ldr-20150331 10Q Q2

PART I FINANCIAL INFORMATION

Item 1.Financial Statements

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)


(Dollars in Thousands)	March 31, 2015		September 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	8,424	$	6,761
Receivables, net of allowances of $1,703 at March 31, 2015 and $1,872 at September 30, 2014		30,756		34,707
Inventories		6,689		6,687
Deferred income tax asset - current		2,348		2,369
Prepaid income taxes		2,131		1,836
Prepaid expenses and other current assets		2,562		1,973
Current assets		52,910		54,333
Property, plant and equipment, at cost		107,404		104,010
Accumulated depreciation and amortization		(60,431)		(57,253)
Net property, plant and equipment		46,973		46,757
Equity in joint ventures		23,137		23,835
Goodwill		40,432		43,218
Intangible assets, net of accumulated amortization of $37,624 at March 31, 2015 and $37,579 at September 30, 2014		13,369		14,077
Dosimetry devices, net of accumulated depreciation of $4,734 at March 31, 2015 and $4,353 at September 30, 2014		3,595		3,958
Deferred income tax assets		19,619		18,374
Other assets		8,922		12,034
ASSETS	$	208,957	$	216,586
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,880	$	6,248
Dividends payable		2,700		5,329
Deferred contract revenue		15,178		14,750
Accrued compensation and related costs		7,098		7,132
Accrued severance		557		2,731
Other accrued expenses		7,182		8,538
Current liabilities		39,595		44,728
Non-current liabilities:
Long-term debt		134,585		133,585
Pension and postretirement obligations		19,101		19,475
Deferred income taxes		431		509
Uncertain income tax liabilities		3,391		3,284
Other non-current liabilities		1,260		1,271
Non-current liabilities		158,768		158,124
Stockholders' equity:
Preferred stock, $.10 par value per share, authorized 1,000,000 shares; none issued		-		-
Common stock, $.10 par value per share, authorized 20,000,000 shares; 9,657,625 and 9,577,874 shares issued and outstanding at March 31, 2015 and September 30, 2014, respectively		966		958
Additional paid in capital		41,064		40,317
Accumulated other comprehensive loss		(13,753)		(10,148)
Accumulated deficit		(18,916)		(18,873)
Landauer, Inc. stockholders' equity		9,361		12,254
Noncontrolling interest		1,233		1,480
Stockholders' equity		10,594		13,734
LIABILITIES AND STOCKHOLDERS' EQUITY	$	208,957	$	216,586

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)


		Three Months Ended March 31,				Six Months Ended March 31,
(Dollars in Thousands, Except per Share)	2015		2014 (As Restated)		2015		2014 (As Restated)
Service revenues	$	32,242	$	32,870	$	64,299	$	64,615
Product revenues		5,897		6,184		11,387		12,586
Net revenues		38,139		39,054		75,686		77,201
Costs and expenses:
Service costs		16,158		15,155		31,792		30,165
Product costs		2,453		3,177		4,570		6,552
Total cost of sales		18,611		18,332		36,362		36,717
Gross profit		19,528		20,722		39,324		40,484
Selling, general and administrative		13,898		13,750		27,553		27,976
Acquisition, reorganization and nonrecurring costs		-		109		-		220
Operating income		5,630		6,863		11,771		12,288
Equity in income of joint ventures		680		535		1,376		1,816
Interest expense, net		(964)		(1,014)		(1,917)		(1,951)
Other (expense) income, net		(485)		5		(234)		164
Income before taxes		4,861		6,389		10,996		12,317
Income tax expense		1,180		1,913		2,790		3,812
Net income		3,681		4,476		8,206		8,505
Less: Net income (loss) attributed to noncontrolling interest		134		(38)		282		170
Net income attributed to Landauer, Inc.	$	3,547	$	4,514	$	7,924	$	8,335

Net income per share attributable to Landauer, Inc. shareholders:
Basic	$	0.37	$	0.47	$	0.83	$	0.87
Weighted average basic shares outstanding		9,493		9,460		9,464		9,441
Diluted	$	0.37	$	0.47	$	0.83	$	0.87
Weighted average diluted shares outstanding		9,520		9,501		9,492		9,485

