Landauer 10Q 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 endedJune 30, 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. 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 July 30, 2013, 9,526,237 shares of common stock, par value $0.10 per share, of the registrant were outstanding.

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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 (Loss) Income (Unaudited)	5

		Consolidated Statement of Stockholders’ Equity (Unaudited)	6

		Consolidated Statements of Cash Flows (Unaudited)	7

		Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27

Item 4.	Controls and Procedures		27


PART II OTHER INFORMATION

Item 1.	Legal Proceedings		27

Item 1A.	Risk Factors		27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		28

Item 3.	Defaults Upon Senior Securities		28

Item 4.	Mine Safety Disclosures		28

Item 5.	Other Information		28

Item 6.	Exhibits		29


SIGNATURE			30

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)


(Dollars in Thousands)	June 30, 2013		September 30, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	8,997	$	17,633
Receivables, net of allowances of $728 and $1,088, respectively		34,807		35,165
Inventories		9,487		8,638
Prepaid income taxes		3,513		2,148
Prepaid expenses and other current assets		4,518		3,975
Current assets		61,322		67,559
Property, plant and equipment, at cost		106,248		101,375
Accumulated depreciation and amortization		(53,326)		(46,983)
Net property, plant and equipment		52,922		54,392
Equity in joint ventures		22,735		24,108
Goodwill		83,833		106,717
Intangible assets, net of accumulated amortization of $12,229 and $9,696, respectively		37,987		37,402
Dosimetry devices, net of accumulated depreciation of $9,989 and $8,879, respectively		6,221		6,189
Other assets		5,837		5,758
Assets	$	270,857	$	302,125
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,490	$	9,656
Dividends payable		5,389		5,345
Deferred contract revenue		13,572		14,947
Accrued compensation and related costs		7,146		8,260
Other accrued expenses		8,863		7,096
Current liabilities		40,460		45,304
Non-current liabilities:
Long-term debt		139,560		141,347
Pension and postretirement obligations		17,655		17,586
Deferred income taxes		10,118		15,733
Other non-current liabilities		892		1,053
Non-current liabilities		168,225		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; 9,589,705 and 9,493,368 shares issued and outstanding at June 30, 2013 and September 30, 2012 respectively		959		949
Additional paid in capital		39,034		35,898
Accumulated other comprehensive loss		(7,866)		(5,272)
Retained earnings		28,721		48,142
Landauer, Inc. stockholders' equity		60,848		79,717
Noncontrolling interest		1,324		1,385
Stockholders' equity		62,172		81,102
Liabilities and Stockholders' Equity	$	270,857	$	302,125

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)



		Three Months Ended June 30,				Nine Months Ended June 30,
(Dollars in Thousands, Except per Share)		2013		2012		2013		2012
Net revenues	$	36,580	$	39,205	$	110,343	$	114,968

Cost and expenses:
Cost of sales		17,964		17,357		51,577		48,292
Selling, general and administrative		12,550		12,251		38,519		37,216
Goodwill impairment charge		22,700		0		22,700		0
Acquisition and reorganization costs		142		348		442		2,509
Costs and expenses		53,356		29,956		113,238		88,017

Operating (loss) income		(16,776)		9,249		(2,895)		26,951
Equity in income of joint ventures		471		684		2,555		2,555
Interest expense, net		(1,154)		(1,113)		(3,268)		(2,566)
Other income (expense), net		112		(50)		431		0

(Loss) income before taxes		(17,347)		8,770		(3,177)		26,940
Income taxes		(3,748)		2,014		146		7,860

Net (loss) income		(13,599)		6,756		(3,323)		19,080
Less: Net income attributed to noncontrolling interest		154		190		400		479

Net (loss) income attributed to Landauer, Inc.	$	(13,753)	$	6,566	$	(3,723)	$	18,601

Net (loss) income per share attributable to Landauer, Inc. shareholders:
Basic	$	(1.46)	$	0.70	$	(0.40)	$	1.98
Weighted average basic shares outstanding		9,439		9,371		9,402		9,357

Diluted	$	(1.46)	$	0.69	$	(0.40)	$	1.97
Weighted average diluted shares outstanding		9,439		9,412		9,402		9,397


Dividends paid per share	$	0.55	$	0.55	$	1.65	$	1.65

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)



	Three Months Ended June 30, 2013

(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net (loss) income	$	(13,753)	$	154	$	(13,599)
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of tax		68		0		68
Foreign currency translation adjustment		(610)		(44)		(654)
Comprehensive (loss) income	$	(14,295)	$	110	$	(14,185)

	Three Months Ended June 30, 2012

(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	6,566	$	190	$	6,756
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of tax		79		0		79
Foreign currency translation adjustment		(1,824)		(59)		(1,883)
Comprehensive income	$	4,821	$	131	$	4,952

	Nine Months Ended June 30, 2013

(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net (loss) income	$	(3,723)	$	400	$	(3,323)
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of tax		204		0		204
Foreign currency translation adjustment		(2,798)		(35)		(2,833)
Comprehensive (loss) income	$	(6,317)	$	365	$	(5,952)

	Nine Months Ended June 30, 2012

(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	18,601	$	479	$	19,080
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of tax		236		0		236
Foreign currency translation adjustment		(2,194)		(80)		(2,274)
Comprehensive income	$	16,643	$	399	$	17,042

