UNITED STATES
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 June 30, 2007
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
LANDAUER, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1218089
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2 Science Road, Glenwood, Illinois 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 is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ X ]
Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]
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 August 2, 2007
---------------------------- -----------------------------
Common stock, $.10 par value 9,197,177
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(000's, except share amounts)
June 30, September 30,
2007 2006
-------- -------------
ASSETS
- ------
Current assets:
Cash and cash equivalents. . . . . . . . . . $ 18,154 $ 15,420
Receivables, net of allowances of
$500 and $567, respectively. . . . . . . . 21,866 20,284
Inventories. . . . . . . . . . . . . . . . . 2,670 2,508
Prepaid expenses and other current
assets . . . . . . . . . . . . . . . . . . 1,262 1,499
Prepaid income taxes . . . . . . . . . . . . 3,070 407
Deferred income taxes. . . . . . . . . . . . 1,445 1,859
-------- --------
Current assets . . . . . . . . . . . . . 48,467 41,977
Property, plant and equipment, at cost . . . . 48,842 46,089
Less: Accumulated depreciation
and amortization . . . . . . . . . . . . . (32,711) (29,673)
-------- --------
Net property, plant and equipment. . . . . . . 16,131 16,416
Equity in joint venture. . . . . . . . . . . . 4,360 3,980
Goodwill . . . . . . . . . . . . . . . . . . . 13,335 13,273
Other intangible assets, net of
amortization of $3,361 and $2,883,
respectively . . . . . . . . . . . . . . . . 6,050 6,377
Dosimetry devices, net of amortization
of $9,472 and $7,789, respectively . . . . . 5,720 6,502
Deferred income taxes. . . . . . . . . . . . . 2,247 1,222
Other assets . . . . . . . . . . . . . . . . . 1,127 927
-------- --------
$ 97,437 $ 90,674
======== ========
The accompanying notes are an integral part of these financial statements.
2
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited) (Cont'd.)
(000's, except share amounts)
June 30, September 30,
2007 2006
-------- -------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
Current liabilities:
Accounts payable . . . . . . . . . . . . . $ 1,702 $ 1,439
Notes payable. . . . . . . . . . . . . . . . - 1,649
Dividends payable. . . . . . . . . . . . . . 4,368 4,092
Deferred contract revenue. . . . . . . . . . 14,782 13,761
Accrued compensation and related costs . . . 3,060 2,815
Accrued pension costs. . . . . . . . . . . . 448 923
Other accrued expenses . . . . . . . . . . . 5,285 3,750
-------- --------
Current liabilities. . . . . . . . . . . 29,645 28,429
Non-current liabilities:
Pension and postretirement obligations . . . 8,778 8,348
-------- --------
Non-current liabilities. . . . . . . . . 8,778 8,348
Minority interest in subsidiary. . . . . . . 193 198
Stockholders' investment:
Preferred stock, $.10 par value per
share, authorized 1,000,000 shares;
none issued. . . . . . . . . . . . . . . . - -
Common stock, $.10 par value per
share, authorized 20,000,000 shares;
9,195,001 and 9,094,190 shares
issued and outstanding at June 30,
2007 and September 30, 2006,
respectively . . . . . . . . . . . . . . . 920 909
Additional paid-in capital . . . . . . . . . 22,781 19,641
Accumulated other comprehensive loss . . . . (163) (498)
Retained earnings. . . . . . . . . . . . . . 35,283 33,647
-------- --------
Stockholders' investment . . . . . . . . 58,821 53,699
-------- --------
$ 97,437 $ 90,674
======== ========
The accompanying notes are an integral part of these financial statements.
3
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(000's, except per share amounts)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenues, net of sales
allowances . . . . . . . . $ 20,589 $ 19,591 $ 62,382 $ 58,859
Costs and expenses:
Cost of sales. . . . . . . 6,596 7,142 20,817 22,061
Selling, general and
administrative . . . . . 6,164 4,687 17,483 14,342
Impairment and
accelerated deprecia-
tion charges . . . . . . 2,357 - 2,357 -
Reorganization charges . . - - - 600
-------- -------- -------- --------
15,117 11,829 40,657 37,003
-------- -------- -------- --------
Operating income . . . . . . 5,472 7,762 21,725 21,856
Equity in income of
joint venture. . . . . . . 426 373 1,113 1,099
Other income, net. . . . . . 223 55 588 205
-------- -------- -------- --------
Income before taxes. . . . . 6,121 8,190 23,426 23,160
Income taxes . . . . . . . . 2,193 3,019 8,652 8,652
-------- -------- -------- --------
Income before minority
interest . . . . . . . . . 3,928 5,171 14,774 14,508
Minority interest. . . . . . 21 50 68 132
-------- -------- -------- --------
Net income . . . . . . . . . $ 3,907 $ 5,121 $ 14,706 $ 14,376
======== ======== ======== ========
Net income per share:
Basic. . . . . . . . . . . $ 0.43 $ 0.57 $ 1.61 $ 1.59
======== ======== ======== ========
Based on weighted
average shares
outstanding. . . . . . . 9,146 9,048 9,116 9,025
======== ======== ======== ========
Diluted. . . . . . . . . . $ 0.42 $ 0.56 $ 1.60 $ 1.58
======== ======== ======== ========
Based on weighted
average shares
outstanding. . . . . . . 9,208 9,104 9,186 9,098
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
4
LANDAUER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(000's)
Nine Months Ended
--------------------
June 30, June 30,
2007 2006
-------- --------
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . $ 14,706 $ 14,376
Adjustments to reconcile net income to
net cash provided by operating activities:
Asset impairment and accelerated
depreciation charges . . . . . . . . . . . . . 2,357 -
Depreciation . . . . . . . . . . . . . . . . . . 5,277 5,644
Amortization . . . . . . . . . . . . . . . . . . 479 485
Equity in net income of joint venture. . . . . . (1,113) (1,099)
Dividends from joint venture . . . . . . . . . . 560 1,967
Stock-based compensation . . . . . . . . . . . . 580 581
Tax benefit from stock-based
compensation arrangements. . . . . . . . . . . 828 1
Excess tax benefit from stock-based
compensation arrangements. . . . . . . . . . . (740) (9)
Loss on sale and disposition of assets . . . . . 5 100
