

69,621 

 

9,575,926 

 

$

958 

 

$

39,465 

 

$

(4,456)

 

$

32,012 

 

$

1,642 

 

$

69,621 

Stock-based compensation arrangements

 

39,785 

 

 

 

 

188 

 

 

 -

 

 

 -

 

 

 -

 

 

192 

 

50,148 

 

 

 

 

290 

 

 

 -

 

 

 -

 

 

 -

 

 

295 

Dividends

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(5,481)

 

 

 -

 

 

(5,481)

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(10,454)

 

 

(396)

 

 

(10,850)

Net income

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

3,051 

 

 

196 

 

 

3,247 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

8,048 

 

 

162 

 

 

8,210 

Foreign currency translation adjustment

 

 -

 

 

 -

 

 

 -

 

 

(256)

 

 

 -

 

 

(68)

 

 

(324)

 

 -

 

 

 -

 

 

 -

 

 

153 

 

 

 -

 

 

(49)

 

 

104 

Defined benefit pension and postretirement plans activity, net of tax

 

 -

 

 

 -

 

 

 -

 

 

165 

 

 

 -

 

 

 -

 

 

165 

 

 -

 

 

 -

 

 

 -

 

 

211 

 

 

 -

 

 

 -

 

 

211 

Balance December 31, 2013

 

9,615,711 

 

$

962 

 

$

39,653 

 

$

(4,547)

 

$

29,582 

 

$

1,770 

 

$

67,420 

Balance March
31, 2014

 

9,626,074 

 

$

963 

 

$

39,755 

 

$

(4,092)

 

$

29,606 

 

$

1,359 

 

$

67,591 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

6

 


 

 

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

Six Months Ended
March 31,

(Dollars in Thousands)

 

2013

 

2012

 

2014

 

2013

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,247 

 

$

5,043 

 

$

8,210 

 

$

10,276 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,894 

 

 

3,450 

 

 

7,662 

 

 

6,976 

Equity in income of joint ventures

 

 

(573)

 

 

(1,528)

 

 

(1,108)

 

 

(2,084)

Dividends from joint ventures

 

 

1,340 

 

 

1,892 

 

 

1,340 

 

 

1,891 

Stock-based compensation and related net tax benefits

 

 

282 

 

 

625 

 

 

453 

 

 

1,504 

Current and long-term deferred taxes, net

 

 

292 

 

 

 

 

791 

 

 

284 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Decrease (increase) in accounts receivable, net

 

 

4,396 

 

 

(1,114)

 

 

3,119 

 

 

(1,244)

Decrease in prepaid taxes

 

 

466 

 

 

1,449 

Increase in other operating assets, net

 

 

(88)

 

 

(1,953)

Decrease (increase) in prepaid taxes

 

 

721 

 

 

(2,755)

Decrease (increase) in other operating assets, net

 

 

571 

 

 

(2,839)

Decrease in accounts payable and other accrued liabilities

 

 

(3,502)

 

 

(5,775)

 

 

(2,025)

 

 

(2,959)

Increase in other operating liabilities, net

 

 

200 

 

 

244 

Increase (decrease) in other operating liabilities, net

 

 

430 

 

 

(26)

Net cash provided by operating activities

 

 

9,954 

 

 

2,340 

 

 

20,164 

 

 

9,024 

Cash flows used by investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

(1,071)

 

 

(1,902)

 

 

(2,415)

 

 

(5,962)

Acquisition of joint ventures and businesses, net of cash acquired

 

 

(1,800)

 

 

 -

 

 

(1,800)

 

 

 -

Other investing activities, net

 

 

(719)

 

 

(453)

 

 

(840)

 

 

(678)

Net cash used by investing activities

 

 

(3,590)

 

 

(2,355)

 

 

(5,055)

 

 

(6,640)

Cash flows (used) provided by financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowings on revolving credit facility

 

 

(21)

 

 

 -

 

 

(43)

 

 

 -

Long-term borrowings - loan

 

 

14,000 

 

 

4,300 

 

 

20,000 

 

 

10,300 

Long-term borrowings - repayment

 

 

(13,000)

 

 

 -

 

 

(24,500)

 

 

(8,587)

Dividends paid to stockholders

 

 

(5,274)

 

 

(5,229)

 

 

(10,520)

 

 

(10,429)

Other financing activities, net

 

 

49 

 

 

(248)

 

 

(347)

 

 

(260)

Net cash used by financing activities

 

 

(4,246)

 

 

(1,177)

 

 

(15,410)

 

 

(8,976)

 

 

 

 

 

 

Effects of foreign currency translation

 

 

(30)

 

 

56 

 

 

108 

 

 

13 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

2,088 

 

 

(1,136)

Net decrease in cash and cash equivalents

 

 

(193)

 

 

(6,579)

Opening balance - cash and cash equivalents

 

 

11,184 

 

 

17,633 

 

 

11,184 

 

 

17,633 

Ending balance - cash and cash equivalents

 

$

13,272 

 

$

16,497 

 

$

10,991 

 

$

11,054 

Accrued capital spending included in accounts payable and other accrued liabilities

 

$

258 

 

$

1,789 

 

The accompanying notes are an integral part of these financial statements.statements.

7

 


 

 

LANDAUER, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

DecemberMarch 31, 20132014

(Dollars in thousands)

 

(1)Basis of Presentation and Consolidation

 

As used herein, the “Company” or “Landauer” refers to Landauer, Inc. and its subsidiaries.

 

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013 and other financial information filed with the Securities and Exchange Commission (the “SEC”).

 

The accounting policies followed by the Company are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013.  There have been no changes to the accounting policies for the threesix month period ended DecemberMarch 31, 2013.2014.

 

The results of operations for the three and six month period ended DecemberMarch 31, 20132014 are not necessarily indicative of the results to be expected for the full fiscal year. The September 30, 2013 balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

 

In the opinion of  management, the accompanying unaudited consolidated financial statements include all adjustments necessary for a fair statement of such financial statements.  Certain reclassifications have been made in the financial statements for comparative purposes.  These reclassifications have no effect on the results of operations or financial position of the Company.

Revision of Prior Period Financial Statements

In connection with the preparation of the consolidated financial statements for the second quarter of fiscal 2014, the Company identified an error in the treatment of accrued additions for property, plant and equipment in the Consolidated Statements of Cash Flows. This error affected the year-to-date Consolidated Statements of Cash Flows presented in each of the quarters of fiscal 2013 and the first quarter of fiscal 2014, as well as the consolidated financial statements for the fiscal years ended September 30, 2013, 2012 and 2011.  This error resulted in an understatement of net cash provided by operating activities and net cash used in investing activities in each of the quarters of fiscal 2013 and the first quarter of fiscal 2014, as well as the year-end consolidated financial statements for the fiscal years ended September 30, 2013 and 2011.  This error resulted in an overstatement of net cash provided by operating activities and net cash used in investing activities for the fiscal year ended September 30, 2012.  In addition, the Company identified an error in its Consolidated Statement of Cash Flows which affected the quarters in 2013.  This error related to the classification of debt financing fees and it resulted in an understatement of net cash provided by operating activities and net cash used by financing activities.  In accordance with accounting guidance presented in ASC 250-10 and SEC Staff Accounting Bulletin No. 99, Materiality, the Company assessed the materiality of these errors and concluded that they were not material to any of the Company’s previously issued financial statements. The Company will revise its previously issued financial statements to correct for these errors. These revisions did not impact the Company’s Consolidated Statements of Operations or Consolidated Balance Sheets for any of these periods.

