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 ~~March~~December 31, 2016

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 No.)

	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 ~~May 5, 2016, 9,603,532~~February 3, 2017, 9,622,159 shares of common stock, par value $0.10 per share, of the registrant were outstanding.

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 (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		1918

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		2421

Item 4.	Controls and Procedures		2522


PART II OTHER INFORMATION

Item 1.	Legal Proceedings		2723

Item 1A.	Risk Factors		2723

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2723

Item 3.	Defaults Upon Senior Securities		2723

Item 4.	Mine Safety Disclosures		2723

Item 5.	Other Information		2723

Item 6.	Exhibits		2824


SIGNATURE			2925

PART I FINANCIAL INFORMATION

Item 1.Financial Statements

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)


(Dollars in Thousands)	March 31, 2016		September 30, 2015		December 31, 2016		September 30, 2016
Assets
Cash and cash equivalents	$	9,213	$	15,314	$	12,442	$	13,285
Receivables, net of allowances of $1,625 at March 31, 2016 and $1,556 at September 30, 2015		32,770		32,412
Receivables, net of allowances of $1,313 at December 31, 2016 and $1,296 at September 30, 2016						32,482		31,998
Inventories		7,059		7,035		5,692		5,670
Deferred income tax assets - current		5,362		4,871		2,006		2,098
Prepaid income taxes						655		764
Prepaid expenses and other current assets		2,592		2,121		3,866		2,187
Total current assets		56,996		61,753		57,143		56,002
Property, plant and equipment, at cost		108,132		104,322		106,301		105,237
Less accumulated depreciation and amortization		(61,452)		(57,955)		(60,248)		(58,820)
Property, plant and equipment, net		46,680		46,367		46,053		46,417
Equity in joint ventures		23,994		24,010		24,956		26,174
Goodwill		35,240		35,072		33,335		33,807
Intangible assets, net of accumulated amortization of $39,605 at March 31, 2016 and $38,662 at September 30, 2015		12,649		13,052
Dosimetry devices, net of accumulated depreciation of $5,761 at March 31, 2016 and $5,282 at September 30, 2015		3,503		3,562
Intangible assets, net of accumulated amortization of $11,699 at December 31, 2016 and $11,772 at September 30, 2016						9,003		9,297
Dosimetry devices, net of accumulated depreciation of $6,379 at December 31, 2016 and $6,197 at September 30, 2016						2,899		3,162
Deferred income tax assets		14,379		16,702		7,873		9,104
Other assets		9,161		8,226		6,490		6,853
Total assets	$	202,602	$	208,744	$	187,752	$	190,816

Liabilities
Accounts payable	$	4,146	$	5,773	$	2,450	$	3,012
Dividends payable		2,743		2,684		2,823		2,815
Deferred contract revenue		13,894		13,904		13,642		13,932
Accrued compensation and related costs		7,127		8,603		7,845		9,256
Accrued severance		599		972		122		302
Other accrued expenses		7,503		6,557		6,197		5,181
Total current liabilities		36,012		38,493		33,079		34,498
Long-term debt		125,985		133,385		107,600		109,100
Pension and postretirement obligations		20,883		20,508		24,874		24,833
Deferred income tax liabilities		269		270		103		86
Uncertain income tax liabilities		2,407		2,310		1,489		1,495
Other non-current liabilities		308		1,451		203		205
Total liabilities		185,864		196,417		167,348		170,217
Commitments and Contingencies

Stockholders' equity
Preferred stock, $0.10 par value per share, authorized 1,000,000 shares; none issued		-		-		-		-
Common stock, $0.10 par value per share, authorized 20,000,000 shares; 9,734,340 and 9,641,532 shares issued and outstanding at March 31, 2016 and September 30, 2015, respectively		973		964
Common stock, $0.10 par value per share, authorized 20,000,000 shares; 9,797,046 and 9,727,264 shares issued and outstanding at December 31, 2016 and September 30, 2016, respectively						980		973
Additional paid in capital		42,489		41,531		44,569		43,982
Accumulated other comprehensive loss		(12,898)		(13,741)		(17,534)		(15,266)
Accumulated deficit		(14,981)		(17,559)		(8,800)		(10,511)
Landauer, Inc. stockholders' equity		15,583		11,195		19,215		19,178
Noncontrolling interest		1,155		1,132		1,189		1,421
Total stockholders' equity		16,738		12,327		20,404		20,599
Total Liabilities and Stockholders' Equity	$	202,602	$	208,744	$	187,752	$	190,816

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


	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended December 31,
(Dollars in Thousands, Except per Share)	2016		2015		2016		2015		2016		2015
Revenues:
Service revenues	$	33,162	$	32,242	$	64,707	$	64,299	$	32,749	$	31,545
Product revenues		4,920		5,897		9,905		11,387		4,823		4,985
Total revenues		38,082		38,139		74,612		75,686		37,572		36,530

Costs and expenses:
Service costs		16,498		16,158		32,676		31,792		15,978		16,178
Product costs		1,829		2,453		3,666		4,570		1,959		1,837
Total cost of sales		18,327		18,611		36,342		36,362		17,937		18,015

Gross profit		19,755		19,528		38,270		39,324		19,635		18,515
Selling, general and administrative		12,538		13,898		24,801		27,553
Selling, general and administrative expense										12,193		12,263
Operating income		7,217		5,630		13,469		11,771		7,442		6,252
Equity in income of joint ventures		252		680		553		1,376		636		301
Interest expense, net		(1,129)		(964)		(2,062)		(1,917)		(794)		(933)
Other (expense) income, net		103		(485)		(57)		(234)		(328)		(160)
Income before taxes		6,443		4,861		11,903		10,996		6,956		5,460
Income tax expense		2,005		1,180		3,692		2,790		2,376		1,687
Net income		4,438		3,681		8,211		8,206		4,580		3,773
Less: Net income attributed to noncontrolling interest		159		134		289		282		179		130
Net income attributed to Landauer, Inc.	$	4,279	$	3,547	$	7,922	$	7,924	$	4,401	$	3,643

Net income per share attributable to Landauer, Inc. shareholders:
Basic	$	0.45	$	0.37	$	0.83	$	0.83	$	0.46	$	0.38
Weighted average basic shares outstanding		9,518		9,493		9,483		9,464		9,540		9,460

Diluted	$	0.45	$	0.37	$	0.83	$	0.83	$	0.46	$	0.38
Weighted average diluted shares outstanding		9,550		9,520		9,516		9,492		9,584		9,492

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



	Three Months Ended March 31, 2016						Six Months Ended March 31, 2016						Three Months Ended December 31, 2016
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total		Landauer, Inc.		Noncontrolling Interest		Total		Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	4,279	$	159	$	4,438	$	7,922	$	289	$	8,211	$	4,401	$	179	$	4,580
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of $76 and $101, respectively		128		-		128		172		-		172
Unrealized gains (losses) on available-for-sale securities, net of taxes of $22 and ($1), respectively		83		-		83		8		-		8
Foreign currency translation adjustment, net of taxes of $519 and $357, respectively		980		22		1,002		663		24		687
Other comprehensive income (loss):
Defined benefit pension and postretirement plans activity, net of taxes of ($71)														119		-		119
Unrealized gains (losses) on available-for-sale securities, net of taxes of $0														-		-		-
Foreign currency translation adjustment, net of taxes of $503														(2,387)		(39)		(2,426)
Comprehensive income	$	5,470	$	181	$	5,651	$	8,765	$	313	$	9,078	$	2,133	$	140	$	2,273