Increase in accounts receivable, net . . . . . . (1,286) (1,878)
Increase in prepaid taxes. . . . . . . . . . . . (2,654) (234)
(Decrease) increase in other
current assets . . . . . . . . . . . . . . . . 514 (27)
Increase in dosimetry devices at cost. . . . . . (986) (2,044)
Increase in other long-term assets . . . . . . . (1,389) (399)
Increase (decrease) in accounts payable
and other current liabilities. . . . . . . . . 638 (1,869)
Increase in deferred contract revenue. . . . . . 925 1,696
Other operating activities . . . . . . . . . . . 422 610
-------- --------
Net cash provided by operating activities. . . . 19,123 17,901
Cash flows used by investing activities:
Acquisition of property, plant and
equipment. . . . . . . . . . . . . . . . . . . (5,398) (2,860)
-------- --------
Net cash used by investing activities. . . . . . (5,398) (2,860)
Cash flows used by financing activities:
Payments on revolving credit facilities. . . . . (1,717) (520)
Dividends paid to minority interest. . . . . . . (117) (102)
Dividends paid to stockholders . . . . . . . . . (12,795) (11,958)
Proceeds from the exercise of stock options. . . 2,450 2,916
Excess tax benefit from stock-based
compensation arrangements. . . . . . . . . . . 740 9
-------- --------
Net cash used by financing activities. . . . . . (11,439) (9,655)
Effects of foreign currency translation. . . . . 448 304
-------- --------
Net increase in cash and cash equivalents. . . . 2,734 5,690
Opening balance - cash and cash equivalents. . . 15,420 9,598
-------- --------
Ending balance - cash and cash equivalents . . . $ 18,154 $ 15,288
======== ========
The accompanying notes are an integral part of these financial statements.
5
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2007
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements reflect
the financial position of Landauer, Inc. and subsidiaries ("Landauer" or
"the Company") as of June 30, 2007 and September 30, 2006, and the
consolidated results of operations and cash flows for the three and nine-
month periods ended June 30, 2007 and 2006. In the opinion of management,
the accompanying unaudited consolidated financial statements contain all
adjustments necessary to present fairly the consolidated financial position
of the Company and its consolidated results of operations and cash flows.
Certain prior year amounts have been reclassified to conform to
current year presentation. These reclassifications have no effect on the
results of operations or financial position.
The results of operations for the three and nine-month periods ended
June 30, 2007 and 2006 are not necessarily indicative of the results to be
expected for the full year. The September 30, 2006 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.
The accounting policies followed by the Company are set forth in the
2006 Landauer Annual Report on Form 10-K. The primary source of revenues
for the Company is radiation measuring and monitoring services including
other services incidental to measuring and monitoring. The measuring and
monitoring services provided by the Company to its customers are of a
subscription nature and are continuous. The Company views its business as
services provided to customers over a period of time and the wear period is
the period over which those services are provided. Badge production,
wearing of badges, badge analysis, and report preparation are integral to
the benefit that the Company provides to its customers. These services are
provided to customers on an agreed-upon recurring basis (monthly, bi-
monthly or quarterly) that the customer chooses for the wear period.
Revenue for these services is recognized on a straight-line basis, adjusted
for changes in pricing and volume, over the wear period as the service is
continuous and no other discernible pattern of recognition is evident.
These revenues are recognized over the periods in which the customers wear
the badges irrespective of whether invoiced in advance or in arrears.
Other services incidental to measuring and monitoring augment the
basic radiation measurement services that the Company offers, providing
administrative and informational tools to customers for the management of
their radiation detection programs. Other service revenues are recognized
upon delivery of the reports to customers or as other such services are
provided.
The Company also sells radiation monitoring equipment to its
customers, principally InLightTM products, for their use in conducting
radiation measurements or managing radiation detection programs. Revenues
from product sales are recognized when shipped.
6
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Cont'd.)
June 30, 2007
(2) IMPAIRMENT AND ACCELERATED DEPRECIATION CHARGES
During fiscal 2007, the Company began implementation of an
information technology initiative to re-engineer various business processes
and replace components of its information technology systems that support
customer relationship management and the order-to-cash cycle. As part of
this information technology initiative, management conducted an evaluation
of its different information technology platforms and the usefulness of its
investments made in legacy information systems' hardware and software; this
evaluation was concluded in the quarter ending June 30, 2007. Management
identified certain legacy assets with a net book value of approximately
$4.6 million that were either subject to immediate impairment or retirement
once the full system implementation has been completed. Management
anticipates that the assets subject to retirement will be utilized through
December 31, 2007, and therefore, the Company will record accelerated
depreciation through the newly determined remaining useful lives.
As of June 30, 2007, the Company recorded a pretax non-cash charge of
$2,357,000 ($1,414,000, after tax at a marginal tax rate of 40%), or $0.15
per diluted share. The non-cash charge included an impairment of $2,185,000
for those assets management determined have no future value and $172,000 of
incremental depreciation expense for those assets that will be utilized
through December 31, 2007. The Company expects also to recognize
accelerated depreciation of $517,000 in each of the subsequent quarters
ending September 30, 2007 and December 31, 2007.