8


The following tables present the effect of this correction on the Company’s Consolidated Statements of Cash Flows for all periods affected:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31, 2013

 

Year Ended
September 30, 2013

(Dollars in Thousands)

 

As Previously Reported

 

Adjustment

 

As Revised

 

As Previously Reported

 

Adjustment

 

As Revised

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Decrease) increase in accounts payable and other accrued liabilities

 

$

(3,502)

 

$

174 

 

$

(3,328)

 

$

(3,389)

 

$

2,793 

 

$

(596)

Net cash provided by operating activities

 

 

9,954 

 

 

174 

 

 

10,128 

 

 

22,957 

 

 

2,793 

 

 

25,750 

Cash flows used by investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

(1,071)

 

 

(174)

 

 

(1,245)

 

 

(6,352)

 

 

(2,793)

 

 

(9,145)

Net cash used by investing activities

 

 

(3,590)

 

 

(174)

 

 

(3,764)

 

 

(8,503)

 

 

(2,793)

 

 

(11,296)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended
June 30, 2013

 

Six Months Ended
March 31, 2013

(Dollars in Thousands)

 

As Previously Reported

 

Adjustment

 

As Revised

 

As Previously Reported

 

Adjustment

 

As Revised

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in other operating assets, net

 

$

(3,679)

 

$

200 

 

$

(3,479)

 

$

(3,039)

 

$

200 

 

$

(2,839)

(Decrease) increase in accounts payable and other accrued liabilities

 

 

(4,006)

 

 

2,849 

 

 

(1,157)

 

 

(4,310)

 

 

1,351 

 

 

(2,959)

Net cash provided by operating activities

 

 

16,533 

 

 

3,049 

 

 

19,582 

 

 

7,473 

 

 

1,551 

 

 

9,024 

Cash flows used by investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

(5,286)

 

 

(2,849)

 

 

(8,135)

 

 

(4,611)

 

 

(1,351)

 

 

(5,962)

Net cash used by investing activities

 

 

(7,259)

 

 

(2,849)

 

 

(10,108)

 

 

(5,289)

 

 

(1,351)

 

 

(6,640)

Cash flows used by financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term borrowings - loan

 

 

19,600 

 

 

(200)

 

 

19,400 

 

 

10,500 

 

 

(200)

 

 

10,300 

Net cash used by financing activities

 

 

(17,705)

 

 

(200)

 

 

(17,905)

 

 

(8,776)

 

 

(200)

 

 

(8,976)

9


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31, 2012

 

Year Ended
September 30, 2012

(Dollars in Thousands)

 

As Previously Reported

 

Adjustment

 

As Revised

 

As Previously Reported

 

Adjustment

 

As Revised

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Decrease) increase in accounts payable and other accrued liabilities

 

$

(5,775)

 

$

1,812 

 

$

(3,963)

 

$

3,982 

 

$

(677)

 

$

3,305 

Net cash provided by operating activities

 

 

2,340 

 

 

1,812 

 

 

4,152 

 

 

37,517 

 

 

(677)

 

 

36,840 

Cash flows used by investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

(1,902)

 

 

(1,812)

 

 

(3,714)

 

 

(15,196)

 

 

677 

 

 

(14,519)

Net cash used by investing activities

 

 

(2,355)

 

 

(1,812)

 

 

(4,167)

 

 

(126,133)

 

 

677 

 

 

(125,456)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended
September 30, 2011

(Dollars in Thousands)

 

As Previously Reported

 

Adjustment

 

As Revised

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

(Decrease) increase in accounts payable and other accrued liabilities

 

$

(323)

 

$

492 

 

$

169 

Net cash provided by operating activities

 

 

31,237 

 

 

492 

 

 

31,729 

Cash flows used by investing activities:

 

 

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

(12,923)

 

 

(492)

 

 

(13,415)

Net cash used by investing activities

 

 

(17,349)

 

 

(492)

 

 

(17,841)

 

(2)Recent Accounting Pronouncements

 

In February 2013, the FASB issued new guidance on the presentation of comprehensive income. This guidance requires reclassification adjustments from other comprehensive income to be presented either in the financial statements or in the notes to the financial statements. The standard would not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the guidance would require an entity to provide enhanced disclosures to present separately by component reclassifications out of accumulated other comprehensive income. This guidance was adopted by the Company in the first quarter of fiscal 2014.  The adoption did not have a material impact on its consolidated financial statements.  

 

In March 2013, the FASB issued an accounting update that clarifies the applicable guidance for the release of the cumulative translation adjustment when an entity ceases to have a controlling financial interest in a subsidiary or a group of assets that is a business within a foreign entity.  The guidance outlines the events when cumulative translation adjustments should be released into net income and is intended by FASB to eliminate some disparity in current accounting practice.  This guidance was adopted by the Company in the first quarter of fiscal 2014.  The adoption did not have a material impact on its consolidated financial statements.

 

In July 2013, the FASB issued new guidance to reduce the diversity in presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit

10


carryforward exists. This requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions listed in the guidance.  This guidance is effective for the Company in the first quarter of fiscal 2015.  The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

 

8


(3)Fair Value Measurements

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market.  Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities.  A fair value hierarchy with three tiers has been established to prioritize the inputs to valuation techniques used to measure fair value.  The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.  Level 1 inputs include quoted prices in active markets for identical assets and liabilities.  Level 2 inputs consist of observable inputs other than quoted prices in active markets or indirectly observable through corroboration with observable market data.  Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances.

 

As of DecemberMarch 31, 20132014 and September 30, 2013, the Company’s financial assets measured and recorded at fair value on a recurring basis were comprised of investments in trading securities, which are reported in other long-term assets.  The investments are held in a Rabbi trust for benefits under the Company’s deferred compensation plan.  Under the plan, participants designate investment options to serve as the basis for measurement of the notional value of their accounts.  The investments include a money market fund and mutual funds that are publicly traded.  The fair values of the shares or underlying securities of these funds are based on quoted market prices and, therefore, are categorized as Level 1 in the fair value hierarchy.

 

Financial assets measured at fair value on a recurring basis are summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at DecemberMarch 31, 20132014 Using

 

Quoted Prices in Active Markets for Identical Assets (Level
(Level 1)

 

Significant Other Observable Inputs (Level 2)

 

Significant Unobservable Inputs
(Level 3)

Asset Category

 

 

 

 

 

 

 

 

Cash equivalents

$

118114 

 

$

 -

 

$

 -

Mutual funds

 

3,4733,445 

 

 

 -

 

 

 -

Total financial assets at fair value

$

3,5913,559 

 

$

 -

 

$

 -

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at September 30, 2013 Using

 

Quoted Prices in Active Markets for Identical Assets (Level
(Level 1)

 

Significant Other Observable Inputs (Level 2)

 

Significant Unobservable Inputs
(Level 3)

Asset Category

 

 

 

 

 

 

 

 

Cash equivalents

$

55 

 

$

 -

 

$

 -

Mutual funds

 

2,922 

 

 

 -

 

 

 -

Total financial assets at fair value

$

2,977 

 

$

 -

 

$

 -

 

911

 


 

 

As of DecemberMarch 31, 2013,2014, the carrying amount of the Company’s long-term debt, which is categorized as Level 12 in the fair value hierarchy, approximated fair value as the stated interest rates were variable in relation to prevailing market rates.

 

(4)Income per Common Share

 

Basic net income per share was computed by dividing net income available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period.  Diluted net income per share was computed by dividing net income available to common stockholders for the period by the weighted average number of shares of common stock that would have been outstanding assuming dilution from stock-based compensation awards during the period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

(Dollars in Thousands, Except per Share)

2013

 

2012

Basic Net Income per Share:

 

 

 

 

 

 

Net income attributed to Landauer, Inc.

 

$

3,051 

 

$

4,877 

Less:  Income allocated to unvested restricted stock

 

 

46 

 

 

31 

Net income available to common stockholders

 

$

3,005 

 

$

4,846 

Basic weighted average shares outstanding

 

 

9,422 

 

 

9,336 

Net income per share - Basic

 

$

0.32 

 

$

0.52 

 

 

 

 

 

 

 

Diluted Net Income per Share:

 

 

 

 

 

 

Net income attributed to Landauer, Inc.

