SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
/X/ QUARTERLY REPORT pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1998 or
/ / TRANSITION REPORT pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the transition from --------------- to ---------------
Commission File Number 1-9788
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LANDAUER, INC.
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(Exact name of registrant as specified in its charter)
Delaware 06-1218089
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2 Science Road, Glenwood, Illinois 60425
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(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code (708) 755-7000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
-- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 12, 1998
--------------------------- -------------------------------
Common stock, $.10 par value 8,609,299
PART I. FINANCIAL INFORMATION
LANDAUER, INC.
Balance Sheets
(000's)
ASSETS
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Mar. 31, Sept. 30,
1998 1997
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(Derived from
audited
(Unaudited) statements)
Current assets:
Cash and cash equivalents $ 7,762 $ 1,860
Short-term investments 2,969 8,381
Accounts receivable, less allowances of
$245,000 at 3/31/98 and $219,000 at 9/30/97 9,433 8,568
Inventories 1,271 1,108
Prepaid expenses 158 96
Deferred taxes on income 1,318 1,318
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Total current assets 22,911 21,331
Property, plant and equipment, at cost 21,589 19,412
Less: Accumulated depreciation
and amortization 12,579 11,681
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Net property, plant and equipment 9,010 7,731
Investment in U.S. Treasury Securities 3,986 4,969
Cost of purchased businesses in excess of
net assets acquired 2,529 2,612
Equity in Japanese joint venture 3,830 4,133
Other assets 2,905 2,959
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$ 45,171 $ 43,735
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The accompanying notes are an integral part of these financial
statements.
LANDAUER, INC.
Balance Sheets (Cont'd.)
(000's)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
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Mar. 31, Sept. 30,
1998 1997
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(Derived from
audited
(Unaudited) statements)
Current liabilities:
Accounts payable $ 909 $ 573
Deferred contract revenue 8,812 8,710
Dividend payable 2,798 2,551
Accrued compensation and related costs 1,331 1,534
Accrued pension costs 795 627
Accrued taxes on income 1,064 832
Accrued expenses 1,853 2,288
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Total current liabilities 17,562 17,115
Stockholders' investment:
Preferred stock, $.10 par value per share -
Authorized - 1,000,000 shares
Outstanding - None -- --
Common stock, $.10 par value per share -
Authorized - 20,000,000 shares
Outstanding - 8,609,299 shares at 3-31-98
and 8,504,091 shares at 9-30-97 861 850
Premium paid in on common stock 8,422 7,860
Cumulative translation adjustments (396) (59)
Retained earnings 18,722 17,969
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Total stockholders' investment 27,609 26,620
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$ 45,171 $ 43,735
========== ==========
The accompanying notes are an integral part of these financial
statements.
LANDAUER, INC.
Statements of Income
(000's, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
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Mar. 31, Mar. 31, Mar. 31 Mar. 31
1998 1997 1998 1997
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Net Revenues $ 10,965 $ 10,441 $ 21,293 $ 19,588
Cost and expenses:
Cost of revenues 3,173 3,003 6,467 5,896
Selling, general and
administrative 2,973 2,800 5,629 5,137
-------- -------- ------- -------
6,146 5,803 12,096 11,032
-------- -------- ------- -------
Operating Income 4,819 4,638 9,197 8,556
Other income and expense, net 383 383 776 757
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Income before income taxes 5,202 5,021 9,973 9,313
Income taxes 1,905 1,838 3,640 3,365
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Net income $ 3,297 $ 3,183 $ 6,333 $ 5,948
======== ======== ======== ========
Income per common share $ 0.38 $ 0.38 $ 0.74 $ 0.70
======== ======== ======== ========
Average shares outstanding 8,609 8,477 8,562 8,477
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
LANDAUER, INC.
