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~~March 31, ~~2015~~2016

Commission ~~File Number~~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 days. Yes [ 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~~May 5, 2016, ~~9,581,743~~9,603,532 shares of common stock, par value $0.10 per share, of the registrant were outstanding.

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		1719

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		2024

Item 4.	Controls and Procedures		2125


PART II OTHER INFORMATION

Item 1.	Legal Proceedings		2327

Item 1A.	Risk Factors		2327

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2327

Item 3.	Defaults Upon Senior Securities		2327

Item 4.	Mine Safety Disclosures		2327

Item 5.	Other Information		2327

Item 6.	Exhibits		2428


SIGNATURE			2529

~~Table of Contents~~

PART I FINANCIAL INFORMATION

Item 1.Financial Statements

LANDAUER, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)


(Dollars in Thousands)	December 31, 2015		September 30, 2015		March 31, 2016		September 30, 2015
Assets
Cash and cash equivalents	$	9,540	$	15,314	$	9,213	$	15,314
Receivables, net of allowances of $1,608 at December 31, 2015 and $1,556 at September 30, 2015		32,058		32,412
Receivables, net of allowances of $1,625 at March 31, 2016 and $1,556 at September 30, 2015						32,770		32,412
Inventories		7,195		7,035		7,059		7,035
Deferred income tax assets - current		4,862		4,871		5,362		4,871
Prepaid expenses and other current assets		2,728		2,121		2,592		2,121
Total current assets		56,383		61,753		56,996		61,753
Property, plant and equipment, at cost		105,826		104,322		108,132		104,322
Less accumulated depreciation and amortization		(59,759)		(57,955)		(61,452)		(57,955)
Property, plant and equipment, net		46,067		46,367		46,680		46,367
Equity in joint ventures		23,026		24,010		23,994		24,010
Goodwill		34,868		35,072		35,240		35,072
Intangible assets, net of accumulated amortization of $38,964 at December 31, 2015 and $38,662 at September 30, 2015		12,839		13,052
Dosimetry devices, net of accumulated depreciation of $5,508 at December 31, 2015 and $5,282 at September 30, 2015		3,411		3,562
Intangible assets, net of accumulated amortization of $39,605 at March 31, 2016 and $38,662 at September 30, 2015						12,649		13,052
Dosimetry devices, net of accumulated depreciation of $5,761 at March 31, 2016 and $5,282 at September 30, 2015						3,503		3,562
Deferred income tax assets		16,132		16,702		14,379		16,702
Other assets		8,959		8,226		9,161		8,226
Total assets	$	201,685	$	208,744	$	202,602	$	208,744

Liabilities
Accounts payable	$	5,165	$	5,773	$	4,146	$	5,773
Dividends payable		2,710		2,684		2,743		2,684
Deferred contract revenue		13,503		13,904		13,894		13,904
Accrued compensation and related costs		6,885		8,603		7,127		8,603
Accrued severance		717		972		599		972
Other accrued expenses		7,454		6,557		7,503		6,557
Total current liabilities		36,434		38,493		36,012		38,493
Long-term debt		127,685		133,385		125,985		133,385
Pension and postretirement obligations		20,878		20,508		20,883		20,508
Deferred income tax liabilities		260		270		269		270
Uncertain income tax liabilities		2,380		2,310		2,407		2,310
Other non-current liabilities		733		1,451		308		1,451
Total liabilities		188,370		196,417		185,864		196,417
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; 9,709,519 and 9,641,532 shares issued and outstanding at December 31, 2015 and September 30, 2015, respectively		971		964
Common stock, $0.10 par value per share, authorized 20,000,000 shares; 9,734,340 and 9,641,532 shares issued and outstanding at March 31, 2016 and September 30, 2015, respectively						973		964
Additional paid in capital		41,918		41,531		42,489		41,531
Accumulated other comprehensive loss		(14,089)		(13,741)		(12,898)		(13,741)
Accumulated deficit		(16,590)		(17,559)		(14,981)		(17,559)
Landauer, Inc. stockholders' equity		12,210		11,195		15,583		11,195
Noncontrolling interest		1,105		1,132		1,155		1,132
Total stockholders' equity		13,315		12,327		16,738		12,327
Total Liabilities and Stockholders' Equity	$	201,685	$	208,744	$	202,602	$	208,744

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


	Three Months Ended December 31,				Three Months Ended March 31,				Six Months Ended March 31,
(Dollars in Thousands, Except per Share)	2015		2014		2016		2015		2016		2015
Revenues:
Service revenues	$	31,545	$	32,057	$	33,162	$	32,242	$	64,707	$	64,299
Product revenues		4,985		5,490		4,920		5,897		9,905		11,387
Total revenues		36,530		37,547		38,082		38,139		74,612		75,686

Costs and expenses:
Service costs		16,178		15,634		16,498		16,158		32,676		31,792
Product costs		1,837		2,117		1,829		2,453		3,666		4,570
Total cost of sales		18,015		17,751		18,327		18,611		36,342		36,362

Gross profit		18,515		19,796		19,755		19,528		38,270		39,324
Selling, general and administrative		12,263		13,655		12,538		13,898		24,801		27,553
Operating income		6,252		6,141		7,217		5,630		13,469		11,771
Equity in income of joint ventures		301		696		252		680		553		1,376
Interest expense, net		(933)		(953)		(1,129)		(964)		(2,062)		(1,917)
Other (expense) income, net		(160)		251		103		(485)		(57)		(234)
Income before taxes		5,460		6,135		6,443		4,861		11,903		10,996
Income tax expense		1,687		1,610		2,005		1,180		3,692		2,790
Net income		3,773		4,525		4,438		3,681		8,211		8,206
Less: Net income attributed to noncontrolling interest		130		148		159		134		289		282
Net income attributed to Landauer, Inc.	$	3,643	$	4,377	$	4,279	$	3,547	$	7,922	$	7,924