 

$

3,051 

 

$

4,877 

Less:   Income allocated to unvested restricted stock

 

 

46 

 

 

31 

Net income available to common stockholder

 

$

3,005 

 

$

4,846 

Basic weighted average shares outstanding

 

 

9,422 

 

 

9,336 

Effect of dilutive securities

 

 

45 

 

 

49 

Diluted weighted averages shares outstanding

 

 

9,467 

 

 

9,385 

Net income per share - Diluted

 

$

0.32 

 

$

0.52 

On December 3, 2013 and February 21, 2014, the Company declared a regular quarterly cash dividend in the amount of $0.55 per share for the fourthfirst and second quarter of fiscal 2013. The dividends were paid on January 6, 2014, to shareholders of record as of December 23, 2013.  respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

Six Months Ended
March 31,

(Dollars in Thousands, Except per Share)

2014

 

2013

 

2014

 

2013

Basic Net Income per Share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributed to Landauer, Inc.

 

$

4,997 

 

$

5,153 

 

$

8,048 

 

$

10,030 

Less:  Income allocated to unvested restricted stock

 

 

46 

 

 

43 

 

 

91 

 

 

75 

Net income available to common stockholders

 

$

4,951 

 

$

5,110 

 

$

7,957 

 

$

9,955 

Basic weighted average shares outstanding

 

 

9,460 

 

 

9,417 

 

 

9,441 

 

 

9,391 

Net income per share - Basic

 

$

0.52 

 

$

0.54 

 

$

0.84 

 

$

1.06 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Net Income per Share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributed to Landauer, Inc.

 

$

4,997 

 

$

5,153 

 

$

8,048 

 

$

10,030 

Less:   Income allocated to unvested restricted stock

 

 

46 

 

 

43 

 

 

91 

 

 

75 

Net income available to common stockholder

 

$

4,951 

 

$

5,110 

 

$

7,957 

 

$

9,955 

Basic weighted average shares outstanding

 

 

9,460 

 

 

9,417 

 

 

9,441 

 

 

9,391 

Effect of dilutive securities

 

 

41 

 

 

45 

 

 

44 

 

 

47 

Diluted weighted averages shares outstanding

 

 

9,501 

 

 

9,462 

 

 

9,485 

 

 

9,438 

Net income per share - Diluted

 

$

0.52 

 

$

0.54 

 

$

0.84 

 

$

1.05 

 

 

(5)Employee Benefit Plans

 

The components of net periodic benefit cost for pension and other benefits were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

Three Months Ended December 31,

Three Months Ended
March 31,

 

Six Months Ended
March 31,

2013

 

2012

2014

 

2013

 

2014

 

2013

Interest cost

$

375 

 

$

340 

$

375 

 

$

340 

 

$

750 

 

$

680 

Expected return on plan assets

 

(377)

 

 

(365)

 

(377)

 

 

(365)

 

 

(754)

 

 

(730)

Amortization of net loss

 

48 

 

 

108 

 

49 

 

 

108 

 

 

97 

 

 

216 

Net periodic benefit cost

$

46 

 

$

83 

$

47 

 

$

83 

 

$

93 

 

$

166 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Benefits

Three Months Ended December 31,

Three Months Ended
March 31,

 

Six Months Ended
March 31,

2013

 

2012

2014

 

2013

 

2014

 

2013

Service cost

$

15 

 

$

17 

$

16 

 

$

17 

 

$

31 

 

$

34 

Interest cost

 

13 

 

 

12 

 

12 

 

 

11 

 

 

25 

 

 

23 

Amortization of net (gain) loss

 

(3)

 

 

 -

Amortization of net gain

 

(3)

 

 

 -

 

 

(6)

 

 

 -

Net periodic benefit cost

$

25 

 

$

29 

$

25 

 

$

28 

 

$

50 

 

$

57 

 

1012

 


 

 

The Company, under the IRS minimum funding standards, has no required contributions to make to its defined benefit pension plan during fiscal 2014.

 

The Company maintains 401(k) Retirement Savings Plans for certain employees, which may provide for employer matching contributions, and a supplemental defined contribution plan for certain executives, which provides for employer contributions at the discretion of the Company.  Amounts expensed for Company contributions under these plans during the first three months of fiscalended March 31, 2014 and 2013 were $458$401 and $371,$430, respectively.

  Amounts expensed during the six months ended March 31, 2014 and 2013 were $859 and $801, respectively.

 

(6)Goodwill and Other Intangibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Radiation Measurement

 

Medical
Physics

 

Medical
Products

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of September 30, 2013

 

$

20,456 

 

$

22,611 

 

$

41,369 

 

$

84,436 

Increase related to acquisitions, net
of subsequent  adjustments for
deferred taxes

 

 

 -

 

 

 -

 

 

2,019 

 

 

2,019 

Effects of foreign currency

 

 

74 

 

 

 

 

 

 

 

 

74 

Accumulated goodwill impairment charges

 

 

 

 

 

 

 

 

 

 

 

 -

Goodwill, net as of December 31, 2013

 

$

20,530 

 

$

22,611 

 

$

43,388 

 

$

86,529 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Radiation Measurement

 

Medical
Physics

 

Medical
Products

 

Total

Balance as of September 30, 2013

 

$

20,456 

 

$

22,611 

 

$

41,369 

 

$

84,436 

Increase related to acquisitions

 

 

 -

 

 

 -

 

 

1,781 

 

 

1,781 

Effects of foreign currency

 

 

158 

 

 

 -

 

 

 

 

167 

Goodwill, net as of March 31, 2014

 

$

20,614 

 

$

22,611 

 

$

43,159 

 

$

86,384 

 

On December 23rd, 2013, the Company acquired a small German distributor on behalf of the Medical Products segment.  The preliminary purchase price allocation indicates an increase in customer lists of $772 and$768, an increase in goodwill of $2,019.$1,781 and an earn-out liability of $885.

   

Intangible assets were as follows for the years ended December  31, were as follows:periods ended:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

 

March 31, 2014

 

 

September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Gross
Carrying
Amount

 

Accumulated
Amortization

Customer lists

 

$

44,865 

 

$

12,676 

 

$

43,954 

 

$

11,639 

 

$

44,925 

 

$

13,562 

 

$

43,954 

 

$

11,639 

Trademarks and tradenames

 

 

2,156 

 

 

451 

 

 

2,154 

 

 

400 

 

 

2,174 

 

 

502 

 

 

2,154 

 

 

400 

Licenses and patents

 

 

4,214 

 

 

1,106 

 

 

4,080 

 

 

1,009 

 

 

4,348 

 

 

1,205 

 

 

4,080 

 

 

1,008 

Other intangibles

 

 

577 

 

 

557 

 

 

577 

 

 

557 

 

 

577 

 

 

557 

 

 

577 

 

 

557 

Intangible assets

 

$

51,812 

 

$

14,790 

 

$

50,765 

 

$

13,605 

 

$

52,024 

 

$

15,826 

 

$

50,765 

 

$

13,604 

 

Identifiable intangible assets with finite lives are amortized over their estimated useful lives.  Intangible assets amortization expenses were $1,037 and $2,222 for the three and six months ended March 31, 2014 and $839 and $1,698 for the three and six months ended March 31, 2013.

