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SECURITIES AND EXCHANGE COMMISSION FORM 10-K
WASHINGTON, DC 20549
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1995
Commission File Number 1-9788
LANDAUER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1218089
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
2 SCIENCE ROAD, GLENWOOD, ILLINOIS 60425
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(708) 755-7000
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK WITH PAR VALUE OF $.10 AMERICAN STOCK EXCHANGE
(Title of each class) (Name of exchange on which
registered)
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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of December 12, 1995, 8,477,285 common shares were
outstanding, and the aggregate market value of the common shares
(based upon the closing price on the American Stock Exchange)
held by non-affiliates was approximately $158,000,000.
Certain portions of the registrant's definitive Proxy Statement
in connection with the February 7, 1996 Annual meeting of
Stockholders (the "Proxy Statement") are incorporated by
reference into Part III of this Annual Report on Form 10-K.
INDEX
Item Page
PART I
1. Business
General Description 6
Marketing and Sales 6
Patents 6
Raw Materials 6
Competition 6
Research and Development 7
Environmental Regulations 7
Employees and Labor Relations 7
2. Properties 7
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 7
4A. Executive Officers of the Registrant 7
PART II
5. Market for Registrant's Common Stock
and Related Stockholder Matters 8
6. Selected Financial Data 8
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
8. Financial Statements and Supplementary Data
Consolidated Balance Sheets 10
Consolidated Statements of Income 11
Consolidated Statements of Stockholders' Investment 11
Consolidated Statements of Cash Flows 12
Notes to Financial Statements 13
Report of Independent Public Accountants 17
9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 17
PART III
10. Directors and Executive Officers of the Registrant 17
11. Executive Compensation 17
12. Security Ownership of Certain Beneficial
Owners and Management 17
13. Certain Relationships and Related Transactions 17
PART IV
14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 18
Financial Statements 18
Financial Statement Schedules 18
List of Exhibits 18
Reports on Form 8-K 18
Signatures of Registrant and Directors 19
PART I
ITEM 1. BUSINESS
GENERAL DESCRIPTION
GENERAL DESCRIPTION
Landauer, Inc. is a Delaware corporation organized on December
22, 1987 to carry on the radiation monitoring business previously
carried on by Tech/Ops, Inc. (Tech/Ops). On February 6, 1991,
the Company changed its name from Tech/Ops Landauer, Inc. to
Landauer, Inc.
The Company offers a service for measuring, primarily through
film and thermoluminescent badges worn by client personnel, the
dosages of x-ray, gamma radiation and other penetrating ionizing
radiations to which the wearer has been exposed. While most of
the Company s revenues are domestic, these services are marketed
in the United Kingdom and Canada.
Landauer's operations also include a service for detecting
radon gas. Landauer also offers personnel dosimetry services for
monitoring nitrous oxide anesthetic gases. At present, these
services make up a small part of revenues.
Landauer's wholly-owned subsidiary, HomeBuyer's Preferred,
Inc., offers a radon protection service agreement to purchasers
of personal residences. The service is targeted to corporate
employee relocation programs which have generally regarded radon
as a serious environmental hazard.
Landauer's activities also include the operations of a 50%-
owned subsidiary in Japan involved in radiation monitoring in
that country.
The Company's shares are listed on the American Stock
Exchange. As of September 30, 1995, there were 8,477,285 shares
outstanding.
As used herein, the "Company" or "Landauer" refers to
Landauer, Inc. and its wholly-owned subsidiary.
MARKETING AND SALES
Landauer's personnel dosimetry services are marketed primarily
by full-time Company personnel located in Illinois, California,
New Jersey, South Carolina, Texas, West Virginia, and the United
Kingdom. U.S. sales personnel also market these services in
Canada. Other concerns, market the Company's services on a
commission basis.
The Company has more than 40,000 customers representing over
800,000 individuals who use the Company's services. No one
customer represents as much as one percent of revenues.
Typically, a client will contract for a year's service in
advance, representing twelve monthly badges, readings, and
reports. Sales are made principally on a subscription basis and
deferred income as shown on the balance sheet represents backlog
data. At September 30, 1995 and 1994, deferred income was
$7,599,000 and $6,602,000, respectively.
Radon gas detection kits are marketed primarily to
institutional customers and to retail customers through some
major retail chains and wholesale distributors to smaller
retailers.
The HomeBuyer's Preferred Radon Protection Plan service
agreement is marketed to companies and to their corporate
relocation service providers for the benefit of purchasers of
residences incident to transfers of personnel.
PATENTS
The Company holds exclusive world-wide licenses to patent
rights for certain technologies which measure radiation exposure
to crystalline materials when stimulated with light. These
licenses were acquired by the Company from Battelle Memorial
Institute in 1994 as part of a collaborative effort to develop a
new generation of radiation dosimetry technology.
Additionally, the Company holds certain patent rights which
relate to various designs of alpha-track radon detection devices.
These patents expire from the years 2000 through 2010.
The Company believes that its business is primarily dependent
upon the Company's technical competence, the quality and
reliability of its services, and its prompt and responsive
performance. However, patent protection plays an important role
in differentiating the Company from its competitors through
technological leadership.
Rights to inventions of employees working for Landauer are
assigned to the Company.
RAW MATERIALS
The Company has many sources for most of its materials and
supplies, such as chemicals, and believes that the number of
sources and availability of items are adequate. Landauer
internally produces certain of its requirements, such as plastic
film badge holders. The Company purchases most of its
photographic film from a single supplier. While it has not yet
identified a second source for its film, the Company is
continuing its efforts to identify alternate suppliers and to
develop alternative technologies.