Statements of Cash Flows
(000's)
(Unaudited)
Three Months Ended
------------------
Mar. 31, Mar. 31,
1998 1997
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Net cash flow from operating activities:
Net income $ 6,333 $ 5,948
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 1,437 1,286
Equity in net income of foreign affiliate (372) (371)
Compensatory effect of stock options 573 63
Increase in accounts receivable (854) (1,089)
Increase in inventories (163) (317)
(Increase) decrease in prepaid expenses (62) 27
Increase (decrease) in accounts payable 336 (17)
Increase (decrease) in deferred contract revenue 102 (37)
Decrease in accrued expenses (238) (94)
Increase in net long-term assets (402) (656)
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Net cash generated from operating activities 6,690 4,743
Cash flow from investing activities:
Purchases of U.S. Treasury Securities (2,953) (6,947)
Maturities of U.S. Treasury Securities 9,348 8,342
Acquisition of property,plant,and equipment (2,177) (936)
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Net cash provided by investing
activities 4,218 459
Cash flow from financing activities:
Dividend received from foreign affiliate 326 356
Dividends paid (5,332) (4,874)
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Net cash used in financing activities (5,006) (4,518)
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Net increase in cash 5,902 684
Opening balance - cash and cash equivalents 1,860 3,359
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Ending balance - cash and cash equivalents $ 7,762 $ 4,043
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Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 1,974 $ 3,399
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Supplemental Disclosure of Non-cash Financing Activity:
Dividend declared $ 2,798 $ 2,543
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Foreign currency translation adjustment $ (337) $ (435)
======== ========
The accompanying notes are an integral part of these financial
statements.
LANDAUDER, INC.
Notes to Financial Statements - March 31, 1998
(Unaudited)
(1) Basis of Presentation
---------------------
The accompanying unaudited condensed financial statements reflect
the financial position of Landauer, Inc. ("Landauer") as of March 31,
1998 and September 30, 1997, and the results of operations for the three-
month and six-month periods ended March 31, 1998 and 1997 and cash flows
for the six-month periods ended March 31, 1998 and 1997. In the opinion
of management, the accompanying unaudited condensed financial statements
contain all adjustments necessary to present fairly the financial
position of Landauer as of March 31, 1998 and September 30, 1997, and the
results of operations for the three-month and six-month periods ended
March 31, 1998 and 1997, and cash flows for the six-month periods ended
March 31, 1998 and 1997.
The accounting policies followed by the Company are set forth in
Note 1 to the Company's financial statements in the 1997 Landauer Annual
Report on Form 10-K, which is incorporated by reference.
The results of operations for the three-month and six-month periods
ended March 31, 1998 and 1997 are not necessarily indicative of the
results to be expected for the full year.
(2) Cash Dividends
--------------
On March 6, 1998, the Company declared a regular quarterly cash
dividend in the amount of $.32 1/2 per share payable on April 3, 1998, to
stockholders of record on March 20, 1998. On November 6, 1997, the
Company declared a regular quarterly cash dividend in the amount of $.32
1/2 per share payable on January 2, 1998, to stockholders of record on
December 19, 1997.
Regular quarterly cash dividends of $.30 per share ($1.20 annually)
were declared during fiscal 1997.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
- -------------------------------
Landauer's cash flow from operating activities for the six months
ended March 31, 1998 and 1997 amounted to $6,690,000 and $4,743,000,
respectively. Investing activities for the first half of fiscal 1998 and
1997 resulted in a net decrease in investments in principally U.S.
Treasury securities of $6,395,000 and $1,395,000, respectively.
Offsetting these were acquisitions of property, plant and equipment in
the amount of $2,177,000 and $936,000, respectively. The Company's
financing activities were limited to payments of cash dividends, offset
by foreign dividends received from Nagase-Landauer, Ltd., our Japanese
joint venture.
The Company has no long-term liabilities and its requirement for
cash flow to support investing activities is generally limited. Capital
expenditures for the balance of fiscal 1998 are expected to amount to
approximately $4,000,000, principally for the development of software
systems, and the acquisition of equipment to support technology
enhancements. The Company anticipates that funds for these capital
improvements will be provided from operations.