(3) CASH DIVIDENDS
On June 1, 2007, the Company declared a regular quarterly cash
dividend in the amount of $0.475 per share for the third quarter. The
dividends were paid on July 6, 2007, to shareholders of record on June 15,
2007. At June 30, 2007, there were accrued and unpaid dividends of
$4,368,000. Regular quarterly cash dividends of $0.45 per share, or $1.80
annually, were paid during fiscal 2006.
(4) COMPREHENSIVE INCOME
The components of accumulated other comprehensive loss included in
the accompanying unaudited consolidated balance sheets at June 30, 2007 and
September 30, 2006 consist of net minimum pension liability adjustments and
cumulative foreign currency translation adjustments. The following table
sets forth the Company's comprehensive income and its components for the
three and nine-month periods ended June 30, 2007 and 2006 (000's):
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Net income . . . . . . . . . $ 3,907 $ 5,121 $ 14,706 $ 14,376
Other comprehensive income:
Foreign currency trans-
lation adjustments . . . 90 252 335 6
-------- -------- -------- --------
Comprehensive income . . . . $ 3,997 $ 5,373 $ 15,041 $ 14,382
======== ======== ======== ========
7
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Cont'd.)
June 30, 2007
(5) INCOME PER COMMON SHARE
Basic earnings per share were computed by dividing net income by the
weighted average number of shares of common stock outstanding during each
period. Diluted earnings per share were computed by dividing net income by
the weighted average number of shares of common stock that would have been
outstanding assuming dilution from stock-based compensation awards during
each period. The following table presents the weighted average number of
shares of common stock for the three and nine-month periods ended June 30,
2007 and 2006 (000's):
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Weighted average number of
shares of common stock
outstanding. . . . . . . . 9,146 9,048 9,116 9,025
Effect of dilutive
stock-based compensation
awards . . . . . . . . . . 62 56 70 73
-------- -------- -------- --------
Weighted average number of
shares of common stock
assuming dilution. . . . . 9,208 9,104 9,186 9,098
======== ======== ======== ========
(6) STOCK-BASED COMPENSATION
The Company maintains three stock-based compensation plans for key
employees and/or non-employee directors: (i) the Landauer, Inc. 1996 Equity
Plan, as amended and restated through November 8, 2001 (the "1996 Equity
Plan"); (ii) the Landauer, Inc. 1997 Non-Employee Director's Stock Option
Plan, as amended and restated through November 8, 2001 (the "1997
Director's Plan"); and (iii) the Landauer, Inc. 2005 Long-Term Incentive
Plan (the "2005 LTI Plan"). For future grants, the 2005 LTI Plan replaced
the 1996 Equity Plan and the 1997 Director's Plan. The Company reserved
500,000 shares of its common stock for grant under the 2005 LTI Plan, and
any shares reserved for award and unused under the previous two plans were
cancelled. The Plans provide for grants of options to purchase the
Company's common stock, restricted stock, restricted stock units,
performance shares and units, and stock appreciation rights. Shares issued
upon settlement of stock-based compensation awards are issued from the
Company's authorized, unissued stock.
Effective October 1, 2005, the Company adopted SFAS No. 123 (Revised
2004), "Share-Based Payment," ("SFAS 123R"), which requires the measurement
and recognition of compensation cost at fair value for all share-based
payments, including stock options. Stock-based compensation includes
compensation expense, recognized over the applicable vesting periods, for
new share-based awards granted after September 30, 2005 and for share-based
awards granted prior to, but not yet vested, as of September 30, 2005.
Stock-based compensation totaled approximately $580,000 and $581,000 for
the nine months ended June 30, 2007 and 2006, respectively. The total
income tax benefit recognized in the consolidated statements of income
related to expense for stock-based compensation was approximately $233,000
and $203,000 during the first three quarters of fiscal 2007 and 2006,
respectively.
8
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Cont'd.)
June 30, 2007
STOCK OPTIONS
No stock options have been granted in fiscal 2007 or 2006. Grants of
stock options in prior fiscal years were granted with an exercise price
equal to the market value of the stock on the date of grant. Expense
related to stock options issued to eligible employees under the Plans is
recognized ratably over the vesting period. Stock options generally vest
over a period of 0 to 4 years and have 10-year contractual terms. A
summary of stock option activity during the nine months ended June 30, 2007
is presented below:
Weighted-
Average
Weighted- Remaining
Number Average Contractual Aggregate
of Exercise Term Intrinsic
Options Price (Years) Value
------- --------- ----------- ---------
Outstanding at
October 1, 2006. . . . 468,000 $41.29
Exercised. . . . . . . . (134,000) 37.44
------- ------
Outstanding at
June 30, 2007. . . . . 334,000 $42.83 6.8 $2,152,000
======= ======
Exercisable at
June 30, 2007. . . . . 333,000 $42.83 6.8 $2,149,000
======= ======
At June 30, 2007, unrecognized compensation expense related to stock
options totaled approximately $1,000 and is expected to be recognized over
a weighted-average period of 2 months. The intrinsic value of options
exercised totaled approximately $1,940,000 and $370,000 during the first
three quarters of fiscal 2007 and 2006, respectively. The total income tax
benefit recognized in the consolidated statements of income related to the
exercise of stock options was approximately $773,000 during the nine-month
period ending June 30, 2007.