Net income per share attributable to Landauer, Inc. shareholders:
Basic	$	0.38	$	0.46	$	0.45	$	0.37	$	0.83	$	0.83
Weighted average basic shares outstanding		9,460		9,446		9,518		9,493		9,483		9,464

Diluted	$	0.38	$	0.46	$	0.45	$	0.37	$	0.83	$	0.83
Weighted average diluted shares outstanding		9,492		9,474		9,550		9,520		9,516		9,492

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



	Three Months Ended December 31, 2015						Three Months Ended March 31, 2016						Six Months Ended March 31, 2016
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total		Landauer, Inc.		Noncontrolling Interest		Total		Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	3,643	$	130	$	3,773	$	4,279	$	159	$	4,438	$	7,922	$	289	$	8,211
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of $25		44		-		44
Unrealized gains (losses) on available-for-sale securities, net of taxes of $23		(75)		-		(75)
Foreign currency translation adjustment, net of taxes of ($162)		(317)		2		(315)
Defined benefit pension and postretirement plans activity, net of taxes of $76 and $101, respectively								128		-		128		172		-		172
Unrealized gains (losses) on available-for-sale securities, net of taxes of $22 and ($1), respectively								83		-		83		8		-		8
Foreign currency translation adjustment, net of taxes of $519 and $357, respectively								980		22		1,002		663		24		687
Comprehensive income	$	3,295	$	132	$	3,427	$	5,470	$	181	$	5,651	$	8,765	$	313	$	9,078

	Three Months Ended December 31, 2014						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		Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	4,377	$	148	$	4,525	$	3,547	$	134	$	3,681	$	7,924	$	282	$	8,206
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of $0		72		-		72
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		(35)		-		(35)		37		-		37		2		-		2
Foreign currency translation adjustment, net of taxes of $954		(1,771)		(99)		(1,870)
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	$	2,643	$	49	$	2,692	$	1,676	$	35	$	1,711	$	4,319	$	84	$	4,403

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


	Landauer, Inc. Stockholders' Equity														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		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, 2015		9,641,532	$	964	$	41,531	$	(13,741)	$	(17,559)	$	1,132	$	12,327		9,641,532	$	964	$	41,531	$	(13,741)	$	(17,559)	$	1,132	$	12,327
Stock-based compensation arrangements		67,987		7		387		-		-		-		394		92,808		9		958		-		-		-		967
Dividends		-		-		-		-		(2,674)		(159)		(2,833)		-		-		-		-		(5,344)		(290)		(5,634)
Net income		-		-		-		-		3,643		130		3,773		-		-		-		-		7,922		289		8,211
Foreign currency translation adjustment, net of tax		-		-		-		(317)		-		2		(315)		-		-		-		663		-		24		687
Unrealized gains (losses) on available-for-sale securities, net of tax		-		-		-		(75)		-		-		(75)		-		-		-		8		-		-		8
Defined benefit pension and postretirement plans activity, net of tax		-		-		-		44		-		-		44		-		-		-		172		-		-		172
December 31, 2015		9,709,519	$	971	$	41,918	$	(14,089)	$	(16,590)	$	1,105	$	13,315
March 31, 2016																9,734,340	$	973	$	42,489	$	(12,898)	$	(14,981)	$	1,155	$	16,738

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



	Three Months Ended December 31,				Six Months Ended March 31,
(Dollars in Thousands)	2015		2014		2016		2015
Cash flows from operating activities:
Net income	$	3,773	$	4,525	$	8,211	$	8,206
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,797		3,078		5,661		6,092
Equity in income of joint ventures		(301)		(696)		(553)		(1,376)
Dividends from joint ventures		1,195		1,139		1,195		1,144
Stock-based compensation and related net tax benefits		457		437		1,144		873
Current and long-term deferred taxes, net		632		(1,195)		1,076		(1,792)
Gain on sale, disposal and abandonment of fixed assets		(9)		(3)		12		124
Gain on investments		(190)		(111)		(221)		(189)
Changes in operating assets and liabilities:
Decrease in accounts receivable, net		224		4,985
(Increase) decrease in accounts receivable, net						(276)		2,923
Decrease (increase) in prepaid taxes		40		(214)		39		(385)
Increase in other operating assets, net		(982)		(1,437)
(Increase) decrease in other operating assets, net						(842)		347
Decrease in accounts payable and other accrued liabilities		(2,052)		(971)		(2,779)		(1,002)
Increase (decrease) in other operating liabilities, net		357		(53)		143		(108)
Net cash provided by operating activities		5,941		9,484		12,810		14,857

Cash flows from investing activities:
Acquisition of property, plant and equipment		(1,534)		(1,384)		(4,278)		(3,063)
Payment of transaction expenses associated with divestiture of business		(472)		-		(472)		-
Other investing activities, net		(923)		(315)		(1,232)		147
Net cash used in investing activities		(2,929)		(1,699)		(5,982)		(2,916)

Cash flows from financing activities:
Long-term borrowings - loan		7,000		8,800		11,000		16,300
Long-term borrowings - repayment		(12,700)		(8,800)		(18,400)		(15,300)
Dividends paid to stockholders		(2,651)		(5,347)		(5,286)		(10,599)
Other financing activities, net		(156)		(331)		(155)		(321)
Net cash used in financing activities		(8,507)		(5,678)		(12,841)		(9,920)

Effects of foreign currency translation		(279)		(471)		(88)		(358)
Net (decrease) increase in cash and cash equivalents		(5,774)		1,636		(6,101)		1,663
Opening balance - cash and cash equivalents		15,314		6,761		15,314		6,761
Ending balance - cash and cash equivalents	$	9,540	$	8,397	$	9,213	$	8,424

Accrued capital spending included in accounts payable and other accrued liabilities	$	1,153	$	205	$	783	$	2,272

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

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.