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Unaudited)



	Three Months Ended March 31, 2015						Six Months Ended March 31, 2015
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total		Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	3,547	$	134	$	3,681	$	7,924	$	282	$	8,206
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of $53		19		-		19		91		-		91
Unrealized gains (losses) on available-for-sale securities, net of taxes of $0		37		-		37		2		-		2
Foreign currency translation adjustment, net of taxes of $1,103, and $2,057, respectively		(1,927)		(99)		(2,026)		(3,698)		(198)		(3,896)
Comprehensive income	$	1,676	$	35	$	1,711	$	4,319	$	84	$	4,403

	Three Months Ended March 31, 2014						Six Months Ended March 31, 2014
	(As Restated)						(As Restated)
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total		Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	4,514	$	(38)	$	4,476	$	8,335	$	170	$	8,505
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of $0		46				46		91				91
Unrealized gains (losses) on available-for-sale securities, net of taxes of $0		25				25		(54)				(54)
Foreign currency translation adjustment, net of taxes of $0		409		19		428		153		(49)		104
Comprehensive income	$	4,994	$	(19)	$	4,975	$	8,525	$	121	$	8,646

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity (Unaudited)


	Landauer, Inc. Stockholders' Equity
(Dollars in Thousands)	Common Stock Shares		Common Stock		Addi- tional Paid in Capital		Accumulated Other Compre-hensive (Loss) Income		(Accumulated Deficit) Retained Earnings		Non- Controlling Interest		Total Stock- holders' Equity
September 30, 2014		9,577,874	$	958	$	40,317	$	(10,148)	$	(18,873)	$	1,480	$	13,734
Stock-based compensation arrangements		79,751		8		747		-		-		-		755
Dividends		-		-		-		-		(7,967)		(331)		(8,298)
Net income		-		-		-		-		7,924		282		8,206
Foreign currency translation adjustment, net of tax		-		-		-		(3,698)		-		(198)		(3,896)
Unrealized gains (losses) on available-for-sale securities, net of tax		-		-		-		2		-		-		2
Defined benefit pension and postretirement plans activity, net of tax		-		-		-		91		-		-		91
March 31, 2015		9,657,625	$	966	$	41,064	$	(13,753)	$	(18,916)	$	1,233	$	10,594

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

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LANDAUER, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)



	Six Months Ended March 31,
(Dollars in Thousands)		2015		2014 (As Restated)
Cash flows from operating activities:
Net income		$	8,206	$	8,505
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			6,092		7,487
Equity in income of joint ventures			(1,376)		(1,816)
Dividends from joint ventures			1,144		1,340
Stock-based compensation and related net tax benefits			873		453
Current and long-term deferred taxes, net			(1,792)		847
Loss on sale, disposal and abandonment of fixed assets			124		-
Gain on investments			(189)		(338)
Changes in operating assets and liabilities:
Decrease in accounts receivable, net			2,923		3,205
(Increase) decrease in prepaid taxes			(385)		1,027
Decrease in other operating assets, net			347		761
Decrease in accounts payable and other accrued liabilities			(1,002)		(2,021)
(Decrease) increase in other operating liabilities, net			(108)		430
Net cash provided by operating activities			14,857		19,880
Cash flows used by investing activities:
Acquisition of property, plant and equipment			(3,063)		(2,415)
Acquisition of joint ventures and businesses, net of cash acquired			-		(1,800)
Other investing activities, net			147		(114)
Net cash used by investing activities			(2,916)		(4,329)
Cash flows (used) provided by financing activities:
Net borrowings on revolving credit facility			-		(43)
Long-term borrowings - loan			16,300		20,000
Long-term borrowings - repayment			(15,300)		(24,500)
Dividends paid to stockholders			(10,599)		(10,520)
Other financing activities, net			(321)		(347)
Net cash used by financing activities			(9,920)		(15,410)
Effects of foreign currency translation			(358)		109
Net increase in cash and cash equivalents			1,663		250
Opening balance - cash and cash equivalents			6,761		8,672
Ending balance - cash and cash equivalents		$	8,424	$	8,922

Accrued capital spending included in accounts payable and other accrued liabilities		$	2,272	$	258

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

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LANDAUER, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2015

(Dollars in thousands)

(1)Basis of Presentation and Consolidation

As used herein, the “Company” or “Landauer” refers to Landauer, Inc. and its subsidiaries.