COMPETITION
The Company believes that it is the largest company in the
field of personnel radiation monitoring. There are three major
competitors as well as a number of small companies that operate
in limited markets.
With the exception of Japan and the United Kingdom, radiation
monitoring activities in most major foreign countries are
generally conducted by government agencies. In early 1995, the
Company began offering radiation monitoring services to customers
in Canada following approval of the Company's devices by Canadian
authorities. In the United States, major government
installations, such as Oak Ridge National Laboratories, have
their own in-house radiation monitoring services. Additionally,
many large private nuclear power plants also have their own in-
house radiation monitoring services. As stated above, the
Company competes on the basis of technical competence, the
quality and reliability of its services, and its prompt and
responsive performance.
Radon gas detection services represent a market in which
Landauer has many large and small competitors, many of whom use
short-term charcoal detectors rather than the Company's alpha-
track detectors. Charcoal radon detection technology measures
gamma radiation (the radioactive decay products of radon gas)
which has been adsorbed in charcoal after a period of from two to
five days. Alpha-track technology measures the damage to a
specially formulated plastic chip caused by radioactive decay
products of radon gas over periods of from two weeks to one year.
In recent years, the major source of revenue for the radon gas
detection market has been in institutional sales to government
agencies. Competition occurs based on the alternative
technologies available and is usually subject to a bid process.
While Landauer believes that it has a strong position in this
field, the demand for radon gas detection services has been
declining in recent years. This trend has resulted from
significantly diminished consumer concern about radon as a health
hazard and reduced funding for radon testing in government
facilities. The Company believes that a reversal of this trend
is beyond its control and that these services will represent a
smaller portion of its activities in the future.
The HomeBuyer's Preferred Radon Protection Plan represents a
new product in a market where other, more traditional methods of
detection and remediation of radon gas hazards have been
employed. Competition has emerged from existing service
providers as well as from start-up firms.
RESEARCH AND DEVELOPMENT
The Company's technological expertise has been an important
factor in its growth. The Company regularly pursues product
improvements to maintain its technical position. The development
of optically-stimulated luminescence dosimetry, announced last
year, was funded by the Company in its collaborative effort with
Battelle Memorial Institute to commercialize a new technology for
radiation dosimetry. The Company plans to introduce this
technology to a small group of customers during 1996.
The Company also participates regularly in several technical
professional societies, both domestic and international, that are
active in the fields of health physics, radiation detection and
monitoring.
ENVIRONMENTAL REGULATIONS
The Company believes that it complies with federal, state and
local provisions which have been enacted or adopted regulating
the discharge of materials into the environment or otherwise
protecting the environment. This compliance has not had, nor is
it expected to have, a material effect on the capital
expenditures, earnings, or competitive position of Landauer.
EMPLOYEES AND LABOR RELATIONS
As of September 30, 1995, the Company employed approximately
260 full-time employees. Landauer believes its relations with
its employees are good.
ITEM 2. PROPERTIES
Landauer owns three buildings totalling approximately 60,000
square feet in Glenwood, Illinois, about 30 miles south of
Chicago. The properties and equipment of the Company are in
good condition and, in the opinion of management, are suitable
and adequate for the Company's operations.
ITEM 3. LEGAL PROCEEDINGS
Landauer is involved in various legal proceedings, but
believes that these matters will be resolved without a material
effect on its financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
Name of Officer Age Position
_______________ ___ ________
Thomas M. Fulton 62 President and Chief Executive
Officer
James M. O'Connell 48 Vice President, Finance,
Treasurer, Secretary, and Chief
Financial Officer
Brent A. Latta 52 Vice President - Marketing
R. Craig Yoder 42 Vice President - Operations
Mr. Fulton had for ten years been the General Manager of the
R. S. Landauer Jr. & Company division of Tech/Ops, Inc., the
former parent of Landauer, and was elected to his current
positions at the inception of the Company on December 22, 1987.
Mr. O'Connell, Mr. Latta, and Dr. Yoder were elected to their
positions on November 7, 1990, November 15, 1988, and February 2,
1994, respectively. Mr. O'Connell, prior to joining the Company
in September 1990, was, for two years, Vice President and Chief
Financial Officer of Darome, Inc., a telecommunications service
and equipment manufacturing company. Mr. Latta, who joined the
Company in June, 1987, had for more than five years previously
been Vice President, Marketing of Sherwood Medical Company, a
manufacturer and distributor of medical products. Dr. Yoder was
elected to his position after serving as the Company's Technology
Manager since 1983. Prior to this he was a member of the senior
technical staff at Pennsylvania Power and Light, and at Battelle
Pacific Northwest Laboratory.
There are no family relationships between any director or
executive officer and any other director or executive officer of
the Company.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock has been traded on the American
Stock Exchange since 1988. A summary of market prices of the
Company's Common Stock is set forth in the table on page 20 of
this Annual Report on Form 10-K. At December 12, 1995, there
were approximately 600 shareholders of record.
The Company has paid regular quarterly cash dividends since
January, 1990. The Company has also paid special cash dividends
in 1990 and 1992. A summary of cash dividends paid for the last
two years is set forth in the table on page 20 of this Annual
Report on Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA.
A summary of selected financial data for the last six years is
set forth in the inside front cover of the Company's Annual
Report to Stockholders accompanying this Annual Report on Form
10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
FISCAL 1995 COMPARED TO FISCAL 1994
Net revenues for fiscal 1995 were $34,032,000, an increase of
$2,379,000, or 7.5%, over fiscal 1994. The growth in revenues
primarily resulted from increased unit sales for personnel
dosimetry services, which accounted for more than 95% of
revenues, as well as higher pricing for those services. Radon-
related services increased slightly compared with fiscal 1994.