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~~three and six month periods ended March ~~December~~ 31, ~~2015~~2016 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2016.

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, 2015 (the “Form 10-K”) and other financial information filed with the Securities and Exchange Commission (the “SEC”). The September 30, 2015 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~~six-month period ended ~~December~~March 31, ~~2015.~~2016.

In May 2014, the Financial Accounting Standards Board (“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, 2017. The FASB decided to allow earlier adoption of the new revenue standard, but not earlier than the original effective date. This 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.

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 results of operations, financial position and liquidity.

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 will be 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 will have a material impact on its results of operations, financial position and liquidity.

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 will have a material impact on its results of operations, financial position and liquidity.

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 this guidance will have on its results of operations, financial position and liquidity.

In April 2015, the FASB issued new guidance on the presentation of debt issuance costs. This update requires a company to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with the presentation of debt discounts. Currently, debt issuance costs are presented as a deferred asset. The recognition and measurement requirements will not change as a result of this guidance. The update requires retrospective application and represents a change in accounting principle. 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 will have a material impact on its results of operations, financial position and liquidity.

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 September 2015, the FASB issued new guidance on business combination provisional adjustments during the measurement period. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined and sets forth new disclosure requirements related to the adjustments. This guidance is effective for the Company in the first quarter of fiscal 2017, 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 January 2016, the FASB issued guidance on the recognition and measurement of financial instruments. This guidance retains the current accounting for classifying and measuring investments in debt securities and loans, but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. The guidance also changes the accounting for investments without a readily determinable fair value and that do not qualify for the practical expedient to estimate fair value. A policy election can be made for these investments whereby estimated fair value may be measured at cost and adjusted in subsequent periods for any impairment or changes in observable prices of identical or similar investments. This 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.

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.

In March 2016, the FASB issued guidance on the accounting for equity method investments. This standard eliminates the requirement that when an existing cost method investment qualifies for the use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Under the new guidance, at the point an investment qualifies for the equity method, any unrealized gain or loss in accumulated other comprehensive income/(loss) (“AOCI”) will be recognized through earnings. 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 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.

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.

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.

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



	Fair Value Measurements at December 31, 2015						Fair Value Measurements at March 31, 2016
(Dollars in Thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Asset Category
Cash equivalents	$	240	$	-	$	-	$	500	$	-	$	-
Mutual funds		4,009		-		-		3,710		-		-
Available-for-sale securities		-		1,935		-		-		2,341		-
Total financial assets at fair value	$	4,249	$	1,935	$	-	$	4,210	$	2,341	$	-

	Fair Value Measurements at September 30, 2015						Fair Value Measurements at September 30, 2015
(Dollars in Thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Asset Category
Cash equivalents	$	272	$	-	$	-	$	272	$	-	$	-
Mutual funds		3,237		-		-		3,237		-		-
Available-for-sale securities		-		1,763		-		-		1,763		-
Total financial assets at fair value	$	3,509	$	1,763	$	-	$	3,509	$	1,763	$	-

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~~March 31, ~~2015~~2016 and September 30, 2015, 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 investments 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 is the 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 contingent consideration liability is classified as Level 3.

The Company had no material assets or liabilities that were measured at fair value on a non-recurring basis during the ~~three~~six months ended ~~December~~March 31, ~~2015~~2016 or fiscal year ended September 30, 2015. There were no transfers between fair value hierarchy levels during these periods.

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.



		Three Months Ended December 31,					Three Months Ended March 31,				Six Months Ended March 31,
(Dollars in Thousands, Except per Share)	(Dollars in Thousands, Except per Share)	2015		2014		(Dollars in Thousands, Except per Share)	2016		2015		2016		2015
Basic Net Income per Share:
Net income attributed to Landauer, Inc.		$	3,643	$	4,377		$	4,279	$	3,547	$	7,922	$	7,924
Less: Income allocated to unvested restricted stock			18		29			21		18		39		47
Net income available to common stockholders		$	3,625	$	4,348		$	4,258	$	3,529	$	7,883	$	7,877
Basic weighted average shares outstanding			9,460		9,446			9,518		9,493		9,483		9,464
Net income per share - Basic		$	0.38	$	0.46		$	0.45	$	0.37	$	0.83	$	0.83

Diluted Net Income per Share:
Net income attributed to Landauer, Inc.		$	3,643	$	4,377		$	4,279	$	3,547	$	7,922	$	7,924
Less: Income allocated to unvested restricted stock			18		29			21		18		39		47
Net income available to common stockholders		$	3,625	$	4,348		$	4,258	$	3,529	$	7,883	$	7,877
Basic weighted average shares outstanding			9,460		9,446			9,518		9,493		9,483		9,464
Effect of dilutive securities			32		28			32		27		33		28
Diluted weighted averages shares outstanding			9,492		9,474			9,550		9,520		9,516		9,492
Net income per share - Diluted		$	0.38	$	0.46		$	0.45	$	0.37	$	0.83	$	0.83

Dividends paid per share		$	0.275	$	0.55		$	0.275	$	0.275	$	0.55	$	0.825

On ~~December 4, 2015,~~February 18, 2016, the Company declared a regular quarterly cash dividend in the amount of $0.275 per share for the ~~first~~second quarter of fiscal 2016. The dividends were paid on ~~January 5,~~April 4, 2016 to shareholders of record as of ~~December~~March 18, ~~2015.~~2016.

