Landauer (LDR) 10-Q 2013 Q2 Quarterly report

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 endedMarch 31, 2013

Commission File Number1-9788

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. YesS 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). YesS   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	S
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£ NoS

As of April 30, 2013, 9,526,486 shares of common stock, par value $0.10 per share, of the registrant were outstanding.

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PART I    FINANCIAL INFORMATION
Item 1.	Financial Statements
		Consolidated Balance Sheets (Unaudited)	3
		Consolidated Statements of Income (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		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21
Item 4.	Controls and Procedures		21
PART II    OTHER INFORMATION
Item 1.	Legal Proceedings		21
Item 1A.	Risk Factors		21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		22
Item 3.	Defaults Upon Senior Securities		22
Item 4.	Mine Safety Disclosures		22
Item 5.	Other Information		22
Item 6.	Exhibits		23
SIGNATURE			24

2

PART I  FINANCIAL INFORMATION

  Item 1. Financial Statements

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

(Dollars in Thousands)	March 31, 2013		September 30, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	11,054	$	17,633
Receivables, net of allowances of $1,133 and $1,088, respectively		36,419		35,165
Inventories		9,718		8,638
Prepaid income taxes		4,902		2,148
Prepaid expenses and other current assets		4,267		3,975
Current assets		66,360		67,559
Property, plant and equipment, at cost		105,883		101,375
Accumulated depreciation and amortization		(51,256)		(46,983)
Net property, plant and equipment		54,627		54,392
Equity in joint ventures		22,683		24,108
Goodwill		106,746		106,717
Intangible assets, net of accumulated amortization of $11,395 and $9,696, respectively		36,091		37,402
Dosimetry devices, net of accumulated depreciation of $9,511 and $8,879, respectively		6,436		6,189
Other assets		6,101		5,758
Assets	$	299,044	$	302,125
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,541	$	9,656
Dividends payable		5,403		5,345
Deferred contract revenue		14,413		14,947
Accrued compensation and related costs		6,938		8,260
Other accrued expenses		7,789		7,096
Current liabilities		41,084		45,304
Non-current liabilities:
Long-term debt		143,260		141,347
Pension and postretirement obligations		17,821		17,586
Deferred income taxes		16,179		15,733
Other non-current liabilities		1,106		1,053
Non-current liabilities		178,366		175,719
Stockholders’ equity:
Preferred stock, $.10 par value per share, authorized 1,000,000 shares; none issued		0		0
Common stock, $.10 par value per share, authorized 20,000,000 shares;      9,562,320 and 9,493,368 shares issued and outstanding at     March 31, 2013 and September 30, 2012, respectively		956		949
Additional paid in capital		37,063		35,898
Accumulated other comprehensive loss		(7,324)		(5,272)
Retained earnings		47,685		48,142
Landauer, Inc. stockholders’ equity		78,380		79,717
Noncontrolling interest		1,214		1,385
Stockholders’ equity		79,594		81,102
Liabilities and Stockholders’ Equity	$	299,044	$	302,125

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

	Three Months Ended March 31,				Six Months Ended March 31,
(Dollars in thousands, Except per Share)	2013		2012		2013		2012
Net revenues	$	37,082	$	39,094	$	73,763	$	75,763
Costs and expenses:
Cost of sales		17,050		16,029		33,613		30,935
Selling, general and administrative		12,578		12,604		25,969		24,965
Acquisition and reorganization costs		300		312		300		2,161
Costs and expenses		29,928		28,945		59,882		58,061
Operating income		7,154		10,149		13,881		17,702
Equity in income of joint ventures		556		1,067		2,084		1,871
Interest expense, net		(1,081)		(863)		(2,114)		(1,453)
Other income (expense), net		224		(9)		319		50
Income before taxes		6,853		10,344		14,170		18,170
Income taxes		1,620		3,104		3,894		5,846
Net income		5,233		7,240		10,276		12,324
Less: Net income attributed to noncontrolling   interest		80		130		246		289
Net income attributed to Landauer, Inc.	$	5,153	$	7,110	$	10,030	$	12,035
Net income per share attributable to   Landauer, Inc. shareholders:
Basic	$	0.54	$	0.76	$	1.06	$	1.28
Weighted average basic shares outstanding		9,417		9,361		9,391		9,347
Diluted	$	0.54	$	0.75	$	1.05	$	1.27
Weighted average diluted shares outstanding		9,462		9,402		9,438		9,387
Dividends paid per share	$	0.55	$	0.55	$	1.10	$	1.10