	Three Months Ended March 31, 2015						Six Months Ended March 31, 2015						Three Months Ended December 31, 2015
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total		Landauer, Inc.		Noncontrolling Interest		Total		Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	3,547	$	134	$	3,681	$	7,924	$	282	$	8,206	$	3,643	$	130	$	3,773
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of $53		19		-		19		91		-		91
Unrealized gains (losses) on available-for-sale securities, net of taxes of $0		37		-		37		2		-		2
Foreign currency translation adjustment, net of taxes of $1,103 and $2,057, respectively		(1,927)		(99)		(2,026)		(3,698)		(198)		(3,896)
Other comprehensive income (loss):
Defined benefit pension and postretirement plans activity, net of taxes of ($25)														44		-		44
Unrealized losses on available-for-sale securities, net of taxes of $23														(75)		-		(75)
Foreign currency translation adjustment, net of taxes of $162														(317)		2		(315)
Comprehensive income	$	1,676	$	35	$	1,711	$	4,319	$	84	$	4,403	$	3,295	$	132	$	3,427

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


	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		(Accumulated Deficit) 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		(Accumulated Deficit) Retained Earnings		Non- Controlling Interest		Total Stock- holders' Equity
September 30, 2015		9,641,532	$	964	$	41,531	$	(13,741)	$	(17,559)	$	1,132	$	12,327
September 30, 2016																9,727,264	$	973	$	43,982	$	(15,266)	$	(10,511)	$	1,421	$	20,599
Stock-based compensation arrangements		92,808		9		958		-		-		-		967		69,782		7		587		-		-		-		594
Dividends		-		-		-		-		(5,344)		(290)		(5,634)		-		-		-		-		(2,690)		(372)		(3,062)
Net income		-		-		-		-		7,922		289		8,211		-		-		-		-		4,401		179		4,580
Foreign currency translation adjustment, net of tax		-		-		-		663		-		24		687		-		-		-		(2,387)		-		(39)		(2,426)
Unrealized gains (losses) on available-for-sale securities, net of tax		-		-		-		8		-		-		8
Defined benefit pension and postretirement plans activity, net of tax		-		-		-		172		-		-		172		-		-		-		119		-		-		119
March 31, 2016		9,734,340	$	973	$	42,489	$	(12,898)	$	(14,981)	$	1,155	$	16,738
December 31, 2016																9,797,046	$	980	$	44,569	$	(17,534)	$	(8,800)	$	1,189	$	20,404

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



	Six Months Ended March 31,				Three Months Ended December 31,
(Dollars in Thousands)	2016		2015		2016		2015
Cash flows from operating activities:
Net income	$	8,211	$	8,206	$	4,580	$	3,773
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,661		6,092		2,678		2,797
Equity in income of joint ventures		(553)		(1,376)		(636)		(301)
Dividends from joint ventures		1,195		1,144		-		1,195
Stock-based compensation and related net tax benefits		1,144		873		744		457
Current and long-term deferred taxes, net		1,076		(1,792)		1,752		632
Gain on sale, disposal and abandonment of fixed assets		12		124
Loss (gain) on sale, disposal and abandonment of fixed assets						17		(9)
Gain on investments		(221)		(189)		(58)		(190)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable, net		(276)		2,923		(892)		224
Decrease (increase) in prepaid taxes		39		(385)
(Increase) decrease in other operating assets, net		(842)		347
Decrease in prepaid taxes						106		40
Increase in other operating assets, net						(1,005)		(982)
Decrease in accounts payable and other accrued liabilities		(2,779)		(1,002)		(1,057)		(2,052)
Increase (decrease) in other operating liabilities, net		143		(108)
Increase in other operating liabilities, net						261		357
Net cash provided by operating activities		12,810		14,857		6,490		5,941

Cash flows from investing activities:
Acquisition of property, plant and equipment		(4,278)		(3,063)		(1,877)		(1,534)
Payment of transaction expenses associated with divestiture of business		(472)		-		-		(472)
Other investing activities, net		(1,232)		147		(538)		(923)
Net cash used in investing activities		(5,982)		(2,916)		(2,415)		(2,929)

Cash flows from financing activities:
Long-term borrowings - loan		11,000		16,300		2,000		7,000
Long-term borrowings - repayment		(18,400)		(15,300)		(3,500)		(12,700)
Dividends paid to stockholders		(5,286)		(10,599)		(2,682)		(2,651)
Other financing activities, net		(155)		(321)		(368)		(156)
Net cash used in financing activities		(12,841)		(9,920)		(4,550)		(8,507)

Effects of foreign currency translation		(88)		(358)		(368)		(279)
Net (decrease) increase in cash and cash equivalents		(6,101)		1,663
Net decrease in cash and cash equivalents						(843)		(5,774)
Opening balance - cash and cash equivalents		15,314		6,761		13,285		15,314
Ending balance - cash and cash equivalents	$	9,213	$	8,424	$	12,442	$	9,540

Accrued capital spending included in accounts payable and other accrued liabilities	$	783	$	2,272	$	683	$	1,153

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

As used herein, the terms “Company,” “Landauer,” “we,” “us,” and “our” refer collectively to Landauer, Inc. and its subsidiaries through which its various businesses are conducted.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

The consolidated financial statements include the accounts of the Company, its subsidiaries and variable interest entities in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. Entities in which the Company does not have a controlling financial interest, but is considered to have significant influence, are accounted for on the equity method.

We believe that we have included all normal recurring adjustments necessary for a fair presentation of the results for the interim period. Operating results for the ~~three and six month periods~~quarter ended ~~March~~ December 31~~31,~~, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, ~~2016.~~2017.

These 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, ~~2015~~2016 (the “Form 10-K”) and other financial information filed with the Securities and Exchange Commission (the “SEC”). The September 30, ~~2015~~2016 balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

The accounting policies followed by the Company are set forth in the Form 10-K, and there have been no changes to the accounting policies for the ~~six-month~~three month period ended ~~March~~December 31, 2016.

In June 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for share-based payments requiring a specific performance target to be achieved in order for employees to become eligible to vest in the awards when that performance target may be achieved after the requisite service period for the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the requisite service has already been rendered. The Company adopted the updated standard in the first quarter of fiscal 2017 with no significant impact on its financial statements.

In April 2015, the FASB issued new guidance on a customer’s accounting for fees paid in a cloud computing arrangement (CCA). Under the new standard, customers will apply the same criteria as vendors to determine whether a CCA contains a software license or is solely a service contract. The Company adopted the updated standard prospectively in the first quarter of fiscal 2017 with no significant impact on its financial statements.

In May 2014, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued new guidance for recognizing revenue from contracts with customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. In July 2015, the FASB deferred the effective date of the new revenue standard by one year. Public companies would now be required to adopt the new guidance for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The FASB decided to allow earlier adoption of the new revenue standard, but not earlier than the original effective date. This guidance is effective for the Company in the first quarter of fiscal 2019. The Company is currently evaluating the impact that adoption of this guidance will have on its results of operations, financial position and liquidity.