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



Pension Benefits	Three Months Ended December 31,				Three Months Ended March 31,				Six Months Ended March 31,
(Dollars in Thousands)	2015		2014		2016		2015		2016		2015
Interest cost	$	392	$	364	$	393	$	364	$	785	$	728
Expected return on plan assets		(373)		(396)		(374)		(396)		(747)		(792)
Amortization of net loss		141		84		140		84		281		168
Net periodic benefit cost	$	160	$	52	$	159	$	52	$	319	$	104

Other Benefits	Three Months Ended December 31,				Three Months Ended March 31,				Six Months Ended March 31,
(Dollars in Thousands)	2015		2014		2016		2015		2016		2015
Service cost	$	15	$	13	$	15	$	12	$	30	$	25
Interest cost		10		8		9		8		19		16
Amortization of net gain		(4)		(12)		(4)		(12)		(8)		(24)
Net periodic benefit cost	$	21	$	9	$	20	$	8	$	41	$	17

The Company, under the IRS minimum funding standards, has no required contributions to make to its defined benefit pension plan during fiscal 2016.

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 and Medical Products segments, which ~~may provide~~provides for certain employer matching contributions. 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~~March 31, 2016 and 2015 were $499 and ~~2014~~$442, respectively. Amounts expensed for Company contributions under these plans during the six months ended March 31, 2016 and 2015 were ~~$419~~$918 and ~~$407,~~$849, respectively.

Changes in the carrying amount of goodwill, by reportable segment, for the ~~three~~six months ended ~~December~~March 31, ~~2015~~2016 were as follows:



(Dollars in Thousands)	Radiation Measurement		Medical Physics		Medical Products		Total		Radiation Measurement		Medical Physics		Medical Products		Total
Balance as of September 30, 2015
Goodwill	$	11,002	$	22,611	$	65,527	$	99,140	$	11,002	$	22,611	$	65,527	$	99,140
Accumulated impairment losses		-		-		(64,068)		(64,068)		-		-		(64,068)		(64,068)
Balance as of September 30, 2015	$	11,002	$	22,611	$	1,459	$	35,072	$	11,002	$	22,611	$	1,459	$	35,072
Effects of foreign currency		(162)		-		(42)		(204)		159		-		9		168
Balance as of December 31, 2015
Balance as of March 31, 2016
Goodwill	$	10,840	$	22,611	$	65,485	$	98,936	$	11,161	$	22,611	$	65,536	$	99,308
Accumulated impairment losses		-		-		(64,068)		(64,068)		-		-		(64,068)		(64,068)
Balance as of December 31, 2015	$	10,840	$	22,611	$	1,417	$	34,868
Balance as of March 31, 2016									$	11,161	$	22,611	$	1,468	$	35,240



	December 31, 2015								March 31, 2016
(Dollars in Thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Accumulated Intangibles Impairment Charge		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Accumulated Intangibles Impairment Charge
Customer lists	$	42,955	$	33,942	$	9,013	$	18,657	$	43,198	$	34,496	$	8,702	$	18,657
Trademarks and tradenames		2,182		2,051		131		1,498		2,183		2,051		132		1,498
Licenses and patents		6,089		2,414		3,675		665		6,296		2,501		3,795		665
Other intangibles		577		557		20		-		577		557		20		-
Intangible assets	$	51,803	$	38,964	$	12,839	$	20,820	$	52,254	$	39,605	$	12,649	$	20,820



	September 30, 2015								September 30, 2015
(Dollars in Thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Accumulated Intangibles Impairment Charge		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Accumulated Intangibles Impairment Charge
Customer lists	$	43,131	$	33,716	$	9,415	$	18,657	$	43,131	$	33,716	$	9,415	$	18,657
Trademarks and tradenames		2,181		2,051		130		1,498		2,181		2,051		130		1,498
Licenses and patents		5,825		2,338		3,487		665		5,825		2,338		3,487		665
Other intangibles		577		557		20		-		577		557		20		-
Intangible assets	$	51,714	$	38,662	$	13,052	$	20,820	$	51,714	$	38,662	$	13,052	$	20,820

Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Intangible asset amortization expense was ~~$555~~$568 and ~~$563~~$1,123 for the three and six months ended ~~December~~March 31, ~~2015~~2016, respectively, and ~~2014,~~was $558 and $1,121 for the three and six months ended March 31, 2015, respectively.

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~~six months ended ~~December~~March 31 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		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)	$	(5,468)	$	259	$	(8,532)	$	(13,741)
Other comprehensive (loss) income before reclassifications		(317)		14		-		(303)		663		97		-		760
Amounts reclassified from accumulated other comprehensive (loss) income		-		(89)		44		(45)		-		(89)		172		83
Net current period other comprehensive (loss) income		(317)		(75)		44		(348)		663		8		172		843
Balance at December 31, 2015	$	(5,785)	$	184	$	(8,488)	$	(14,089)
Balance at March 31, 2016									$	(4,805)	$	267	$	(8,360)	$	(12,898)



(Dollars in Thousands)	Foreign Currency Translation Adjustments		Unrealized Gains and Losses on Available-for-Sale Securities		Pension and Postretirement Plans		Comprehensive (Loss) Income		Foreign Currency Translation Adjustments		Unrealized Gains and Losses on Available-for-Sale Securities		Pension and Postretirement Plans		Comprehensive (Loss) Income
Balance at September 30, 2014	$	(2,493)	$	166	$	(7,821)	$	(10,148)	$	(2,493)	$	166	$	(7,821)	$	(10,148)
Other comprehensive (loss) income before reclassifications		(1,771)		57		-		(1,714)		(3,698)		101		-		(3,597)
Amounts reclassified from accumulated other comprehensive (loss) income		-		(92)		72		(20)		-		(99)		91		(8)
Net current period other comprehensive (loss) income		(1,771)		(35)		72		(1,734)		(3,698)		2		91		(3,605)
Balance at December 31, 2014	$	(4,264)	$	131	$	(7,749)	$	(11,882)
Balance at March 31, 2015									$	(6,191)	$	168	$	(7,730)	$	(13,753)

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

(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).