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Unaudited)

	Three Months Ended March 31, 2013
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	5,153	$	80	$	5,233
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of tax		28		0		28
Foreign currency translation adjustment		(1,564)		7		(1,557)
Comprehensive income	$	3,617	$	87	$	3,704
	Three Months Ended March 31, 2012
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	7,110	$	130	$	7,240
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of tax		78		0		78
Foreign currency translation adjustment		302		4		306
Comprehensive income	$	7,490	$	134	$	7,624
	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		0		136
Foreign currency translation adjustment		(2,188)		9		(2,179)
Comprehensive income	$	7,978	$	255	$	8,233
	Six Months Ended March 31, 2012
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	12,035	$	289	$	12,324
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of tax		157		0		157
Foreign currency translation adjustment		(370)		(21)		(391)
Comprehensive income	$	11,822	$	268	$	12,090

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity (Unaudited)

	Landauer, Inc. Stockholders’ Equity
(Dollars in Thousands)	Common Stock Shares	Common Stock		Addi- tional Paid in Capital		Accumu- lated Other Compre- hensive Income (Loss)		Retained Earnings		Non- Controlling Interest		Total Stock- holders’ Equity
Balance   September 30, 2012	9,493,368	$	949	$	35,898	$	(5,272)	$	48,142	$	1,385	$	81,102
Stock-based compensation   arrangements	68,952		7		1,165		0		0		0		1,172
Dividends	0		0		0		0		(10,487)		(426)		(10,913)
Net income	0		0		0		0		10,030		246		10,276
Foreign currency translation   adjustment	0		0		0		(2,188)		0		9		(2,179)
Defined benefit pension and   postretirement plans activity,   net of tax	0		0		0		136		0		0		136
Balance   March 31, 2013	9,562,320	$	956	$	37,063	$	(7,324)	$	47,685	$	1,214	$	79,594

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended March 31,
(Dollars in Thousands)		2013		2012
Cash flows from operating activities:
Net income		$	10,276	$	12,324
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			6,976		5,030
Equity in income of joint ventures			(2,084)		(1,871)
Dividends from joint ventures			1,891		1,393
Stock-based compensation and related net tax benefits			1,504		1,641
Current and long-term deferred taxes, net			284		1,753
Changes in operating assets and liabilities:
Increase in accounts receivable, net			(1,244)		(2,886)
(Increase) decrease in prepaid taxes			(2,755)		3,994
Increase in other operating assets, net			(3,039)		(1,879)
Decrease in accounts payable and other accrued liabilities			(4,310)		(2,009)
(Decrease) increase in other operating liabilities, net			(26)		1,068
Net cash provided by operating activities			7,473		18,558
Cash flows used by investing activities:
Acquisition of property, plant and equipment			(4,611)		(7,358)
Acquisition of joint ventures and businesses, net of cash acquired			0		(98,297)
Other investing activities, net			(678)		(796)
Net cash used by investing activities			(5,289)		(106,451)
Cash flows provided (used) by financing activities:
Net borrowings on revolving credit facility			0		(19,805)
Long-term borrowings - loan			10,500		132,887
Long-term borrowings - repayment			(8,587)		(3,800)
Dividends paid to stockholders			(10,429)		(10,408)
Other financing activities, net			(260)		(277)
Net cash provided by financing activities			(8,776)		98,597
Effects of foreign currency translation			13		81
Net (decrease) increase in cash and cash equivalents			(6,579)		10,785
Opening balance - cash and cash equivalents			17,633		7,914
Ending balance - cash and cash equivalents		$	11,054	$	18,699

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

7

LANDAUER, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2013

(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, 2012 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, 2012. There have been no changes to the accounting policies for the three and six month periods ended March 31, 2013.