 

(7)Accumulated Other Comprehensive (Loss) Income (Loss)

 

Accumulated elements of other comprehensive (loss) income (loss) (“AOCI”), net of tax, are included in the stockholders’ equity section of the condensed consolidated balance sheets.  Changes in each component of AOCI are as follows:

 

1113

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Translation Adjustments

 

Pension and Postretirement Plans, net of tax

 

Total

Foreign Currency Translation Adjustments

 

Pension and Postretirement Plans, net of tax

 

Total

Balance at September 30, 2013

$

(178)

 

$

(4,278)

 

$

(4,456)

$

(178)

 

$

(4,278)

 

$

(4,456)

Other comprehensive income before reclassifications

 

(256)

 

 

 -

 

 

(256)

 

153 

 

 

 -

 

 

153 

Amounts reclassified from accumulated other comprehensive income

 

 -

 

 

165 

 

 

165 

 

 -

 

 

211 

 

 

211 

Net current period other comprehensive income

 

(256)

 

 

165 

 

 

(91)

 

153 

 

 

211 

 

 

364 

Balance at December 31, 2013

$

(434)

 

$

(4,113)

 

$

(4,547)

Balance at March 31, 2014

$

(25)

 

$

(4,067)

 

$

(4,092)

 

Reclassifications out of accumulated other comprehensive (loss) income (loss) included in the computation of net periodic benefit costs (refer to Note 5 of the Notes to Consolidated Financial Statements for additional details regarding employee benefit plans) waswere as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension and Postretirement Plans

Three Months Ended December 31,

Three Months Ended
March 31,

 

Six Months Ended
March 31,

2013

 

2012

2014

 

2013

 

2014

 

2013

Amortization of net loss

$

45 

 

$

108 

$

46 

 

$

108 

 

$

91 

 

$

216 

Provision for income taxes

 

120 

 

 

 -

 

 -

 

 

 -

 

 

120 

 

 

 -

Total net of tax

$

165 

 

$

108 

$

46 

 

$

108 

 

$

211 

 

$

216 

 

(8)Segment Information

 

During the first fiscal quarter of 2014, the Company changed the presentation of its reporting segments to separately disclose certain ‘corporate expenses’ that had previously been reported within the Radiation Measurement segment.  As a result, the current segment disclosures will reflect three reporting segments: Radiation Measurement, Medical Physics, Medical Products and one functional group: Corporate.  The following tables summarize financial information for each reportable segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

Six Months Ended
March 31,

 

 

2014

 

2013

 

2014

 

2013

Revenues by segment:

 

 

 

 

 

 

 

 

 

 

 

 

Radiation Measurement

 

$

29,184 

 

$

27,249 

 

$

56,925 

 

$

53,652 

Medical Physics

 

 

8,029 

 

 

7,598 

 

 

15,768 

 

 

15,187 

Medical Products

 

 

2,341 

 

 

2,235 

 

 

4,566 

 

 

4,924 

Consolidated revenues

 

$

39,554 

 

$

37,082 

 

$

77,259 

 

$

73,763 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

Six Months Ended
March 31,

 

 

2014

 

2013

 

2014

 

2013

Operating income (loss) by segment:

 

 

 

 

 

 

 

 

 

 

 

 

Radiation Measurement

 

$

10,301 

 

$

10,141 

 

$

18,880 

 

$

19,573 

Medical Physics

 

 

600 

 

 

732 

 

 

1,033 

 

 

1,524 

Medical Products

 

 

(174)

 

 

304 

 

 

(612)

 

 

974 

Corporate

 

 

(3,362)

 

 

(4,023)

 

 

(6,911)

 

 

(8,190)

Consolidated operating income

 

$

7,365 

 

$

7,154 

 

$

12,390 

 

$

13,881 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

2013

 

2012

Revenues by segment:

 

 

 

 

 

 

Radiation Measurement

 

$

27,741 

 

 

26,403 

Medical Physics

 

 

7,739 

 

 

7,589 

Medical Products

 

 

2,225 

 

 

2,689 

Consolidated revenues

 

$

37,705 

 

 

36,681 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

2013

 

2012

Operating income (loss) by segment:

 

 

 

 

 

 

Radiation Measurement

 

$

8,579 

 

 

9,432 

Medical Physics

 

 

433 

 

 

792 

Medical Products

 

 

(438)

 

 

670 

Corporate

 

 

(3,549)

 

 

(4,167)

Consolidated operating income

 

$

5,025 

 

 

6,727 

 

 

1214


(9)Related Party Transactions

The Company has a minority interest in Yamasato, Fujiwara, Higa & Associates, Inc. doing business as Aquila.  The Company provides dosimetry parts to Aquila for their military contract.  The sales to Aquila during the three months ended March 31, 2014 and 2013 were $681 and $1,191, respectively.  Sales during the six months ended March 31, 2014 and 2013 were $681 and $2,758, respectively.  The purchases from Aquila during the three months ended March 31, 2014 and 2013 were $253 and $0, respectively.  Purchases during the six months ended March 31, 2014 and 2013 were $253 and $27, respectively.

The Company has a 50% equity interest in Nagase-Landauer, Ltd. (“Nagase”), a radiation measurement company in Japan.  The sales to Nagase during the three months ended March 31, 2014 and 2013 were $284 and $67, respectively.  Sales during the six months ended March 31, 2014 and 2013 were $621 and $236, respectively.  The purchases from Nagase during the three months ended March 31, 2014 and 2013 were $319 and $881, respectively.  Purchases during the six months ended March 31, 2014 and 2013 were $801 and $1,738, respectively.

15

 


 

 

Item Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of ourthe Company’s unaudited consolidated financial condition and results of operations should be read in conjunction with ourthe annual audited consolidated financial statements and related notes thereto. The following discussion includes forward-looking statements that involve certain risks and uncertainties. For additional information regarding forward-looking statements and risk factors, see “Forward-Looking Statements” herein and Item 1A. “Risk Factors” in ourthe Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013.

 

The preparation of financial statements in conformity with GAAP requires that management make assumptions and estimates that affect the results of operations and the amounts of assets and liabilities reported in the financial statements as well as related disclosures.  Critical accounting policies are those that are most important to the portrayal of a company’s financial condition and results, and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.  We base ourThe Company bases their estimates, judgments and assumptions on historical experience and other relevant factors that are believed to be reasonable under the circumstances. In any given reporting period, ourthe Company’s actual results may differ from the estimates, judgments and assumptions used in preparing ourthe consolidated financial statements. 

 

Goodwill and Other Intangible Assets

 

ThereAs of March 31, 2014, the Medical Products reporting unit had a goodwill balance of $43.2 million. The annual impairment testing of goodwill, as required by GAAP, was no provision for impairment charges duringperformed in the first three monthsfourth quarter of fiscal 2014year 2013, based on fair values and fiscal 2013, respectively.net carrying values. The Company will continue to evaluate goodwill and other identified intangible assets for impairment. Goodwill and other identified intangible assets are material componentsestimated fair value of the Company’s financial statements and impairment charges to the Company’s goodwill or other identified intangible assets in future periods could be material to the Company’s resultsCompany's Medical Products business exceeded its carrying value by less than 10%  as of operations. 

September 30, 2013.  While historical performance and current expectations have resulted in fair values of goodwill and other identified intangible assets in excess of carrying values, if ourthe Company’s assumptions are not realized, it is possible that in the future an additional impairment charge may need to be recorded. However, it is not possible at this time to determine if an impairment charge would result or if such a charge would be material.  The Company will continue to monitor the recoverability of its remaining goodwill.

 

For a detailed discussion of the Company’s critical accounting policies, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in ourthe Annual Report on Form 10-K for the year ended September 30, 2013.

 

Results of Operations

Comparison of the firstsecond fiscal quarter ended DecemberMarch 31, 20132014 and the firstsecond fiscal quarter ended DecemberMarch 31, 20122013

 

Revenues for the firstsecond fiscal quarter of 2014 were $37.7$39.5 million, an increase of $1.0$2.4 million, or 2.7%6.5%, compared with revenues of $36.7$37.1 million for the firstsecond fiscal quarter of 2013. The Radiation Measurement segment experienced an increase of $1.4$1.9 million, due primarily to a $1.1$2.2 million increase in revenue from international operations.operations offset by a decrease in domestic revenues of $0.3 million.  Medical ProductsPhysics segment revenues decreasedincreased by $0.5$0.4 million due primarily to the decline in the Spherz selling price and shipments.increased imaging services.  

 

Cost of sales for the firstsecond fiscal quarter of 2014 was $18.2$18.3 million, an increase of $1.6$1.3 million, or 9.6%7.6%, compared with cost of sales of $16.6$17.0 million for the firstsecond fiscal quarter of 2013. The cost of sales increase was due primarily to increased international expenses of $0.4$0.9 million as a result of increased international sales an increase in material costs of $0.5 million and an increase in service costs of $0.3 million.

$0.6 million on higher startup costs in new regions for Medical Physics, offset by decreased labor costs of $0.4 million due primarily to lower benefit costs.