Cost of sales as a percentage of net revenues decreased to
29.1% in fiscal 1995 compared with 29.4% a year ago. The
decrease in costs was primarily attributable to overhead costs.
Selling, general and administrative expenses for fiscal 1995
increased $437,000, or 4.8%, compared with fiscal 1994. As a
percentage of net revenues, such expenses decreased to 27.8% in
fiscal 1995 from 28.5% a year ago.
Other income for fiscal 1995 increased to $1,381,000 from
$913,000 in fiscal 1994. Higher interest and income from the
Company's Japanese venture contributed to most of the increase.
Income tax expense for fiscal 1995 was $5,985,000 compared
with $5,334,000 in fiscal 1994. The fiscal 1995 effective tax
rate was 37.3% compared with 37.5% for fiscal 1994.
As a result, net income for fiscal 1995 increased $1,158,000,
or 13%, to $10,061,000. Income per share increased from $1.05 in
fiscal 1994 to $1.19 in fiscal 1995.
FISCAL 1994 COMPARED TO FISCAL 1993
Net revenues for fiscal 1994 were $31,653,000, an increase of
$2,247,000, or 7.6%, over fiscal 1993. The growth in revenues
resulted from increased unit sales for personnel dosimetry
services, which accounted for more than 95% of revenues, as well
as higher pricing for those services. Radon gas detection
services declined compared with fiscal 1993.
Cost of sales as a percentage of net revenues decreased to
29.4% in fiscal 1994 compared with 29.8% a year ago. The
decrease in costs was primarily attributable to lower direct
labor costs.
Selling, general and administrative expenses for fiscal 1994
increased $462,000, or 5.4%, compared with fiscal 1993. As a
percentage of net revenues, such expenses decreased to 28.5% in
fiscal 1994 from 29.1% a year ago.
Other income for fiscal 1994 increased to $913,000 from
$752,000 in fiscal 1993. Higher interest and income from the
Company's Japanese venture contributed to most of the increase.
Income tax expense for fiscal 1994 was $5,334,000 compared
with $4,796,000 in fiscal 1993. The fiscal 1994 effective tax
rate was 37.5% compared with 37.4% for fiscal 1993.
As a result, net income for fiscal 1994 increased $880,000, or
11.0%, to $8,903,000 in 1994. Income per share increased from
$.95 in fiscal 1993 to $1.05 in fiscal 1994.
FOURTH QUARTER RESULTS OF OPERATIONS
Revenues in the fourth quarter of fiscal 1995 were
$8,779,000, or 10% higher than $7,958,000 reported for the same
period in fiscal 1994. The increase is primarily attributable to
personnel dosimetry revenues. Net income for the quarter of
$2,679,000 represented a 15% increase compared with the same
period in 1994. Income per share for the fourth quarters of 1995
and 1994 was $.32 and $.27, respectively.
Revenues in the fourth quarter of fiscal 1994 were
$7,958,000, or 7.8% higher than $7,382,000 reported for the same
period in fiscal 1993. The increase is attributable to personnel
dosimetry revenues offsetting continued declines in radon gas
detection revenues. Net income for the quarter of $2,329,000
represented a 16.6% increase compared with the same period in
1993. Income per share for the fourth quarters of 1994 and 1993
was $.27 and $.24, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Landauer's cash flows, as shown in the statement of cash
flows, can differ significantly from year to year as a result of
the Company's investment and financing activities. Investments
in short-term instruments with a maturity of greater than three
months are classified separately from cash and cash equivalents
in current assets and investments with maturities of greater than
one year are classified as non-current assets.
Investing activities relating to acquisitions of U.S. treasury
securities amounted to $1,337,000 and $2,409,000, respectively,
in fiscal 1995 and 1994. Investing activities relating to
acquisition of property, plant and equipment amounted to
$2,062,000 and $1,534,000 respectively, in fiscal 1995 and 1994.
The Company's financing activities are limited to payments of
regular and special cash dividends, offset by small amounts of
foreign dividends received.
The Company has no significant long-term liabilities and its
requirement for cash flow to support investing activities is
generally limited. Capital expenditures for fiscal 1996 are
expected to amount to $2,500,000, principally for equipment. The
Company anticipates that funds for these capital improvements
will be provided from operations.
The Company presently maintains no external sources of
liquidity, and, in the opinion of management, resources are
adequate for projected operations and capital spending programs,
as well as continuation of the regular cash dividend program.
Landauer requires limited working capital for its operations
since many of its customers pay for annual services in advance.
Such advance payments amounted to $7,599,000 and $6,602,000
respectively, as of September 30, 1995 and 1994, and are included
in deferred contract revenue. While these amounts represent more
than one-half of current liabilities, such amounts generally do
not represent a cash requirement.
Landauer offers radiation monitoring services in the United
Kingdom and Canada. The Company's operations in these markets do
not depend on significant capital resources.