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 inter-company balances and transactions are 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 accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014 and other financial information filed with the Securities and Exchange Commission (the “SEC”). The September 30, 2014 balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The accounting policies followed by the Company are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014. There have been no changes to the accounting policies for the six month period ended March 31, 2015.

The results of operations for the three and six month periods ended March 31, 2015 are not necessarily indicative of the results to be expected for the full fiscal year.

Restatement and Revision of Prior Period Financial Statements

In connection with the preparation of the consolidated financial statements for the fiscal year ended September 30, 2014, the Company identified errors in its previously issued financial statements for the interim periods ended March 31, 2014. In accordance with accounting guidance presented in ASC 250-10 and SEC Staff Accounting Bulletin No. 99, Materiality, (“SAB 99”) management assessed the materiality of these errors and concluded that they were material to the Company’s financial statements for the three and six months ended March 31, 2014. The Company restated its financial statements for the three and six month periods ended March 31, 2014 to correct for these errors. Following is a description of the corrections:

Income taxes – The Company did not properly allocate income between taxing jurisdictions for certain items. This resulted in the misstatement of income tax expense (benefit), prepaid taxes, current and deferred tax assets and liabilities, other accrued expenses and accumulated other comprehensive income.

Revenue and accounts receivable – The Company identified the following errors related to revenue recognition and its accounting for receivables:

The Company did not properly defer revenue for the portion of the badge wear period remaining at the end of each month. This resulted in the misstatement of revenue and the deferred revenue liability.

The Company did not recognize revenue for certain customers in accordance with contractually established terms and conditions. This resulted in the misstatement of revenue, cost of sales, inventory and the deferred revenue liability.

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Revenue was recognized for certain product sales prior to the transfer of the risk of loss to customers. This resulted in the misstatement of revenue, cost of sales, inventory and the deferred revenue liability.

Credit memos were recorded to customers’ accounts prior to recognition of the related revenue. This resulted in the misstatement of revenue and receivables, net of allowances.

The Company did not properly record an allowance for credit memos to be issued to customers in the same periods as the related revenue. This resulted in the misstatement of revenue and receivables, net of allowances.

The Company utilized a methodology at one of its foreign subsidiaries to record an allowance for doubtful accounts that did not properly estimate future bad debts based on the subsidiary’s historical experience. As a result, the Company did not record an allowance for certain significantly aged receivables and bad debt expense was not recorded in the proper periods. This resulted in the misstatement of selling, general and administrative expenses and receivables, net of allowances.

Dosimetry devices – The Company did not properly account for certain dosimetry devices, based on the expected useful life of the devices as determined by the wear period of the related badges. This resulted in a misstatement of cost of sales and dosimetry devices, net of accumulated depreciation.

Long-term investments - The Company recorded fixed income mutual fund investments held by one of its foreign subsidiaries as cash, instead of properly classifying them as available-for-sale securities. As a result, both realized and unrealized gains were incorrectly recorded as interest income. This resulted in the misstatement of interest expense, net, other income (expense), net, net income attributed to noncontrolling interest, comprehensive income, cash, other assets, accumulated other comprehensive income, and noncontrolling interest.

Sales taxes – The Company did not collect and remit sales taxes to the proper taxing jurisdictions. This resulted in the misstatement of selling, general and administrative expenses and other accrued expenses.

Intangible assets – The Company’s intangible assets include purchased customer lists, licenses, patents, trademarks and tradenames. These assets are recorded at fair value and assigned estimated useful lives at the time of acquisition. The Company did not properly amortize certain customer lists and trademarks based on their assigned useful lives and, therefore, did not record amortization expense in the proper periods. This resulted in a misstatement of selling, general and administrative expenses and intangible assets, net of accumulated amortization.