~~In June 2014,~~ To date, the ~~FASB issued new guidance on accounting for share-based payments requiring~~Company has formed a ~~specific performance target~~committee to ~~be achieved in order for employees to become eligible to vest~~evaluate the impact and are in the awards when that performance target may be achieved after the requisite service period for the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the requisite service has already been rendered. This guidance is effective for the Company in the first quarterinitial stages of ~~fiscal 2017. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this guidance will have on its results of operations, financial position and liquidity.~~

In August 2014, the FASB issued new guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of doubt about the entity’s ability to continue as a going concern. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. This guidance will be effective for the Company in the first quarter of fiscal 2017, with early adoption permitted. The Company does not expect the adoption of this guidance will have a material impact on its results of operations, financial position and liquidity.

In January 2015, the FASB issued new guidance on accounting for unusual and infrequently occurring items, which eliminates the concept of extraordinary items. An unusual and infrequently occurring item will no longer be classified as an extraordinary item and segregated from ordinary operations in the income statement, but will be shown as a component of income from continuing operations or separately disclosed in notes to the financial statements. This guidance is effective for the Company in the first quarter of fiscal 2017, with early adoption permitted. The Company does not expect the adoption of this guidance will have a material impact on its results of operations, financial position and liquidity.

In February 2015, the FASB issued amended guidance on the model used to evaluate whether certain legal entities should be consolidated. This guidance is effective for the Company in the first quarter of fiscal 2017. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its results of operations, financial position and liquidity.

In April 2015, the FASB issued new guidance on the presentation of debt issuance costs. This update requires a company to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with the presentation of debt discounts. Currently, debt issuance costs are presented as a deferred asset. The recognition and measurement requirements will not change as a result of this guidance. The update requires retrospective application and represents a change in accounting principle. This guidance is effective for the Company in the first quarter of fiscal 2017, with early adoption permitted. The Company does not expect the adoption of this guidance will have a material impact on its results of operations, financial position and liquidity.evaluation.

In July 2015, the FASB issued new guidance on simplifying the measurement of inventory. This update requires a company to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for the Company in the first quarter of fiscal 2018, and should be applied prospectively ~~with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its results of operations, financial position and liquidity.~~

In September 2015, the FASB issued new guidance on business combination provisional adjustments during the measurement period. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined and sets forth new disclosure requirements related to the adjustments. This guidance is effective for the Company in the first quarter of fiscal 2017, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its results of operations, financial position and liquidity.

In November 2015, the FASB issued new guidance on the presentation of deferred income taxes. This update requires a company to present deferred tax liabilities and assets as noncurrent in a classified statement of financial position rather than the current requirement to separate deferred income tax liabilities and assets into current and noncurrent amounts. This guidance is effective for the Company in the first quarter of fiscal 2018, with early adoption permitted. The Company does not expect the adoption of this guidance will have a material impact ~~on its results of operations, financial position and liquidity.~~

In January 2016, the FASB issued guidance on the recognition and measurement of financial instruments. This guidance retains the current accounting for classifying and measuring investments in debt securities and loans, but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. The guidance also changes the accounting for investments without a readily determinable fair value and that do not qualify for the practical expedient to estimate fair value. A policy election can be made for these investments whereby estimated fair value may be measured at cost and adjusted in subsequent periods for any impairment or changes in observable prices of identical or similar investments. This guidance is effective for the Company in the first quarter of fiscal 2019. The Company is currently evaluating the impact that adoption of this guidance will have on its results of operations, financial position and liquidity.

In February 2016, the FASB issued guidance on the accounting treatment for leases. This guidance will require all leases with durations greater than twelve months to be recognized on the balance sheet of the lessee. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. This guidance is effective for the Company in the first quarter of fiscal 2020, although early adoption is permitted. The Company is currently evaluating the impact that adoption of this guidance will have on its results of operations, financial position and liquidity.

In March 2016, the FASB issued new guidance to improve the accounting for share-based payments. This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. The guidance also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for the Company in the first quarter of fiscal 2018, although early adoption is permitted. The Company is currently evaluating the impact that adoption of this guidance will have on its results of operations, financial position and liquidity.

In August 2016, the FASB issued an ASU to provide cash flow statement guidance for certain cash receipts and payments, including (a) debt prepayment or extinguishment costs; (b) contingent consideration payments made after a business combination; (c) insurance settlement proceeds; (d) distributions from equity method investees; (e) beneficial interests in securitization transactions and (f) application of the predominance principle for cash receipts and payments with aspects of more than one class of cash flows. The update is effective for the Company in the first quarter of fiscal 2018. The Company is currently evaluating the effect that this update will have on its financial statements and related disclosures.

No other new accounting pronouncement issued or effective during the fiscal year had, or is expected to have, a material impact on the Consolidated Financial Statements.

The Company estimates the fair value of assets and liabilities in accordance with the framework established by the authoritative guidance for fair value measurements. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The level in the fair value hierarchy within which the fair value measurement is reported is based on the lowest level input that is significant to the measurement in its entirety.

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

Fair Value Measurements at March 31, 2016
(Dollars in Thousands)
Level 1

Level 2

Level 3
Asset Category

Cash equivalents
$
500

$
-

$
-
Mutual funds

3,710

-

-
Available-for-sale securities

-

2,341

-
Total financial assets at fair value
$
4,210

$
2,341

$
-

Fair Value Measurements at September 30, 2015
(Dollars in Thousands)
Level 1

Level 2

Level 3
Asset Category

Cash equivalents
$
272

$
-

$
-
Mutual funds

3,237

-

-
Available-for-sale securities

-

1,763

-
Total financial assets at fair value
$
3,509

$
1,763

$
-



	Fair Value Measurements at December 31, 2016
(Dollars in Thousands)	Level 1		Level 2		Level 3
Asset Category
Cash equivalents	$	536	$	-	$	-
Mutual funds		4,163		-		-
Total financial assets at fair value	$	4,699	$	-	$	-

	Fair Value Measurements at September 30, 2016
(Dollars in Thousands)	Level 1		Level 2		Level 3
Asset Category
Cash equivalents	$	453	$	-	$	-
Mutual funds		3,687		-		-
Total financial assets at fair value	$	4,140	$	-	$	-

Following is a description of each category in the fair value hierarchy and the financial assets and liabilities of the Company that were included in each category at ~~March~~December 31, 2016 and September 30, ~~2015,~~2016, measured on a recurring basis.

The Level 1 financial assets 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.

The Level 2 financial assets are long-term investments consisting primarily of fixed income mutual funds, classified as available-for-sale securities. These investments are reported in other long-term assets. The investments in fixed income mutual funds are valued based on the net asset value of the underlying securities as provided by the investment account manager. The investments are not restricted or subject to a lockup and may be redeemed on demand. Notice within a certain period of time prior to redemption is not required.

The Company’s long-term debt is classified as Level 2. The carrying amount of the Company’s long-term debt is the approximated fair value, as the stated interest rates were variable in relation to prevailing market rates.