The results of operations for the three and six month periods ended March 31, 2013 are not necessarily indicative of the results to be expected for the full fiscal year. The September 30, 2012 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.

(2) Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards Board (“FASB”) issued new guidance on the impairment testing for indefinite-lived intangible assets other than goodwill. This guidance now permits entities to initially perform a qualitative assessment on indefinite-lived intangible assets impairment to assess whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, as a result of the qualitative assessment, it is determined that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. The Company will adopt the guidance for its annual impairment tests performed in fiscal 2013. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

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 is effective for the Company in the first quarter of fiscal 2014. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

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(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 March 31, 2013 and September 30, 2012, 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 March 31, 2013 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category
Cash equivalents	$	51	$	0	$	0
Mutual funds		2,864		0		0
Total financial assets at fair value	$	2,915	$	0	$	0
	Fair Value Measurements at September 30, 2012 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category
Cash equivalents	$	42	$	0	$	0
Mutual funds		2,368		0		0
Total financial assets at fair value	$	2,410	$	0	$	0

As of March 31, 2013, the carrying amount of the Company’s long-term debt, which is categorized as Level 1 in the fair value hierarchy, approximated fair value as the stated interest rates were variable in relation to prevailing market rates.

9

(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.

Unvested stock-based compensation awards that contain non-forfeitable rights to dividends are treated as participating securities and included in the computation of earnings per share pursuant to the two-class method. The Company’s time vested restricted stock is a participating security. Undistributed net income allocated to unvested restricted stock was not material for the three and six month periods ended March 31, 2013 and 2012. The following table sets forth the computation of net income per share:

	Three Months Ended March 31,				Six Months Ended March 31,
(Dollars in thousands, Except per Share)	2013		2012		2013		2012
Basic Net Income per Share:
Net income attributed to Landauer, Inc.	$	5,153	$	7,110	$	10,030	$	12,035
Less: Income allocated to unvested restricted stock		43		35		75		67
Net income available to common stockholders	$	5,110	$	7,075	$	9,955	$	11,968
Basic weighted average shares outstanding		9,417		9,361		9,391		9,347
Net income per share – Basic	$	0.54	$	0.76	$	1.06	$	1.28
Diluted Net Income per Share:
Net income attributed to Landauer, Inc.	$	5,153	$	7,110	$	10,030	$	12,035
Less:  Income allocated to unvested restricted stock		43		35		75		67
Net income available to common stockholders	$	5,110	$	7,075	$	9,955	$	11,968
Basic weighted average shares outstanding		9,417		9,361		9,391		9,347
Effect of dilutive securities		45		41		47		40
Diluted weighted average shares outstanding		9,462		9,402		9,438		9,387
Net income per share – Diluted	$	0.54	$	0.75	$	1.05	$	1.27

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(5) Employee Benefit Plans

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

	Pension Benefits				Other Benefits
	Three Months Ended March 31,
	2013		2012		2013		2012
Service cost	$	0	$	0	$	17	$	14
Interest cost		340		360		11		14
Expected return on plan assets		(365)		(328)		0		0
Amortization of net loss		108		79		0		0
Net periodic benefit cost	$	83	$	111	$	28	$	28
	Pension Benefits				Other Benefits
	Six Months Ended March 31,
	2013		2012		2013		2012
Service cost	$	0	$	0	$	34	$	29
Interest cost		680		720		23		27
Expected return on plan assets		(730)		(656)		0		0
Amortization of net loss		216		157		0		0
Net periodic benefit cost	$	166	$	221	$	57	$	56

The Company, under IRS minimum funding standards, is required to make a contribution of $356 to its defined benefit pension plan during fiscal 2013.

