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EX-32.2 - EX-32.2 - LANDAUER INCldr-20161231xex32_2.htm
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EX-31.2 - EX-31.2 - LANDAUER INCldr-20161231xex31_2.htm
EX-31.1 - EX-31.1 - LANDAUER INCldr-20161231xex31_1.htm
EX-10.2 - EX-10.2 - LANDAUER INCldr-20161231xex10_2.htm

 



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended December 31, 2016



Commission file number 1-9788





 

 

 



LANDAUER, INC.

(Exact Name of Registrant as Specified in Its Charter)

 



 

 

 



Delaware

06-1218089

 



(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 



 

 

 



2 Science Road, Glenwood, IL  60425

(Address of Principal Executive Offices and Zip Code)

 



 

 

 



Registrant’s Telephone Number, Including Area Code:  (708) 755-7000

 



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 daysYes [ 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 February 3, 2017, 9,622,159 shares of common stock, par value $0.10 per share, of the registrant were outstanding.





1

 


 

 

TABLE OF CONTENTS





 

 

 

 



 

 

 

 

PART I    FINANCIAL INFORMATION

 

 



 

 

 

 

Item 1.

Financial Statements

 

 



 

 

 

 



 

Consolidated Balance Sheets (Unaudited)

3

 



 

 

 

 



 

Consolidated Statements of Operations (Unaudited)

4

 



 

 

 

 



 

Consolidated Statements of Comprehensive Income (Unaudited)

5

 



 

 

 

 



 

Consolidated Statement of Stockholders’ Equity (Unaudited)

6

 



 

 

 

 



 

Consolidated Statements of Cash Flows (Unaudited)

7

 



 

 

 

 



 

Notes to Consolidated Financial Statements (Unaudited)

8

 



 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

 



 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

 



 

 

 

 

Item 4.

Controls and Procedures

22

 



 

 

 

 



 

 

 

 

PART II    OTHER INFORMATION

 

 



 

 

 

 

Item 1.

Legal Proceedings

23

 



 

 

 

 

Item 1A.

Risk Factors

23

 



 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23

 



 

 

 

 

Item 3.

Defaults Upon Senior Securities

23

 



 

 

 

 

Item 4.

Mine Safety Disclosures

23

 



 

 

 

Item 5.

Other Information

23

 



 

 

 

Item 6.

Exhibits

24

 



 

 

 

 



 

 

 

 

SIGNATURE

25

 







 

2

 


 

 

 

PART I  FINANCIAL INFORMATION



Item 1.Financial Statements



LANDAUER, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)









 

 

 

 

 

 

(Dollars in Thousands)

 

December 31,
2016

 

September 30,
2016

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,442 

 

$

13,285 

Receivables, net of allowances of $1,313 at December 31, 2016 and $1,296 at September 30, 2016

 

 

32,482 

 

 

31,998 

Inventories

 

 

5,692 

 

 

5,670 

Deferred income tax assets - current

 

 

2,006 

 

 

2,098 

Prepaid income taxes

 

 

655 

 

 

764 

Prepaid expenses and other current assets

 

 

3,866 

 

 

2,187 

Total current assets

 

 

57,143 

 

 

56,002 

Property, plant and equipment, at cost

 

 

106,301 

 

 

105,237 

Less accumulated depreciation and amortization

 

 

(60,248)

 

 

(58,820)

Property, plant and equipment, net

 

 

46,053 

 

 

46,417 

Equity in joint ventures

 

 

24,956 

 

 

26,174 

Goodwill

 

 

33,335 

 

 

33,807 

Intangible assets, net of accumulated amortization of $11,699 at December 31, 2016 and $11,772 at September 30, 2016

 

 

9,003 

 

 

9,297 

Dosimetry devices, net of accumulated depreciation of $6,379 at December 31, 2016 and $6,197 at September 30, 2016

 

 

2,899 

 

 

3,162 

Deferred income tax assets

 

 

7,873 

 

 

9,104 

Other assets

 

 

6,490 

 

 

6,853 

Total assets

 

$

187,752 

 

$

190,816 



 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accounts payable

 

$

2,450 

 

$

3,012 

Dividends payable

 

 

2,823 

 

 

2,815 

Deferred contract revenue

 

 

13,642 

 

 

13,932 

Accrued compensation and related costs

 

 

7,845 

 

 

9,256 

Accrued severance

 

 

122 

 

 

302 

Other accrued expenses

 