The Company presently maintains no external sources of liquidity,
and, in the opinion of management, resources are adequate for projected
operations and capital spending programs, as well as continuation of the
regular cash dividend program.
Landauer requires limited working capital for its operations since
many of its customers pay for services in advance. Such advance payments
amounted to $8,812,000 and $8,710,000, respectively, as of March 31, 1998
and September 30, 1997, and are included in deferred contract revenue.
While these amounts represent approximately one-half of current
liabilities, such amounts do not represent a cash requirement.
Results of Operations
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Revenues for the quarter ended March 31, 1998 were 5% higher
compared with the same quarter a year ago. The increase in revenues was
primarily attributable to gains in the Company's traditional radiation
dosimetry business. Gross margins were 71.1% of revenues for the second
quarter of fiscal 1998 comparable to the same period in 1997.
Selling, general and administrative expenses for the current
quarter were 27.1% as a percent of revenues compared to 26.8% for the
second quarter of fiscal 1997. As a result, operating income for the
second fiscal quarter of 1998 was 43.9% of revenues compared to 44.4% for
the same period last year. Income before income taxes was 47.4% of the
revenues for the quarter just ended compared to 48.1% for the second
fiscal quarter of 1997.
The effective tax rate for the Company during the second quarter of
fiscal 1998 was 36.6% comparable to the same period last year. Resulting
net income of $3,297,000 for the second fiscal quarter of 1998 compared
with $3,183,000 reported in fiscal 1997. Income per share for the
quarter was $.38 versus $.37 for the second fiscal quarter of 1997.
Revenues for the six months ended March 31, 1998, were 9% higher
compared with the first six months of fiscal 1997. The increase in
revenues were attributable to gains in the Company's traditional
radiation dosimetry business. Gross margins for the first half of fiscal
1998 were 69.6% of revenues compared with 69.9% a year ago.
Selling, general, and administrative expenses were 26.4% of
revenues for the first half of fiscal 1998 compared to 26.2% for the
LANDAUER, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Cont'd.)
first half of fiscal 1997. Operating income for the first half of fiscal
1998 was 43.2% of revenues compared with 43.7% for the same period last
year. Income before income taxes was 46.8% of revenues for the six
months just ended compared to 47.5% of revenues for the same period in
fiscal 1997.
The effective tax rate for the Company during the first half of
fiscal 1998 was 36.5% compared with 36.1% a year ago. Resulting net
income of $6,333,000 for the first six months of 1998 was 6.5% higher
than $5,948,000 reported in fiscal 1997. Income per share thus far in
fiscal 1998 was $.74 versus $.70 for the same period in fiscal 1997.
LANDAUER, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Cont'd.)
PART II. OTHER INFORMATION
Item 2. Legal Proceedings
-----------------
Landauer is involved in various legal proceedings but believes
that these matters will be resolved without a material effect on its
financial position.
Item 4. Submission of Matters to a Vote of Security Holders
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At its Annual Meeting held on February 4, 1998, the shareholders
voted to re-elect Gary D. Eppen, Marvin G. Schorr and Michael D. Winfield
as directors for three-year terms. Voting for all nominees were
6,765,995 shares (representing 79.6% of total shares outstanding), and
votes for 53,081 shares were withheld from all nominees. Continuing as
directors are Thomas M. Fulton, Robert J. Cronin, Richard R. Risk, Paul
B. Rosenberg and Herbert Roth, Jr.
The shareholders also voted to reappoint Arthur Andersen LLP as
the Company's auditors for the following year, with 6,776,511 shares
(79.7% of total shares outstanding) voting for, 19,224 shares against,
and 23,527 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) No exhibits are filed with this report.
(b) There were no reports on Form 8-K during the quarter for
which this report is
filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
LANDAUER, INC.
Date: May 12, 1998
/s/ James M. O'Connell
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James M. O'Connell
Vice President and Treasurer
(Principal Financial and
Accounting Officer)