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

(2)This amount is reported in Income tax expense on the Consolidated Statements of Operations

The effective tax rates for the three months ended ~~December~~March 31, 2016 and 2015 were 31.1% and ~~2014 were 30.9% and 26.2%~~24.3%, respectively. The increase in the effective tax rate was primarily due to the mix of earnings between jurisdictions with differing tax rates. The effective tax rates for the six months ended March 31, 2016 and 2015 were 31.0% and 25.4%, respectively. The increase in the effective tax rate was primarily due to the mix of earnings between jurisdictions with differing tax rates, estimated foreign tax credit, and ratio of permanent items versus a lower overall forecasted pretax. The Company believes it is reasonably possible that ~~$640~~$645 thousand of unrecognized tax benefits will be realized in fiscal year 2016.

The Company is organized into three reportable business segments: Radiation Measurement, Medical Physics and Medical Products. 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,				Three Months Ended March 31,				Six Months Ended March 31,
(Unaudited, Dollars in Thousands)	2015		2014		2016		2015		2016		2015
Revenues by segment:
Radiation Measurement	$	24,704	$	26,491	$	25,520	$	27,246	$	50,224	$	53,737
Medical Physics		9,353		8,484		10,033		8,561		19,386		17,045
Medical Products		2,473		2,572		2,529		2,332		5,002		4,904
Consolidated revenues	$	36,530	$	37,547	$	38,082	$	38,139	$	74,612	$	75,686

	Three Months Ended December 31,				Three Months Ended March 31,				Six Months Ended March 31,
(Unaudited, Dollars in Thousands)	2015		2014		2016		2015		2016		2015
Operating income (loss) by segment:
Radiation Measurement	$	8,898	$	9,384	$	9,969	$	9,414	$	18,867	$	18,798
Medical Physics		778		618		918		321		1,696		939
Medical Products		490		334		432		244		922		578
Corporate		(3,914)		(4,195)		(4,102)		(4,349)		(8,016)		(8,544)
Consolidated operating income	$	6,252	$	6,141	$	7,217	$	5,630	$	13,469	$	11,771

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 contract. The Company also has a 50% equity interest in Nagase-Landauer, Ltd. (“Nagase”), a radiation measurement company in Japan.

In connection with the preparation of the consolidated financial statements for the interim periods ended March 31, 2015, the Company identified an error in its previously issued financial statements for the interim period ended December 31, 2014. The Company did not properly report sales to related parties in its Related Party Transactions footnote. As a result of this error, the Company understated sales to Nagase by $616 as previously reported for the three months ended December 31, 2014. In accordance with accounting guidance presented in SAB 99, management assessed the materiality of this error and concluded that it was not material to the Company’s financial statements for the three months ended December 31, 2014.

The sales to and purchases from Aquila were as ~~follows for the periods ended:~~follows:

The sales to and purchases from Nagase were as ~~follows for the periods ended. Sales to Nagase for the three months ended December 31, 2014 has been corrected for the error discussed above.~~follows:

The Company divested its Medical Products business on May 3, 2016 for gross cash proceeds of $12 million. The assets of the Medical Products business represent approximately 4% of the Company’s consolidated assets, and the revenues of the Medical Products business represent approximately 7% of the Company’s consolidated revenues. The Company has evaluated whether this divestiture qualifies as a discontinued operation pursuant to FASB Accounting Standards Codification 205-20 “Discontinued Operations.” The Company has concluded that the divestiture of the Medical Products business does not represent a strategic shift and is therefore not considered a discontinued operation, and is not material to be shown as assets held for sale as of March 31, 2016.

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.~~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, 2015.

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.

Comparison of the ~~first~~second fiscal quarter ended ~~December~~March 31, ~~2015~~2016 and the ~~first~~second fiscal quarter ended ~~December~~March 31, ~~2014~~2015

Revenues for the ~~first~~second fiscal quarter of 2016 were ~~$36.5~~flat at $38.1 million, ~~a decrease of $1.0 million, or 2.7%, compared to~~the same as revenues ~~of $37.5 million~~ for the ~~first~~second fiscal quarter of 2015. Revenues in the Radiation Measurement segment decreased ~~$1.8~~$1.7 million, which was primarily due to the Radon business that was divested in September 2015, resulting in a $1.6 million reduction in revenues. In addition, unfavorable foreign currency translation rates reduced revenues by ~~$1.2~~$0.6 million. Domestic ~~radiation~~Radiation Measurement services revenues increased ~~2.8%~~5.0%, partially offsetting the impact of the Radon business divestiture and the foreign currency rates.Revenues in the Medical Physics segment increased ~~$0.9~~$1.4 million, due to increased imaging ~~services.~~services. Revenues in the Medical Products segment ~~were essentially flat.~~increased $0.2 million.