INFLATION
From time to time the Company tries to reflect the
inflationary impact of materials, labor and other operating costs
and expenses in its prices. The market for the services which
the Company offers, however, is highly competitive, and in some
cases has limited the ability of the Company to offset any
inflationary cost increases.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
CONSOLIDATED BALANCE SHEETS
LANDAUER, INC. AND SUBSIDIARY
(dollars in thousands)
As of September 30, Notes 1995 1994
ASSETS
Current assets:
Cash and cash equivalents 1 $ 1,915 $ 2,178
Short-term investments 1 6,456 3,976
Receivables, net of allowances for doubtful accounts
of $151,000 in 1995 and $138,000 in 1994 6,972 6,253
Inventories 1 955 799
Prepaid expenses 280 78
Deferred taxes on income 3 746 824
Total current assets 17,324 14,108
--------------------------------------------------------------------------------
Property, plant and equipment, at cost: 1
Land and improvements 567 547
Buildings and improvements 3,187 3,228
Equipment 13,104 11,160
16,858 14,935
Less: accumulated depreciation and amortization 9,104 7,856
Net property, plant and equipment 7,754 7,079
--------------------------------------------------------------------------------
Investment in U.S. Treasury Securities 1 3,978 5,121
Cost of purchased businesses in excess of
net assets acquired 1 2,946 3,113
Equity in joint venture 2 4,104 3,688
Other assets 2,643 2,531
TOTAL ASSETS $ 38,749 $ 35,640
================================================================================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable $ 638 $ 218
Dividends payable 2,119 1,865
Deferred contract revenue 1 7,599 6,602
Accrued compensation and related costs 1,098 880
Accrued pension costs 5 704 839
Accrued taxes on income 1 & 3 1,587 1,527
Other accrued expenses 1,219 1,178
Total current liabilities 14,964 13,109
--------------------------------------------------------------------------------
Commitments and contingencies 6
STOCKHOLDERS' INVESTMENT 4 & 6
Preferred Stock -- --
Common Stock 848 848
Premium paid in on common stock 7,561 7,831
Cumulative translation adjustments 819 879
Retained earnings 14,557 12,973
Total stockholders' investment 23,785 22,531
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 38,749 $ 35,640
================================================================================
The accompanying notes are an integral part of these financial
statements.
CONSOLIDATED STATEMENTS OF INCOME
LANDAUER, INC. AND SUBSIDIARY
(dollars in thousands, except per share)
For the years ended September 30, Notes 1995 1994 1993
Net revenues $ 34,032 $ 31,653 $ 29,406
--------------------------------------------------------------------------------
Costs and expenses
Cost of sales 9,901 9,300 8,772
Selling, general, and administrative 1 9,466 9,029 8,567
19,367 18,329 17,339
--------------------------------------------------------------------------------
Operating income 14,665 13,324 12,067
Other income 2 1,381 913 752
--------------------------------------------------------------------------------
Income before taxes 16,046 14,237 12,819
Income taxes 1 & 3 (5,985) (5,334) (4,796)
--------------------------------------------------------------------------------
Net Income $ 10,061 $ 8,903 $ 8,023
================================================================================
Net income per common and common equivalent share $ 1.19 $ 1.05 $ 0.95
================================================================================
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
(dollars in thousands)
Premium
Paid
in on Cumulative Total
Common Common Translation Retained Stockholders'
Stock Stock Adjustments Earnings Investment
Balance September 30, 1992 $ 8,471 $ 170 -- $ 10,289 $ 18,930
Options exercised,
net of repurchases 6 25 -- -- 31
Change in par value
to $.10 per share (7,629) 7,629 -- -- --
Net income -- -- -- 8,023 8,023
Dividends -- -- -- (6,782) (6,782)
Compensatory effect of
stock options -- (7) -- -- (7)
--------------------------------------------------------------------------------
Balance September 30, 1993 $ 848 $ 7,817 -- $ 11,530 $ 20,195
Net income -- -- -- 8,903 8,903
Foreign currency
translation adjustment -- -- 879 -- 879
Dividends -- -- -- (7,460) (7,460)
Compensatory effect
of stock options -- 14 -- -- 14
--------------------------------------------------------------------------------
Balance September 30, 1994 $ 848 $ 7,831 879 $ 12,973 $ 22,531
Options exercised,
net of repurchases -- (313) -- -- (313)
Net income -- -- -- 10,061 10,061
Foreign currency
translation adjustment -- -- (60) -- (60)
Dividends -- -- -- (8,477) (8,477)
Compensatory effect
of stock options -- 43 -- -- 43
--------------------------------------------------------------------------------
Balance September 30, 1995 $ 848 $ 7,561 $ 819 $ 14,557 $ 23,785
================================================================================
The accompanying notes are an integral part of these financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
LANDAUER, INC. AND SUBSIDIARY
(dollars in thousands)
For the years ended September 30, 1995 1994 1993
Cash flow from operating activities:
Net income $ 10,061 $ 8,903 $ 8,023
Non-cash expenses, revenues, and gains
reported in income
Depreciation and amortization 2,369 2,115 1,884
Equity in income of joint venture (830) (594) (499)
Exercise of stock options - net (270) 14 25
Deferred income taxes 78 (66) --
--------------------------------------------------------------------------------
1,347 1,469 1,410
--------------------------------------------------------------------------------
Net increase in other current assets (1,077) (295) (608)
Net increase in current liabilities 1,601 1,161 445
Net increase in net long-term assets (927) (1,009) (1,358)
--------------------------------------------------------------------------------
(403) (143) (1,521)
--------------------------------------------------------------------------------
Net cash generated from operating activities 11,008 10,229 7,912
Cash flow from investing activities:
(Acquisition) disposition of investments - net (1,337) (2,409) 729
Acquisition of property, plant and equipment (2,062) (1,534) (2,655)
--------------------------------------------------------------------------------
Net cash used by investing activities (3,399) (3,943) (1,926)
Cash flow from financing activities:
Dividend received from foreign affiliate 354 321 159
Dividends paid (8,223) (7,291) (6,781)
--------------------------------------------------------------------------------
Net cash used by financing activities (7,869) (6,970) (6,622)
--------------------------------------------------------------------------------
Net decrease in cash (263) (684) (636)
Opening balance - cash and cash equivalents 2,178 2,862 3,498
--------------------------------------------------------------------------------
Ending balance - cash and cash equivalents $ 1,915 $ 2,178 $ 2,862
================================================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 5,897 $ 4,884 $ 4,471
================================================================================
Supplemental Disclosure of Non-cash Financing Activity:
Dividend declared $ 2,119 $ 1,865 $ 1,696
Foreign currency translation adjustment (60) 879 --
================================================================================
The accompanying notes are an integral part of these financial
statements.