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 six months of fiscal 2013 and 2012 were $801 and $834, respectively.

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(6) Segment Information

The following tables summarize financial information for each reportable segment:

	Three Months Ended March 31, 2013
	Radiation Measurement			Medical Physics			Medical Products			Consolidated
Revenues	$	27,249		$	7,598		$	2,235		$	37,082
Operating income		6,118			732			304			7,154
	Three Months Ended March 31, 2012
	Radiation Measurement			Medical Physics		Medical Products			Consolidated
Revenues	$		27,358	$	7,688	$		4,048	$		39,094
Operating income			8,029		109			2,011			10,149

	Six Months Ended March 31, 2013
	Radiation Measurement			Medical Physics			Medical Products			Consolidated
Revenues	$	53,652		$	15,187		$	4,924		$	73,763
Operating income		11,383			1,524			974			13,881
	Six Months Ended March 31, 2012
	Radiation Measurement			Medical Physics		Medical Products			Consolidated
Revenues	$		54,402	$	15,122	$		6,239	$		75,763
Operating income			14,319		1,002			2,381			17,702

There have been no significant changes to segment assets from September 30, 2012 to March 31, 2013.

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

The following discussion and analysis of our unaudited consolidated financial condition and results of operations should be read in conjunction with our 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 our Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

Second Fiscal Quarter Executive Overview

Revenues in the second fiscal quarter of 2013 are $2.0 million less than the prior year fiscal quarter as a result of a $1.8 million decrease of Medical Products due to a decline in selling price and shipments of Spherz and a $.1 million decrease in Radiation Measurement. The Radiation Measurement decrease is due to a decrease of $.6 million in domestic revenues, offset by $.5 million increase from international subsidiaries and foreign exchange.

Cost and Expenses in the second fiscal quarter of 2013 is up $1.0 million, and is primarily attributable to additional IT expense related to our new IT platform enhancement of $1.9 million, increased international costs of $.4 million, additional customer service support $.3 million, offset by $.5 million in decreased materials, $.7 million in decreased service costs and $.3 million in prior year IT Platform expenses.

Equity in income of joint ventures in the second fiscal quarter of 2013 is down $.5 million over the prior year period due to declines in Japan and the United States related to delays in equipment sales. Interest expense is up $.2 million on slightly higher average borrowings over the prior fiscal year. Income tax effective rate for the second fiscal quarter of 2013 is 23.6% versus the prior year second fiscal quarter rate of 30.0%.

Net income attributable to Landauer for the second fiscal quarter of 2013 and 2012 are $5.2 million and $7.1 million, respectively, and diluted earnings per share of $.54 and $.75, respectively.

Results of Operations

Comparison of the second fiscal quarter ended March 31, 2013 and the second fiscal quarter ended March 31, 2012

Revenues for the second fiscal quarter of 2013 and for the second fiscal quarter of 2012 were $37.1 million and $39.1 million, respectively. The Medical Products segment had a decrease of $1.8 million in revenues due to a decline in Spherz selling price and shipments and both Radiation Measurement and Medical Physics each had a $.1 million decrease in revenues over the prior fiscal year period. Consolidated revenue for the second fiscal quarter of 2013 was negatively affected in the amount of $.1 million by currency fluctuation, as compared with the prior fiscal year period, principally due to weakness in the Brazil Real against the U.S. dollar.

Cost of sales for the second fiscal quarter of 2013 was $17.0 million, an increase of $1.0 million, or 6.3%, compared with cost of sales of $16.0 million for the second fiscal quarter of 2012. The cost of sales increase was due to increased IT expenses due to the Company’s IT platform enhancement of $.5 million for additional depreciation, $1.0 million in IT consulting services and $.4 million in increased international costs, offset by decreased materials of $.5 million and decreased service costs of $.3 million.