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 (Loss) Income		Retained Earnings		Non- Controlling Interest		Total Stock- holders' Equity
BalanceSeptember 30, 2012	9,493,368	$	949	$	35,898	$	(5,272)	$	48,142	$	1,385	$	81,102
Stock-based compensation arrangements	96,337		10		3,136		0		0		0		3,146
Dividends	0		0		0		0		(15,698)		(426)		(16,124)
Net (loss) income	0		0		0		0		(3,723)		400		(3,323)
Foreign currency translation adjustment	0		0		0		(2,798)		0		(35)		(2,833)
Defined benefit pension and postretirement plans activity, net of tax	0		0		0		204		0		0		204
Balance June 30, 2013	9,589,705	$	959	$	39,034	$	(7,866)	$	28,721	$	1,324	$	62,172

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)



	Nine Months Ended June 30,
(Dollars in Thousands)		2013		2012

Cash flows from operating activities:
Net (loss) income		$	(3,323)	$	19,080
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			10,860		7,752
Goodwill impairment charge			22,700		0
Equity in income of joint ventures			(2,555)		(2,555)
Dividends from joint ventures			1,891		1,393
Stock-based compensation and related net tax benefits			2,293		2,361
Current and long-term deferred taxes, net			(5,531)		2,430
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net			305		(4,480)
(Increase) decrease in prepaid taxes			(1,349)		4,774
Increase in other operating assets, net			(3,679)		(2,265)
Decrease in accounts payable and other accrued liabilities			(4,006)		(376)
(Decrease) increase in other operating liabilities, net			(1,073)		2,339
Net cash provided by operating activities			16,533		30,453

Cash flows used by investing activities:
Acquisition of property, plant and equipment			(5,286)		(11,476)
Acquisition of joint ventures and businesses, net of cash acquired			0		(98,297)
Other investing activities, net			(1,973)		(754)
Net cash used by investing activities			(7,259)		(110,527)

Cash flows (used) provided by financing activities:
Net borrowings on revolving credit facility			0		(19,805)
Long-term borrowings - loan			19,600		132,887
Long-term borrowings - repayment			(21,387)		(5,300)
Dividends paid to stockholders			(15,658)		(15,607)
Other financing activities, net			(260)		(273)
Net cash (used) provided by financing activities			(17,705)		91,902

Effects of foreign currency translation			(205)		(568)

Net (decrease) increase in cash and cash equivalents			(8,636)		11,260
Opening balance - cash and cash equivalents			17,633		7,914
Ending balance - cash and cash equivalents		$	8,997	$	19,174

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

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LANDAUER, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

June 30, 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 nine month periods ended June 30, 2013.

The results of operations for the three and nine month periods ended June 30, 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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In March 2013, the FASB issued an accounting update that clarifies the applicable guidance for the release of the cumulative translation adjustment when an entity ceases to have a controlling financial interest in a subsidiary or a group of assets that is a business within a foreign entity. The guidance outlines the events when cumulative translation adjustments should be released into net income and is intended by FASB to eliminate some disparity in current accounting practice. This guidance 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.

(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 June 30, 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.

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



	Fair Value Measurements at June 30, 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	$	55	$	0	$	0
Mutual funds		2,744		0		0
Total financial assets at fair value	$	2,799	$	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 June 30, 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.

(4) (Loss) Income per Common Share

Basic net (loss) 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 (loss) income per share was computed by dividing net (loss) 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. In periods where losses are recorded, inclusion of potentially dilutive securities in the calculation would decrease the loss per common share and, therefore, these securities are not added to the weighted average number of shares outstanding.

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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 nine month periods ended June 30, 2013 and 2012. The following table sets forth the computation of net income per share:



	Three Months Ended June 30,				Nine Months Ended June 30,
(Dollars in Thousands, Except per Share)	2013		2012		2013		2012
Basic Net (Loss) Income per Share:
Net (loss) income attributed to Landauer, Inc.	$	(13,753)	$	6,566	$	(3,723)	$	18,601
Less: Income allocated to unvested restricted stock		0		34		0		101
Net (loss) income available to common stockholders	$	(13,753)	$	6,532	$	(3,723)	$	18,500
Basic weighted average shares outstanding		9,439		9,371		9,402		9,357
Net (loss) income per share - Basic	$	(1.46)	$	0.70	$	(0.40)	$	1.98

Diluted Net (Loss) Income per Share:
Net (loss) income attributed to Landauer, Inc.	$	(13,753)	$	6,566	$	(3,723)	$	18,601
Less: Income allocated to unvested restricted stock		0		34		0		101
Net (loss) income available to common stockholder	$	(13,753)	$	6,532	$	(3,723)	$	18,500
Basic weighted average shares outstanding		9,439		9,371		9,402		9,357
Effect of dilutive securities		0		41		0		40
Diluted weighted averages shares outstanding		9,439		9,412		9,402		9,397
Net (loss) income per share - Diluted	$	(1.46)	$	0.69	$	(0.40)	$	1.97

(5) Employee Benefit Plans

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



Pension Benefits	Three Months Ended June, 30				Nine Months Ended June, 30
	2013		2012		2013		2012
Interest cost	$	340	$	360	$	1,020	$	1,080
Expected return on plan assets		(365)		(328)		(1,095)		(984)
Amortization of net loss		109		79		325		236
Net periodic benefit cost	$	84	$	111	$	250	$	332


Other Benefits	Three Months Ended June, 30				Nine Months Ended June, 30
	2013		2012		2013		2012
Service cost	$	18	$	15	$	52	$	44
Interest cost		11		13		34		40
Net periodic benefit cost	$	29	$	28	$	86	$	84

The Company, under the IRS minimum funding standards, funded its defined benefit pension plan in fiscal year 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 nine months of fiscal 2013 and 2012 were $1,150 and $990, respectively.