Gross margin was ~~50.7%~~51.9% for the ~~first~~second fiscal quarter of 2016, compared with ~~52.8%~~51.2% for the ~~first~~second fiscal quarter of 2015. Gross margin in the Radiation Measurement ~~segment decreased~~and Medical Physics segments increased for the ~~first~~second fiscal quarter of 2016 as compared to the ~~first~~second fiscal quarter of 2015 due to ~~the~~a favorable mix of ~~lower~~higher margin ~~product sales. Gross margin in the Medical Physics segment decreased for the first fiscal quarter of 2016 as compared to the first fiscal quarter of 2015 due to an increase in staffing expenses.~~ service revenues.

Selling, general and administrative expenses for the ~~first~~second fiscal quarter of 2016 were ~~$12.3~~$12.5 million, a decrease of $1.4 million, or ~~10.2%~~10.1%, compared with ~~$13.7~~$13.9 million for the ~~first~~second fiscal quarter of 2015. Operating expenses in Corporate and the Radiation Measurement segment decreased $1.2 million primarily due to professional fees, the Radon divestiture and the impact of foreign currency ~~rates and lower personnel costs.~~rates.

Operating income for the ~~first~~second fiscal quarter of 2016 was ~~$6.2~~$7.2 million, compared with operating income of ~~$6.1~~$5.6 million for the ~~first~~second fiscal quarter of 2015. ~~The~~Operating income increased due to the higher gross margins as well as the decrease in selling, general and administrative ~~expenses~~expenses.

Equity in ~~our Radiation Measurement segment offset~~income of joint ventures decreased to $0.3 million for the ~~impact~~second fiscal quarter of 2016 from $0.7 million for the ~~lower revenues~~second fiscal quarter of 2015 due to ~~the Radon divestiture.~~ lower profit on product sales to our joint venture in Japan.

Equity in income of joint ventures for the first fiscal quarter of 2016 was $0.3 million compared with $0.7 million for the first fiscal quarter of 2015. Product sales by our joint venture were impacted by the lower military sales.

The effective tax rates for the ~~three months ended December 31,~~second fiscal quarter of 2016 and 2015 were 31.1% and ~~2014 were 30.9% and 26.2%~~24.3%, respectively. The increase in the effective tax rate was primarily due to the mix of earnings between jurisdictions with differing tax ~~rates~~.rates.

Net income attributed to Landauer for the ~~first~~second fiscal quarter of 2016 was ~~$3.6~~$4.3 million, compared with net income of ~~$4.4~~$3.5 million in the ~~first~~second fiscal quarter of 2015. The ~~decrease~~increase in net income was driven by ~~the divestiture of our Radon business during September 2015, resulting in~~stronger operating margins, partially offset by a ~~$0.4 million decrease in net income. In addition, the~~ higher effective tax rate ~~impacted net income by approximately $0.3 million.~~.

Radiation Measurement revenues for the ~~first~~second fiscal quarter of 2016 were ~~$24.7~~$25.5 million, a decrease of ~~$1.8~~$1.7 million, or ~~6.8%~~6.3%, compared with ~~$26.5~~$27.2 million for the ~~first~~second fiscal quarter of 2015. The decrease in revenues was primarily due to the Radon business that was divested in September 2015, resulting in a $1.6 million reduction in revenues. In addition, unfavorable foreign currency translation rates reduced revenues by $0.6 million. Domestic Radiation Measurement services revenues increased 5.0%, partially offsetting the impact of the Radon business divestiture and the foreign currency rates.

Operating income for the ~~first~~second fiscal quarter of 2016 ~~was $8.9~~increased to $10.0 million ~~compared with operating income of~~from $9.4 million for the ~~first~~second fiscal quarter of 2015 due to lower operating expenses. Personnel expenses have decreased as a result of the management restructuring in the fourth fiscal quarter of 2015. ~~The decrease was primarily due to the loss of operating income from the divested Radon business, which was approximately $0.6 million for the first fiscal quarter of 2015.~~In addition, outside research and development expenses have decreased.

Medical Physics revenues for the ~~first~~second fiscal quarter of 2016 were ~~$9.4~~$10.0 million, an increase of ~~$0.9~~$1.4 million, or ~~10.6%~~16.3%, compared with ~~$8.5 million~~$8.6 million for the ~~first~~second fiscal quarter of 2015. Imaging services revenue increased by ~~$0.6~~$0.8 million, or ~~26%~~33.3%, 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~~second fiscal quarter of 2016 was ~~$0.8~~$0.9 million, compared to ~~$0.6~~$0.3 million for the ~~first~~second fiscal ~~quarter~~quarter of 2015. The increase in operating income was primarily due to the margin on the increased revenues.

Medical Products revenues increased to $2.5 million for the second fiscal quarter of 2016 from $2.3 million for the second fiscal quarter of 2015.

Medical Products operating income increased to $0.4 million for the second fiscal quarter of 2016 from $0.2 million for the second fiscal quarter of 2015 due to the margin on the increased revenues.

Corporate selling, general and administrative expenses for the second fiscal quarter of 2016 were $4.1 million, a decrease of $0.2 million, or 4.7%, compared to $4.3 million for the second fiscal quarter of 2015. The decrease was due to lower professional fees, including audit and legal fees.

Comparison of the six months ended March 31, 2016 and the six months ended March 31, 2015

Revenues for the first six months of fiscal 2016 were $74.6 million, a decrease of $1.1 million, or 1.5%, compared to revenues of $75.7 million for the first six months of fiscal 2015. Revenues in the Radiation Measurement segment decreased $3.5 million, which was primarily due to the Radon business that was divested in September 2015, resulting in a $3.2 million reduction in revenues. In addition, unfavorable foreign currency translation rates reduced revenues by $1.8 million. Domestic Radiation Measurement services revenues increased 3.8%, partially offsetting the impact of the Radon business divestiture and the foreign currency rates. Revenues in the Medical Physics segment increased $2.4 million, due to increased imaging services. Revenues in the Medical Products segment were essentially flat with an increase of $0.1 million.