 

6,197 

 

 

5,181 

Total current liabilities

 

 

33,079 

 

 

34,498 

Long-term debt

 

 

107,600 

 

 

109,100 

Pension and postretirement obligations

 

 

24,874 

 

 

24,833 

Deferred income tax liabilities

 

 

103 

 

 

86 

Uncertain income tax liabilities

 

 

1,489 

 

 

1,495 

Other non-current liabilities

 

 

203 

 

 

205 

Total liabilities

 

 

167,348 

 

 

170,217 

Commitments and Contingencies

 

 

 

 

 

 



 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred stock, $0.10 par value per share, authorized 1,000,000 shares; none issued

 

 

 -

 

 

 -

Common stock, $0.10 par value per share, authorized 20,000,000 shares; 9,797,046 and 9,727,264 shares issued and outstanding at December 31, 2016 and September 30, 2016, respectively

 

 

980 

 

 

973 

Additional paid in capital

 

 

44,569 

 

 

43,982 

Accumulated other comprehensive loss

 

 

(17,534)

 

 

(15,266)

Accumulated deficit

 

 

(8,800)

 

 

(10,511)

Landauer, Inc. stockholders' equity

 

 

19,215 

 

 

19,178 

Noncontrolling interest

 

 

1,189 

 

 

1,421 

Total stockholders' equity

 

 

20,404 

 

 

20,599 

Total Liabilities and Stockholders' Equity

 

$

187,752 

 

$

190,816 



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

3

 


 

 

 

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)











 

 

 

 

 

 



 

Three Months Ended December 31,

(Dollars in Thousands, Except per Share)

 

2016

 

2015

Revenues:

 

 

 

 

 

 

Service revenues

 

$

32,749 

 

$

31,545 

Product revenues

 

 

4,823 

 

 

4,985 

Total revenues

 

 

37,572 

 

 

36,530 



 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

Service costs

 

 

15,978 

 

 

16,178 

Product costs

 

 

1,959 

 

 

1,837 

Total cost of sales

 

 

17,937 

 

 

18,015 



 

 

 

 

 

 

Gross profit

 

 

19,635 

 

 

18,515 

Selling, general and administrative expense

 

 

12,193 

 

 

12,263 

Operating income

 

 

7,442 

 

 

6,252 

Equity in income of joint ventures

 

 

636 

 

 

301 

Interest expense, net

 

 

(794)

 

 

(933)

Other (expense) income, net

 

 

(328)

 

 

(160)

Income before taxes

 

 

6,956 

 

 

5,460 

Income tax expense

 

 

2,376 

 

 

1,687 

Net income

 

 

4,580 

 

 

3,773 

Less:  Net income attributed to noncontrolling interest

 

 

179 

 

 

130 

Net income attributed to Landauer, Inc.

 

$

4,401 

 

$

3,643 



 

 

 

 

 

 

Net income per share attributable to Landauer, Inc. shareholders:

 

 

 

 

 

 

Basic

 

$

0.46 

 

$

0.38 

Weighted average basic shares outstanding

 

 

9,540 

 

 

9,460 



 

 

 

 

 

 

Diluted

 

$

0.46 

 

$

0.38 

Weighted average diluted shares outstanding

 

 

9,584 

 

 

9,492 



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



4

 


 

 

 

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Unaudited)









 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Three Months Ended

December 31, 2016

(Dollars in Thousands)

 

Landauer, Inc.

 

Noncontrolling
Interest

 

Total

Net income

 

$

4,401 

 

$

179 

 

$

4,580 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Defined benefit pension and postretirement plans activity, net of taxes of ($71)

 

 

119 

 

 

 -

 

 

119 

Unrealized gains (losses) on available-for-sale securities, net of taxes of $0

 

 

 -

 

 

 -

 

 

 -

Foreign currency translation adjustment, net of taxes of $503

 

 

(2,387)

 

 

(39)

 

 

(2,426)

Comprehensive income

 

$

2,133 

 

$

140 

 

$

2,273 



 

 

 

 

 

 

 

 

 



 

Three Months Ended

December 31, 2015

(Dollars in Thousands)

 

Landauer, Inc.