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(6) Goodwill and Other Intangibles

Changes in the carrying amount of goodwill by reportable segment for the nine months ended June 30, 2013 were as follows:



	Radiation Measurement		Medical Physics		Medical Products		Total

Balance as of September 30, 2012:	$	20,037	$	22,611	$	64,069	$	106,717
Effects of foreign currency		(184)						(184)
Accumulated goodwill impairment charges						(22,700)		(22,700)
Goodwill, net as of June 30, 2013	$	19,853	$	22,611	$	41,369	$	83,833

During the third quarter of fiscal 2013, in connection with our quarterly forecasting cycle, we updated the forecasted results of operations for our operating segments based on the most recent financial results and our best estimate of future operations. The updated forecast reflects a decline in revenues for the Medical Products segment primarily due to the inability to generate new sales to replace decreasing revenues. As a result, in connection with the preparation of our financial statements for the quarter ended June 30, 2013, we performed an impairment analysis with respect to the carrying value of goodwill in our Medical Products segment.

In accordance with FASB ASC 350, we aggregate our business components into reporting units and test for goodwill impairment. For our purposes, our reporting units and operating segments are the same as our reporting segments, so we test goodwill at the reporting segment level. Goodwill impairment is determined using two-step process. The first step of the goodwill impairment test is to identify potential impairment by comparing the fair value of a segment with its net book value (or carrying amount), including goodwill. If the fair value of a segment exceeds its carrying amount, goodwill of the segment is considered not to be impaired and the second step of the impairment test is unnecessary. If the carrying amount of the segment exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the segment’s goodwill with the carrying amount of that goodwill. If the carrying amount of the segment’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the segment is allocated to all of the assets and liabilities of that segment (including any unrecognized intangible assets) as if the segment had been acquired in a business combination and the fair value of the segment was the purchase price paid to acquire the segment.

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		June 30, 2013				September 30, 2012
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization

Customer lists	$	43,671	$	10,760	$	40,880	$	8,501
Trademarks and tradenames		2,139		0		2,123		0
Licenses and patents		3,829		912		3,518		638
Other intangibles		577		557		577		557
Intangible assets	$	50,216	$	12,229	$	47,098	$	9,696

Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Intangible assets amortization expense was $834 and $2,533 for three and nine months ended June 30, 2013 and $463 and $1,529 for the three and nine months ended June 30, 2012.

(7) Segment Information

The following tables summarize financial information for each reportable segment:



Three Months Ended June 30, 2013
	Radiation Measurement		Medical Physics		Medical Products		Consolidated
Revenues	$	26,383	$	7,903	$	2,294	$	36,580
Operating income (loss)		4,759		1,056		(22,591)		(16,776)

Three Months Ended June 30, 2012
	Radiation Measurement		Medical Physics		Medical Products		Consolidated
Revenues	$	26,926	$	8,064	$	4,215	$	39,205
Operating income		6,813		517		1,919		9,249

Nine Months Ended June 30, 2013
	Radiation Measurement		Medical Physics		Medical Products		Consolidated
Revenues	$	80,035	$	23,090	$	7,218	$	110,343
Operating income (loss)		16,142		2,580		(21,617)		(2,895)

Nine Months Ended June 30, 2012
	Radiation Measurement		Medical Physics		Medical Products		Consolidated
Revenues	$	81,328	$	23,186	$	10,454	$	114,968
Operating income		21,132		1,519		4,300		26,951


	June 30, 2013		September 30, 2012
Segment assets:
Radiation Measurement	$	163,001	$	171,831
Medical Physics		35,784		36,304
Medical Products		72,072		93,990
Consolidated assets	$	270,857	$	302,125

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(8) Subsequent Events

On August 2, 2013, the Company entered into an amended and restated revolving credit agreement (the “Credit Agreement”) with its group of lenders that provided, among other things, the extension of the expiration date from November 14, 2016 to August 2, 2018 and the accordion feature increased from $25,000 to $50,000.

In addition, the covenants for minimum net worth have been deleted from the Credit Agreement. The leverage ratio covenants have changed to a maximum 3.50 to 1.00 for the period of September 30, 2013 through June 30, 2015, and to a maximum 3.25 to 1.00 for the periods September 30, 2015 and thereafter. The fixed charge ratio covenants have changed to a minimum 1.10 to 1.00 for the period of September 30, 2013 through June 30, 2015, and to a minimum 1.15 to 1.00 for the periods September 30, 2015 and thereafter. The amended terms provide for an interest rate equal to LIBOR plus a margin of between 1.25% and 2.50% and for the base rate a margin of between .25% and 1.50% as compared to a Libor margin of between 1.25% and 2.75%, and a base rate margin of between .25% and 1.75% in the current credit agreement.

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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.