1316

 


 

 

Selling, general and administrative expenses for the firstsecond fiscal quarter of 2014 were $14.5$13.7 million, an increase of $1.1 million, or 8.2%8.7%, compared with operating expenses of $13.4$12.6 million for the firstsecond fiscal quarter of 2013. The selling, general and administrative expense increase was due primarily to $1.0 million of increased research and development expenses of $0.5 million, primarily attributed to advancement of ourthe Company’s next generation dosimetry platform, $0.4an increase in amortization costs of $0.3 million,  an increase in increased amortization expense and $0.2payroll of $0.3 million, in increased payroll largely due to new personnel, an increase in international costs of $0.2 million and an increase in professional fees of $0.2 million, offset by $0.5a decrease in outside services of $0.4 million of reduced stock compensation expense from revised estimates consistent with the company’s fiscal 2014 guidance.related to customer service support.

 

Operating income for the firstsecond fiscal quarter of 2014 was $5.0$7.4 million, a decreasean increase of $1.7$0.2 million, or 25.4%2.8%, compared with operating income of $6.7$7.2 million for the firstsecond fiscal quarter of 2013. The decreaseincrease was related to increased revenue of $2.4 million and $0.4 million of reduced outside customer service support, offset by an increase in operating income was due tocosts of sales of $1.3 million and increased research and development costs of $1.0 million, a $0.5 decrease in Spherz revenue, an increase in material costs of $0.5 million, an increase in amortization costs, of $0.4$0.3 million, due to revised intangible lifean adjustment to useful lives and an increase in services andservice costs of $0.6 million, payroll costs of $0.5$0.2 million, offset by $0.7an increase in international costs of $0.2 million and an increase in professional fees of increased international operating income and $0.5 million of reduced stock compensation expense from revised estimates.$0.2 million.

 

Equity in income of joint ventures for the firstsecond fiscal quarter of 2014 was $0.6$0.5 million, a decrease of $0.9$0.1 million, or 60.0%16.7%, from the prior year firstsecond fiscal quarter amount of $1.5$0.6 million, due primarily to decreases of equipment shipments of the RadWatch product largely related with services and associated timing of military funding of defense department budgets.negative foreign exchange impact on equity earnings from Nagase-Landauer in Japan.

 

The effective tax rate for the firstsecond fiscal quarter of 2014 and 2013 was 31.5%28.2% and 31.1%23.6%, respectively.    The increase in the effective tax rate was due primarily to a true-up of a prior year pension adjustment.the research and development credit not being retroactively reenacted as it was in fiscal 2013.

 

Net income attributable to Landauer for the firstsecond fiscal quarter of 2014 was $3.1$5.0 million, a decrease of $1.8$0.2 million, or 36.7%3.8%, compared with net income of $4.9$5.2 million in the firstsecond fiscal quarter of 2013.  The decrease in net income was dueprimarily related to an increase inincreased research and development costs of $1.0 million, a decrease in equity earnings due to timing of $0.9 million,  a $0.5 million decrease in Spherz revenue, an increase in material costs of $0.5 million, an increase in amortization costs, of $0.4$0.3 million, due to an adjustment to useful lives and an increase in services of $0.6 million, payroll costs of $0.3 million, an increase in international costs of $0.2 million and an increase in servicesprofessional fees of $0.2 million, other income decrease of $0.2 million and payroll costsincreased taxes of $0.5$0.3 million, offset by $0.7a net gross margin benefit on increased sales of $1.1 million in international operating income, a decrease of $0.8 million in income taxes and $0.5$0.4 million of reduced stock compensation expense from revised estimates.outside customer services support.

 

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the firstsecond fiscal quarter of 2014 were $9.2$11.6 million compared with $11.5$11.3 million for the firstsecond fiscal quarter of 2013. The declineincrease was due primarily to lower income, lower provision for income taxes offset by slightlyincreased revenue and gross profit outpacing higher depreciation.selling, general and administrative expense. A reconciliation of net income to EBITDA and Adjusted EBITDA is included herein under this Item 2.

 

Change in Segment Presentation

 

During the first fiscal quarter of 2014, the Company changed the presentation of its reporting segments to separately disclose certain ‘corporate expenses’ that had previously been reported within the Radiation Measurement segment.  As a result, the current segment disclosures will reflect three reporting segments: Radiation Measurement, Medical Physics, Medical Products and one functional group: Corporate.

 

Radiation Measurement Segment

 

Radiation Measurement revenues for the firstsecond fiscal quarter of 2014 were $27.7$29.2 million, an increase of $1.4$1.9 million, or 5.3%7.0%, from the firstsecond fiscal quarter of 2013 of $26.4$27.3 million. The $1.4$1.9 million increase in the fiscal quarter was due primarily to increases in revenues from both equipment and measurement services at international subsidiaries.  Operating income fornon-recurring service revenue to Health Canada and equipment sales in the first fiscal quarter of 2014EMEA region, and increases

1417

 


 

 

was $8.6in measurement services at international subsidiaries of $2.2 million, aoffset by domestic business decrease of $0.9$0.3 million due largely to lower military Radwatch revenues.  Operating income for the second fiscal quarter of 2014 was $10.3 million, an increase of $0.2 million, or 9.6%2.0%, compared to operating income of $9.4$10.1 million for the firstsecond fiscal quarter of 2013. The decreaseincrease in operating income was due to increased revenue of $1.9 million, offset by increased costs of sales of $0.6 million, increased research and development expenses of $1.0$0.4 million, primarily attributed to advancement of ourthe Company’s next generation dosimeter and increased materials expensesemployee costs due primarily to new personnel of $0.3$0.5 million offset byand increased international operating incomecosts of $0.7$0.2 million.

 

Medical Physics Segment

 

Medical Physics revenues for the firstsecond fiscal quarter of 2014 were $7.7$8.0 million, an increase of $0.1$0.4 million, or 1.3%5.3%, as compared to $7.6 million for the firstsecond fiscal quarter of 2013. The increase in revenue is primarily attributable to increased imaging services.  Medical Physics operating income for the firstsecond fiscal quarter of 2014 was $0.4$0.6 million, or 5.2%7.5% of revenues, as compared to $0.8$0.7 million, or 10.5%9.2% of revenues, in the firstsecond fiscal quarter of 2013.  The decrease in operating income was partially due to increased staffing in support of the continued advancement of itsthe segment’s system-sell initiativesinitiatives.

Medical Products Segment

Medical Products revenues for the second fiscal quarter of 2014 were $2.3 million, an increase of $0.1 million, or 4.5%, compared to $2.2 million for the second fiscal quarter of 2013.  Operating loss for the second fiscal quarter of 2014 was $0.2 million, a decrease of $0.5 million, as compared to operating income of $0.3 million for the second fiscal quarter of 2013. The decrease is due primarily to an increase in costs related to a mix in revenue of $0.3 million and previously unallocatedincreased amortization of $0.3 million.

Corporate Selling, General and Administrative Expenses

Corporate selling, general and administrative expenses reflect costs associated with supporting the entire Company, including executive management and administrative functions such as accounting, treasury, legal, human resources, and information technology management, as well as other costs required to support the Company.  Corporate expenses for the second fiscal quarter of 2014 were $3.4 million, a decrease of $0.6 million as compared to $4.0 million in the second fiscal quarter of 2013.  The decrease was due primarily to reduced employee incentives of $0.2 million and the allocation of staffing to support segment initiatives.

Comparison of the six months ended March 31, 2014 and the six months ended March 31, 2013

Revenues for the first six months of fiscal 2014 were $77.3 million, an increase of $3.5 million, or 4.7%, compared with revenues of $73.8 million for the first six months of fiscal 2013. The Radiation Measurement segment experienced an increase of $3.2 million, due primarily to an increase in revenue from international operations.  Medical Physics segment revenues increased by $0.6 million due primarily to increased imaging services, offset by decreased Medical Products revenue of $0.3 million as a result of decreased Spherz pricing and shipments.