The Company recorded a liability for contingent consideration during the second quarter of fiscal 2014 related to the acquisition of ilumark GmbH and the launch of its new medical products. The liability was recorded at fair value, which was determined using a discounted cash flow model based on assumptions and projections relevant to revenues. A discount rate of 11% was used and payments are projected to occur in fiscal 2016 and 2017. The contingent consideration liability is classified as Level 3.

The Company had no material assets or liabilities that were measured at fair value on a non-recurring basis during the six months ended March 31, 2016 or fiscal year ended September 30, 2015. There were no transfers between fair value hierarchy levels during these periods.

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 March 31,				Six Months Ended March 31,					Three Months Ended December 31,
(Dollars in Thousands, Except per Share)	(Dollars in Thousands, Except per Share)	2016		2015		2016		2015		(Dollars in Thousands, Except per Share)	2016		2015
Basic Net Income per Share:
Net income attributed to Landauer, Inc.		$	4,279	$	3,547	$	7,922	$	7,924		$	4,401	$	3,643
Less: Income allocated to unvested restricted stock			21		18		39		47			23		18
Net income available to common stockholders		$	4,258	$	3,529	$	7,883	$	7,877		$	4,378	$	3,625
Basic weighted average shares outstanding			9,518		9,493		9,483		9,464			9,540		9,460
Net income per share - Basic		$	0.45	$	0.37	$	0.83	$	0.83		$	0.46	$	0.38

Diluted Net Income per Share:
Net income attributed to Landauer, Inc.		$	4,279	$	3,547	$	7,922	$	7,924		$	4,401	$	3,643
Less: Income allocated to unvested restricted stock			21		18		39		47			23		18
Net income available to common stockholders		$	4,258	$	3,529	$	7,883	$	7,877		$	4,378	$	3,625
Basic weighted average shares outstanding			9,518		9,493		9,483		9,464			9,540		9,460
Effect of dilutive securities			32		27		33		28			44		32
Diluted weighted averages shares outstanding			9,550		9,520		9,516		9,492			9,584		9,492
Net income per share - Diluted		$	0.45	$	0.37	$	0.83	$	0.83		$	0.46	$	0.38

Dividends paid per share		$	0.275	$	0.275	$	0.55	$	0.825		$	0.275	$	0.275

On ~~February 18,~~November 30, 2016, the Company declared a regular quarterly cash dividend in the amount of $0.275 per ~~share for the second quarter of fiscal 2016.~~share. The dividends were paid on ~~April 4, 2016~~January 3, 2017 to shareholders of record as of ~~March 18,~~December 16, 2016.

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



Pension Benefits	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended December 31,
(Dollars in Thousands)	2016		2015		2016		2015		2016		2015
Interest cost	$	393	$	364	$	785	$	728	$	352	$	392
Expected return on plan assets		(374)		(396)		(747)		(792)		(388)		(373)
Amortization of net loss		140		84		281		168		190		141
Net periodic benefit cost	$	159	$	52	$	319	$	104	$	154	$	160

Other Benefits	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended December 31,
(Dollars in Thousands)	2016		2015		2016		2015		2016		2015
Service cost	$	15	$	12	$	30	$	25	$	16	$	15
Interest cost		9		8		19		16		9		10
Amortization of net gain		(4)		(12)		(8)		(24)		-		(4)
Net periodic benefit cost	$	20	$	8	$	41	$	17	$	25	$	21

The Company, under the IRS minimum funding standards, has no required contributions to make to its defined benefit pension plan during fiscal ~~2016.~~2017.

The Company sponsors a 401(k) retirement savings plan covering substantially all of the U.S. full-time employees in the Company’s Radiation Measurement segment as well as substantially all of the employees in the Company’s Medical Physics segment, and prior to its divestiture, the Medical Products ~~segments, which provides for certain employer matching contributions.~~segment. The Company also maintains a supplemental defined contribution plan for certain executives, which allows participating executives to make voluntary deferrals and provides for employer contributions at the discretion of the Company. Amounts expensed for Company contributions under these plans during the three months ended ~~March~~December 31, 2016 and 2015 were ~~$499~~$543 and ~~$442,~~$419, respectively. ~~Amounts expensed for Company contributions under these plans during the six months ended March 31, 2016 and 2015 were $918 and $849, respectively.~~

Changes in the carrying amount of goodwill, by reportable segment, for the ~~six~~three months ended ~~March~~December 31, 2016 were as follows:

(Dollars in Thousands)

Radiation Measurement

Medical Physics

Medical Products

Total
Balance as of September 30, 2015

Goodwill

$
11,002

$
22,611

$
65,527

$
99,140
Accumulated impairment losses

-

-

(64,068)

(64,068)
Balance as of September 30, 2015

$
11,002

$
22,611

$
1,459

$
35,072
Effects of foreign currency

159

-

9

168
Balance as of March 31, 2016

Goodwill

$
11,161

$
22,611

$
65,536

$
99,308
Accumulated impairment losses

-

-

(64,068)

(64,068)
Balance as of March 31, 2016

$
11,161

$
22,611

$
1,468

$
35,240



(Dollars in Thousands)	Radiation Measurement		Medical Physics		Total

Balance as of September 30, 2016	$	11,196	$	22,611	$	33,807
Currency translation adjustment		(472)		-		(472)
Balance as of December 31, 2016	$	10,724	$	22,611	$	33,335

The Company had no accumulated impairment losses as of December 31, 2016 and September 30,2016.



	March 31, 2016								December 31, 2016
(Dollars in Thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Accumulated Intangibles Impairment Charge		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer lists	$	43,198	$	34,496	$	8,702	$	18,657	$	16,578	$	10,319	$	6,259
Trademarks and tradenames		2,183		2,051		132		1,498		133		-		133
Licenses and patents		6,296		2,501		3,795		665		3,434		823		2,611
Other intangibles		577		557		20		-		557		557		-
Intangible assets	$	52,254	$	39,605	$	12,649	$	20,820	$	20,702	$	11,699	$	9,003



	September 30, 2015								September 30, 2016
(Dollars in Thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Accumulated Intangibles Impairment Charge		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer lists	$	43,131	$	33,716	$	9,415	$	18,657	$	16,982	$	10,436	$	6,546
Trademarks and tradenames		2,181		2,051		130		1,498		133		-		133
Licenses and patents		5,825		2,338		3,487		665		3,397		779		2,618
Other intangibles		577		557		20		-		557		557		-
Intangible assets	$	51,714	$	38,662	$	13,052	$	20,820	$	21,069	$	11,772	$	9,297

Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Intangible asset amortization expense was ~~$568~~$386 and ~~$1,123~~$555 for the three ~~and six~~ months ended ~~March~~December 31, 2016 ~~respectively,~~ and ~~was $558 and $1,121 for the three and six months ended March 31,~~ 2015, respectively.