 

Noncontrolling
Interest

 

Total

Net income

 

$

3,643 

 

$

130 

 

$

3,773 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Defined benefit pension and postretirement plans activity, net of taxes of ($25)

 

 

44 

 

 

 -

 

 

44 

Unrealized losses on available-for-sale securities, net of taxes of $23

 

 

(75)

 

 

 -

 

 

(75)

Foreign currency translation adjustment, net of taxes of $162

 

 

(317)

 

 

 

 

(315)

Comprehensive income

 

$

3,295 

 

$

132 

 

$

3,427 



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

5

 


 

 

 

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

 

Accumulated Other Compre-hensive (Loss) Income

 

(Accumulated Deficit) Retained
Earnings

 

Non-
Controlling
Interest

 

Total
Stock-
holders'
Equity

September 30, 2016

 

9,727,264 

 

$

973 

 

$

43,982 

 

$

(15,266)

 

$

(10,511)

 

$

1,421 

 

$

20,599 

Stock-based compensation arrangements

 

69,782 

 

 

 

 

587 

 

 

 -

 

 

 -

 

 

 -

 

 

594 

Dividends

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(2,690)

 

 

(372)

 

 

(3,062)

Net income

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

4,401 

 

 

179 

 

 

4,580 

Foreign currency translation adjustment, net of tax

 

 -

 

 

 -

 

 

 -

 

 

(2,387)

 

 

 -

 

 

(39)

 

 

(2,426)

Defined benefit pension and postretirement plans activity, net of tax

 

 -

 

 

 -

 

 

 -

 

 

119 

 

 

 -

 

 

 -

 

 

119 

December 31, 2016

 

9,797,046 

 

$

980 

 

$

44,569 

 

$

(17,534)

 

$

(8,800)

 

$

1,189 

 

$

20,404 



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

6

 


 

 

 

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)









 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended December 31,

(Dollars in Thousands)

 

2016

 

2015

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

4,580 

 

$

3,773 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

2,678 

 

 

2,797 

Equity in income of joint ventures

 

 

(636)

 

 

(301)

Dividends from joint ventures

 

 

 -

 

 

1,195 

Stock-based compensation and related net tax benefits

 

 

744 

 

 

457 

Current and long-term deferred taxes, net

 

 

1,752 

 

 

632 

Loss (gain) on sale, disposal and abandonment of fixed assets

 

 

17 

 

 

(9)

Gain on investments

 

 

(58)

 

 

(190)

Changes in operating assets and liabilities:

 

 

 

 

 

 

(Increase) decrease in accounts receivable, net

 

 

(892)

 

 

224 

Decrease in prepaid taxes

 

 

106 

 

 

40 

Increase in other operating assets, net

 

 

(1,005)

 

 

(982)

Decrease in accounts payable and other accrued liabilities

 

 

(1,057)

 

 

(2,052)

Increase in other operating liabilities, net

 

 

261 

 

 

357 

Net cash provided by operating activities

 

 

6,490 

 

 

5,941 



 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

(1,877)

 

 

(1,534)

Payment of transaction expenses associated with divestiture of business

 

 

 -

 

 

(472)

Other investing activities, net

 

 

(538)

 

 

(923)

Net cash used in investing activities

 

 

(2,415)

 

 

(2,929)



 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Long-term borrowings - loan

 

 

2,000 

 

 

7,000 

Long-term borrowings - repayment

 

 

(3,500)

 

 

(12,700)

Dividends paid to stockholders

 

 

(2,682)

 

 

(2,651)

Other financing activities, net

 

 

(368)

 

 

(156)

Net cash used in financing activities

 

 

(4,550)

 

 

(8,507)



 

 

 

 

 

 

Effects of foreign currency translation

 

 

(368)

 

 

(279)

Net decrease in cash and cash equivalents

 

 

(843)

 

 

(5,774)

Opening balance - cash and cash equivalents

 

 

13,285 

 

 

15,314 

Ending balance - cash and cash equivalents

 

$

12,442 

 

$

9,540 



 

 

 

 

 

 

Accrued capital spending included in accounts payable and other accrued liabilities

 

$

683 

 

$

1,153 



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

7

 


 

 

 

LANDAUER, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

December 31, 2016

(Dollars in Thousands)



(1)Basis of Presentation and Consolidation



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



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



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



The preparation of the interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates. 



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



These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (the “Form 10-K”) and other financial information filed with the Securities and Exchange Commission (the “SEC”).  The September 30, 2016 balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.