CRITICAL ACCOUNTING POLICIES

Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”). We review our financial reporting and disclosure practices and accounting policies to ensure that our financial reporting and disclosures provide accurate information relative to the current economic and business environment.The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that management make assumptions and estimates that affect the results of operations and the amounts of assets and liabilities reported in the financial statements as well as related disclosures. Critical accounting policies are those that are most important to the portrayal of a company’s financial condition and results, and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.While all decisions regarding accounting policies are important, we believe that there are six accounting policies that could be considered critical. These critical accounting policies relate to the following items: revenue recognition and deferred contract revenue; property, plant & equipment and other assets; goodwill and other intangible assets; income taxes; defined benefit pension and other postretirement benefit plans; and stock-based compensation. For a detailed discussion of these critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended September 30, 2012. Below is an update to our critical accounting policy relating to goodwill and other intangible assets. There have been no material changes to our other critical accounting policies during the first nine months of 2013.

Goodwill and Other Intangible Assets

The Company’s intangible assets include purchased customer lists, licenses, patents, trademarks, tradenames and goodwill. Purchased customer lists are recorded at cost and are amortized on a straight-line basis over estimated useful lives, which range from 10 to 15 years. Patents and licenses are also recorded at cost and are amortized on a straight-line basis over their useful lives, which range from 10 to 20 years. The Company acquired goodwill primarily from its acquisitions of Landauer-Europe, SAPRA-Landauer, LMP and IZI as well as other smaller investments. Goodwill as well as trademarks and tradenames have indefinite lives.

FASB authoritative guidance requires that goodwill and certain intangible assets with indefinite lives be reviewed periodically for impairment. The Company has three segments, Radiation Measurement, Medical Physics and Medical Products. The Company performs an impairment test for each of its segments with goodwill annually and, for goodwill and other intangible assets that are not being amortized, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Triggering events include, but are not limited to, a current-period operating or cash flow loss; a product, technology, or service introduced by a competitor; or a loss of key personnel. When such events or changes in circumstances occur, the Company performs a financial analysis of future undiscounted cash flows projections by asset or asset group.

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Pursuant to our policy, we performed the annual goodwill impairment test as of September 30, 2012 and determined that no impairment of goodwill existed as of that date. During the third quarter of 2013, it became apparent that recent changes implemented to our Medical Products segment had not yet achieved anticipated upward sales trends to the extent forecasted. Early budget reviews also indicated future sales growth may be less than expected. We updated the forecasted results of operations for our Medical Products operating segment based on the most recent financial results and our best estimates of future operations. The updated forecast reflects a slower growth in revenues for the Medical Products segment due to anticipated continued pricing pressures from certain competitors greater than the anticipated growth from existing and new product sales. As a result, we concluded a triggering event occurred and in connection with the preparation of our financial statements for the quarter ended June 30, 2013, we performed an impairment analysis with respect to the carrying value of goodwill in our Medical Products segment.

In accordance with FASB ASC Topic 350, we aggregate our business components into segments and test for goodwill impairment. Goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is to identify potential impairment by comparing the fair value of a segment with its net book value (or carrying amount), including goodwill. If the fair value of a segment exceeds its carrying amount, goodwill of the segment is considered not to be impaired and the second step of the impairment test is unnecessary. If the carrying amount of the segment exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the segment’s goodwill with the carrying amount of that goodwill. If the carrying amount of the segment’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the segment is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the segment had been acquired in a business combination and the fair value of the segment was the purchase price paid to acquire the segment.

Based on the result of the first step of the goodwill impairment analysis, we determined that the fair value of our Medical Products segment was less than its carrying value as of June 30, 2013 and, as such, we applied the second step of the goodwill impairment test to this segment. Based on the result of this second step of the goodwill impairment analysis, we recorded a $22.7 million non-cash pretax charge to reduce the carrying value of goodwill in our Medical Products segment. As a result of the charge recognized during the third quarter, the carrying amount of our goodwill in the Medical Products segment was reduced to $41.4 million at June 30, 2013. Determining the fair value of a segment requires our management to make significant judgments, estimates and assumptions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and also the magnitude of any such charge. In estimating the fair value of our Medical Products segment, we considered the income approach and the market approach. The income approach recognizes that the value of an asset is premised upon the expected receipt of future economic benefits. This approach involves projecting the cash flows the asset is expected to generate. Fair value indications are developed in the income approach by discounting expected future cash flows available to the investor at a rate which reflects the risk inherent in the investment. The market approach is primarily comprised of comparable companies. This approach compares the subject segment to selected reasonably similar companies whose securities are actively traded in the public markets. Comparing revenue growth and EBITDA margins allows us to project an indicated range of fair values. In determining the fair value of our Medical Products segment, we have relied on a combination of the income approach and the market approach. For companies providing services similar to those provided by us, the income and market approaches will generally provide the most reliable indications of value because the value of such companies is more dependent on their ability to generate earnings than on the value of the individual assets.

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In the income approach, we utilized a discounted cash flow analysis, which involved estimating the expected after-tax cash flows that will be generated by our Medical Products segment and then discounting these cash flows to present value reflecting the relevant risks associated with the segment and the time value of money. This approach requires the use of significant estimates and assumptions, including long-term projections of future cash flows, market conditions, discount rates reflecting the risk inherent in future cash flows, revenue growth, perpetual growth rates and profitability, among others. In estimating future cash flows for our Medical Products segment, we relied on an internally generated 10 year forecasts built around previous estimates and modified for recent weaknesses and business assumptions. Our forecast is based on our historical experience, current backlog, expected market demand, and other industry information. Our discounted cash flow analysis assumed an 11% weighted average cost of capital discount rate considering the segment as an independent standalone entity not part of the Landauer enterprise. In the market approach, we selected reasonably similar companies whose securities are actively traded in the public markets. Comparing revenue growth and EBITDA margins allows us to project an indicated range of fair values. These multiples were then applied to the operating data for the Medical Products segment and adjusted for factors to arrive at an indication of value.