Accumulated elements of other comprehensive loss, net of tax, are included in the stockholders’ equity section of the condensed consolidated balance sheets. Changes in each component for the ~~six~~three months ended ~~March~~December 31, 2016 and 2015 are as follows:



(Dollars in Thousands)	Foreign Currency Translation Adjustments		Unrealized Gains and Losses on Available-for-Sale Securities		Pension and Postretirement Plans		Comprehensive (Loss) Income		Foreign Currency Translation Adjustments		Unrealized Gains and Losses on Available-for-Sale Securities		Pension and Postretirement Plans		Comprehensive (Loss) Income
Balance at September 30, 2015	$	(5,468)	$	259	$	(8,532)	$	(13,741)
Balance at September 30, 2016									$	(4,696)	$	-	$	(10,570)	$	(15,266)
Other comprehensive (loss) income before reclassifications		663		97		-		760		(2,387)		-		-		(2,387)
Amounts reclassified from accumulated other comprehensive (loss) income		-		(89)		172		83		-		-		119		119
Net current period other comprehensive (loss) income		663		8		172		843		(2,387)		-		119		(2,268)
Balance at March 31, 2016	$	(4,805)	$	267	$	(8,360)	$	(12,898)
Balance at December 31, 2016									$	(7,083)	$	-	$	(10,451)	$	(17,534)



(Dollars in Thousands)	Foreign Currency Translation Adjustments		Unrealized Gains and Losses on Available-for-Sale Securities		Pension and Postretirement Plans		Comprehensive (Loss) Income		Foreign Currency Translation Adjustments		Unrealized Gains and Losses on Available-for-Sale Securities		Pension and Postretirement Plans		Comprehensive (Loss) Income
Balance at September 30, 2014	$	(2,493)	$	166	$	(7,821)	$	(10,148)
Balance at September 30, 2015									$	(5,468)	$	259	$	(8,532)	$	(13,741)
Other comprehensive (loss) income before reclassifications		(3,698)		101		-		(3,597)		(317)		14		-		(303)
Amounts reclassified from accumulated other comprehensive (loss) income		-		(99)		91		(8)		-		(89)		44		(45)
Net current period other comprehensive (loss) income		(3,698)		2		91		(3,605)		(317)		(75)		44		(348)
Balance at March 31, 2015	$	(6,191)	$	168	$	(7,730)	$	(13,753)
Balance at December 31, 2015									$	(5,785)	$	184	$	(8,488)	$	(14,089)

The tables below present the impact on net income of significant amounts reclassified out of each component of accumulated other comprehensive loss:

(1)These accumulated other comprehensive loss components are 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).

(1)This amount is reported in Interest ~~expense,~~Expense, net on the Consolidated Statements of Operations

(2)This amount is reported in Income ~~tax expense~~Tax Expense (Benefit) on the Consolidated Statements of Operations

The effective tax rates for the three months ended ~~March~~December 31, 2016 and 2015 were ~~31.1%~~34.2% and ~~24.3%~~30.9%, respectively. The increase in the effective tax rate was primarily due to the mix of taxable earnings between jurisdictions ~~with differing~~and tax ~~rates. The effective tax rates for~~law changes that impacted the six months ended March 31, 2016 and 2015 were 31.0% and 25.4%, respectively. The increase in the effective tax rate was primarily due to the mix of earnings between jurisdictions with differing tax rates, estimated foreign tax credit, and ratio of permanent items versus a lower overall forecasted pretax.prior year. The Company believes it is reasonably possible that ~~$645 thousand~~$563 of unrecognized tax benefits will be realized in fiscal year ~~2016.~~2017.

~~The~~In fiscal year 2017, the Company is organized into ~~three~~two reportable business segments: Radiation Measurement ~~Medical Physics~~ and Medical ~~Products.~~Physics. As disclosed in the Form 10-K for the fiscal period ended September 30, 2016, the Medical Products business was divested in May 2016; accordingly, there were no reportable revenues and operating income for the three month period ended December 31, 2016 for that reportable segment. These segments reflect the manner in which the Company’s businesses are currently managed and represent an aggregation of services and products based on type of customer and how the businesses are marketed. For more information regarding the nature of the Company’s services and products, see Note 16 of the Notes to Consolidated Financial Statements in the Form 10-K.

The following tables summarize financial information for each reportable segment:



	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended December 31,
(Unaudited, Dollars in Thousands)	2016		2015		2016		2015		2016		2015
Revenues by segment:
Radiation Measurement	$	25,520	$	27,246	$	50,224	$	53,737	$	27,632	$	24,704
Medical Physics		10,033		8,561		19,386		17,045		9,940		9,353
Medical Products		2,529		2,332		5,002		4,904		-		2,473
Consolidated revenues	$	38,082	$	38,139	$	74,612	$	75,686	$	37,572	$	36,530

	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended December 31,
(Unaudited, Dollars in Thousands)	2016		2015		2016		2015		2016		2015
Operating income (loss) by segment:
Radiation Measurement	$	9,969	$	9,414	$	18,867	$	18,798	$	11,232	$	8,898
Medical Physics		918		321		1,696		939		679		778
Medical Products		432		244		922		578		-		490
Corporate		(4,102)		(4,349)		(8,016)		(8,544)		(4,469)		(3,914)
Consolidated operating income	$	7,217	$	5,630	$	13,469	$	11,771	$	7,442	$	6,252

The Company has a minority interest in Yamasato, Fujiwara, Higa & Associates, Inc. doing business as Aquila. The Company provides dosimetry parts to Aquila for its military contract. The Company also has a 50% equity interest in Nagase-Landauer, Ltd. (“Nagase”), a radiation measurement company in Japan.

The Company divested its Medical Products business on May 3, 2016 for gross cash proceeds of $12 million. The assets of the Medical Products business represent approximately 4% of the Company’s consolidated assets, and the revenues of the Medical Products business represent approximately 7% of the Company’s consolidated revenues. The Company has evaluated whether this divestiture qualifies as a discontinued operation pursuant to FASB Accounting Standards Codification 205-20 “Discontinued Operations.” The Company has concluded that the divestiture of the Medical Products business does not represent a strategic shift and is therefore not considered a discontinued operation, and is not material to be shown as assets held for sale as of March 31, 2016.

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

The following discussion and analysis of the Company’s unaudited consolidated financial condition and results of operations should be read in conjunction with the annual audited consolidated financial statements and related notes thereto included in the Company’s Form 10-K. 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 the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2015.~~2016.

The preparation of the interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Critical accounting policies are those that are most important to the portrayal of a company’s financial condition and results of operations, 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. The Company bases its 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, the Company’s actual results may differ from the estimates, judgments and assumptions used in preparing the consolidated financial statements.

Comparison of the ~~second~~first fiscal quarter ended ~~March~~December 31, 2016 and the ~~second~~first fiscal quarter ended ~~March~~December 31, 2015

Revenues for the ~~second~~first fiscal quarter of ~~2016~~2017 were ~~flat at $38.1~~$37.6 million, ~~the same as~~an increase of $1.1 million, or 3.0%, compared to revenues of $36.5 million for the ~~second~~first fiscal quarter of ~~2015.~~2016. Revenues in the Radiation Measurement segment ~~decreased $1.7~~increased $2.9 million, which was primarily due to product sales to the ~~Radon business that was divested~~military and growth in ~~September 2015, resulting in a $1.6 million reduction in~~international revenues. In addition, unfavorable foreign currency translation rates reduced revenues by $0.6 million. Domestic Radiation Measurement services revenues increased 5.0%, partially offsetting the impact of the Radon business divestiture and the foreign currency rates.Revenues in the Medical Physics segment increased ~~$1.4~~$0.6 million, due to increased imaging services. Revenues in the Medical Products segment ~~increased $0.2 million.~~were $0.0 million, a decrease of $2.5 million due to the divestiture of this business in May 2016.