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





8

 


 

 

 

(2)Recent Accounting Pronouncements



Accounting Standards Adopted



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



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



Accounting Standards Not Yet Adopted



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



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



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



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

9

 


 

 

 



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



In June 2016, the FASB issued new guidance to introduce a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update is effective for the Company in the first quarter of fiscal 2020, although early adoption is permitted. The Company is currently evaluating the effect that this update will have on its financial statements and related disclosures.



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



In November 2016, the FASB issued amendments to current guidance related to the classification and presentation of changes in restricted cash in the Statement of Cash Flows.  The update is effective for the Company in the first quarter of fiscal 2019, and early adoption is permitted.  The Company is currently evaluating the impact that this update will have on its financial statements and related disclosures. 



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

10

 


 

 

 

(3)Fair Value Measurements



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



The three levels of the hierarchy are as follows:



·

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date

·

Level 2 – Inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. 

·

Level 3 – Unobservable inputs for the asset or liability used to measure fair value that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability.



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







 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



Fair Value Measurements at December 31, 2016

(Dollars in Thousands)

Level 1

 

Level 2

 

Level 3

Asset Category

 

 

 

 

 

 

 

 

Cash equivalents

$

536 

 

$

 -

 

$

 -

Mutual funds

 

4,163 

 

 

 -

 

 

 -

Total financial assets at fair value

$

4,699 

 

$

 -

 

$

 -



 

 

 

 

 

 

 

 



Fair Value Measurements at September 30, 2016

(Dollars in Thousands)

Level 1

 

Level 2

 

Level 3

Asset Category

 

 

 

 

 

 

 

 

Cash equivalents

$

453 

 

$

 -

 

$

 -

Mutual funds

 

3,687 

 

 

 -

 

 

 -

Total financial assets at fair value

$

4,140 

 

$

 -

 

$

 -



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



The Level 1 financial assets were comprised of investments in trading securities, which are reported in other long-term assets.  The investments are held in a Rabbi trust for benefits under the Company’s deferred compensation plan.  Under the plan, participants designate investment options to serve as the basis for measurement of the notional value of their accounts.  The investments include a money market fund and mutual funds that are publicly traded.  The fair values of the shares or underlying securities of these funds are based on quoted market prices.



11

 


 

 

 

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



(4)Income per Common Share



Basic net income per share was computed by dividing net income available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period.  Diluted net income per share was computed by dividing net income available to common stockholders for the period by the weighted average number of shares of common stock that would have been outstanding assuming dilution from stock-based compensation awards during the period.    



The following table sets forth the computation of net income per share:





 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended
December 31,

(Dollars in Thousands, Except per Share)

2016

 

2015

Basic Net Income per Share:

 

 

 

 

 

 

Net income attributed to Landauer, Inc.

 

$

4,401 

 

$

3,643 

Less:  Income allocated to unvested restricted stock

 

 

23 

 

 

18 

Net income available to common stockholders

 

$

4,378 

 

$

3,625 

Basic weighted average shares outstanding

 

 

9,540 

 

 

9,460 

Net income per share - Basic

 

$

0.46 

 

$

0.38 



 

 

 

 

 

 

Diluted Net Income per Share:

 

 

 

 

 

 

Net income attributed to Landauer, Inc.

 

$

4,401 

 

$

3,643 

Less:  Income allocated to unvested restricted stock

 

 

23 

 

 

18 

Net income available to common stockholders

 

$

4,378 

 

$

3,625 

Basic weighted average shares outstanding

 

 

9,540 

 

 

9,460 

Effect of dilutive securities

 

 

44 

 

 

32 

Diluted weighted averages shares outstanding

 

 

9,584 

 

 

9,492 

Net income per share - Diluted

 

$

0.46 

 

$

0.38 



 

 

 

 

 

 

Dividends paid per share

 

$

0.275 

 

$

0.275 



On November 30, 2016, the Company declared a regular quarterly cash dividend in the amount of $0.275 per share. The dividends were paid on January 3, 2017 to shareholders of record as of December  16, 2016.