While we believe that the estimates and assumptions underlying our valuation methodology are reasonable, different estimates and assumptions could result in different outcomes. The table below presents the decrease in the fair value of the Medical Products segment given a one percent increase in the discount rate or a one percent decrease in the long term assumed annual revenue growth rate.

			Decrease in Fair Value of the Medical Products Segment *(in thousands)*

	Discount Rate – Increase by 1%		$ 7,000
	Long-term Growth Rate – Decrease by 1%		$ 3,000

As described above, a goodwill impairment analysis requires significant judgments, estimates and assumptions. The results of this impairment analysis are as of a point in time. There is no assurance that the actual future earnings or cash flows of our segments will not decline significantly from our projections. Any significant decline in our operations could result in additional goodwill impairment charges. After taking into account the $22.7 million impairment charge, the carrying values of goodwill for each of our segments as of June 30, 2013 are as follows (in thousands):



	Radiation Measurement		Medical Physics		Medical Products		Total

Balance as of September 30, 2012:	$	20,037	$	22,611	$	64,069	$	106,717
Effects of foreign currency		(184)						(184)
Accumulated goodwill impairment charges						(22,700)		(22,700)
Goodwill, net as of June 30, 2013	$	19,853	$	22,611	$	41,369	$	83,833

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Intangible assets represent purchased assets that lack physical substance but can be distinguished from goodwill. Our intangible assets, net of accumulated amortization, totaled $38.0 million at June 30, 2013 and consist of customer lists, trademarks and trade names, licenses and patents as well as other intangibles. We use valuation techniques in estimating the initial fair value of acquired intangible assets. These valuations are primarily based on the present value of the estimated net cash flows expected to be derived from the intangible assets, discounted for assumptions such as future customer attrition. We evaluate our intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Therefore, changes such as higher or earlier-than-expected customer attrition or obsolescence of technology may result in higher future amortization charges or an impairment charge for intangible assets. As part of the goodwill impairment analysis discussed above, we also reviewed our Medical Products segment intangible assets and did not identify impairment.

Third Fiscal Quarter Executive Overview

Revenues in the third fiscal quarter of 2013 are $2.6 million less than the prior year fiscal quarter as a result of a $1.9 million decrease of revenues in our Medical Products segment due to a decline in the selling price and shipments of Spherz product and a $0.5 million decrease in Radiation Measurement. The Radiation Measurement segment decrease is due to a decrease of $1.2 million in domestic revenues, offset by a $0.7 million increase in revenues from international subsidiaries and foreign exchange.

Cost and Expenses in the third fiscal quarter of 2013 is up $0.9 million, and is primarily attributable to additional IT expense related to our new IT platform enhancement of $1.7 million, additional customer service support of $0.2 million, offset by $0.6 million in prior year IT Platform expenses, $0.4 million in decreased material costs and $.4 million in decreased service costs.

Due to declines in revenue and related extended forecasts in the Medical Products segment, the Company performed a valuation test and recorded a goodwill impairment charge of $22.7 million on its investment.

Equity in income of joint ventures in the third fiscal quarter of 2013 is down $.2 million over the prior year period due to declines in equipment sales in Japan. Interest expense is up $0.1 million on slightly higher average borrowings over the prior fiscal year. Income tax effective rate for the third fiscal quarter of 2013 is 21.6% versus the prior year third fiscal quarter rate of 23.0%.

Net (loss) income attributable to Landauer for the third fiscal quarter of 2013 and 2012 are ($13.8) million and $6.6 million, respectively, and diluted earnings per share of ($1.46) and $.69, respectively.

Results of Operations

Comparison of the third fiscal quarter ended June 30, 2013 and the third fiscal quarter ended June 30, 2012

Revenues for the third fiscal quarter of 2013 and for the third fiscal quarter of 2012 were $36.6 million and $39.2 million, respectively, a decrease of $2.6 million or 6.6%. The Medical Products segment had a decrease of $1.9 million in revenues due to the decline in Spherz selling price and shipments in the third fiscal quarter of 2013 and decreased revenues in both the Radiation Measurement and Medical Physics segments of $0.5 million and $0.2 million, respectively over the prior fiscal year period. Consolidated revenue for the third fiscal quarter of 2013 was favorably affected in the amount of $0.1 million by currency fluctuation, as compared with the prior fiscal year period, principally due to gains in the Euro against the U.S. dollar.

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Cost of sales for the third fiscal quarter of 2013 was $18.0 million, an increase of $0.6 million, or 3.4%, compared with cost of sales of $17.4 million for the third fiscal quarter of 2012. The cost of sales increase was due to increased IT expenses related to the Company’s IT platform enhancement of $0.5 million for additional depreciation, $0.8 million in IT consulting services and $0.2 million in increased international costs, offset by decreased material costs of $0.4 million and decreased service costs of $0.4 million.

Selling, general and administrative costs for the third fiscal quarter of 2013 were $12.6 million, an increase of $0.3 million, or 2.4%, compared with selling, general and administrative costs of $12.3 million for the third fiscal quarter of 2012. The selling, general and administrative expense changes in the third fiscal quarter of 2013 were $0.4 million of additional depreciation expense for the IT platform and $0.2 million of additional customer service support, $0.2 million of increased R&D costs and $0.4 million in other cost increases, offset by $0.6 million of prior year IT platform enhancement related expense and service cost reductions of $0.3 million.