RESTRICTED SHARE AWARDS
In addition to stock options, key employees and/or non-employee
directors are eligible to receive performance shares and restricted stock,
under the Company's 2005 Long-Term Incentive Plan. Restricted share awards
consist of performance shares and time vested restricted stock.
Performance shares represent a right to receive shares of common stock upon
satisfaction of performance goals or other specified metrics. Performance
shares are paid out in common stock and will be fully vested upon issuance.
The fair value of performance shares and restricted stock is based on the
average of the Company's high and low stock prices on the date of grant.
Restricted stock issued to eligible employees under the 2005 LTI plan
vests, to date, over a period from 6 months to 5 years, and performance
shares contingently vest over various periods, depending on the nature of
the performance goal. Compensation expense for performance shares is
recorded ratably over the vesting period, assuming that achievement of
performance goals is deemed probable. Compensation expense for restricted
stock is recognized ratably over the vesting period. The weighted average
fair value of restricted share grants, including restricted stock and
performance shares, granted during the nine months ended June 30, 2007 and
2006 was $49.28 and $46.20, respectively.
9
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Cont'd.)
June 30, 2007
Restricted share transactions during the nine months ended June 30,
2007 were as follows:
Number of Weighted-
Restricted Average
Share Fair
Awards Value
---------- ----------
Outstanding at October 1, 2006 . . . . . . 14,000 $46.57
Granted. . . . . . . . . . . . . . . . . . 29,000 49.28
Vested . . . . . . . . . . . . . . . . . . (2,000) 47.80
------ ------
Outstanding at June 30, 2007 . . . . . . . 41,000 $48.41
====== ======
At June 30, 2007, unrecognized compensation expense related to
restricted share awards totaled approximately $1.4 million and is expected
to be recognized over a weighted average period of 2 years. The total fair
value of shares vested during the nine-month period ended June 30, 2007 was
$87,000. No shares vested during the nine-month period ended June 30,
2006.
(7) NOTES PAYABLE
In April 2004, the Company negotiated a $25 million line of credit
with a commercial bank and borrowed $7,724,000 (euro-denominated) under
this facility as part of funding the acquisition of the remaining 49%
minority interest in Landauer-Europe. The credit agreement was amended,
effective March 25, 2005, to extend the maturity date to March 25, 2006 and
reduce the aggregate loan commitment under the credit facility to $15
million, with an option for the Company to increase to $25 million. A
second amendment was made effective March 25, 2006, to extend the maturity
date to March 25, 2007 and increase the minimum tangible net worth covenant
to $22.4 million. The Company did not renew the line upon its maturity in
March 2007.
At September 30, 2006, outstanding borrowings under the credit
agreement were $1,649,000. No borrowings were outstanding at June 30,
2007. The Company funded euro-based debt service payments from euro-
denominated cash flows. It is expected that cash on hand and cash flow
from operations will be sufficient to fund the cash requirements of the
business.
(8) PENSION AND POSTRETIREMENT MEDICAL BENEFIT EXPENSES
The components of net periodic benefit cost for pension and retiree
medical plans are as follows (000's):
10
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Cont'd.)
June 30, 2007
Pension Other
Benefits Benefits
-------------- -------------
Three Months Ended
June 30,
------------------------------
2007 2006 2007 2006
------ ------ ------ ------
Components of net periodic
benefit cost:
Service cost. . . . . . . . . . . . . $ 277 $ 293 $ 18 $ (3)
Interest cost . . . . . . . . . . . . 307 283 18 18
Expected return on plan assets. . . . (185) (190) - -
Amortization of transition (asset)
obligation. . . . . . . . . . . . . (1) (2) - (2)
Amortization of prior service cost. . 36 39 (28) (38)
Recognized net actuarial loss . . . . 4 23 11 32
Special termination benefits (1). . . 47 - - -
------ ------ ------ ------
Net periodic benefit cost . . . . . . $ 485 $ 446 $ 19 $ 7
====== ====== ====== ======
Pension Other
Benefits Benefits
-------------- -------------
Nine Months Ended
June 30,
------------------------------
2007 2006 2007 2006
------ ------ ------ ------
Components of net periodic
benefit cost:
Service cost. . . . . . . . . . . . . $ 866 $ 954 $ 41 $ 22
Interest cost . . . . . . . . . . . . 902 870 57 65
Expected return on plan assets. . . . (563) (583) - -
Amortization of transition (asset)
obligation. . . . . . . . . . . . . (4) (6) - 2
Amortization of prior service cost. . 111 117 (84) (72)
Recognized net actuarial loss . . . . 36 89 49 76
Special termination benefits (1). . . 94 - - -
------ ------ ------ ------
Net periodic benefit cost . . . . . . $1,442 $1,441 $ 63 $ 93
====== ====== ====== ======
(1) Represents benefit costs arising from the early retirement of the
Company's former chief financial officer.
In accordance with funding requirements for the 2007 plan year,
Landauer contributed $124,000 to its pension plan in the quarter ended
December 31, 2006 and $249,000 in the quarter ended June 30, 2007. In
January 2007, the Company contributed an additional $792,000 to the pension
plan to fulfill funding requirements for the 2006 plan year.
11
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Cont'd.)
June 30, 2007
(9) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
(FIN No. 48). FIN No. 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in
accordance with FASB Statement No. 109, "Accounting for Income Taxes."
This interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN No. 48 also
provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition. In
addition, the FASB released Staff Position No. FIN 48-1 (FSP 48-1) to
provide guidance on how an enterprise should determine whether a tax
position is effectively settled for the purpose of recognizing previously
unrecognized tax benefits. FIN No. 48 is effective for fiscal years
beginning after December 15, 2006, and will become effective for the
Company at the beginning of fiscal 2008. The Company continues to evaluate
the impact of FIN No. 48 and the Staff Position to its financial position,
results of operations and financial disclosures.