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Total selling, general and administrative expenses for the second fiscal quarter of 2013 and 2012 were $12.6 million. The selling, general and administrative expense changes in the second fiscal quarter of 2013 were $.4 million of additional depreciation expense for the IT platform and $.3 million of additional customer service support, offset by $.3 million of prior year IT platform expense and service cost reductions of $.4 million.

Operating income for the second fiscal quarter of 2013 was $7.1 million, a decrease of $3.0 million, or 29.7%, compared with operating income of $10.1 million for the second fiscal quarter of 2012. The decrease in operating income was due to reduced Medical Products sales of $1.8 million, increased IT expenses due to the Company’s IT platform enhancement of $1.9 million, additional international costs of $.4 million and additional customer service support of $.3 million, offset by decreased materials of $.5 million, decreased prior year IT platform expenses of $.3 million, and decreased service costs of $.7 million. The Company also had additional acquisition expense of $.3 million offset by prior year acquisition expense of $.3 million.

Equity in income of joint ventures for the second fiscal quarter of 2013 was $.6 million, a decrease of $.5 million, or 45.5%, from the prior year second fiscal quarter amount of $1.1 million, due primarily to decreased equipment sales in Japan and the United States. Interest expense for the second fiscal quarter of 2013 was $1.1 million, an increase of $.2 million or 22.2%, from the prior year second fiscal quarter amount of $.9 million, due primarily to increased average debt associated with borrowings to acquire IZI Medical Products, LLC (“IZI”) in the first fiscal quarter of 2012.

The effective tax rate for the second fiscal quarter of 2013 and 2012 was 23.6% and 30.0%, respectively. The decline in the effective tax rate was due primarily to the enactment of the R&D credit for calendar year 2013 in the second fiscal quarter of 2013 as well as a change in the mix of earnings based on geographic location of the Company’s operations in various jurisdictions and specific legal entities subject to taxation in those jurisdictions.

Net income attributable to Landauer for the second fiscal quarter of 2013 and 2012 was $5.2 million and $7.1 million, respectively, or $.54 and $.75 per diluted share, respectively. The decrease in net income was due to reduced Medical Products sales of $1.8 million, increased IT expenses due to the Company’s IT platform enhancement of $1.9 million, decreased equity earnings of $.5 million, additional international costs of $.4 million and additional customer service support of $.3 million, offset by effective tax rate reduction decreasing taxes by $1.5 million, decreased materials of $.5 million, decreased service costs of $.7 million and decreased prior year IT platform expenses of $.3 million,.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the second fiscal quarter of 2013 were $11.3 million compared with $13.7 million for the second fiscal quarter of 2012. The decrease was due primarily to lower earnings. 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 second fiscal quarter of 2013 decreased .4%, or $.1 million, to $27.3 million from the second fiscal quarter of 2012 amount of $27.4 million. The decrease in the fiscal second quarter was primarily due to revenue decreases domestically over the prior year second fiscal quarter of $.6 million offset by international increases of $.6 million less currency impacts of $.1 million. Operating income for the second fiscal quarter of 2013 of $6.1 million decreased $1.9 million, or 23.8%, from the second fiscal quarter of 2012 of $8.0 million. The decrease in operating income was due to increased IT expenses due to the Company’s IT platform enhancement of $1.9 million and $.4 million in increased international costs, $.3 million of additional customer service support offset by decreased materials of $.4 million, and decreased prior year IT platform expenses of $.3 million.

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Corporate expenses for shared functions are recognized in the RadiationMeasurement segment where they have been reported historically. Acquisition and reorganization costs are not allocated to the segments. As the Company’s business model evolves in increased complexity, management may determine it will be necessary to change this reporting practice to reflect any appropriate allocations.