During the third quarter of 2013, it became apparent that anticipated revenue trends in our Medical Products segment were not being achieved to the extent forecasted. Early budget reviews also indicated future sales growth may be less than expected. We updated the forecasted results of operations for our Medical Products operating segment based on the most recent financial results and our best estimates of future operations. The updated forecast reflects a slower growth in revenues for the Medical Products segment due to anticipated continued pricing pressures from certain competitors greater than the anticipated growth from existing and new product sales. As a result of these lowered actual and forecast results, we performed a goodwill impairment test, which indicated the value of the Medical Products goodwill was less than its book value. We recorded a $22.7 million pretax charge for the impairment of goodwill to reduce the carrying value of goodwill in our Medical Products segment. The impairment charge is non-cash in nature and does not affect the Company’s liquidity or debt covenant compliance.

Operating (loss) income for the third fiscal quarter of 2013 was a loss of $16.8 million, a decrease of $26.0 million, or 282.6%, compared with operating income of $9.2 million for the third fiscal quarter of 2012. The decrease in operating income was due to a goodwill impairment of $22.7 million, reduced Medical Products sales of $1.9 million, increased IT expenses due to the Company’s IT platform enhancement of $1.7 million, additional customer service support of $0.2 million, offset by decreased service costs of $0.7 million, decreased prior year IT platform enhancement related expenses of $0.6 million and decreased material costs of $0.4 million.

Equity in income of joint ventures for the third fiscal quarter of 2013 was $0.5 million, a decrease of $0.2 million, or 28.5%, from the prior year third fiscal quarter amount of $0.7 million, due primarily to decreased equipment sales in Japan. Interest expense for the third fiscal quarter of 2013 was $1.2 million, an increase of $0.1 million or 9.1%, from the prior year third fiscal quarter amount of $1.1 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 third fiscal quarter of 2013 and 2012 was 21.6% and 23.0%, respectively. The decrease in the effective tax rate was due primarily to benefits from U.S. foreign tax credits. Without impairment of goodwill the effective tax rate would have been 20.9% for the third fiscal quarter of 2013, a decline over the prior year's tax rate due primarily to benefits from U.S. foreign tax credits.

Net loss for the third fiscal quarter ended June 30, 2013 was $13.8 million, or $1.46 per diluted share, compared to net income of $6.6 million, or $0.69 per diluted share, in the same period last year. The decrease in net income was due to a goodwill impairment of $22.7 million, reduced high margin Medical Products sales of $1.9 million, increased IT expenses due to the Company’s IT platform enhancement of $1.7 million, additional customer service support of $0.2 million, offset by decreased taxes of $5.8 million and decreased service costs of $0.7 million.

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(Loss) earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the third fiscal quarter of 2013 were ($12.6) million compared with $12.3 million for the third fiscal quarter of 2012. The decrease was due primarily to lower earnings from a goodwill impairment charge of $22.7 million. Adjusted EBITDA for the third fiscal quarter of 2013 and 2012 were $11.1 million and $13.9 million, respectively. 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 third fiscal quarter of 2013 decreased 1.9%, or $0.5 million, to $26.4 million from the third fiscal quarter of 2012 amount of $26.9 million. The decrease in the fiscal third quarter was primarily due to revenue decreases domestically over the prior year third fiscal quarter of $1.2 million, due to fewer equipment sales, offset by international increases of $0.6 million and currency benefits of $.1 million. Operating income for the third fiscal quarter of 2013 of $4.8 million decreased $2.0 million, or 29.4%, from the third fiscal quarter of 2012 of $6.8 million. The decrease in operating income was due to increased IT expenses related to the Company’s IT platform enhancement of $1.7 million, $0.5 million of decreased revenue, $0.2 million of additional customer service support, $0.2 million of increased R&D and $0.2 million of international costs offset by decreased prior year IT platform expenses of $0.6 million, decreased acquisition costs of $0.3 million and lower material costs of $0.2 million.

Corporate expenses for shared functions are recognized in the Radiation Measurement 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 third fiscal quarter of 2013 of $7.9 million decreased by $0.2 million, or 1.3%, from the third fiscal quarter of 2012 amount of $8.1 million. Medical Physics operating income increased to $1.0 million, or 12.7% of revenues, as compared to $0.5 million, or 6.2% of revenues, due primarily to decreased service costs of $0.7 million in the third fiscal quarter of 2012.

Medical Products Segment

Medical Products revenues for the third fiscal quarter of 2013 decreased 45.2 percent, or $1.9 million, from the third fiscal quarter of 2012 to $2.3 million. Medical Products operating loss for the third fiscal quarter of 2013 was $22.6 million as compared to operating income of $1.9 million in the third fiscal quarter of 2012. The decrease in operating income was due primarily to a goodwill impairment of $22.7 million, as well as a decline in selling price and shipments of high margin Spherz product. During the third quarter of 2013, it became apparent that anticipated revenue trends in our Medical Products segment were not being achieved to the extent forecasted. Early budget reviews also indicated future sales growth may be less than expected. We updated the forecasted results of operations for our Medical Products operating segment based on the most recent financial results and our best estimates of future operations. The updated forecast reflects a slower growth in revenues for the Medical Products segment due to anticipated continued pricing pressures from certain competitors greater than the anticipated growth from existing and new product sales resulting in a goodwill impairment. Since achieving a stabilization of revenue trends during the first-half of the fiscal year, we began to experience modest growth during the third fiscal quarter of 2013.