Gross ~~margin~~profit was ~~51.9%~~52.3% for the ~~second~~first fiscal quarter of 2017, compared with 50.7% for the first fiscal quarter of 2016. Gross profit increased for the first fiscal quarter of 2017 as compared to the first fiscal quarter of 2016 ~~compared with 51.2% for the second fiscal quarter of 2015.~~ ~~Gross margin in the Radiation Measurement and Medical Physics segments increased for the second fiscal quarter of 2016 as compared~~due primarily to the ~~second fiscal quarter of 2015 due~~increase in product sales to ~~a favorable mix of higher margin service revenues~~the military..

Selling, general and administrative expenses for the ~~second~~first fiscal quarter of ~~2016~~2017 were ~~$12.5~~$12.2 million, a decrease of ~~$1.4~~$0.1 million, or ~~10.1%~~0.8%, compared with ~~$13.9~~$12.3 million for the ~~second~~first fiscal quarter of ~~2015.~~2016. Operating expenses in the Medical Products segment decreased $1.1 million, partially offset by a $0.8 million increase in Corporate and Radiation Measurement expenses and a $0.2 million increase in Medical Physics expenses. Operating expenses in the Medical Products segment decreased $1.1 million due to the divestiture of the business in May 2016. Operating expenses in Corporate and the Radiation Measurement segment ~~decreased $1.2~~increased $0.8 million primarily due to ~~professional fees,~~a $0.3 million increase in research and development expenses for the ~~Radon divestiture~~Verifii digital dosimetry platform and a $0.2 million increase in proxy expenses for the ~~impact~~2017 Annual Meeting of ~~foreign currency rates.~~Stockholders. The increase in operating expenses in Medical Physics was driven by an increase in personnel expenses.

Operating income for the ~~second~~first fiscal quarter of ~~2016~~2017 was ~~$7.2~~$7.4 million, compared with operating income of ~~$5.6~~$6.2 million for the ~~second~~first fiscal quarter of ~~2015.~~2016. Operating income increased due primarily to the ~~higher~~ gross ~~margins as well as the decrease in selling, general and administrative expenses.~~

~~Equity in income of joint ventures decreased to $0.3 million for the second fiscal quarter of 2016 from $0.7 million for the second fiscal quarter of 2015 due to lower~~ profit on ~~product sales~~the higher military sales. In addition, the Company successfully appealed the real estate taxes for fiscal 2011 and 2012, and as a result, is expected to ~~our joint venture in Japan.~~receive a $0.6 million refund.

The effective tax rates for the ~~second~~first fiscal quarter of 2017 and 2016 were 34.2% and ~~2015 were 31.1% and 24.3%~~30.9%, respectively. The increase in the effective tax rate was primarily due to the mix of taxable earnings between jurisdictions ~~with differing~~and tax ~~rates.~~law changes that impacted the prior year.

Net income attributed to Landauer for the ~~second~~first fiscal quarter of ~~2016~~2017 was ~~$4.3~~$4.4 million, compared with net income of ~~$3.5~~$3.6 million in the ~~second~~first fiscal quarter of ~~2015.~~2016. The increase in net income was driven by stronger operating margins, partially offset by a higher effective tax rate.

Radiation Measurement revenues for the ~~second~~first fiscal quarter of ~~2016~~2017 were ~~$25.5~~$27.6 million, ~~a decrease~~an increase of ~~$1.7~~$2.9 million, or ~~6.3%~~11.7%, compared with $2$24.7~~7.2~~ million for the ~~second~~first fiscal quarter of ~~2015.~~2016. The ~~decrease~~growth in revenues was primarily due to product sales to the ~~Radon business that~~military and higher international revenues. During the third fiscal quarter of 2016, the Company was ~~divested~~awarded a military order from the National Guard of the United States for the Radwatch personal in-field radiation monitoring system. Approximately $2.2 million of the increase in ~~September 2015, resulting in a $1.6 million reduction in revenues. In addition, unfavorable foreign currency translation rates reduced~~ revenues ~~by $0.6 million. Domestic Radiation Measurement services~~resulted from the shipment of products for the National Guard order. International revenues increased ~~5.0%, partially offsetting the impact of the Radon business divestiture and the foreign currency rates.~~$0.5 million due primarily to higher product sales.

Operating income for the ~~second~~first fiscal quarter of ~~2016~~2017 increased to ~~$10.0~~$11.2 million from ~~$9.4~~$8.9 million for the ~~second~~first fiscal quarter of ~~2015~~2016 due to ~~lower operating expenses. Personnel expenses have decreased as a result~~the gross profit on the increased product sales and due to the refund of ~~the management restructuring in the fourth~~real estate taxes for fiscal ~~quarter of 2015. In addition, outside research~~2011 and ~~development expenses have decreased.~~2012.

Medical Physics revenues for the ~~second~~first fiscal quarter of ~~2016~~2017 were $10.0 million, an increase of ~~$1.4~~$0.6 million, or ~~16.3%~~6.4%, compared with ~~$8.6~~$9.4 million for the ~~second~~first fiscal quarter of ~~2015.~~2016. Imaging services revenue increased by ~~$0.8~~$0.6 million, or ~~33.3%~~20.7%, driven by higher demand for the Company’s solutions for The Joint Commission’s new Diagnostic Imaging requirements that became effective for hospitals and ambulatory care centers on July 1, 2015.

Operating income for the ~~second~~first fiscal quarter of ~~2016~~2017 was ~~$0.9~~$0.7 million, compared to ~~$0.3~~$0.8 million for the ~~second~~first fiscal q~~uarter~~quarter of ~~2015.~~2016. The ~~increase~~decrease in operating income was primarily due to ~~the margin on the increased revenues~~.an increase in personnel expenses.

Medical Products revenues ~~increased~~decreased to $0.0 million for the first fiscal quarter of 2017 from $2.5 million for the ~~second~~first fiscal quarter of 2016 ~~from $2.3 million for~~as a result of the ~~second fiscal quarter of 2015.~~divestiture that occurred in May 2016.

Medical Products operating income ~~increased~~decreased to ~~$0.4~~$0.0 million for the ~~second~~first fiscal quarter of 2017 from $0.5 million for the first fiscal quarter of 2016 ~~from $0.2 million for the second fiscal quarter of 2015~~ due to the ~~margin on the increased revenues.~~

~~Corporate selling, general and administrative expenses for the second fiscal quarter of~~May 2016 ~~were $4.1 million, a decrease of $0.2 million, or 4.7%, compared to $4.3 million for the second fiscal quarter of~~ ~~2015. The decrease was due to lower professional fees, including audit and legal fees~~.