In September 2006, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 158, "Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106, and 132(R)." The Statement requires companies to
recognize on their balance sheet the funded status of their defined benefit
pension and other postretirement benefit plans and to recognize changes in
the funded status of these plans through comprehensive income in the year
in which the changes occur. The Statement also requires companies to
measure the plan assets and its obligations as of the end of the employer's
fiscal year. The provisions of SFAS No. 158 will be effective for the
Company at the end of fiscal 2007. The effect on the Company's financial
statements is dependent upon assumptions used and actual returns on assets
at the time of adoption. The Company currently estimates that the adoption
of this Statement will result in the recognition of an additional liability
with a related pre-tax charge to accumulated other comprehensive income in
the amount of approximately $2.4 million.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities, including an
Amendment of FASB Statement No. 115." SFAS No. 159 permits entities to
choose to measure many financial instruments and certain other items at
fair value on an instrument-by-instrument basis, with unrealized gains and
losses related to these financial instruments reported in earnings at each
subsequent reporting date. SFAS No. 159 also establishes presentation and
disclosure requirements to facilitate comparisons between companies that
choose different measurement attributes for similar assets and liabilities.
SFAS No. 159 is effective for fiscal years beginning after November 15,
2007. The Company is currently evaluating the impact of SFAS No. 159 to
its financial position, results of operations and financial disclosures.
In March 2007, the FASB ratified the Emerging Issues Task Force
(EITF) Issue No. 06-10, "Accounting for the Deferred Compensation and
Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life
Insurance Arrangements." The EITF affirmed as a final consensus that an
employer should recognize a liability for the postretirement benefit
related to a collateral assignment split-dollar life insurance arrangement
in accordance with either SFAS No. 106 or APB Opinion No. 12. Issue No.
06-10 applies only when the arrangement is determined to provide a
postretirement benefit. The final consensus on Issue No. 06-10 will also
12
LANDAUER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Cont'd.)
June 30, 2007
require an employer to recognize and measure the asset under a collateral
assignment arrangement based on the substance of the arrangement. The
Issue is effective for fiscal years beginning after December 15, 2007,
including interim periods within those fiscal years. The Company is
currently evaluating the impact of Issue No. 06-10 to its financial
position, results of operations and financial disclosures.
In June 2007, the FASB ratified EITF Issue No. 06-11, "Accounting for
Income Tax Benefits of Dividends on Share-Based Payment Awards." EITF No.
06-11 requires companies to recognize the realized tax benefit from
dividends or dividend equivalents that are charged to retained earnings and
paid to employees for nonvested or outstanding equity-classified employee
share-based payment awards as an increase to additional paid-in-capital.
The EITF also addresses the accounting for these tax benefits if an
entity's estimate of forfeitures changes in subsequent periods. The Issue
is to be applied prospectively to dividends declared in fiscal years
beginning after December 15, 2007, including interim periods within those
fiscal years. The Company is currently evaluating the impact of Issue No.
06-11 to its financial position, results of operations and financial
disclosures.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
- --------
Landauer is a leading provider of analytical services to determine
occupational and environmental radiation exposure. For over 50 years, the
Company has provided complete radiation dosimetry services to hospitals,
office-based physicians, universities, national laboratories, nuclear power
facilities and other industries in which radiation poses a potential threat
to employees or other individuals. Landauer's services include the
manufacture of various types of radiation detection monitors, the
distribution and collection of the monitors to and from clients, and the
analysis and reporting of exposure findings. These services are provided
to approximately 1.5 million individuals in the U.S., Japan, France, the
United Kingdom, Brazil, Canada, China, Australia and other countries.
Substantially all of the Company's revenues are realized from
radiation monitoring services and other services incidental to radiation
dose measurement. The Company enters into agreements with customers to
provide them with radiation monitoring services, generally for a twelve-
month period; these agreements generally have a high degree of renewal.
Relationships with customers are generally stable and recurring, and the
Company provides customers with on-going services. As part of its
services, the Company provides its customers with radiation detection
badges that are produced and owned by the Company. The badges are worn for
a period selected by the customers ("the wear period"), generally one, two,
or three months in duration. At the end of the wear period, the badges are
returned to the Company for analysis. The Company analyzes the badges that
have been worn and provides its customers with a report indicating
radiation exposures. The Company recycles certain badge components for
reuse, while also producing replacement badges on a continual basis.
Additional reporting and other radiation measurement and management
services ("ancillary services") are provided to customers at their option.
13
Landauer's InLight dosimetry system, introduced in late fiscal 2003,
provides smaller in-house and commercial laboratories the ability to offer
a complete radiation monitoring service. The system is based on the
Company's propriety OSL technology and instruments and dosimetry devices
developed by Matsushita Industrial Equipment Company. InLight allows
customers the flexibility to tailor their precise dosimetry needs. InLight
services may involve a customer acquiring or leasing dosimetry detectors
and reading equipment from the Company. Landauer has positioned the
InLight system as both a product line and a radiation monitoring service in
ways that others can directly benefit from the technical and operational
advantage of OSL technology.
Landauer's operations include services for the measurement and
monitoring of radon gas (referred to as "sales of radon kits") and services
related to the remediation of radon gas. These services require the
customer to deploy a radon detector and return the detector to the
Company's laboratories for dose determination and reporting. Where a
customer has purchased a radon services agreement, the Company may assist
with remediation services on properties where radon measurements exceed a
specified threshold. These services are provided by the Company's wholly-
owned subsidiary, HomeBuyer's Preferred, Inc.