Medical Physics Segment

Medical Physics revenues for the second fiscal quarter of 2013 of $7.6 million decreased by $.1 million, or 1.3%, from the second fiscal quarter of 2012 amount of $7.7 million. Medical Physics operating income was $.7 million due primarily to decreased service costs of $.7 million, or 9.2% of revenues, as compared to $.1 million, or 1.3% of revenues, in the second fiscal quarter of 2012.

Medical Products Segment

Medical Products revenues for the second fiscal quarter of 2013 were $2.2 million, a decrease of 45.1%, or $1.8 million, from the second fiscal quarter of 2012 amount of $4.0 million. Revenue declined by $1.8 million over the prior year period due to a decline in selling price and shipments of Spherz without a corresponding decrease in costs. Operating income for the second fiscal quarter of 2013 was $.3 million, or 13.6% of revenues, as compared to $2.0 million, or 50.0% of revenues, in the second fiscal quarter of 2012.

Comparison of the six months ended March 31, 2013 and the six months ended March 31, 2012

Revenues for the first six months of fiscal 2013 and for the first six months of fiscal 2012 were $73.8 million and $75.8 million, respectively. The Medical Products segment had a decline of $1.3 million due to a decline in Spherz selling price and shipments and the Radiation Measurement segment decreased $.7 million in revenues. Consolidated revenue for the first six months of fiscal 2013 was negatively affected in the amount of $.3 million by currency fluctuation, as compared with the prior fiscal year period, principally due to weakness in the Brazil Real and the Euro against the U.S. dollar.

Cost of sales for the first six months of fiscal 2013 was $33.6 million, an increase of $2.7 million, or 8.7%, compared with cost of sales of $30.9 million for the first six months of fiscal 2012. The cost of sales increase was due to increased IT expenses due to the Company’s IT platform enhancement of $2.5 million, $.3 million of international costs and service costs of $.2 million offset by decreased materials of $.4 million.

Total selling, general and administrative expenses for the first six months of fiscal 2013 were $26.0 million, an increase of $1.0 million, or 4.0%, compared with selling, general and administrative expenses of $25.0 million for the first six months of fiscal 2012. The increase was primarily due to additional IT platform depreciation of $.7 million and additional customer service support of $.8 million and other cost changes of $.8 million offset by service cost reductions of $.7 million and prior year IT platform expenses of $.6 million.

Acquisition costs in the first six months of fiscal 2013 were $.3 million as compared to the prior fiscal year six months of $2.2 million.

Operating income for the first six months of fiscal 2013 was $13.9 million, a decrease of $3.8 million, or 21.5%, compared with operating income of $17.7 million for the first six months of fiscal 2012. The decrease in operating income was due to reduced Medical Products operating income of $1.4 million, reduced Radiation Measurement revenue of $.7 million, increased IT expenses due to the Company’s IT platform enhancement of $3.2 million, additional manufacturing and international costs of $.6 million and additional customer service support of $.8 million, offset by decreased acquisition costs of $1.9 million and service cost reductions of $.5 million and prior year IT platform expense of $.6 million.

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Equity in income of joint ventures for the first six months of fiscal 2013 was $2.1 million, an increase of $.2 million, or 10.5%, from the prior year first six months amount of $1.9 million. Interest expense for the first six months of fiscal 2013 was $2.1 million, an increase of $.6 million or 40.0%, from the prior year first six months expense of $1.5 million due primarily to increased debt associated with borrowings to acquire IZI in the first six months of fiscal 2012.

The effective tax rate for the first six months of fiscal 2013 and 2012 was 27.5% and 32.2%, respectively. The decline in the effective tax rate was due primarily to the enactment of the R&D credit for calendar year 2013 in the second fiscal quarter of 2013 as well as a change in the mix of earnings based on geographic location of the Company’s operations in various jurisdictions and specific legal entities subject to taxation in those jurisdictions.