~~Comparison of the six months ended March 31, 2016 and the six months ended March 31, 2015~~

Revenues for the first six months of fiscal 2016 were $74.6 million, a decrease of $1.1 million, or 1.5%, compared to revenues of $75.7 million for the first six months of fiscal 2015. Revenues in the Radiation Measurement segment decreased $3.5 million, which was primarily due to the Radon business that was divested in September 2015, resulting in a $3.2 million reduction in revenues. In addition, unfavorable foreign currency translation rates reduced revenues by $1.8 million. Domestic Radiation Measurement services revenues increased 3.8%, partially offsetting the impact of the Radon business divestiture and the foreign currency rates. Reve~~nues in the Medical Physics segment increased $2.4 million, due to increased imaging services.~~ ~~Revenues in the Medical Products segment were essentially flat with an increase of $0.1 million.~~

Gross margin was 51.3% for the first six months of fiscal 2016, compared with 52.0% for the first six months of fiscal 2015. Gross margins in the Radiation Measurement segment have increased to 62.1% for the first six months of fiscal 2016 ~~from 61.2% for the first six months of fiscal 2015. However, consolidated gross margins have decreased due to the $3.5 million decrease in revenues in our high margin Radiation Measurement segment.~~

~~Selling, general and administrative expenses for the first six months of fiscal 2016 were $24.8 million, a decrease of $2.8 million, or 10.1%, compared with $27.6 million for the first six months of~~ fiscal 2015. Operating expenses in Corporate and the Radiation Measurement segment decreased $2.3 million primarily due to professional fees, the Radon divestiture and the impact of foreign currency rates.

~~Operating income for the first six months of fiscal 2016 was $13.5 million, compared with operating income of $11.8 million for the first six~~ ~~months of fiscal 2015. The decrease in Corporate and Radiation Measurement selling, general and administrative expenses offset the impact of the lower revenues in the Radiation Measurement segment.~~

~~Equity in income of joint ventures for the first~~ six months of fiscal 2016 was $0.6 million compared with $1.4 million for the first six months of fiscal 2015. Product sales by our joint venture, Aquila, were impacted by the timing of military sales. In addition, equity in income of joint ventures decreased due to lower profit on product sales to our joint venture in Japan.

The effective tax rates for the first six months of fiscal 2016 and 2015 were 31.0% and 25.4%, respectively. The increase in the effective tax rate was primarily due to the mix of earnings between jurisdictions with differing tax rates.

Net income attributed to Landauer for the first six months of fiscal 2016 was $7.9 million, the same as net income of $7.9 million in the first six months of fiscal 2015. The increase in operating income was offset by the decrease in equity in income of joint ventures and by the impact of the higher effective tax rate.

~~Radiation Measurement revenues for the first six months of fiscal 2016 were $50.2 million, a decrease of $3.5 million, or 6.5%, compared with $53.7 million for the first six months of fiscal 2015.~~ The decrease in revenues was primarily due to the Radon business that was divested in September 2015, resulting in a $3.2 million reduction in revenues. In addition, unfavorable foreign currency translation rates reduced revenues by $1.8 million. Domestic Radiation Measurement services revenues increased 3.8%, partially offsetting the impact of the Radon business divestiture and the foreign currency rates.

~~Operating income for the first six months of fiscal 2016 was $18.9 million compared with operating income of $18.8 million for the first six months of fiscal 2015.~~ ~~The decrease in selling, general and administrative expenses offset the impact of the lower revenues~~.

~~Medical Physics revenues for the first six months of fiscal 2016 were $19.4 million, an increase of $2.4 million, or 14.1%, compared with $17.0 millio~~n for the first six months of fiscal 2015. Imaging services revenue increased by $1.5 million, or 31.9%, driven by higher demand for the Company’s solutions for The Joint Commission’s new Diagnostic Imaging requirements that became effective for hospitals and ambulatory care centers on July 1, 2015.

~~Operating income for the first six months of fiscal 2016 was $1.7 million, compared to $0.9~~ ~~million for first six months of fiscal 2015. The increase in operating income was primarily due to the margin on the increased sales~~.

~~Medical Products revenues were essentially flat at $5.0 million for the first six months of fiscal 2016 compared with $4.9 million for the first six months of fiscal 2015.~~

~~Medical Products had operating income of $0.9 million for the first six months of fiscal 2016 versus operating income of $0.6 million for the first six months of fiscal 2015.~~divestiture.

Corporate selling, general and administrative expenses for the first ~~six months~~fiscal quarter of ~~fiscal 2016~~2017 were ~~$8.0~~$4.5 million, ~~a decrease~~an increase of ~~$0.5~~$0.6 million, or ~~5.9%~~15.4%, compared to ~~$8.5~~$3.9 million for the first ~~six months~~fiscal quarter of ~~fiscal 2015.~~2016. The ~~decrease~~increase was due to ~~lower professional fees, including audit and legal fees~~a $0.3 million increase in stock compensation expense as well as a $0.2 million increase in proxy expenses for the 2017 Annual Meeting of Stockholders..

The Company’s principal source of liquidity is operating cash flows supplemented by borrowings under its credit facility. The Company’s cash-generating capability is one of its fundamental strengths and provides it with substantial financial flexibility in meeting operating and investing needs.

Cash provided by operating activities for the first ~~six~~three months of fiscal ~~2016~~2017 was ~~$12.8~~$6.5 million, ~~a decrease~~an increase of ~~$2.1~~$0.6 million over the same fiscal period in ~~2015.~~2016. The ~~decrease~~increase was primarily due to ~~the large reduction~~lower spending in ~~accounts receivable, net in the first six months of fiscal 2015 ($2.9 million)~~professional service fees compared to ~~a relatively small reduction in~~ the ~~first six months of fiscal 2016 ($0.3 million).~~prior year.

Cash used in investing activities for the first ~~six~~three months of fiscal ~~2016~~2017 was ~~$6.0~~$2.4 million, ~~an increase~~a change of ~~$3.1~~$0.5 million over the same fiscal period of ~~2015.~~2016. The ~~increase~~change was primarily due to ~~higher capital spending of $1.3 million related to IT infrastructure and an increase in investments of $0.8 million. The Company also paid $0.5 million in~~ transaction expenses related to the ~~September 2015 divestiture~~disposition of ~~our~~the Radon business ~~during the first six months of~~which were paid in fiscal 2016.

Cash used in financing activities for the first ~~six~~three months of fiscal ~~2016~~2017 was ~~$12.8~~$4.6 million, ~~an increase~~a change of ~~$2.9~~$3.9 million over the same fiscal period of ~~2015.~~2016. The ~~increase~~change was primarily due to ~~higher~~lower net repayments of debt ~~partially offset by a reduction in dividend payments to stockholders~~ compared to the ~~first six months~~prior year. In addition, the Company expects to pay down debt over the next four to five years as it realizes a cash tax benefit of ~~2015~~approximately $16.0 million resulting from the disposal of the Medical Products business. As of ~~March~~December 31, 2016, the Company had ~~$49.0~~$32.4 million of unused availability under its current ~~$175.0~~$140.0 million credit facility, which the Company believes provides adequate liquidity to meet its current and anticipated obligations.During the first six months of fiscal 2016 and 2015, the Company paid cash dividends of $5.3 million and $10.6 million, respectively. The Company reduced its dividend payment from $0.55 per share to $0.275 per share during the third fiscal quarter of 2015.