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Comparison of the nine months ended June 30, 2013 and the nine months ended June 30, 2012

Revenues for the first nine months of fiscal 2013 and for the first nine months of fiscal 2012 were $110.3 million and $115.0 million, respectively. The Medical Products segment had a decline of $3.3 million due to the decline in Spherz selling price and shipments and the Radiation Measurement segment decreased $1.3 million in revenues. Consolidated revenue for the first nine months of fiscal 2013 was negatively affected in the amount of $0.2 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 first nine months of fiscal 2013 was $51.5 million, an increase of $3.2 million, or 6.6%, compared with cost of sales of $48.3 million for the first nine months of fiscal 2012. The cost of sales increase was due to increased IT expenses related to the Company’s IT platform enhancement of $3.9 million, $0.6 million of international costs offset by decreased material costs of $1.2 million and decreased service costs of $0.2 million.

Selling, general and administrative expenses for the first nine months of fiscal 2013 were $38.5 million, an increase of $1.3 million, or 3.5%, compared with selling, general and administrative expenses of $37.2 million for the first nine months of fiscal 2012. The increase was primarily due to additional IT platform depreciation of $1.1 million and additional customer service support of $1.0 million, other cost changes of $1.0 million and $.2 million of increased R&D costs offset by service cost reductions of $1.0 million and prior year IT platform enhancement related expenses of $1.0 million.

Acquisition and reorganization costs in the first nine months of fiscal 2013 were $0.4 million as compared to the prior fiscal year nine months of $2.5 million.

Operating (loss) income for the first nine months of fiscal 2013 was $2.9 million, a decrease of $29.9 million, compared with operating income of $27.0 million for the first nine months of fiscal 2012. The decrease in operating income was due to a goodwill impairment charge of $22.7 million, reduced Medical Products revenue of $3.3 million, reduced Radiation Measurement revenue of $1.3 million, increased IT expenses due to the Company’s IT platform enhancement of $5.0 million and additional customer service support of $1.0 million, offset by decreased acquisition costs of $2.1 million, service cost reductions of $1.2 million, decreased material costs of $1.2 million and a prior year IT platform enhancement related expense of $1.0 million.

Equity in income of joint ventures for the first nine months of fiscal 2013 and 2012 was $2.6 million. Interest expense for the first nine months of fiscal 2013 was $3.3 million, an increase of $0.7 million or 26.9%, from the prior year first nine months expense of $2.6 million due primarily to increased debt associated with borrowings to acquire IZI in the first nine months of fiscal 2012.

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The effective tax rate was a benefit of (4.6)% and an expense of 29.2% for the first nine months of fiscal 2013 and 2012, respectively. The decline in the effective tax rate was primarily due to the U.S. research and development credits having a larger impact on our effective tax rate due to lower pretax income. Without impairment of goodwill the effective tax rate would have been 25.7% for the first nine months of fiscal 2013, a decline over the prior year rate due primarily to the U.S. research and development credits.

Net (loss) income attributable to Landauer for the first nine months of fiscal 2013 and 2012 was ($3.7) million and $18.6 million, respectively, or ($.40) and $1.97 per diluted share, respectively. The decrease in net income was due to a goodwill impairment charge of $22.7 million, reduced Medical Products revenue of $3.3 million, reduced Radiation Measurement revenue of $1.3 million, increased IT expenses due to the Company’s IT platform enhancement of $5.0 million and additional customer service support of $1.0 million, offset by reduced taxes of $7.8 million, decreased acquisition costs of $2.1 million, service cost reductions of $1.2 million, decreased material costs of $1.2 million and a prior year IT platform enhancement related expense of $1.0 million.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first nine months of fiscal 2013 were $10.2 million compared with $36.5 million for the first nine months of fiscal 2012. The decrease was primarily due to a goodwill impairment charge of $22.7 million and lower earnings. Adjusted EBITDA for the first nine months of fiscal 2013 and 2012 were $35.4 million and $42.3 million, respectively. 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 nine months of fiscal 2013 were $80.0 million, a decrease of 1.6%, or $1.3 million, from the first nine months of fiscal 2012 amount of $81.3 million. The decrease in the first nine months of fiscal 2013 was primarily due to decreases of equipment sales domestically of approximately $2.0 million and currency impacts of $0.2 million, offset by international sales gains of $0.9 million as compared to prior fiscal year first nine months. Operating income for the first nine months of fiscal 2013 decreased $5.0 million, or 22.3%, to $16.1 million compared to $21.1 million for the first nine months of fiscal 2012. The decrease in operating income was due to reduced Radiation Measurement revenue of $1.3 million, increased IT expenses due to the Company’s IT platform enhancement of $5.0 million, additional customer service support of $1.0 million, additional manufacturing and international costs of $0.5 million and $0.2 million of increased R&D costs offset by prior fiscal year first nine months acquisition costs of $2.1 million and prior year IT platform costs of $1.0 million.

Medical Physics Segment

Medical Physics revenues for the first nine months of fiscal 2013 decreased $0.1 million to $23.1 million from the first nine months of fiscal 2012 amount of $23.2 million. Medical Physics operating income was $2.6 million, or 11.3% of revenues, as compared to $1.5 million, or 6.5% of revenues, in the first nine months of fiscal 2012, due primarily to decreased service costs of $1.2 million.