Equity in joint ventures – The Company identified the following errors related to accounting for its joint ventures:

During fiscal 2012 and 2013, the Company did not properly record its share of equity income from certain joint ventures in the proper periods.

The Company did not properly eliminate intra-entity profit on sales to one of its joint ventures accounted for on the equity method. This resulted in the misstatement of equity in income of joint ventures and equity in joint ventures (investment account).

Revenue was recorded at one of the Company’s joint ventures on equipment sales prior to transfer of the risk of loss to the customer. As a result, the Company did not record its share of equity income from the joint venture in the proper periods.

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The following table summarizes the impact of the restatement on net income (loss) and diluted net income (loss) per share attributed to Landauer, Inc. for the three and six months ended March 31, 2014:



(Dollars in Thousands, Except per Share Amounts)	Three Months Ended March 31, 2014 (Unaudited)				Six Months Ended March 31, 2014 (Unaudited)
	Net Income (Loss)		Diluted Net Income (Loss) Per Share		Net Income (Loss)		Diluted Net Income (Loss) Per Share
As previously reported	$	4,997	$	0.52	$	8,048	$	0.84
Revenue and accounts receivable		(500)				(248)
Dosimetry devices		13				25
Long-term investments		(25)				54
Sales taxes		(16)				(32)
Intangible assets		-				150
Equity in joint ventures		-				708
Total adjustments		(528)		(0.05)		657		0.07
Income tax expense (benefit)		(41)		-		362		0.04
Less amounts attributed to noncontrolling interest		(4)		-		8		-
Net impact of adjustments		(483)		(0.05)		287		0.03
As restated	$	4,514	$	0.47	$	8,335	$	0.87

The effect of the restatement on the previously issued Consolidated Statement of Operations for the three and six months ended March 31, 2014 is as follows:



	Three Months Ended March 31, 2014 (Unaudited)				Six Months Ended March 31, 2014 (Unaudited)
(Dollars in Thousands, Except per Share)	Previously Reported		As Restated		Previously Reported		As Restated
Service revenues	$	32,983	$	32,870	$	64,877	$	64,615
Product revenues		6,571		6,184		12,382		12,586
Net revenues		39,554		39,054		77,259		77,201
Costs and expenses:
Service costs		15,195		15,155		30,244		30,165
Product costs		3,150		3,177		6,308		6,552
Total cost of sales		18,345		18,332		36,552		36,717
Gross profit		21,209		20,722		40,707		40,484
Selling, general, and administrative		13,735		13,750		28,097		27,976
Acquisition, reorganization and nonrecurring costs		109		109		220		220
Operating income		7,365		6,863		12,390		12,288
Equity in income of joint ventures		535		535		1,108		1,816
Interest expense, net		(975)		(1,014)		(1,867)		(1,951)
Other income (expense), net		(8)		5		29		164
Income before taxes		6,917		6,389		11,660		12,317
Income tax (benefit) expense		1,954		1,913		3,450		3,812
Net income		4,963		4,476		8,210		8,505
Less: Net income attributed to noncontrolling interest		(34)		(38)		162		170
Net income attributed to Landauer, Inc.		4,997		4,514		8,048		8,335
Net income per share attributed to Landauer, Inc. shareholders:
Basic		0.52		0.47		0.84		0.87
Weighted average basic shares outstanding		9,460		9,460		9,441		9,441
Diluted		0.52		0.47		0.84		0.87
Weighted average diluted shares outstanding		9,501		9,501		9,485		9,485

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The effect of the restatement on the previously issued Consolidated Statement of Cash Flows for the six months ended March 31, 2014 is as follows:



	Six Months Ended March 31, 2014 (Unaudited) (a)
(Dollars in Thousands)	Previously Reported		As Restated
Cash flows provided from operating activities:
Net income		8,210		8,505
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,662		7,487
Gain on investments		(203)		(338)
Equity in income of joint ventures		(1,108)		(1,816)
Dividends from joint ventures		1,340		1,340
Stock-based compensation and related net tax benefits		453		453
Current and long-term deferred taxes, net		791		847
Changes in operating assets and liabilities:
Decrease in accounts receivable, net		3,119		3,205
Decrease in prepaid taxes		721		1,027
Decrease in other operating assets, net		571		761
Decrease in accounts payable and other accrued liabilities		(2,025)		(2,021)
Increase in other operating liabilities, net		430		430
Net cash provided by operating activities		19,961		19,880
Cash flows used by investing activities:
Acquisition of property, plant & equipment		(2,415)		(2,415)
Acquisition of joint ventures and businesses, net of cash acquired		(1,800)		(1,800)
Other investing activities, net		(637)		(114)
Net cash used by investing activities		(4,852)		(4,329)
Cash flows (used) provided by financing activities:
Net borrowings on revolving credit facility		(43)		(43)
Long–term borrowings - loan		20,000		20,000
Long–term borrowings - repayment		(24,500)		(24,500)
Dividends paid to stockholders		(10,520)		(10,520)
Other financing activities, net		(347)		(347)
Net cash used by financing activities		(15,410)		(15,410)
Effects of foreign currency translation		108		109
Net (decrease) increase in cash and cash equivalents		(193)		250
Opening balance – cash and cash equivalents		11,184		8,672
Ending balance – cash and cash equivalents		10,991		8,922

^(a)

As reported in the Company's 2014 third fiscal quarter Form 10-Q (filed on August 11, 2014), certain errors were identified in the Consolidated Statement of Cash Flows that impacted prior periods. The errors related to the following: treatment of accrued additions for property, plant and equipment, classification of debt financing fees and classification of unrealized gains or losses on investments in the Consolidated Statements of Cash Flows. The prior period consolidated statements of cash flows were revised in the 2014 third fiscal quarter Form 10-Q to correct for these errors and the impacts of the corrections are reflected within the 'Previously Reported' columns above.

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In connection with the preparation of the consolidated financial statements for the interim periods ended March 31, 2015, the Company identified errors in its previously issued financial statements for the interim periods ended March 31, 2014. The Company did not properly report sales and purchases to related parties in its Related Party Transactions footnote. As a result of these errors, the Company understated sales to Aquila by $284 and $2,360 for the three and six months ended March 31, 2014, respectively, and understated sales to Nagase by $31 and $99 for the three and six months ended March 31, 2014, respectively. Further, the Company understated sales to Aquila by $2,360 for the nine months ended June 30, 2014, understated sales to Nagase by $80 and $179 for the three and nine months ended June 30, 2014, respectively, understated sales to Nagase by $616 for the three months ended December 31, 2014, understated sales to Aquila by $215 for the fiscal year ended September 30, 2014 and understated sales to Nagase by $271 for the fiscal year ended September 30, 2014. In accordance with accounting guidance presented in SAB 99, management assessed the materiality of these errors and concluded that they were not material to the Company’s financial statements for the three and six months ended March 31, 2014. The Company is revising its financial statements for the three and six month periods ended March 31, 2014 to correct for these errors.

(2)Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued new guidance to reduce the diversity in presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. This requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions listed in the guidance. This guidance was adopted by the Company in the first quarter of fiscal 2015. The adoption did not have a material impact on the Company’s consolidated financial statements.

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. This guidance is effective for the Company in the first quarter of fiscal 2018. In April 2015, the FASB proposed a one year deferral of the effective date of the new revenue standard for the new revenue standard. Early adoption is not permitted. The Company is currently evaluating the impact that adoption of this guidance will have on its consolidated financial statements.

In June 2014, the 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. This guidance is effective for the Company in the first quarter of fiscal 2017. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this guidance will have on its consolidated financial statements.

In August 2014, the FASB issued new guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of doubt about the entity’s ability to continue as a going concern. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. This guidance is effective for the Company in the first quarter of fiscal 2017, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In November 2014, the FASB issued new guidance on accounting for pushdown accounting in the event of a business combination. This update provides an acquired entity with an option to apply

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pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. This guidance was adopted by the Company in the first quarter of fiscal 2015. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In January 2015, the FASB issued new guidance on accounting for unusual and infrequently occurring items, which eliminates the concept of extraordinary items. An unusual and infrequently occurring item will no longer be classified as an extraordinary item and segregated from ordinary operations in the income statement, but will be shown as a component of income from continuing operations or separately disclosed in notes to the financial statements. This guidance is effective for the Company in the first quarter of fiscal 2017, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In February 2015, the FASB issued amended guidance on the model used to evaluate whether certain legal entities should be consolidated. This guidance is effective for the Company in the first quarter of fiscal 2017. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this guidance will have on its consolidated financial statements.