Gross margin was 51.3% for the first six months of fiscal 2016, compared with 52.0% for the first six months of fiscal 2015. Gross margins in the Radiation Measurement segment have increased to 62.1% for the first six months of fiscal 2016 from 61.2% for the first six months of fiscal 2015. However, consolidated gross margins have decreased due to the $3.5 million decrease in revenues in our high margin Radiation Measurement segment.

Selling, general and administrative expenses for the first six months of fiscal 2016 were $24.8 million, a decrease of $2.8 million, or 10.1%, compared with $27.6 million for the first six months of fiscal 2015. Operating expenses in Corporate and the Radiation Measurement segment decreased $2.3 million primarily due to professional fees, the Radon divestiture and the impact of foreign currency rates.

Operating income for the first six months of fiscal 2016 was $13.5 million, compared with operating income of $11.8 million for the first six months of fiscal 2015. The decrease in Corporate and Radiation Measurement selling, general and administrative expenses offset the impact of the lower revenues in the Radiation Measurement segment.

Equity in income of joint ventures for the first six months of fiscal 2016 was $0.6 million compared with $1.4 million for the first six months of fiscal 2015. Product sales by our joint venture, Aquila, were impacted by the timing of military sales. In addition, equity in income of joint ventures decreased due to lower profit on product sales to our joint venture in Japan.

The effective tax rates for the first six months of fiscal 2016 and 2015 were 31.0% and 25.4%, respectively. The increase in the effective tax rate was primarily due to the mix of earnings between jurisdictions with differing tax rates.

Net income attributed to Landauer for the first six months of fiscal 2016 was $7.9 million, the same as net income of $7.9 million in the first six months of fiscal 2015. The increase in operating income was offset by the decrease in equity in income of joint ventures and by the impact of the higher effective tax rate.

Radiation Measurement revenues for the first six months of fiscal 2016 were $50.2 million, a decrease of $3.5 million, or 6.5%, compared with $53.7 million for the first six months of fiscal 2015. The decrease in revenues was primarily due to the Radon business that was divested in September 2015, resulting in a $3.2 million reduction in revenues. In addition, unfavorable foreign currency translation rates reduced revenues by $1.8 million. Domestic Radiation Measurement services revenues increased 3.8%, partially offsetting the impact of the Radon business divestiture and the foreign currency rates.

Operating income for the first six months of fiscal 2016 was $18.9 million compared with operating income of $18.8 million for the first six months of fiscal 2015. The decrease in selling, general and administrative expenses offset the impact of the lower revenues.

Medical Physics revenues for the first six months of fiscal 2016 were $19.4 million, an increase of $2.4 million, or 14.1%, compared with $17.0 million for the first six months of fiscal 2015. Imaging services revenue increased by $1.5 million, or 31.9%, 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 six months of fiscal 2016 was $1.7 million, compared to $0.9 million for first six months of fiscal 2015. The increase in operating income was primarily due to the margin on the increased sales.

Medical Products revenues were essentially flat at ~~$2.5~~$5.0 million for the first six months of fiscal ~~quarter of~~ 2016 compared with ~~$2.6~~$4.9 million for the first six months of fiscal ~~quarter of~~ 2015.

Medical Products had operating income of ~~$0.5~~$0.9 million for the first six months of fiscal ~~quarter of~~ 2016 versus operating income of ~~$0.3~~$0.6 million for the first six months of fiscal ~~quarter of~~ 2015.

Corporate selling, general and administrative expenses for the first six months of fiscal ~~quarter of~~ 2016 were ~~$3.9~~$8.0 million, a decrease of ~~$0.3~~$0.5 million, or ~~7.1%~~5.9%, compared to ~~$4.2~~$8.5 million for the first six months of fiscal ~~quarter of~~ 2015. The decrease was due to lower professional fees, including audit and legal ~~fees.~~fees.

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.

Cash provided by operating activities for the first ~~three~~six months of fiscal 2016 was ~~$5.9~~$12.8 million, a decrease of ~~$3.5~~$2.1 million over the same fiscal period in 2015. The decrease was primarily due to the large reduction in accounts receivable, net in the first six months of fiscal ~~quarter of~~ 2015 ($~~5.0~~2.9 million) compared to a relatively small reduction in the first six months of fiscal ~~quarter of~~ 2016 ($~~0.2~~0.3 million).

Cash used in investing activities for the first ~~three~~six months of fiscal 2016 was ~~$2.9~~$6.0 million, an increase of ~~$1.2~~$3.1 million over the same fiscal period of 2015. ~~During the first fiscal quarter~~The increase was primarily due to higher capital spending of ~~2016, the~~$1.3 million related to IT infrastructure and an increase in investments of $0.8 million. The Company also paid $0.5 million in transaction expenses related to the September 2015 divestiture of our Radon ~~business.~~business during the first six months of fiscal 2016.

Cash used in financing activities for the first ~~three~~six months of fiscal 2016 was ~~$8.5~~$12.8 million, an increase of ~~$2.8~~$2.9 million over the same fiscal period of 2015. The increase was primarily due to higher net repayments of debt, partially offset by a reduction in dividend payments to stockholders compared to the first ~~fiscal quarter~~six months of ~~2015.~~2015. As of ~~December~~March 31, ~~2015,~~2016, the Company had ~~$47.3~~$49.0 million of unused availability under its current $175.0 million credit facility, which the Company believes provides adequate liquidity to meet its current and anticipated obligations. During the first ~~three~~six months of fiscal 2016 and 2015, the Company paid cash dividends of ~~$2.6~~$5.3 million and ~~$5.3~~$10.6 million, respectively. The Company reduced its dividend payment from $0.55 per share to $0.275 per share during the third fiscal quarter of 2015.