Landauer operates a mature business, and growth in numbers of
domestic customers is modest. In recent years, the Company's strategy has
been to expand into new international markets, primarily by partnering with
existing dosimetry service providers with a prominent local presence. In
addition, the Company has been developing new platforms and formats for its
OSL technology, such as InLight, to gain access to markets where the
Company previously did not have a significant presence, such as smaller in-
house and commercial laboratories and nuclear power facilities. Revenue
growth in recent years has occurred as a result of increased prices for
certain services, entry into new markets through joint ventures and
acquisitions, modest unit growth, and new ancillary services and products.
The services provided by the Company to its customers are ongoing and
of a subscription nature. As such, revenues are recognized in the periods
in which such services are rendered, irrespective of whether invoiced in
advance or in arrears. Given the subscription nature of Landauer's
services, quarterly revenues have historically been fairly consistent.
During the second quarter of each fiscal year, however, the Company
provides additional services of reporting annual radiation dose summaries
that generate increased revenues. Growth in the Company's InLight product
line may result in some variability in quarter-to-quarter revenue
comparisons, given the nature of purchase cycles associated with sales of
radiation dose measurement instruments and detectors.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2007
- ---------------------------------------------------------
Revenues for the third quarter of fiscal 2007 were $20,589,000, a
5.1% increase compared to revenues of $19,591,000 for the same quarter in
fiscal 2006. Domestic revenue for the quarter was approximately flat with
prior year. International revenue increased $909,000, or 23.8%, supported
by growth in volume in most regions, the addition of a new 51% owned joint
venture in Australia and favorable currency exchange rates.
The cost of sales for the third quarter of fiscal 2007 were
$6,596,000, a decrease of $546,000 or 7.6%, compared with cost of sales of
$7,142,000 for the same quarter in fiscal 2006. Gross margins were 68.0%
of revenues for the third quarter of fiscal 2007, compared with the 63.5%
reported for the same period in fiscal 2006. The improvement is a result
of the profit improvement plan initiated in the second quarter of fiscal
2006, resulting in a reduction in labor and related expenses, and reduced
depreciation expense due to certain investments in manufacturing and lab
operations equipment becoming fully depreciated.
14
Selling, general and administrative expenses for the third quarter of
fiscal 2007 were $6,164,000, an increase of $1,477,000 or 31.5%, compared
with expense of $4,687,000 for the third quarter of fiscal 2006. Factors
contributing to the increase in selling, general and administrative costs
include: $483,000 in spending to re-engineer business processes and to
replace the Company's information technology systems that support improved
customer relationship management and the order-to-cash cycle; $105,000
incremental operating expenses from the addition of the new 51% owned joint
venture in Australia; $279,000 of increased cost in other foreign
operations, primarily relating to increased foreign exchange rates; and
$352,000 of increased spending for professional fees primarily related to
tax services.
As part of the IT initiative announced earlier this year, management
completed the technical design phase of the new system and the resulting
final evaluation of the usefulness of investments made in legacy
information systems' hardware and software. Of these assets, $3.5 million
were determined to be either impaired or subject to accelerated
depreciation. This resulted in a third quarter charge of $2.4 million
($1.4 million, after-tax), of which $2.2 million was for impaired assets.
Resulting operating income for the quarter ended June 30, 2007 was
$5,472,000, a decrease of 29.5% compared with $7,762,000 reported in the
same quarter a year ago.
Net other income, including equity in income of joint venture, for
the quarter was $221,000 higher than a year ago, reflecting higher net
interest income and higher equity earnings from Nagase Landauer. The
effective income tax rate for the third quarter of fiscal 2007 was 35.8%
compared with the prior year at 36.9%. Resulting net income for the
quarter ended June 30, 2007 amounted to $3,907,000, or $0.42 per diluted
share, compared with $5,121,000, or $0.56 per diluted share, for the same
quarter in fiscal 2006. The impact of the asset impairment and accelerated
depreciation charges decreased diluted earnings per share by $0.15.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 2007
- -------------------------------------------------------------
Revenues for the first nine months of the fiscal year were
$62,382,000, a 6.0% increase compared to revenues of $58,859,000 for the
same period in fiscal 2006. Domestic revenue growth was $739,000, or 1.5%,
from gains in the core radiation monitoring business and the HomeBuyer's
Preferred subsidiary, and increases in the domestic InLight services
revenue. International revenue increased $2,784,000, or 25.4%, supported
by growth in volume in most regions, lead by InLight services, the addition
of a new 51% owned joint venture in Australia and favorable currency
exchange rates.
The cost of sales for the first nine months of fiscal 2007 were
$20,817,000, a decrease of $1,244,000 or 5.6%, compared with cost of sales
of $22,061,000 for the same period in fiscal 2006. Gross margins were
66.6% of revenues for the first nine months of fiscal 2007, compared with
the 62.5% reported for the same period in fiscal 2006. The improvement is
a result of the profit improvement plan initiated in the second quarter of
fiscal 2006 resulting in a reduction in labor and related expenses and
postage costs. Further contributing to the improved margin is reduced
depreciation expense due to certain investments in manufacturing and lab
operations equipment becoming fully depreciated.
15
Selling, general and administrative expenses for the first nine
months of fiscal 2007 were $17,483,000, an increase of $3,141,000 or 21.9%,
compared with expense of $14,342,000 for the same period in fiscal 2006.