12

 


 

 

 

(5)Employee Benefit Plans



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





 

 

 

 

 



 

 

 

 

 

Pension Benefits

Three Months Ended
December 31,

(Dollars in Thousands)

2016

 

2015

Interest cost

$

352 

 

$

392 

Expected return on plan assets

 

(388)

 

 

(373)

Amortization of net loss

 

190 

 

 

141 

Net periodic benefit cost

$

154 

 

$

160 



 

 

 

 

 

Other Benefits

Three Months Ended
December 31,

(Dollars in Thousands)

2016

 

2015

Service cost

$

16 

 

$

15 

Interest cost

 

 

 

10 

Amortization of net gain

 

 -

 

 

(4)

Net periodic benefit cost

$

25 

 

$

21 



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



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



(6)Goodwill and Intangible Assets



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









 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

 

Radiation Measurement

 

Medical
Physics

 

 

Total



 

 

 

 

 

 

 

 

 

 

Balance as of September 30, 2016

 

$

11,196 

 

$

22,611 

 

 

$

33,807 

Currency translation adjustment

 

 

(472)

 

 

 -

 

 

 

(472)

Balance as of December 31, 2016

 

$

10,724 

 

$

22,611 

 

 

$

33,335 



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



13

 


 

 

 

Intangible assets consisted of the following: 





 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

December 31, 2016

(Dollars in Thousands)

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying Amount

Customer lists

 

$

16,578 

 

$

10,319 

 

$

6,259 

Trademarks and tradenames

 

 

133 

 

 

 -

 

 

133 

Licenses and patents

 

 

3,434 

 

 

823 

 

 

2,611 

Other intangibles

 

 

557 

 

 

557 

 

 

 -

Intangible assets

 

$

20,702 

 

$

11,699 

 

$

9,003 









 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

September 30, 2016

(Dollars in Thousands)

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying Amount

Customer lists

 

$

16,982 

 

$

10,436 

 

$

6,546 

Trademarks and tradenames

 

 

133 

 

 

 -

 

 

133 

Licenses and patents

 

 

3,397 

 

 

779 

 

 

2,618 

Other intangibles

 

 

557 

 

 

557 

 

 

 -

Intangible assets

 

$

21,069 

 

$

11,772 

 

$

9,297 



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



(7)Accumulated Other Comprehensive Loss



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





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

Foreign Currency Translation Adjustments

 

Unrealized Gains and Losses on Available-for-Sale Securities

 

Pension and Postretirement Plans

 

Comprehensive (Loss) Income

Balance at September 30, 2016

$

(4,696)

 

$

 -

 

$

(10,570)

 

$

(15,266)

Other comprehensive (loss) income before reclassifications

 

(2,387)

 

 

 -

 

 

 -

 

 

(2,387)

Amounts reclassified from accumulated other comprehensive (loss) income

 

 -

 

 

 -

 

 

119 

 

 

119 

Net current period other comprehensive (loss) income

 

(2,387)

 

 

 -

 

 

119 

 

 

(2,268)

Balance at December 31, 2016

$

(7,083)

 

$

 -

 

$

(10,451)

 

$

(17,534)





14

 


 

 

 



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

(Dollars in Thousands)

Foreign Currency Translation Adjustments

 

Unrealized Gains and Losses on Available-for-Sale Securities

 

Pension and Postretirement Plans

 

Comprehensive (Loss) Income

Balance at September 30, 2015

$

(5,468)

 

$

259 

 

$

(8,532)

 

$

(13,741)

Other comprehensive (loss) income before reclassifications

 

(317)

 

 

14 

 

 

 -

 

 

(303)

Amounts reclassified from accumulated other comprehensive (loss) income

 

 -

 

 

(89)

 

 

44 

 

 

(45)

Net current period other comprehensive (loss) income

 

(317)

 

 

(75)

 

 

44 

 

 

(348)

Balance at December 31, 2015

$

(5,785)

 

$

184 

 

$

(8,488)

 

$

(14,089)



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





 

 

 

 

 



 

 

 

 

 

Pension and Postretirement Plans (1)

Three Months Ended
December 31,

(Dollars in Thousands)

2016

 

2015

Amortization of net loss

$

190 

 

$

69 

Total before tax

 

190 

 

 

69 

Provision for income taxes

 

71 

 

 

25 

Total net of tax

$

119 

 

$

44 



(1)These accumulated other comprehensive loss components are included in the computation of net periodic benefit costs (refer to Note 5 of the Notes to Consolidated Financial Statements for additional details regarding employee benefit plans).