Cost of sales for the first six months of fiscal 2014 was $36.6 million, an increase of $3.0 million, or 8.9%, compared with cost of sales of $33.6 million for the first six months of fiscal 2013. The cost of sales increase was due primarily to increased international expenses of $1.3 million as a result of increased international sales, an increase in service costs of $1.0 million on higher startup costs in new regions for Medical Physics and $0.7 million of IT platform expenses, offset by decreased labor costs of $0.7 million due primarily to lower benefit costs.

Selling, general and administrative expenses for the first six months of fiscal 2014 were $28.1 million, an increase of $2.1 million, or 8.1%, compared with operating expenses of $26.0 million for the

18


first six months of fiscal 2013. The selling, general and administrative expense increase was due primarily to increased research and development expenses of $1.6 million, primarily attributed to advancement of the Company’s next generation dosimetry platform, an increase in amortization costs of $0.7 million, an increase in professional fees of $0.5 million and increased international costs of $0.2 million, offset by $1.1 million of reduced outside services related to prior year customer service support.

Operating income for the first six months of fiscal 2014 was $12.4 million, a decrease of $1.5 million, or 10.8%, compared with operating income of $13.9 million for the first six months of fiscal 2013. The decrease was due primarily to changesincreased research and development expenses of $1.6 million, primarily attributed to advancement of the Company’s next generation dosimetry platform, an increase in segment presentation.amortization costs of $0.7 million,  an increase in professional fees of and an increase in international costs of $0.2 million, offset by $1.1 million of reduced outside services related to prior year customer service support and increased gross margins of $0.5 million on increased revenues, reduced by increased cost of goods and services.

Equity in income of joint ventures for the first six months of fiscal 2014 was $1.1 million, a decrease of $1.0 million from the prior fiscal year’s first six months amount of $2.1 million, due primarily to decreases in sales of a joint venture partner unrelated to the Company’s Radwatch radiation measurement products.

The effective tax rate for the first six months of fiscal 2014 and 2013 was 29.6% and 27.5%, respectively.  The increase in the effective tax rate was due primarily to the research and development credit not being retroactively reenacted as it was in fiscal 2013.

Net income attributable to Landauer for the first six months of fiscal 2014 was $8.0 million, a decrease of $2.0 million, or 20.0%, compared with net income of $10.0 million in the first six months of fiscal 2013.  The decrease was due to increased research and development costs of $1.6 million, an increase in amortization costs, of $0.7 million, due to an adjustment to useful lives,  equity income decrease of $1.0 million, offset by reduced outside customer service support of  $1.1 million and decreased taxes on lower income of $0.5 million.

EBITDA for the first six months of fiscal 2014 were $20.8 million compared with $22.8 million for the first six months of fiscal 2013. The decrease was due primarily to increased research and development expenses. A reconciliation of net income to EBITDA and Adjusted EBITDA is included herein under this Item 2.

Radiation Measurement Segment

Radiation Measurement revenues for the first six months of fiscal 2014 were $56.9 million, an increase of $3.2 million, or 6.0%, from the first six months of fiscal 2013 of $53.7 million. The $2.7 million increase in the first six months of fiscal 2014 was due primarily to increases in revenues from both equipment and measurement services at international subsidiaries of $3.3 million.  Operating income for the first six months of fiscal 2014 was $18.9 million, a decrease of $0.7 million, or 3.6%, compared to operating income of $19.6 million for the first six months of fiscal 2013. The decrease in operating income was due to increased costs of sales of $1.5 million, increased research and development expenses of $1.5 million primarily attributed to advancement of the Company’s next generation dosimeter and increased employee costs, due primarily to new personnel, of $0.9 million, increase in professional fees of $0.3 million, increased amortization costs of $0.2 million and increased international costs of $0.2 million, offset by $3.2 million of higher revenue and $1.0 million of reduced outside services related to prior year customer service support.

Medical Physics Segment

Medical Physics revenues for the first six months of fiscal 2014 were $15.8 million, an increase of $0.6 million, or 3.9%, as compared to $15.2 million for the first six months of fiscal 2013. The increase

19


in revenue is primarily attributable to increased imaging services.  Medical Physics operating income for the first six months of fiscal 2014 was $1.0 million, or 6.3% of revenues, as compared to $1.5 million, or 9.9% of revenues, in the first six months of fiscal 2013.  The decrease in operating income was partially due to increased staffing in support of the continued advancement of the segment’s system-sell initiatives.

 

Medical Products Segment

 

Medical Products revenues for the first six months of fiscal quarter of 2014 were $2.2$4.6 million, a decrease of $0.5$0.3 million, or 18.5%6.1%, compared to $2.7$4.9 million for the first six months of fiscal quarter2013.  The decrease in revenues of 2013.$0.3 million is due primarily to the decline in the Spherz selling price and shipments.  Operating loss for the first six months of fiscal quarter of 2014 was $0.4$0.6 million, a decrease of $1.1$1.6 million, as compared to operating income of $0.7$1.0 million for the first six months of fiscal quarter of 2013. The decrease is due primarily to a decrease in revenue of $0.5$0.3 million, an increase in amortizationcosts related to a mix in revenue of $0.4$0.5 million and increased materialamortization costs of $0.2$0.7 million.

 

Corporate Selling, General and Administrative Expenses

 

Corporate selling, general and administrative expenses reflect costs associated with supporting the entire Company, including executive management and administrative functions such as accounting, treasury, legal, human resources, and information technology management, as well as other costs required to support the Company.  Corporate expenses for the first six months of fiscal quarter of 2014 were $3.6$6.9 million, a decrease of $0.6$1.3 million as compared to $4.2$8.2 million in the first six months of fiscal quarter of 2013.  The decrease was due primarily to $0.5reduced employee incentives of $0.9 million and the allocation of reduced stock compensation expense from revised estimates consistent with the company’s fiscal 2014 guidance.staffing to support segment initiatives.

 

Fiscal 2014 Revised Outlook

 

Landauer’s business plan for fiscal 2014 currently anticipates aggregate revenues for the year to be in the range of $140.0 to $160.0 million, and reflects the uncertainty of government funding during fiscal 2014 related to the military equipment sales opportunities the Company has developed.  The Company also anticipates that the effective tax rate for the full fiscal year will now be within a range of 28%29% to 32%31%.

 

Based upon the above assumptions, the Company anticipates reported net income for fiscal 2014 in the range of $16.0 to $18.0 million, and revised Adjusted EBITDA for fiscal 2014 in the range of $46.0$44.0 to $49.0$47.0 million.

 

Liquidity and Capital Resources

 

Cash provided by operations was $10.0$20.2 million and $2.3$9.0 million infor the first six months of fiscal quarter of 2014 and 2013, respectively. The increase was due primarily to a $5.5$4.4 million increase in receivable collections as a result of system go-live normalization following the Company’s IT platform enhancement and other favorable working capital changes of $2.2$4.7 million.

 

15


Cash used by investing activities for the first six months of fiscal quarter of 2014 was $3.6$5.1 million compared to the prior fiscal year’s first fiscal quartersix months amount of $2.4$6.6 million. The primary difference was due to a reduction in capital spending, partially offset by a small acquisition of a German distributor on behalf of the Medical Products segment for $1.8 million.  

 

Financing activities for the first six months of fiscal quarter of 2014 were comprised primarily of long-term borrowings onunder the credit agreement of $14.0$20.0 million compared to the previous fiscal year’s first fiscal quartersix months borrowings of $4.3$10.3 million, offset by $13.0$24.5 million of repayments in the first six months of fiscal quarter of 2014 and no$8.6 million of repayments in the previous fiscal year’s first fiscal quarter.  Thesix months.  As of March 31, 2014, the Company had $31.0$36.7 million of unused availability under its current $175.0 million credit

20


facility, which provides adequate liquidity to meet its current and anticipated obligations. During the first six months of fiscal quarter of 2014 and 2013, the Company funded cash dividends of $5.3$10.5 million and $5.2$10.4 million, respectively, or $0.55 per share, for cash dividends declared in eachthe fourth fiscal quarter of 2013 and 2012.2012 and the first fiscal quarter of 2014 and 2013.