NOTES TO FINANCIAL STATEMENTS, LANDAUER, INC. AND SUBSIDIARY
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements include the accounts
of Landauer, Inc. and HomeBuyer s Preferred, Inc. its wholly-
owned subsidiary (Landauer or the Company). Nagase-Landauer,
Ltd. (50%-owned), is a Japanese corporation which is accounted
for on the equity basis. All material intercompany transactions
have been eliminated.
The cost of purchased businesses included in the
accompanying financial statements exceeded the fair value of net
assets at the date of acquisition in the amount of $3,865,000 and
has been charged to "Cost of purchased business in excess of net
assets acquired." The excess is being amortized on a straight-
line basis over fifteen years, except for an acquisition
initiated prior to 1971 ($942,000), where in the opinion of
management there has been no diminution in value. As of
September 30, 1995 and 1994, accumulated amortization was
$919,000 and $752,000, respectively.
CASH EQUIVALENTS
Cash equivalents include investments with an original
maturity of three months or less.
INVESTMENT IN U.S. TREASURY SECURITIES
Investments in U.S. Treasury Securities having an original
maturity of longer than three months but less than one year are
classified as current assets. Those having an original maturity
of longer than one year are classified as non-current assets.
The Company's policy is to hold investments until maturity
and accordingly are carried at cost, adjusted for accretion of
discount and amortization of premium in accordance with the
provisions of Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."
INVENTORIES
Inventories are priced at the lower of cost or market, and
costs are relieved from inventory on a first-in, first-out basis.
REVENUES AND DEFERRED CONTRACT REVENUE
The Company recognizes revenues and the related costs for
its radiation monitoring services in the period for which such
services are provided. Many customers pay for these services in
advance. The Company defers recognition of a portion of revenues
from sales of radon gas detection monitors until such time as the
analysis of the monitors and reporting of exposure findings have
been completed.
Revenues from sales of HomeBuyer's Preferred Radon
Protection Plan service agreements are substantially deferred
until the Company's obligation under the terms of the agreement,
generally one year or less, is completed.
Advance payments from radiation monitoring services and the
unrecognized portion of revenues from radon gas monitoring and
radon plan revenues are recorded as deferred contract revenue in
the Company's balance sheet.
RESEARCH AND DEVELOPMENT
The cost of research and development programs is charged to
selling, general and administrative expense as incurred and
amounted to approximately $1,460,000 in 1995, $1,585,000 in 1994,
and $1,529,000 in 1993.
DEPRECIATION AND MAINTENANCE
Plant and equipment are depreciated on a straight-line basis
over their estimated useful lives, which are primarily thirty
years for buildings and five to eight years for equipment.
Maintenance and repairs are charged to expense, and renewals and
betterments are capitalized.
INCOME TAXES
Landauer files income tax returns in the jurisdictions in
which it operates. For financial statement purposes, provisions
for federal and state income taxes have been computed in
accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109 entitled "Accounting for
Income Taxes."
INCOME PER COMMON AND COMMON EQUIVALENT SHARE
The weighted average number of outstanding common and common
equivalent shares for Landauer during 1995 and 1994 was
8,477,285, and in 1993 was 8,476,282.
2. EQUITY IN JOINT VENTURE
The 50% interest in the common stock of Nagase-Landauer,
Ltd., a Japanese corporation located in Tokyo and engaged in
providing radiation monitoring services in Japan, is accounted
for on the equity basis. The related equity in earnings of this
joint venture and fees earned therefrom are included in other
income in the accompanying Statement of Income.
Condensed unaudited results of operations for Nagase-
Landauer, Ltd. For the three years ended September 30, 1995 are
as follows, converted into U.S. dollars at the then-current rate
of exchange:
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1995 1994 1993
----------------------------------------------------
REVENUES $ 12,390 $ 11,030 $ 10,073
INCOME BEFORE
INCOME TAXES 3,523 2,911 2,561
NET INCOME 1,661 1,188 998
FEE INCOME AND LANDAUER
SHARE OF EQUITY IN
EARNINGS (50%) $ 1,136 $ 751 $ 640
======== ======= =======
Condensed unaudited balance sheets for the years ended
September 30, 1995 and 1994 are as follows:
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1995 1994
----------------------------------------------------
CURRENT ASSETS $ 11,942 $ 10,062
OTHER ASSETS 1,681 1,905
TOTAL ASSETS $ 13,623 $ 11,967
======== ========
LIABILITIES $ 5,414 $ 4,592
STOCKHOLDERS' INVESTMENT 8,209 7,375
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' INVESTMENT $ 13,623 $ 11,967
======== ========
3. INCOME TAXES
The components of the provision for income taxes for the
years ended September 30, 1995, 1994 and 1993 are as follows:
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1995
----------------------------------------------------
CURRENT DEFERRED TOTAL
FEDERAL $ 4,759 $ 64 $ 4,823
STATE 1,148 14 1,162
------- ------- -------
TOTAL $ 5,907 $ 78 $ 5,985
======= ======= =======
----------------------------------------------------
1994
----------------------------------------------------
CURRENT DEFERRED TOTAL
FEDERAL $ 4,330 $ (55) $ 4,275
STATE 1,070 (11) 1,059
------- ------- -------
TOTAL $ 5,400 $ (66) $ 5,334
======= ======= =======
----------------------------------------------------
1993
----------------------------------------------------
CURRENT DEFERRED TOTAL
FEDERAL $ 3,783 $ 69 $ 3,852
STATE 927 17 944
------- ------- -------
TOTAL $ 4,710 $ 86 $ 4,796
======= ======= =======
The provision for taxes on income in each period differs
from that which would be computed by applying the statutory U.S.