 

 

 

 

 



 

 

 

 

 

Unrealized Gains and Losses on Available-for-Sale Securities

Three Months Ended
December 31,

(Dollars in Thousands)

2016

 

2015

Realized gains on available-for-sale securities into earnings (1)

$

 -

 

$

(105)

Total before tax

 

 -

 

 

(105)

Provision for income taxes (2)

 

 -

 

 

(16)

Total net of tax

$

 -

 

$

(89)



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

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



15

 


 

 

 

(8)Income Taxes



The effective tax rates for the three months ended December 31, 2016 and 2015 were 34.2% and 30.9%, respectively. The increase in the effective tax rate was primarily due to the mix of taxable earnings between jurisdictions and tax law changes that impacted the prior year.  The Company believes it is reasonably possible that $563 of unrecognized tax benefits will be realized in fiscal year 2017.



(9)Segment Information



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



The following tables summarize financial information for each reportable segment:





 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended
December 31,

(Unaudited, Dollars in Thousands)

 

2016

 

2015

Revenues by segment:

 

 

 

 

 

 

Radiation Measurement

 

$

27,632 

 

$

24,704 

Medical Physics

 

 

9,940 

 

 

9,353 

Medical Products

 

 

 -

 

 

2,473 

Consolidated revenues

 

$

37,572 

 

$

36,530 



 

 

 

 

 

 



 

Three Months Ended
December 31,

(Unaudited, Dollars in Thousands)

 

2016

 

2015

Operating income (loss) by segment:

 

 

 

 

 

 

Radiation Measurement

 

$

11,232 

 

$

8,898 

Medical Physics

 

 

679 

 

 

778 

Medical Products

 

 

 -

 

 

490 

Corporate

 

 

(4,469)

 

 

(3,914)

Consolidated operating income

 

$

7,442 

 

$

6,252 







 

 

 

 

 

 

(Dollars in Thousands)

 

December 31,
2016

 

September 30,
2016

Segment assets:

 

 

 

 

 

 

Radiation Measurement

 

$

157,499 

 

$

160,560 

Medical Physics

 

 

43,460 

 

 

43,174 

Eliminations

 

 

(13,207)

 

 

(12,918)

Consolidated assets

 

$

187,752 

 

$

190,816 











16

 


 

 

 

(10)Related Party Transactions



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



The sales to and purchases from Aquila were as follows:





 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended
December 31,

(Dollars in Thousands)

 

2016

 

2015

Sales to Aquila

 

$

2,568 

 

$

396 

Purchases from Aquila

 

 

74 

 

 

(10)



Balance sheet items associated with Aquila were as follows:





 

 

 

 

 

 



 

 

 

 

 

 

(Dollars in Thousands)

 

December 31,

2016

 

September 30,

2016

Amounts in accounts receivable

 

$

2,888 

 

$

1,910 

Amounts in accounts payable

 

 

394 

 

 

320 



The sales to and purchases from Nagase were as follows:





 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended
December 31,

(Dollars in Thousands)

 

2016

 

2015

Sales to Nagase

 

$

1,241 

 

$

1,098 

Purchases from Nagase

 

 

310 

 

 

595 



Balance sheet items associated with Nagase were as follows:





 

 

 

 

 

 



 

 

 

 

 

 

(Dollars in Thousands)

 

December 31,

2016

 

September 30,

2016

Amounts in accounts receivable

 

$

334 

 

$

288 

Amounts in accounts payable

 

 

41 

 

 

23 











17

 


 

 

 

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



The following discussion and analysis of the Company’s unaudited consolidated financial condition and results of operations should be read in conjunction with the annual audited consolidated financial statements and related notes thereto included in the Company’s Form 10-K.  The following discussion includes forward-looking statements that involve certain risks and uncertainties.  For additional information regarding forward-looking statements and risk factors, see “Forward-Looking Statements” herein and Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.



The preparation of the interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Critical accounting policies are those that are most important to the portrayal of a company’s financial condition and results of operations, and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.  The Company bases its estimates, judgments and assumptions on historical experience and other relevant factors that are believed to be reasonable under the circumstances.  In any given reporting period, the Company’s actual results may differ from the estimates, judgments and assumptions used in preparing the consolidated financial statements.



Results of Operations

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



Revenues for the first fiscal quarter of 2017 were $37.6 million, an increase of $1.1 million, or 3.0%, compared to revenues of $36.5 million for the first fiscal quarter of 2016.  Revenues in the Radiation Measurement segment increased $2.9 million, which was primarily due to product sales to the military and growth in international revenuesRevenues in the Medical Physics segment increased $0.6 million, due to increased imaging services.  Revenues in the Medical Products segment were $0.0 million, a decrease of $2.5 million due to the divestiture of this business in May 2016.