 

The Company expects to meet short-term liquidity requirements (including capital expenditures) through net cash from operating activities, cash on hand and, if necessary, the debt facility. As of March 31, 2014, long-term liquidity requirements consist primarily of obligations under the long-term debt obligations.  The Company does not have any required debt repayments until August 2, 2018 when the debt facility expires.

 

Non-GAAP Financial Measures

 

The tables below include financial measures of EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per Diluted Share. These are non-GAAP measures. Management believes that such measures supplement evaluations using operating income, net income, and diluted earnings per share and other GAAP measures, and are a useful indicator for investors. These indicators can help readers gain a meaningful understanding of the Company’s core operating results and future prospects without the effect of non-recurring and non-cash items and the Company’s ability to generate cash flows from operations that are available for taxes, capital expenditures, and debt repayment. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with GAAP.

 

The Company uses these non-GAAP financial measures for internal budgeting and other managerial purposes, such as when publicly providing the Company’s business outlook and as a measurement for potential acquisitions. A limitation associated with Adjusted EBITDA is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s business. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. Management compensates for these limitations by also relying on the comparable GAAP financial measure of operating income, which includes depreciation and amortization.

 

These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP, but they should not be considered a substitute for, or superior to, GAAP results. The Company intends to continue to provide these non-GAAP financial measures as part of its future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in the Company’s financial reporting.

 

21


A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is provided below:

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

Six Months Ended
March 31,

 

2014

 

2013

2014

 

2013

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

Net income attributed to Landauer, Inc.

$

4,997 

 

$

5,153 

$

8,048 

 

$

10,030 

Add back:

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

873 

 

 

976 

 

1,662 

 

 

1,908 

Depreciation and amortization

 

3,768 

 

 

3,526 

 

7,662 

 

 

6,976 

Provision for income taxes

 

1,954 

 

 

1,620 

 

3,450 

 

 

3,894 

Earnings before interest, taxes, depreciation
and amortization (EBITDA)

$

11,592 

 

$

11,275 

$

20,822 

 

$

22,808 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Non-cash stock based compensation

 

171 

 

 

382 

 

463 

 

 

1,066 

IT platform enhancements expenses

 

 -

 

 

27 

 

 -

 

 

205 

Acquisition, reorganization and nonrecurring costs

 

109 

 

 

300 

 

220 

 

 

300 

Sub-total adjustments

 

280 

 

 

709 

 

683 

 

 

1,571 

Adjusted EBITDA

$

11,872 

 

$

11,984 

$

21,505 

 

$

24,379 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

Six Months Ended
March 31,

 

2014

 

2013

2014

 

2013

Adjusted Net Income

 

 

 

 

 

 

 

 

 

 

Net income attributed to Landauer, Inc.

$

4,997 

 

$

5,153 

$

8,048 

 

$

10,030 

Sub-total adjustments

 

280 

 

 

709 

 

683 

 

 

1,571 

Income-taxes on adjustments

 

(75)

 

 

(167)

 

(202)

 

 

(432)

Adjustments, net

 

205 

 

 

542 

 

481 

 

 

1,139 

Adjusted, Net Income

$

5,202 

 

$

5,695 

$

8,529 

 

$

11,169 

Adjusted Net Income per Diluted Share

$

0.55 

 

$

0.60 

$

0.90 

 

$

1.18 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

2013

 

2012

Adjusted EBITDA

 

 

 

 

 

Net income attributed to Landauer, Inc.

$

3,051 

 

$

4,877 

Add back:

 

 

 

 

 

Interest expense, net

 

789 

 

 

932 

Depreciation and amortization

 

3,894 

 

 

3,450 

Provision for income taxes

 

1,496 

 

 

2,274 

Earnings before interest, taxes, depreciation and amortization (EBITDA)

$

9,230 

 

$

11,533 

Adjustments:

 

 

 

 

 

Non-cash stock based compensation

 

292 

 

 

684 

IT platform enhancements expenses

 

 -

 

 

178 

Acquisition and reorganization costs

 

111 

 

 

 -

Sub-total adjustments

 

403 

 

 

862 

Adjusted EBITDA

$

9,633 

 

$

12,395 

 

 

 

 

 

 

Adjusted Net Income

 

 

 

 

 

Net income attributed to Landauer, Inc.

$

3,051 

 

$

4,877 

Sub-total adjustments

 

403 

 

 

862 

Income-taxes on adjustments

 

(127)

 

 

(268)

Adjustments, net

 

276 

 

 

594 

Adjusted, Net Income

$

3,327 

 

$

5,471 

Adjusted Net Income per Diluted Share

$

0.35 

 

$

0.58 

 

 

 

 

 

 

 

Recent Accounting Pronouncements

 

See Note 2 to the Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q.

 

Contractual Obligations

 

There have been no material changes, outside of the ordinary course of business, in the Company’s outstanding contractual obligations since the end of fiscal year 2013 through DecemberMarch 31, 2013.2014.

 

Forward-Looking Statements

 

Certain matters contained in this report, including the information contained under the heading “Fiscal 2014 Outlook,” constitute forward-looking statements that are based on certain assumptions and involve certain risks and uncertainties.  These include the following, without limitation: assumptions, risks and uncertainties associated with the Company’s future performance, the Company’s development and introduction of new technologies in general; the ability to protect and utilize the Company’s intellectual property; continued customer acceptance of the InLight technology; the adaptability of optically stimulated luminescence (“OSL”) technology to new platforms and formats; military and other government funding for the purchase of certain of the Company’s equipment and services; the impact on sales and pricing of certain customer group purchasing arrangements; changes in spending or

22


reimbursement for medical products or services; the costs associated with the Company’s research and business development efforts; the usefulness of older technologies and related licenses and intellectual property; the effectiveness of and costs associated with the Company’s IT platform enhancements; the anticipated results of operations of the Company and its subsidiaries or ventures; valuation of the Company’s long-lived assets or business units relative to future cash flows; changes in pricing of services and products; changes in postal and delivery practices; the Company’s business plans; anticipated revenue

17


and cost growth; the ability to integrate the operations of acquired businesses and to realize the expected benefits of acquisitions; the risks associated with conducting business internationally; costs incurred for potential acquisitions or similar transactions; other anticipated financial events; the effects of changing economic and competitive conditions, including instability in capital markets which could impact availability of short and long-term financing; the timing and extent of changes in interest rates; the level of borrowings; foreign exchange rates; government regulations; accreditation requirements; changes in the trading market that affect the costs of obligations under the Company’s benefit plans; and pending accounting pronouncements.  These assumptions may not materialize to the extent assumed, and risks and uncertainties may cause actual results to be different from what is anticipated today.  These risks and uncertainties also may result in changes to the Company’s business plans and prospects, and could create the need from time to time to write down the value of assets or otherwise cause the Company to incur unanticipated expenses.  Additional information may be obtained by reviewing the information set forth in Item 1A “Risk Factors” and Item 7A “Quantitative and Qualitative Disclosures about Market Risk” and information contained in the Company's Annual Report on Form 10-K for the year ended September 30, 2013 and other reports filed by the Company, from time to time, with the SEC. The Company does not undertake, and expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events or changes in the Company’s expectations, except as required by law.

 

1823

 


 

 

Item 3.quantitative and Qualitative Disclosures About Market Risk

 

The Company is exposed to market risk, including changes in foreign currency exchange rates.  These risks are set forth in Item 7A “Quantitative and Qualitative Disclosures about Market Risk” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013.  The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through DecemberMarch 31, 2013.2014.

 

Item 4.Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report,March 31, 2014, an evaluation was performed under the supervision and with the participation of the Company’sour management, including theour Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) (the Company’s principal executive officer and principal financial officer, respectively), of the effectiveness of the design and operation of the Company’s disclosure“disclosure controls and proceduresprocedures” as defined in Rule 13(a)-15(e)Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended.