Factors contributing to the increase in selling, general and administrative
costs include: $1,003,000 in spending to re-engineer business processes and
to replace the Company's information technology systems that support
improved customer relationship management and the order-to-cash cycle;
$380,000 incremental operating expenses from the addition of the new 51%
owned Joint venture in Australia; $640,000 of increased cost in other
foreign operations, primarily relating to increased foreign exchange rates;
and $533,000 higher spending for salaries and benefits and $780,000 in
professional fees for investments in support of certain strategic
initiatives and increased spending for professional fees primarily related
to tax services.
Operating income for the nine months ended June 30, 2007 was
$21,725,000, a decrease of 0.6% compared with $21,856,000 in the same
period a year ago. The current year operating income was impacted by the
asset impairment and accelerated depreciation charges discussed above in
the results of operations for the quarter ended June 30, 2007. Prior year
operating results were reduced by $600,000 in reorganization expenses in
support of the profit improvement plan initiated in the second quarter of
2006.
Net other income, including equity in income of joint venture, for
the first nine months was $397,000 higher than a year ago, primarily
reflecting higher net interest income. The effective income tax rate for
the first nine months of fiscal 2007 was 36.9% compared with the prior year
at 37.4%. Resulting net income for the nine months ended June 30, 2007
amounted to $14,706,000 or $1.60 per diluted share, compared with
$14,376,000, or $1.58 per diluted share, for the same period in fiscal
2006.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Landauer generated $2,734,000 in cash during the nine months ended
June 30, 2007, resulting in cash on hand of $18,154,000 at June 30, 2007.
The Company made payments of $1,717,000 on its line of credit during the
nine months ended June 30, 2007, ending the period with no borrowings
outstanding.
Cash flows provided by operating activities for the first nine months
of fiscal 2007 were $19,123,000, an increase of $1,222,000, or 6.8%, from
fiscal 2006. The increase is due primarily to an increase in net income,
exclusive of the third quarter non-cash impairment and accelerated
depreciation charge, as well as an increase in the contribution from the
change in the components of working capital compared to prior year,
partially offset by a decline in dividends received from Nagase-Landauer,
Ltd. compared to prior year.
Investing activities included acquisitions of property, plant and
equipment in the amounts of $5,398,000 and $2,860,000 for the nine months
ended June 30, 2007 and 2006, respectively. Landauer's board of directors
approved a program to re-engineer business processes and replace the
Company's information technology systems that support customer relationship
management and the order-to-cash cycle. The total cost of the program is
estimated to be $9,000,000 to $10,000,000 of which approximately $6,600,000
will be capitalized. Capital expenditures for the remainder of fiscal 2007
are expected to be in the range of $2,000,000 to $2,500,000, principally
for the development and implementation of supporting software systems. The
Company anticipates that funds for these capital improvements will be
provided from operations.
16
The Company's financing activities were comprised of credit facility
activities and payments of cash dividends to shareholders and minority
partners, offset partially by proceeds from the exercise of stock options.
During the first nine months of fiscal 2007 and 2006, the Company paid cash
dividends of $12,795,000, or $0.475 per share, and $11,958,000, or $0.45
per share, respectively, and such amounts have been provided from
operations.
As described in Note 6 to the financial statements, the Company
maintained a credit facility, which expired in March 2007. As amended, the
credit facility permitted borrowing up to $15,000,000, with an option for
the Company to increase to $25,000,000. In April 2004, the Company
borrowed $7,724,000 to acquire the remaining 49% minority interest in
Landauer-Europe. At September 30, 2006, outstanding borrowings under the
credit agreement were $1,649,000. No borrowings were outstanding at June
30, 2007. The borrowings were classified as current liabilities and were
denominated in euros, which is the functional currency of Landauer-Europe.
In the opinion of management, cash flows from operations 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,
reflected on the balance sheet as "Deferred Contract Revenue", amounted to
$14,782,000 and $13,761,000 as of June 30, 2007 and September 30, 2006,
respectively. While these amounts represent approximately 49.9% and 48.4%
of current liabilities as of June 30, 2007 and September 30, 2006,
respectively, such amounts do not represent a cash requirement.
All customers are invoiced in accordance with the Company's standard
terms, with payment generally due thirty to sixty days from date of
invoice. A significant portion of the Company's revenues is subject to
health care industry reimbursement cycles, particularly hospitals.
Landauer offers radiation monitoring services in the United Kingdom,
Canada, Japan, Brazil, China, Australia and France. The Company's
operations in these markets generally do not depend on significant capital
resources.
OUTLOOK FOR BALANCE OF FISCAL 2007
- ----------------------------------
The Company anticipates 2007 aggregate revenue growth to be in the
range of 4-5 percent. Investments in sales and marketing and our
information systems initiative will accelerate in the coming quarter. In
addition, we will record approximately $517,000 of additional depreciation
in the fourth quarter from accelerating the depreciation of certain IT
assets. As a result, we believe earnings for fiscal 2007 will be flat with
2006. (In fiscal 2006, Landauer reported revenues of $79.0 million, net
income of $19.0 million, and diluted earnings per share of $2.09. These
results included $1.0 million in after-tax reorganization and management
transition charges.) Excluding the impairment and accelerated depreciation
charges, earnings are expected to grow 4 - 5 percent.
FORWARD LOOKING STATEMENTS
- --------------------------
Certain of the statements made herein 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
development and introduction of new technologies in general; introduction
and customer acceptance of the InLight technology; the adaptability of
optically stimulated luminescence (OSL) technology to new platforms and
formats, such as Luxel<registered trademark>+; the costs associated with
the Company's research and business development efforts; the usefulness of
17
older technologies; 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 products and services; changes in postal and delivery practices; the
Company's business plans; anticipated revenue and cost growth; the risks
associated with conducting business internationally; other anticipated
financial events; the effects of changing economic and competitive
conditions; foreign exchange rates; government regulations; accreditation
requirements; 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 anticipated results. 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, 2006 and other reports filed by the Company, from
time to time, with the SEC.