federal income tax rate to the income before taxes. The
following is a summary of the major items affecting the
provision:
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1995 1994 1993
----------------------------------------------------
STATUTORY FEDERAL
INCOME TAX RATE 34% 34% 34%
COMPUTED TAX PROVISION
AT STATUTORY RATE $ 5,456 $ 4,841 $ 4,358
INCREASES(DECREASES)
RESULTING FROM:
STATE INCOME TAX PROVISION,
NET OF FEDERAL BENEFIT 764 696 622
OTHER (235) (203) (184)
INCOME TAX PROVISION IN THE
STATEMENT OF INCOME $ 5,985 $ 5,334 $ 4,796
======= ======= =======
During 1993 the Company adopted SFAS No. 109, "Accounting
For Income Taxes". Accordingly, the Company recognizes certain
income and expense items in different years for financial and tax
reporting purposes. Temporary differences are primarily
attributable to (a) utilization of accelerated depreciation
methods for tax purposes, (b) amortization of badge holder and
software development costs, (c) limitations on deductibility of
pension costs, (d) reserves for self-insurance claims, vacation
pay, and other compensation-related costs, and (e) reserves for
obsolete inventory.
Significant components of deferred taxes are as follows:
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1995 1994
----------------------------------------------------
DEFERRED TAX ASSETS:
BADGE HOLDER AMORTIZATION $ 688 $ 626
PENSION ACCRUAL 436 417
COMPENSATION EXPENSE 360 365
INVENTORY RESERVE 60 66
OTHER 1 5
------- --------
$ 1,545 $ 1,479
======== ========
DEFERRED TAX LIABILITIES:
DEPRECIATION $ 464 $ 415
SOFTWARE DEVELOPMENT 335 240
-------- --------
$ 799 $ 655
======== ========
Management does not believe that a valuation allowance is
required for the net deferred tax asset.
4. CAPITAL STOCK
Landauer has two classes of capital stock, preferred and
common. During 1993, the shareholders voted to change the par
value of both classes of stock from no-par to a par value of $.10
per share. The change in par value did not affect any of the
existing rights of shareholders. As of September 30, 1995 and
1994 there were 8,477,285 shares of common stock issued and
outstanding (20,000,000 shares are authorized). There are no
shares of preferred stock issued (1,000,000 are authorized).
Landauer has reserved 600,000 shares of common stock for
grants under its Key Employee Stock Bonus and Option Plan.
Recipients of grants or options must execute a standard form of
noncompetition agreement. As of September 30, 1995, there have
been no bonus shares issued. Options granted under this plan may
be either incentive stock options or non-qualified options.
Options granted become exercisable over a four-year period at a
price not less than fair market value on the date of grant. The
options expire ten years from the date of grant.
During fiscal 1995, options for 40,000 shares were exercised
at from $6.39 to $13.25 per share. In connection with the
exercise of these options, the Company simultaneously repurchased
40,000 shares at an average price of $19.00 per share. As of
September 30, 1995, non-qualified options for 525,000 shares had
been granted at prices from $6.39 to $19.31 per share. At year-
end, 332,330 shares were exercisable. This plan also provides
for the grant of stock appreciation rights, either separately or
in relation to options granted. As of September 30, 1995, no
stock appreciation rights had been granted.
On February 22, 1989, the Company entered into an agreement
with its President under which options to purchase up to 100,000
shares of the Company's common stock were granted, at a price of
$10.50 per share, exercisable over a ten-year period subject to
the attainment of certain financial goals. For the years ended
September 30, 1995, 1994, and 1993, options for the purchase of
5,520, 3,150 and 2,290 shares, respectively, became exercisable
under this agreement.
The Company has paid regular quarterly cash dividends since
January, 1990. Summaries of cash dividends paid are set forth in
the tables on the inside front cover and on page 20 of this
report. It is the Company's intention to continue the regular
quarterly cash dividend policy under currently foreseeable
circumstances.
5. EMPLOYEE BENEFIT PLANS
Landauer maintains a noncontributory defined benefit pension
and retirement plan covering substantially all full-time
employees. The following table sets forth the funded status of
the plan at September 30, 1995 and 1994 in accordance with SFAS
No.87:
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1995 1994
----------------------------------------------------
ACTUARIAL PRESENT VALUE OF BENEFIT OBLIGATIONS
VESTED BENEFITS $ 2,428 $ 2,180
UNVESTED BENEFITS 46 51
------- -------
ACCUMULATED BENEFIT OBLIGATION 2,474 2,231
EFFECT OF PROJECTED FUTURE COMPENSATION
LEVELS 2,130 1,888
------- --------
PROJECTED BENEFIT OBLIGATION 4,604 4,119
PLAN ASSETS AT FAIR VALUE 3,160 2,998
------- -------
PLAN ASSETS LESS THAN PROJECTED
BENEFIT OBLIGATION (1,444) (1,121)
UNRECOGNIZED NET LOSS 819 368
UNRECOGNIZED TRANSITION AMOUNT (79) (86)
------- -------
ACCRUED PENSION COST $ (704) $ (839)
======== ========
The Landauer net pension expense for 1995 and 1994 included
the following components as defined by SFAS No. 87:
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1995 1994
----------------------------------------------------
SERVICE COSTS/BENEFITS EARNED
DURING THE YEAR $ 343 $ 335
INTEREST COST ON PROJECTED
BENEFIT OBLIGATION 299 265
ACTUAL RETURN ON PLAN ASSETS (225) (217)
NET AMORTIZATION AND DEFERRED ITEMS -- (6)
------- --------
NET PENSION EXPENSE $ 417 $ 377
======= =======
Plan assets include marketable equity securities, corporate
and government debt securities, and cash and short-term
investments. The average discount rate and rate of increase in
future compensation levels used in determining the actuarial
present value of the projected benefit obligation were 7.5% and
5.5%, respectively, and the expected long-term rate of return on
assets was 8%.