Gross profit was 52.3% for the first fiscal quarter of 2017, compared with 50.7% for the first fiscal quarter of 2016.   Gross profit increased for the first fiscal quarter of 2017 as compared to the first fiscal quarter of 2016 due primarily to the increase in product sales to the military.    



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



Operating income for the first fiscal quarter of 2017 was $7.4 million, compared with operating income of $6.2 million for the first fiscal quarter of 2016.  Operating income increased due primarily to the gross profit on the higher military sales.  In addition, the Company successfully appealed the real estate taxes for fiscal 2011 and 2012, and as a result, is expected to receive a $0.6 million refund.



18

 


 

 

 

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



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



Radiation Measurement Segment



Radiation Measurement revenues for the first fiscal quarter of 2017 were $27.6 million, an increase of $2.9 million, or 11.7%, compared with $24.7 million for the first fiscal quarter of 2016The growth in revenues was primarily due to product sales to the military and higher international revenues.  During the third fiscal quarter of 2016, the Company was awarded a military order from the National Guard of the United States for the Radwatch personal in-field radiation monitoring system.  Approximately $2.2 million of the increase in revenues resulted from the shipment of products for the National Guard order.  International revenues increased $0.5 million due primarily to higher product sales.    



Operating income for the first fiscal quarter of 2017 increased to $11.2 million from $8.9 million for the first fiscal quarter of 2016 due to the gross profit on the increased product sales and due to the refund of real estate taxes for fiscal 2011 and 2012.



Medical Physics Segment



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



Operating income for the first fiscal quarter of 2017 was $0.7 million, compared to $0.8 million for the first fiscal quarter of 2016.  The decrease in operating income was primarily due to an increase in personnel expenses.



Medical Products Segment



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



Medical Products operating income decreased to $0.0 million for the first fiscal quarter of 2017 from $0.5 million for the first fiscal quarter of 2016 due to the May 2016 divestiture.    



Corporate Selling, General and Administrative Expenses



Corporate selling, general and administrative expenses for the first fiscal quarter of 2017 were $4.5 million, an increase of $0.6 million, or 15.4%, compared to $3.9 million for the first fiscal quarter of 2016.  The increase was due to a $0.3 million increase in stock compensation expense as well as a $0.2 million increase in proxy expenses for the 2017 Annual Meeting of Stockholders.  







19

 


 

 

 

Liquidity and Capital Resources



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



The following table sets forth a summary of the Company’s cash flows:





 

 

 

 

 



 

 

 

 

 



Three Months Ended December 31,

(Dollars in Thousands)

2016

 

2015

Net cash provided by (used in):

 

 

 

 

 

Operating activities

$

6,490 

 

$

5,941 

Investing activities

 

(2,415)

 

 

(2,929)

Financing activities

 

(4,550)

 

 

(8,507)

Effect of foreign currency translation

 

(368)

 

 

(279)

Net decrease in cash and cash equivalents

$

(843)

 

$

(5,774)



Cash provided by operating activities for the first three months of fiscal 2017 was $6.5 million, an increase of $0.6 million over the same fiscal period in 2016.  The increase was primarily due to lower spending in professional service fees compared to the prior year.



Cash used in investing activities for the first three months of fiscal 2017 was $2.4 million, a change of $0.5 million over the same fiscal period of 2016The change was primarily due to transaction expenses related to the disposition of the Radon business which were paid in fiscal 2016.



Cash used in financing activities for the first three months of fiscal 2017 was $4.6 million, a change of $3.9 million over the same fiscal period of 2016.  The change was primarily due to lower net repayments of debt compared to the prior year.  In addition, the Company expects to pay down debt over the next four to five years as it realizes a cash tax benefit of approximately $16.0 million resulting from the disposal of the Medical Products business.  As of December 31, 2016, the Company had $32.4 million of unused availability under its current $140.0 million credit facility, which the Company believes provides adequate liquidity to meet its current and anticipated obligations.



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



Recent Accounting Pronouncements



See Note 2 to the Consolidated Financial Statements in Item 1 of Part I 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 2016 through December 31, 2016.