RECENT ACCOUNTING PRONOUNCEMENTS
- --------------------------------
In June 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
(FIN No. 48). FIN No. 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in
accordance with FASB Statement No. 109, "Accounting for Income Taxes."
This interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN No. 48 also
provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition. In
addition, the FASB released Staff Position No. FIN 48-1 (FSP 48-1) to
provide guidance on how an enterprise should determine whether a tax
position is effectively settled for the purpose of recognizing previously
unrecognized tax benefits. FIN No. 48 is effective for fiscal years
beginning after December 15, 2006, and will become effective for the
Company at the beginning of fiscal 2008. The Company continues to evaluate
the impact of FIN No. 48 and the Staff Position to its financial position,
results of operations and financial disclosures.
In September 2006, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 158, "Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106, and 132(R)." The Statement requires companies to
recognize on their balance sheet the funded status of their defined benefit
pension and other postretirement benefit plans and to recognize changes in
the funded status of these plans through comprehensive income in the year
in which the changes occur. The Statement also requires companies to
measure the plan assets and its obligations as of the end of the employer's
fiscal year. The provisions of SFAS No. 158 will be effective for the
Company at the end of fiscal 2007. The effect on the Company's financial
statements is dependent upon assumptions used and actual returns on assets
at the time of adoption. The Company currently estimates that the adoption
of this Statement will result in the recognition of an additional liability
with a related pre-tax charge to accumulated other comprehensive income in
the amount of approximately $2.4 million.
18
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities, including an
Amendment of FASB Statement No. 115." SFAS No. 159 permits entities to
choose to measure many financial instruments and certain other items at
fair value on an instrument-by-instrument basis, with unrealized gains and
losses related to these financial instruments reported in earnings at each
subsequent reporting date. SFAS No. 159 also establishes presentation and
disclosure requirements to facilitate comparisons between companies that
choose different measurement attributes for similar assets and liabilities.
SFAS No. 159 is effective for fiscal years beginning after November 15,
2007. The Company is currently evaluating the impact of SFAS No. 159 to
its financial position, results of operations and financial disclosures.
In March 2007, the FASB ratified the Emerging Issues Task Force
(EITF) Issue No. 06-10, "Accounting for the Deferred Compensation and
Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life
Insurance Arrangements." The EITF affirmed as a final consensus that an
employer should recognize a liability for the postretirement benefit
related to a collateral assignment split-dollar life insurance arrangement
in accordance with either SFAS No. 106 or APB Opinion No. 12. Issue No.
06-10 applies only when the arrangement is determined to provide a
postretirement benefit. The final consensus on Issue No. 06-10 will also
require an employer to recognize and measure the asset under a collateral
assignment arrangement based on the substance of the arrangement. The
Issue is effective for fiscal years beginning after December 15, 2007,
including interim periods within those fiscal years. The Company is
currently evaluating the impact of Issue No. 06-10 to its financial
position, results of operations and financial disclosures.
In June 2007, the FASB ratified EITF Issue No. 06-11, "Accounting for
Income Tax Benefits of Dividends on Share-Based Payment Awards." EITF No.
06-11 requires companies to recognize the realized tax benefit from
dividends or dividend equivalents that are charged to retained earnings and
paid to employees for nonvested or outstanding equity-classified employee
share-based payment awards as an increase to additional paid-in-capital.
The EITF also addresses the accounting for these tax benefits if an
entity's estimate of forfeitures changes in subsequent periods. The Issue
is to be applied prospectively to dividends declared in fiscal years
beginning after December 15, 2007, including interim periods within those
fiscal years. The Company is currently evaluating the impact of Issue No.
06-11 to its financial position, results of operations and financial
disclosures.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The accounting policies followed by the Company are set forth in
Item 7 and "Summary of Significant Accounting Policies" in the Notes to
Consolidated Financial Statements of the 2006 Landauer Annual Report on
Form 10-K. The Company believes that at June 30, 2007, there have been no
material changes to this information.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk, including changes in foreign
currency exchange rates and interest rates. These risks are set forth in
Item 7A of the 2006 Landauer Annual Report on Form 10-K. The Company
believes there have been no material changes in the information provided
from the end of the preceding fiscal year through June 30, 2007.
19
ITEM 4. CONTROLS AND PROCEDURES
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 (the "Exchange Act"). Based upon that evaluation,
the Company's management, including the CEO and CFO, concluded that the
Company's disclosure controls and procedures as of June 30, 2007 were
effective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
- ----------------------------------------------------
There have been no changes in the Company's internal control over
financial reporting that occurred during the period ended June 30, 2007
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, 2007, 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 of the
2006 Landauer Annual Report on Form 10-K. There have been no material
changes from the risk factors previously disclosed in the Company's fiscal
2006 Form 10-K.
ITEM 6. EXHIBITS
Exhibit 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
Exhibit 31.2 Certification of Jonathon M. Singer, Chief
Financial Officer, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 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
Exhibit 32.2 Certification of Jonathon M. Singer, Chief
Financial Officer, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
20
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: August 8, 2007
/s/ Jonathon M. Singer
---------------------------------
Jonathon M. Singer
Senior Vice President, Treasurer,
and Secretary
(Principal Financial and
Accounting Officer)
21