During 1993, Landauer adopted a 401(k) savings plan covering
substantially all full-time employees. Qualified contributions
made by employees to the plan are partially matched by the
Company. $79,000 and $92,000 was provided to expense for the
years ended September 30, 1995 and 1994, respectively, under this
plan.
During 1993, Landauer adopted SFAS No. 106, "Accounting for
Postretirement Benefits Other than Pensions" to account for the
Company's unfunded retiree medical expense reimbursement plan.
Under the terms of the plan which covers retirees with ten or
more years of service, the Company will reimburse retirees for
(i) a portion of the cost of coverage under the then-current
medical and dental insurance plans if the retiree is under age
65, or (ii) all or a portion of the cost of Medicare and
supplemental coverages if the retiree is over age 64. The amount
of the Company's unrecognized transition obligation resulting
from the adoption of SFAS No. 106 is $385,000 as of September 30,
1995. The effect of the adoption of this standard on the
Company's financial position and results of operation was not
material.
In 1994 the Company adopted a Supplemental Key Executive
Retirement Plan which provides for certain retirement benefits
payable to key officers and managers. While charges for the plan
are expensed annually, the plan is not separately funded, and the
maximum liability under the plan at September 30, 1995 was
$637,000.
6. COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal proceedings, but
believes that the outcome of these proceedings will not have a
materially adverse effect on its financial condition.
Landauer has entered into an Employment and Compensation
Agreement with its President providing for his employment in that
capacity through September 30, 1997, renewable thereafter through
December 31, 1998 subject to certain financial performance
standards. Under the Agreement, a non-qualified stock option for
100,000 shares (included in the options described in Note 5
above) was granted to the President which becomes exercisable for
up to 10,000 shares per year on each December 1 from 1989 through
1998 under a formula reflecting average return on stockholders'
investment and earnings per share over successive three-year
periods. The Agreement also provides that, in the event of
termination of employment, under certain circumstances, within
two years after a change in control (as defined) of Landauer that
is not approved by the Board of Directors, the President would
receive specified benefits as defined in the Agreement.
In connection with the 1988 transfer of the personnel
dosimetry business to Landauer, the Company has entered into a
Liability Assumption and Sharing Agreement with Tech/Ops, Inc.
(Tech/Ops) providing for, among other things, (i) assumption by
Landauer of all determinable and contingent liabilities and
obligations of Tech/Ops relating to the personnel dosimetry and
radon detection business, (ii) assumption by the other former
subsidiary of all determinable and contingent liabilities and
obligations of Tech/Ops relating to its electronic controller
business, (iii) joint and several assumption by Landauer and the
other former subsidiary of all contingent liabilities of Tech/Ops
and (iv) the allocation of other liabilities jointly and
severally assumed to the business in which they relate or, if
they relate to neither business, in ratios reflective of relative
profit contributions of the respective businesses for the five
years ended September 30, 1987. As a result of this Agreement,
$22,000, $42,000, and $57,000 of expenses were charged to
operations for the years ended September 30, 1995, 1994 and 1993,
respectively.
The Company maintains a directors' retirement plan which
provides for certain retirement benefits payable to nonemployee
directors. While charges for the plan are expensed annually, the
plan is not separately funded, and the maximum liability under
the plan at September 30, 1995 was $380,000.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Directors of Landauer, Inc.
We have audited the consolidated balance sheets of Landauer,
Inc. and Subsidiary, a Delaware corporation (see Note 1), as of
September 30, 1995 and 1994 and the related consolidated
statements of income, stockholders' investment, and cash flows
for each of the three years in the period ended September 30,
1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Landauer, Inc. and Subsidiary as of
September 30, 1995 and 1994, and the consolidated results of its
operations, and the changes in stockholders' investment and cash
flows for each of the three years in the period ended September
30, 1995 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
November 9, 1995
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the headings Election
of Directors and Beneficial Ownership of Certain Voting
Securities in the Proxy Statement relating to the directors of
the Company is incorporated herein by reference. The information
contained in Item 4A hereof relating to the executive officers of
the registrant is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Except for the information relating to Item 13 hereof and
except for information referred to in Item 402(a)(8) of
Regulation S-K, the information contained under the headings
Executive Compensation, Compensation Committee Report and
Approval of 1996 Equity Plan in the Proxy Statement is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information contained under the heading Beneficial
Ownership of Certain Voting Securities in the Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except for the information relating to Item 11 hereof and
except for information referred to in Item 402(a)(8) of
Regulation S-K, the information contained under the headings
Election of Directors, and Certain Relationships and Related
Transactions in the Proxy Statement is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
A-1. FINANCIAL STATEMENTS
The financial statements of Landauer, Inc. filed as part of
this Annual Report on Form 10-K are indexed at page 5.
A-2. FINANCIAL STATEMENT SCHEDULES
The Financial statement schedules filed as part of this
Annual Report on Form 10-K have been included elsewhere in the
financial statements or the notes thereto.
A-3. List of Exhibits
(3) (a) Certificate of Incorporation of the Registrant, as
amended through February 4, 1993, is incorporated by reference to
Exhibit (3) (a) to the Annual Report on Form 10-K for the fiscal
year ended September 30, 1993.