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Medical Products Segment

Medical Products revenues for the first nine months of fiscal 2013 decreased 31.4 percent, or $3.3 million, from the first nine months of fiscal 2012 to $7.2 million. Medical Products operating loss for the first nine months of fiscal 2013 was $21.6 million as compared to $4.3 million in the first nine months of fiscal 2012. The decrease in operating income was due to a goodwill impairment charge of $22.7 million and a decline in revenue by $3.3 million. During the third quarter of 2013, it became apparent that anticipated revenue trends in our Medical Products segment were not being achieved to the extent forecasted. Early budget reviews also indicated future sales growth may be less than expected. We updated the forecasted results of operations for our Medical Products operating segment based on the most recent financial results and our best estimates of future operations. The updated forecast reflects a slower growth in revenues for the Medical Products segment due to anticipated continued pricing pressures from certain competitors greater than the anticipated growth from existing and new product sales resulting in an impairment of goodwill.

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 26% to 28%.

Based upon the above assumptions, the Company anticipates reported net income for fiscal 2013 in the range of $18.5 million to $20.5 million and Adjusted EBITDA expected for fiscal 2013 in the range of $47 million to $49 million.

Liquidity and Capital Resources

Cash provided by operations was $16.5 million and $30.5 million in the first nine months of fiscal 2013 and 2012, respectively. The major changes in the components of cash provided by operations between the two periods were an increase in prepaid taxes of $6.1 million due to the timing of tax payments, decrease in accounts payable of $2.8 million and lower net income (without impairment)offset by an improvement in accounts receivable collections of $4.8 million.

Cash used by investing activities for the first nine months of fiscal 2013 was $7.3 million compared to the prior fiscal year first nine months amount of $110.5 million. The primary difference was due to the acquisitions made in the previous fiscal year, primarily the purchase of IZI for $93 million.

Financing activities for the first nine months of fiscal 2013 were comprised primarily of dividend payments of $15.7 million and net loan repayments $1.8 million compared to the previous fiscal year’s first nine months net borrowings of $107.5 million less dividend payments of $15.6 million.

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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.

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:

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	Three Months Ended June 30,
	2013		2012
Adjusted EBITDA
Net (loss) income attributed to Landauer, Inc.	$	(13,753)	$	6,566
Add back:
Interest expense, net		1,049		1,020
Depreciation and amortization		3,884		2,722
Provision for income taxes		(3,748)		2,014
(Loss) earnings before interest, taxes, depreciation and amortization (EBITDA)	$	(12,568)	$	12,322
Adjustments:
Non-cash stock based compensation		789		661
IT platform enhancements expenses		1		585
Acquisition and reorganization costs		142		348
Goodwill impairment charge		22,700		0
Sub-total adjustments		23,632		1,594
Adjusted EBITDA	$	11,064	$	13,916

Adjusted Net Income
Net (loss) income attributed to Landauer, Inc.	$	(13,753)	$	6,566
Sub-total adjustments		23,632		1,594
Income-taxes on adjustments		(5,105)		(367)
Adjustments, net		18,527		1,227
Adjusted, Net Income	$	4,774	$	7,793
Adjusted Net Income per Diluted Share	$	0.51	$	0.83

	Nine Months Ended June 30,
	2013		2012
Adjusted EBITDA
Net (loss) income attributed to Landauer, Inc.	$	(3,723)	$	18,601
Add back:
Interest expense, net		2,957		2,319
Depreciation and amortization		10,860		7,752
Provision for income taxes		146		7,860
Earnings before interest, taxes, depreciation and amortization (EBITDA)	$	10,240	$	36,532
Adjustments:
Non-cash stock-based compensation expense		1,855		2,115
IT platform enhancements expenses		206		1,173
Acquisition and reorganization costs		442		2,509
Goodwill impairment charge		22,700		0
Sub-total adjustments		25,203		5,797
Adjusted EBITDA	$	35,443	$	42,329

Adjusted Net Income
Net (loss) income attributed to Landauer, Inc.	$	(3,723)	$	18,601
Sub-total adjustments		25,203		5,797
Income taxes on adjustments		1,159		(1,693)
Adjustments, net		26,362		4,104
Adjusted Net Income	$	22,639	$	22,705
Adjusted Net Income per Diluted Share	$	2.41	$	2.42

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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.

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 June 30, 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 June 30, 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 June 30, 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 June 30, 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 June 30, 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 June 30, 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 June 30, 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	$	0.00	-	-
February 1 - February 28, 2013	88		58.80	-	-
March 1 - March 31, 2013	0		0.00	-	-
Quarter ended March 31, 2013	88	$	58.80	-	-
April 1 - April 30, 2013	0	$	0	-	-
May 1 - May 31, 2013	0		0	-	-
June 1 - June 30, 2013	0		0	-	-
Quarter ended June 30, 2013	0	$	0	-	-

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




10.1		Amended and Restated Credit Agreement, dated as of August 2, 2013, among Landauer, Inc., Global Physics Solutions, Inc., IZI Medical Products, LLC, BMO Harris Bank N.A., as administrative agent, the lenders party thereto and PNC Bank, National Association as syndication agent.

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 June 30, 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.

8


		LANDAUER, INC.


Date: August 7, 2013		/s/ Michael K. Burke
		Michael K. Burke
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

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Landauer (LDR) Inactive 10-Q2013 Q2 Quarterly report

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