Net income attributable to Landauer for the first six months of fiscal 2013 and 2012 was $10.0 million and $12.0 million, respectively, or $1.05 and $1.27 per diluted share, respectively. The decrease in net income was due to reduced Medical Products operating income of $1.4 million, reduced Radiation Measurement revenue of $.7 million, increased IT expenses due to the Company’s IT platform enhancement of $3.2 million, additional manufacturing and international costs of $.6 million, additional customer service support of $.8 million and additional other expenses of $.2 million, offset by effective tax rate reduction decreasing taxes by $1.9 million and decreased acquisition costs of $1.9 million and service costs reductions of $.5 million and prior year IT platform expense of $.6 million.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first six months of fiscal 2013 were $22.8 million compared with $24.2 million for the first six months of fiscal 2012. The decrease was primarily due to lower earnings. 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 2013 were $53.7 million, a decrease of 1.3%, or $.7 million, from the first six months of fiscal 2012 amount of $54.4 million. The decrease in the first six months of fiscal 2013 was primarily due to decreases of equipment sales by $.3 million and currency impacts of $.3 million as compared to prior fiscal year first six months. Operating income for the first six months of fiscal 2013 decreased $2.9 million, or 20.3%, to $11.4 million from the first six months of fiscal 2012 amount of $14.3 million. The decrease in operating income was due to reduced Radiation Measurement revenue of $.7 million, increased IT expenses due to the Company’s IT platform enhancement of $3.2 million, additional manufacturing and international costs of $.6 million and additional customer service support of $.8 million, offset by prior fiscal year first six months acquisition costs of $1.9 million and prior year IT platform costs of $.6 million.

Corporate expenses for shared functions are recognized in the RadiationMeasurement segment where they have been reported historically. Acquisition and reorganization costs are not allocated to the segments. As the Company’s business model evolves in increased complexity, management may determine it will be necessary to change this reporting practice to reflect any appropriate allocations.

Medical Physics Segment

Medical Physics revenues for the first six months of fiscal 2013 increased $.1 million to $15.2 million from the first six months of fiscal 2012 amount of $15.1 million. Medical Physics operating income was $1.5 million, or 9.9% of revenues, as compared to $1.0 million, or 6.6% of revenues, in the first six months of fiscal 2012 due primarily to decreased service costs of $.5 million.

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Medical Products Segment

Medical Products revenues for the first six months of fiscal 2013 decreased 21.0%, or $1.3 million, to $4.9 million from the first six months of fiscal 2012 amount of $6.2 million. Revenue declined by $1.3 million over the prior year period due to a decline in selling price and shipments of Spherz without a corresponding decrease in costs. Operating income for the first six months of fiscal 2013 was $1.0 million, or 20.4% of revenues, as compared to $2.4 million, or 38.7% of revenues, in the first six months of fiscal 2012.

Fiscal 2013 Outlook

Landauer’s business plan for fiscal 2013currently anticipates aggregate revenues for the yearto be in the range of $150 million to $155 million. The business plan also anticipates a blended effective tax rate for the full fiscal year in the range of 28% to 30%.

Based upon the above assumptions, the Company anticipates reported net income for fiscal 2013 in the range of $21 million to $23 million and Adjusted EBITDA expected for fiscal 2013 in the range of $51 million to $53 million.

Liquidity and Capital Resources

Cash provided by operations was $7.5 million and $18.6 million in the first six months of fiscal 2013 and 2012, respectively. The major changes in the components of cash provided by operations between the two periods were a decrease in prepaid taxes of $6.8 million due to the timing of tax payments, accounts payable of $2.3 million and reduced net income of $2.0 million.

Cash used by investing activities for the first six months of fiscal 2013 was $5.3 million compared to the prior fiscal year first six months amount of $106.5 million. The primary difference was due to the acquisitions made in the previous fiscal year, primarily the purchase of IZI for $98.3 million.

Financing activities for the first six months of fiscal 2013 were comprised primarily of long-term borrowings on the credit agreement of $1.9 million compared to the previous fiscal year’s first six months net borrowings of $129.1 million. During the first six months of fiscal 2013 and 2012, the Company funded cash dividends of $10.4 million, or $.55 per share, for the fourth quarter of fiscal 2012 and 2011 and the first quarter of fiscal 2013 and 2012.