Based upon that evaluation, the Company’sour CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as a result of the material weakness that existed in our internal control over financial reporting described below. 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design effective controls over the preparation and review of our Consolidated Statement of Cash Flows.  Specifically, controls were not designed to ensure transactions were properly classified within the Consolidated Statement of Cash Flows, including nonrecurring transactions and adjustments pertaining to purchases of property, plant and equipment. This control deficiency resulted in an auditor adjustment for the six months ended March 31, 2014 and the revision of our consolidated financial statements for the fiscal years ended September 30, 2011, 2012, and 2013, the interim periods within fiscal 2013, and the three months ended December 31, 2013.  Additionally, this control deficiency could result in misstatements of our Consolidated Statements of Cash Flows that would result in a material misstatement of the consolidated financial statements that would not be prevented or detected on a timely basis.  Accordingly, our management has determined that this control deficiency constitutes a material weakness.

In light of the material weakness as of March 31, 2014 described above, we re-evaluated our conclusion regarding the effectiveness of our internal control over financial reporting as of September 30, 2013.  As a result of an audit adjustment identified in the Consolidated Statement of Cash Flows as of September 30, 2013 and the revision to the Consolidated Statement of Cash Flows for the year ended September 30, 2012 as disclosed in our 2013 Form 10-K filed on December 16, 2013, we had previously identified a deficiency in the controls over the preparation and review of the Consolidated Statement of Cash Flows that was not considered to be a material weakness at the time.  Given the additional errors identified in the Consolidated Statement of Cash Flows for the year ended September 30, 2013, as well as auditor adjustments in our Consolidated Statement of Cash flows for the six months ended March 31, 2014, we now consider the control deficiency identified as of September 30, 2013 were effective.to be a material weakness.  As of September 30, 2013, we did not design effective controls over the preparation and review of our Consolidated Statement of Cash Flows as described above.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

24


Notwithstanding the identified material weakness, management believes the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly state in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Plan for Remediation of the Material Weakness

In response to the material weakness described above, our management, with the oversight from our Audit Committee of the Board of Directors, has taken steps and plans to take additional measures to remediate the underlying causes of the material weakness, primarily by enhancing processes to increase the effectiveness of review over nonrecurring transactions and adjustments pertaining to purchases of property, plant, and equipment.  While we believe we will remediate the material weakness prior to filing our Annual Report on Form 10-K for the fiscal year ending September 30, 2014, we can provide no assurance at this time that management will be able to report that our internal control over financial reporting is effective as of September 30, 2014.  Until the remediation steps set forth below are fully implemented, the material weakness described above will continue to exist.

In response to the material weakness identified related to the preparation and review of the Consolidated Statements of Cash Flows in the six month period ended March 31, 2014, we have taken the following actions to improve the design of our internal control in order to remediate this weakness:

·

Enhance our checklist to identify the most common elements of investing and financing activities, including nonrecurring transactions and adjustments; and

·

Enhance our process to accurately estimate adjustments pertaining to purchases of property, plant and equipment.  We will also improve the precision of our review of adjustments made to the Consolidated Statement of Cash Flows as well as the templates and supporting schedules that support the Statement of Cash Flows.

In addition, for future reporting periods, we intend to do the following in order to remediate the material weakness:

·

Enhance our templates and supporting schedules that facilitate the preparation of the Consolidated Statement of Cash Flows.  We will also implement additional procedures for the review of these supporting schedules.

We believe these additional internal controls will be effective in remediating the material weakness related to the preparation and review of the Consolidated Statements of Cash Flows described above. As we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to address the material weakness or determine to modify the remediation plan described above.

 

Changes in Internal Control Over Financial Reporting

 

There were noAs described above, there have been changes in the Company’sour internal control over financial reporting that occurred during the quarterly periodquarter ended DecemberMarch 31, 20132014 that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.reporting .  At the time that our Annual Report on Form 10-K for the year ended September 30, 2013 was filed on December 16, 2013, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2013. Subsequent to that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of September 30, 2013 and subsequent periods through March 31, 2014 because of the material weakness in our internal control over financial reporting described above.  Subsequent to the filing of this Quarterly Report, we will file an amended Form 10-K for the fiscal year ended September 30, 2013 to revise our disclosures in Item 9A for this material weakness.

 

25


PART II  OTHER INFORMATION

 

Item 1.Legal Proceedings

 

The Company is a party, from time to time, to various legal proceedings, lawsuits and other claims arising in the ordinary course of its business.  The Company does not believe that any such litigation pending as of DecemberMarch 31, 2013,2014, if adversely determined, would have a material effect on its business, financial position, results of operations, or cash flows.

 

Item 1A.Risk Factors

 

Information regarding risk factors are set forth in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013.  The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through DecemberMarch 31, 2013.2014.

 

1926

 


 

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

 

The Company’s purchases of its equity securities from the end of the preceding fiscal year through DecemberMarch 31, 20132014 includes the deemed surrender of existing shares of Landauer common stock to the Company by stock-based compensation plan participants to satisfy the exercise price or tax liability of employee stock awards at the time of exercise or vesting.  These surrendered shares are not part of any publicly announced share repurchase program.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period

Total
Number of Shares
Purchased

 

 

Average
Price Paid
per Share

 

Total Number of
Shares Purchased
as Part of
Publicly
Announced
Plans
or Programs

 

Maximum
Number of
Shares that May
Yet be
Purchased
Under the Plans
or Programs

Total
Number of Shares
Purchased

 

 

Average
Price Paid
per Share

 

Total Number of
Shares Purchased
as Part of
Publicly
Announced
Plans
or Programs

 

Maximum
Number of
Shares that May
Yet be
Purchased
Under the Plans
or Programs

October 1 - October 31, 2013

105 

 

$

51.26 

 

 -

 

 -

105 

 

$

51.26 

 

 -

 

 -

November 1 - November 30, 2013

1,426 

 

 

47.80 

 

 -

 

 -

1,426 

 

 

47.80 

 

 -

 

 -

December 1 - December 31, 2013

3,260 

 

 

52.16 

 

 -

 

 -

3,260 

 

 

52.16 

 

 -

 

 -

Quarter ended December 31, 2013

4,791 

 

$

50.84 

 

 -

 

 -

4,791 

 

$

50.84 

 

 -

 

 -

January 1 - January 31, 2014

541 

 

$

52.56 

 

 -

 

 -

February 1 - February 28, 2014

 

 

0.00 

 

 -

 

 -

March 1 - March 31, 2014

 

 

0.00 

 

 -

 

 -

Quarter ended March 31, 2014

541 

 

$

52.56 

 

 -

 

 -

 

Item 3.Defaults Upon Senior Securities

 

Not Applicable 

 

Item 4.Mine Safety Disclosures

 

Not Applicable 

 

Item 5.Other Information

 

Not Applicable 

 

2027

 


 

 

Item 6.Exhibits

 

 

 

 

 

 

 

 

 

 

31.1*

 

Certification of William E. Saxelby, President and Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

31.2*

 

Certification of Michael K. Burke, Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

32.1*

 

Certification of William E. Saxelby, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

32.2*

 

Certification of Michael K. Burke, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

101.INS**

 

XBRL INSTANCE FILE

 

 

 

101.SCH**

 

XBRL SCHEMA FILE

 

 

 

101.CAL**

 

XBRL CALCULATION FILE

 

 

 

101.DEF**

 

XBRL DEFINITION FILE

 

 

 

101.LAB**

 

XBRL LABEL FILE

 

 

 

101.PRE**

 

XBRL PRESENTATION FILE

 

 

 

 

* Filed herewith

 

** Furnished with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended DecemberMarch  31, 20132014

 

2128

 


 

 

SIGNATURE

 

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.

 

8

 

 

 

11

 

 

 

 

 

 

 

 

 

LANDAUER, INC.

 

 

 

 

 

Date: February 10,May 19, 2014

 

/s/ Michael K. Burke

 

 

 

Michael K. Burke

 

 

 

Senior Vice President and Chief Financial Officer (Principal Financial Officer)

 

 

 

 

 

 

 

 

2229