(3) (b) By-laws of the Registrant are incorporated by reference
to Exhibit (3) (b) to the Annual Report on Form 10-K for the
fiscal year ended September 30, 1992.
(4) (a) Specimen common stock certificate of the Registrant
incorporated by reference to Exhibit (4) (a) to the Annual Report
for the fiscal year ended September 30, 1991.
(10) (a) Landauer, Inc. Key Employee Stock Bonus and Option
Plan, as amended through June 17, 1992, is incorporated by
reference to Exhibit (10) (a) to the Annual Report on Form 10-K
for the fiscal year ended September 30, 1992.
(10) (b) Liability and Assumption Sharing Agreement among
Tech/Ops, Inc., Tech/Ops Sevcon, Inc., and the Registrant is
incorporated by reference to Exhibit (10) (d) to the Annual
Report on Form 10-K for the fiscal year ended September 30, 1993.
(10) (c) Form of Indemnification Agreement between the
Registrant and each of its directors is incorporated by reference
to Exhibit (10) (e) to the Annual Report on Form 10-K for the
fiscal year ended September 30, 1993.
(10) (d) Employment and Compensation Agreement dated February
22, 1989 between the Registrant and Thomas M. Fulton, as amended
through June 17, 1992, is incorporated by reference to Exhibit
(10) (f) to the Annual Report on Form 10-K for the fiscal year
ended September 30, 1992.
(10) (e) Landauer, Inc. Directors' Retirement Plan dated March
21, 1990, incorporated by reference to Exhibit (10) (g) to Annual
Report for the fiscal year ended September 30, 1990.
(10) (f) Form of Supplemental Key Executive Retirement Plan is
incorporated by reference to Exhibit (10) (h) to the Annual
Report on Form 10-K for the fiscal year ended September 30, 1993.
(10) (g) The Landauer, Inc. Incentive Compensation Plan for
Executive Officers is attached hereto as Exhibit 10(g).
(21) Subsidiaries of the registrant are incorporated by reference
to Exhibit (22) to the Annual Report on Form 10-K for the fiscal
year ended September 30, 1993.
Exhibits 10(a), 10(d), 10(e), 10(f), and 10(g) listed above
are the management contracts and compensatory plans or
arrangements required to be filed as exhibits hereto pursuant to
the requirements of Item 601 of Regulation S-K.
B. Reports on Form 8-K
The Company did not file a Report on Form 8-K during the
fiscal quarter ended September 30, 1995.
SIGNATURES OF REGISTRANT AND DIRECTORS
Pursuant to the requirements of Section 13 or 15(d) 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.
By/s/ Thomas M. Fulton December 13, 1995
----------------------
Thomas M. Fulton
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated:
Signature Title Date
/s/ Thomas M. Fulton President and December 13, 1995
-------------------- Director
Thomas M. Fulton (Principal Executive Officer)
/s/ James M. O'Connell Vice President, December 13, 1995
---------------------- Finance
James M. O'Connell Treasurer and Secretary
(Principal Financial and
Accounting Officer)
/s/ Gary D. Eppen Director December 13, 1995
------------------
Gary D. Eppen
/s/ Richard H. Leet Director December 13, 1995
--------------------
Richard H. Leet
/s/ Paul B. Rosenberg Director December 13, 1995
---------------------
Paul B. Rosenberg
/s/ Herbert Roth, Jr. Director December 13, 1995
---------------------
Herbert Roth, Jr.
/s/ Marvin G. Schorr Director December 13, 1995
--------------------
Marvin G. Schorr
/s/ C. Vincent Vappi Director December 13, 1995
---------------------
C. Vincent Vappi
/s/ Michael D. Winfield Director December 13, 1995
-----------------------
Michael D. Winfield
QUARTERLY FINANCIAL DATA (UNAUDITED)
(dollars in thousands, except per share)
--------------------------------------------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
--------------------------------------------------------------------------------
Net revenues 1995 $ 8,013 $ 8,673 $ 8,567 $ 8,779 $ 34,032
1994 7,487 8,347 7,861 7,958 31,653
--------------------------------------------------------------------------------
Operating income 1995 $ 3,316 $ 3,854 $ 3,608 $ 3,887 $ 14,665
1994 3,013 3,581 3,268 3,462 13,324
--------------------------------------------------------------------------------
Net income 1995 $ 2,260 $ 2,635 $ 2,487 $ 2,679 $ 10,061
1994 2,014 2,364 2,196 2,329 8,903
================================================================================
Net income per
share (a) 1995 $ .27 $ .31 $ .29 $ .32 $ 1.19
1994 .24 .28 .26 .27 1.05
================================================================================
Cash dividends
per share - regular 1995 $ .25 $ .25 $ .25 $ .25 $ 1.00
1994 .22 .22 .22 .22 .88
================================================================================
Common stock price
per share 1995 high $ 17.00 $ 18.25 $ 19.00 $ 19.38 $ 19.38
low 16.13 16.25 17.50 17.63 16.13
--------------------------------------------------------------------------------
1994 high $ 16.50 $ 16.38 $ 15.50 $ 16.63 $ 16.63
low 14.63 14.25 13.38 13.13 13.13
================================================================================
(a) Based upon a weighted average of 8,477,285 common shares
outstanding for 1995 and 1994.
EX-27
2
ART. 5 FDS FOR YEAR 1995
5
0000825410
LANDAUER, INC.
1,000
YEAR
SEP-30-1995
OCT-01-1994
SEP-30-1995
1,915
6,456
7,123
151
955
17,324
16,858
9,104
38,749
14,964
0
848
0
0
22,937
38,749
34,032
34,032
9,901
9,901
0
0
0
16,046
5,985
10,061
0
0
0
10,061
1.19
1.19