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 accounting principles generally accepted in the United States.

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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.

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

	Three Months Ended March 31,
	2013		2012
Adjusted EBITDA
Net income attributed to Landauer, Inc.	$	5,153	$	7,110
Add back:
Interest expense, net		976		771
Depreciation and amortization		3,526		2,674
Provision for income taxes		1,620		3,104
Earnings before interest, taxes, depreciation and amortization (EBITDA)	$	11,275	$	13,659
Adjustments:
Non-cash stock-based compensation expense		382		624
IT platform enhancements expenses		27		306
Acquisition and reorganization costs		300		312
Sub-total adjustments		709		1,242
Adjusted EBITDA	$	11,984	$	14,901
Adjusted Net Income
Net income attributed to Landauer, Inc.	$	5,153	$	7,110
Sub-total adjustments		709		1,242
Income taxes on adjustments		(167)		(373)
Adjustments, net		542		869
Adjusted Net Income	$	5,695	$	7,979
Adjusted Net Income per Diluted Share	$	.60	$	.85

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	Six Months Ended
	March 31,
	2013		2012
Adjusted EBITDA
Net income attributed to Landauer, Inc.	$	10,030	$	12,035
Add back:
Interest expense, net		1,908		1,299
Depreciation and amortization		6,976		5,030
Provision for income taxes		3,894		5,846
Earnings before interest, taxes, depreciation and amortization (EBITDA)	$	22,808	$	24,210
Adjustments:
Non-cash stock-based compensation expense		1,066		1,454
IT platform enhancements expenses		205		588
Acquisition and reorganization costs		300		2,161
Sub-total adjustments		1,571		4,203
Adjusted EBITDA	$	24,379	$	28,413
Adjusted Net Income
Net income attributed to Landauer, Inc.	$	10,030	$	12,035
Sub-total adjustments		1,571		4,203
Income taxes on adjustments		(432)		(1,353)
Adjustments, net		1,139		2,850
Adjusted Net Income	$	11,169	$	14,885
Adjusted Net Income per Diluted Share	$	1.18	$	1.59

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Recent Accounting Pronouncements

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

Critical Accounting Policies

Our accounting policies require us to apply methodologies, estimates and judgments that have a significant impact on the results we report in our consolidated financial statements. In our 2012 Annual Report on Form 10-K, we discussed those material policies that we believe are critical and require the use of complex judgment in their application. There have been no changes to our critical accounting policies since that time.

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 2012 and through March 31, 2013.

Forward-Looking Statements

Certain matters contained in this report, including the information contained under the heading “Fiscal 2013 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 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 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, 2012 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.

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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, 2012. The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through March 31, 2013.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the 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 controls and procedures as defined in Rule 13(a)-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures as of March 31, 2013 were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the quarterly period ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 March 31, 2013, 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, 2012. The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through March 31, 2013.

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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 March 31, 2013 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 Repurchase Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
October 1 - October 31, 2012	0	$	0	-	-
November 1 - November 30, 2012	1,100		58.99	-	-
December 1 - December 31, 2012	9,715		58.05	-	-
Quarter ended December 31, 2012	10,815	$	58.14	-	-
January 1 - January 31, 2013	0	$	0	-	-
February 1 - February 28, 2013	88		58.80	-	-
March 1 - March 31, 2013	0		0	-	-
Quarter ended March 31, 2013	88	$	58.80	-	-

Item 3. Defaults Upon Senior Securities

Not Applicable 

Item 4. Mine Safety Disclosures

Not Applicable 

Item 5. Other Information

Not Applicable 

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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 March 31, 2013

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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.

	LANDAUER, INC.
Date: May 8, 2013	/s/ Michael K. Burke
	Michael K. Burke
	Senior Vice President and Chief Financial Officer (Principal Financial Officer)

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