(3)Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. A fair value hierarchy with three tiers has been established to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. Level 1 inputs include quoted prices in active markets for identical assets and liabilities. Level 2 inputs consist of observable inputs other than quoted prices in active markets or indirectly observable through corroboration with observable market data. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances.

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

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	Fair Value Measurements at March 31, 2015 Using
(Dollars in Thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category
Cash equivalents	$	115	$	-	$	-
Mutual funds		3,616		-		-
Available-for-sale securities		-		1,524		-
Total financial assets at fair value	$	3,731	$	1,524	$	-

	Fair Value Measurements at September 30, 2014 Using
(Dollars in Thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category
Cash equivalents	$	105	$	-	$	-
Mutual funds		3,629		-		-
Available-for-sale securities		-		2,382		-
Total financial assets at fair value	$	3,734	$	2,382	$	-

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 March 31, 2015 and September 30, 2014, 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.

The Level 2 financial assets are long-term investments consisting primarily of fixed income mutual funds, classified as available-for-sale securities. These are reported in other long-term assets. The investments in fixed income mutual funds are valued based on the net asset value of the underlying securities as provided by the investment account manager. The investments are not restricted or subject to a lockup and may be redeemed on demand. Notice within a certain period of time prior to redemption is not required.

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

The Company recorded a liability for contingent consideration during the second quarter of fiscal 2014 related to the acquisition of ilumark GmbH and the launch of its new medical products. The liability was recorded at fair value, which was determined using a discounted cash flow model based on assumptions and projections relevant to revenues. A discount rate of 11% was used and payments are projected to occur in fiscal 2016 and 2017. The fair value of the contingent consideration was $774 as of March 31, 2015 and is reported in other accrued expenses and other non-current liabilities at $131 and $643, respectively. The contingent consideration liability is classified as Level 3.

There were no transfers between fair value hierarchy levels during the period.

Table of Contents

(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 March 31,				Six Months Ended March 31,
(Dollars in Thousands, Except per Share)	2015		2014 (As Restated)		2015		2014 (As Restated)
Basic Net Income per Share:
Net income attributed to Landauer, Inc.	$	3,547	$	4,514	$	7,924	$	8,335
Less: Income allocated to unvested restricted stock		18		46		47		91
Net income available to common stockholders	$	3,529	$	4,468	$	7,877	$	8,244
Basic weighted average shares outstanding		9,493		9,460		9,464		9,441
Net income per share - Basic	$	0.37	$	0.47	$	0.83	$	0.87

Diluted Net Income per Share:
Net income attributed to Landauer, Inc.	$	3,547	$	4,514	$	7,924	$	8,335
Less: Income allocated to unvested restricted stock		18		46		47		91
Net income available to common stockholders	$	3,529	$	4,468	$	7,877	$	8,244
Basic weighted average shares outstanding		9,493		9,460		9,464		9,441
Effect of dilutive securities


	LANDAUER, INC. (Exact Name of registrant as specified in its charter)

	Delaware	06-1218089
	(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification Number)

	2 Science Road, Glenwood, IL 60425 (Address of principal executive offices and zip code)

	Registrant’s telephone number, including area code: (708) 755-7000


Large accelerated filer	[ ]	Accelerated filer	[ X ]
Non-accelerated filer	[ ]	Smaller reporting company	[ ]
(Do not check if a smaller reporting company)



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		20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26

Item 4.	Controls and Procedures		26


PART II OTHER INFORMATION

Item 1.	Legal Proceedings		29

Item 1A.	Risk Factors		29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30

Item 3.	Defaults Upon Senior Securities		30

Item 4.	Mine Safety Disclosures		30

Item 5.	Other Information		30

Item 6.	Exhibits		31


SIGNATURE			32