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~~March 31, ~~2015.~~2016. The Company intends to use excess cash to continue to pay down the long-term debt balance. The debt facility expires August 2, 2018.

See Note 2 to the Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q.

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 2015 through ~~December~~March 31, ~~2015.~~2016.

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 in general; the ability to protect and utilize the Company’s intellectual property; events or circumstances which result in an impairment of assets, including but not limited to, goodwill and identifiable intangible 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 medical products or 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, 2015 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.

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, 2015. The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through ~~December~~March 31, ~~2015.~~2016.

As of ~~December~~March 31, ~~2015,~~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 not effective as a result of the previously reported material weaknesses that existed in our internal control over financial reporting described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In prior filings, we identified and reported material weaknesses in the Company’s internal control over financial reporting, which still exist as of ~~December~~March 31, ~~2015,~~2016, due to continued remediation and testing procedures. In response to the identified material weaknesses, our management, with oversight from our audit committee, has dedicated significant resources to improve our control environment and to remedy the identified material weaknesses.

We believe that we have designed and implemented the appropriate controls to fully remediate the remaining material weaknesses. However, the Company is required to demonstrate the effectiveness of the new processes for a sufficient period of time. Therefore, until the actions set forth below, including the efforts to implement and test the necessary control activities we identify, are fully completed, the following material weaknesses will continue to exist.

Control Environment - We did not maintain an effective control environment as we did not maintain a sufficient complement of personnel with an appropriate level of knowledge of accounting, experience and training commensurate with our financial reporting requirements. Additionally, we did not consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives. These material weaknesses contributed to the following control deficiencies, each of which is considered to be a material weakness:

Remediation Activities: We have improved our IT general controls and segregation of duties. We have adopted a new global IT general controls framework, and have implemented this new framework domestically. We have begun to implement this new framework in our European entities. In addition, we have removed access to financial application programs and data beyond that needed for certain personnel to perform their individual job responsibilities.

Risk Assessment - We did not design and implement effective risk assessment with regard to our processes and procedures commensurate with our financial reporting requirements. Specifically, we did not design and implement controls in response to risks of misstatement of the financial statements. This material weakness contributed to the following control deficiencies, each of which is considered to be a material weakness:

Remediation Activities: We have improved our controls to ensure the accurate and timely reporting of revenue and the related receivables, including the following:

We commenced a formal risk assessment during fiscal 2015 to assess risks and identify, design, implement, and re-evaluate our control activities and completed the risk assessment as of September 30, 2015.

The risk assessment and revenue material weaknesses also resulted in revisions to second and third quarter fiscal 2014, annual fiscal 2014 and first quarter fiscal 2015 financial statement disclosures related to sales to its equity investees. Management has determined that these revisions, first disclosed in the second quarter of fiscal 2015, are additional effects of the material weaknesses related to risk assessment and revenue described above.

Notwithstanding the identified material weaknesses, management believes the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in conformity with U.S. GAAP.

There has been no change in the Company’s internal control over financial reporting that occurred during the ~~first~~second quarter of fiscal 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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~~March 31, ~~2015,~~2016, if adversely determined, would have a material effect on its business, financial position, results of operations, or cash flows.

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, 2015. The Company believes there have been no material changes in the information provided from the end of the preceding fiscal year through ~~December~~March 31, ~~2015.~~2016.

The Company’s purchases of its equity securities from the end of the preceding fiscal year through ~~December~~March 31, ~~2015~~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	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, 2015	608	$	39.58	-	-	608	$	39.58	-	-
November 1 - November 30, 2015	278		40.83	-	-	278		40.83	-	-
December 1 - December 31, 2015	433		37.01	-	-	433		37.01	-	-
Quarter ended December 31, 2015	1,319	$	39.00	-	-	1,319	$	39.00	-	-
January 1 - January 31, 2016						-	$	-	-	-
February 1 - February 29, 2016						342		29.12	-	-
March 1 - March 31, 2016						-		-	-	-
Quarter ended March 31, 2016						342	$	29.12	-	-

		Cer
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~~March 31, ~~2015.~~2016.

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.


(Dollars in Thousands)	December 31, 2015		September 30, 2015		March 31, 2016		September 30, 2015
Segment assets:
Radiation Measurement	$	136,571	$	142,850	$	138,156	$	142,850
Medical Physics		44,475		43,677		45,094		43,677
Medical Products		47,907		48,308		47,770		48,308
Eliminations		(27,268)		(26,091)		(28,418)		(26,091)
Consolidated assets	$	201,685	$	208,744	$	202,602	$	208,744



(Dollars in Thousands)	December 31, 2015		September 30, 2015		March 31, 2016		September 30, 2015
Amounts in accounts receivable	$	2,440	$	2,795	$	1,919	$	2,795
Amounts in accounts payable		54		284		173		284



Pension and Postretirement Plans (1)	Three Months Ended December 31,				Three Months Ended March 31,				Six Months Ended March 31,
(Dollars in Thousands)	2015		2014		2016		2015		2016		2015
Amortization of net loss	$	69	$	72	$	204	$	72	$	273	$	144
Total before tax		69		72		204		72		273		144
Provision for income taxes		25		-		76		53		101		53
Total net of tax	$	44	$	72	$	128	$	19	$	172	$	91

8
		LANDAUER, INC.
		(Registrant)

Date: ~~February~~May 9, 2016		/s/ Daniel J. Fujii
		Daniel J. Fujii
		Chief Financial Officer