20

 


 

 

 

Forward-Looking Statements



Certain matters contained in this report constitute forward-looking statements that are based on certain assumptions and involve certain risks and uncertainties.    These include the following, without limitation: assumptions, risks and uncertainties associated with the Company’s future performance; the Company’s development and introduction of new technologies and products in general; the ability to protect and utilize the Company’s intellectual property; events or circumstances which result in an impairment of assets; 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 services; the costs associated with the Company’s research and business development efforts; the usefulness of older technologies and related licenses and intellectual property; the effectiveness of and costs associated with the Company’s IT platform enhancements and investments in cyber security enhancements; the anticipated results of operations of the Company and its subsidiaries or joint ventures; valuation of the Company’s long-lived assets or reporting units relative to future cash flows; changes in pricing of services and products; changes in postal and delivery practices; the Company’s business plans; anticipated revenue and cost growth; the ability to integrate the operations of acquired businesses and to realize the expected benefits of acquisitions; the risks associated with conducting business internationally; costs incurred for potential acquisitions or similar transactions; other anticipated financial events; the effects of changing economic and competitive conditions, including instability in capital markets which could impact availability of short and long-term financing; the timing and extent of changes in interest rates; the level of borrowings; foreign exchange rates; government regulations; accreditation requirements; changes in the trading market that affect the costs of obligations under the Company’s benefit plans; and pending accounting pronouncements.    These assumptions may not materialize to the extent assumed, and risks and uncertainties may cause actual results to be different from what is anticipated today.    These risks and uncertainties also may result in changes to the Company’s business plans and prospects, and could create the need from time to time to write down the value of assets or otherwise cause the Company to incur unanticipated expenses.    Additional information may be obtained by reviewing the information set forth in Item 1A. “Risk Factors” and Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” of the Company’s Annual Report on Form 10-K for the year ended September 30, 2016 and information contained in other reports filed by the Company, from time to time, with the SEC.  The Company does not undertake, and expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events or changes in the Company’s expectations, except as required by law.



Item 3.quantitative and Qualitative Disclosures About Market Risk



The Company is exposed to market risk, including changes in foreign currency exchange rates and is subject to interest rate risk related to borrowings under its existing credit facility.  These risks are set forth in Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.  The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through December 31, 2016.





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Item 4.Controls and Procedures



Evaluation of Disclosure Controls and Procedures



As of December 31, 2016, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal executive officer and principal financial officer, respectively), of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended.



Based upon that evaluation, our CEO and CFO concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level for the purpose of ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to management including the CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. 



Changes in Internal Control Over Financial Reporting



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

22

 


 

 

 

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



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 December 31, 2016 includes the deemed surrender of existing shares of Landauer common stock to the Company by stock-based compensation plan participants to satisfy the exercise price or tax liability of employee stock awards at the time of exercise or vesting.  These surrendered shares are not part of any publicly announced share repurchase program.







 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Period

 

Total
Number of Shares
Purchased

 

Average
Price Paid
per Share

 

Total Number of
Shares Purchased
as Part of
Publicly
Announced
Plans
or Programs

 

Maximum
Number of
Shares that May
Yet be
Purchased
Under the Plans
or Programs

October 1 - October 31, 2016

 

149 

 

$

43.89 

 

 -

 

 -

November 1 - November 30, 2016

 

 -

 

 

 -

 

 -

 

 -

December 1 - December 31, 2016

 

 -

 

 

 -

 

 -

 

 -

Quarter ended December 31, 2016

 

149 

 

$

43.89 

 

 -

 

 -



Item 3.Defaults Upon Senior Securities



Not Applicable 



Item 4.Mine Safety Disclosures



Not Applicable 



Item 5.Other Information



Not Applicable 

23

 


 

 

 

Item 6.Exhibits





 

Cer

10

 

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



 

 

10.2*

 

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



 

 

31.1*

 

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



 

 

31.2*

 

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



 

 

32.1*

 

Certification of Michael P. Kaminski, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



 

 

32.2*

 

Certification of Daniel J. Fujii, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



 

 

101.INS**

 

XBRL INSTANCE FILE



 

 

101.SCH**

 

XBRL SCHEMA FILE



 

 

101.CAL**

 

XBRL CALCULATION FILE



 

 

101.DEF**

 

XBRL DEFINITION FILE



 

 

101.LAB**

 

XBRL LABEL FILE



 

 

101.PRE**

 

XBRL PRESENTATION FILE



 

 



*

Filed herewith



 

 



**

Furnished with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2016.



 

 



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



24

 


 

 

 

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.



 

(Registrant)



 

 

Date:  February 9, 2017 

 

/s/ Daniel J. Fujii



 

Daniel J. Fujii



 

Chief Financial Officer



25