The Company expects to meet short-term liquidity requirements (including capital expenditures) through net cash from operating activities and cash on hand. The Company was in compliance with all covenants under the credit facility as of ~~March~~December 31, 2016. The Company currently intends to use excess cash to continue to pay down the long-term debt balance. The debt facility expires August 2, 2018.

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

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 ~~2015~~2016 through ~~March~~December 31, 2016.

Certain matters contained in this report 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 and products in general; the ability to protect and utilize the Company’s intellectual property; events or circumstances which result in an impairment of ~~assets, including but not limited to, goodwill and identifiable intangible~~ assets; 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 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 and investments in cyber security enhancements; the anticipated results of operations of the Company and its subsidiaries or joint ventures; valuation of the Company’s long-lived assets or reporting 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 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” of the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2015~~2016 and information contained in 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.

The Company is exposed to market risk, including changes in foreign currency exchange rates and is subject to interest rate risk related to borrowings under its existing credit facility. 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, ~~2015.~~2016. The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through ~~March~~December 31, 2016.

As of ~~March~~December 31, 2016, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and 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 controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended.

Based upon that evaluation, our CEO and CFO concluded that the Company’s disclosure controls and procedures were ~~not~~ effective ~~as a result of the previously reported material weaknesses 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~~at a reasonable ~~possibility that a material misstatement~~assurance level for the purpose of ~~our annual or interim financial statements will not be prevented or detected on a timely basis.~~

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, orensuring that the ~~degree of compliance with~~information required to be disclosed by us in the ~~policies~~reports that we file or ~~procedures may deteriorate.~~

~~In prior filings, we identified~~submit under the Exchange Act is (a) recorded, processed, summarized and reported ~~material weaknesses~~within the time periods specified in the ~~Company’s internal control over financial reporting, which still exist as of March 31, 2016, due~~SEC’s rules and forms and (b) accumulated and communicated to ~~continued remediation and testing procedures. In response to the identified material weaknesses, our~~ management ~~with oversight from our audit committee, has dedicated significant resources to improve our control environment and to remedy the identified material weaknesses.~~

We believe that we have designed and implemented the appropriate controls to fully remediate the remaining material weaknesses. However, the Company is required to demonstrate the effectiveness of the new processes for a sufficient period of time. Therefore, until the actions set forth below, including the ~~efforts~~CEO and CFO, or persons performing similar functions, as appropriate to ~~implement and test the necessary control activities we identify, are fully completed, the following material weaknesses will continue to exist.~~

~~Control Environment~~ - We did not maintain an effective control environment as we did not maintain a sufficient complement of personnel with an appropriate level of knowledge of accounting, experience and training commensurate with our financial reporting requirements. Additionally, we did not consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives. These material weaknesses contributed to the following control deficiencies, each of which is considered to be a material weakness:

~~Remediation Activities:We have improved our IT general controls and segregation of duties. We have~~ adopted a new global IT general controls framework, and have implemented this new framework domestically. We have begun to implement this new framework in our European entities. In addition, we have removed access ~~to financial application programs and data beyond that needed for certain personnel to perform their individual job responsibilities.~~

~~Risk Assessment~~ - We did not design and implement effective risk assessment with regard to our processes and procedures commensurate with our financial reporting requirements. Specifically, we did not design and implement controls in response to risks of misstatement of the financial statements. This material weakness contributed to the following control deficiencies, each of which is considered to be a material weakness:

~~Remediation Activities:~~ ~~We have improved our controls to ensure the accurate and~~allow timely ~~reporting of revenue and the related receivables, including the following:~~

~~We commenced a formal risk assessment during fiscal 2015~~ ~~to assess risks and identify, design, implement, and re-evaluate our control activities and completed the risk assessment as of September 30, 2015.~~

The risk assessment and revenue material weaknesses also resulted in revisions to second and third quarter fiscal 2014, annual fiscal 2014 and first quarter fiscal 2015 financial statement disclosures related to sales to its equity investees. Management has determined that these revisions, first disclosed in the second quarter of fiscal 2015, are additional effects of the material weaknesses related to risk assessment and revenue described above.

Notwithstanding the identified material weaknesses, management believes the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in conformity with U.S. GAAP.decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the ~~second~~first quarter of fiscal ~~2016~~2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 ~~March~~December 31, 2016, if adversely determined, would have a material effect on its business, financial position, results of operations, or cash flows.

Information regarding risk factors is set forth in Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2015.~~2016. The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through ~~March~~December 31, 2016.

The Company’s purchases of its equity securities from the end of the preceding fiscal year through ~~March~~December 31, 2016 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
October 1 - October 31, 2015

608

$
39.58

-

-
November 1 - November 30, 2015

278

40.83

-

-
December 1 - December 31, 2015

433

37.01

-

-
Quarter ended December 31, 2015

1,319

$
39.00

-

-
January 1 - January 31, 2016

-

$
-

-

-
February 1 - February 29, 2016

342

29.12

-

-
March 1 - March 31, 2016

-

-

-

-
Quarter ended March 31, 2016

342

$
29.12

-

-



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
October 1 - October 31, 2016	149	$	43.89	-	-
November 1 - November 30, 2016	-		-	-	-
December 1 - December 31, 2016	-		-	-	-
Quarter ended December 31, 2016	149	$	43.89	-	-

		Cer
10		Support Agreement, dated January 10, 2017, by and among the Registrant and Gilead Capital LP, Gilead Capital GP LCC and Jeffrey A. Strong is incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed January 12, 2017.

10.2*		Landauer, Inc. 2016 Incentive Compensation Plan, reflecting all amendments through December 13, 2016

31.1*		Certification of Michael P. Kaminski, President and Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Daniel J. Fujii, Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Michael P. Kaminski, 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 Daniel J. Fujii, 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 ~~March~~December 31, 2016.

Exhibit 10.2 listed above is a management contract or compensatory plan or arrangement.

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.


(Dollars in Thousands)	March 31, 2016		September 30, 2015		December 31, 2016		September 30, 2016
Segment assets:
Radiation Measurement	$	138,156	$	142,850	$	157,499	$	160,560
Medical Physics		45,094		43,677		43,460		43,174
Medical Products		47,770		48,308
Eliminations		(28,418)		(26,091)		(13,207)		(12,918)
Consolidated assets	$	202,602	$	208,744	$	187,752	$	190,816



(Dollars in Thousands)	March 31, 2016		September 30, 2015		December 31, 2016		September 30, 2016
Amounts in accounts receivable	$	1,919	$	2,795	$	2,888	$	1,910
Amounts in accounts payable		173		284		394		320



Pension and Postretirement Plans (1)	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended December 31,
(Dollars in Thousands)	2016		2015		2016		2015		2016		2015
Amortization of net loss	$	204	$	72	$	273	$	144	$	190	$	69
Total before tax		204		72		273		144		190		69
Provision for income taxes		76		53		101		53		71		25
Total net of tax	$	128	$	19	$	172	$	91	$	119	$	44

8
		LANDAUER, INC.
		(Registrant)

Date: ~~May~~February 9, ~~2016~~2017		/s/ Daniel J. Fujii
		Daniel J. Fujii
		Chief Financial Officer