64359526a4dd4c0

Index


Item		Page
Part I
1.	Business	4
	General Description.......................................................................................................................................................................	4
	Marketing and Sales.......................................................................................................................................................................	6
	Seasonality.......................................................................................................................................................................................	7
	International Activities.....................................................................................................................................................................	7
	Patents...............................................................................................................................................................................................	7
	Raw Materials...................................................................................................................................................................................	8
	Competition.......................................................................................................................................................................................	8
	Research and Development.........................................................................................................................................................	8
	Regulatory Matters.........................................................................................................................................................................	9
	Employees and Labor Relations.................................................................................................................................................	10
	Available Information.......................................................................................................................................................................	10
1A.	Risk Factors...........................................................................................................................................................................................	10
1B.	Unresolved Staff Comments...............................................................................................................................................................	19
2.	Properties...............................................................................................................................................................................................	19
3.	Legal Proceedings.............................................................................................................................................................................	19
4.	Mine Safety Disclosures.....................................................................................................................................................................	19
Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	20
6.	Selected Financial Data.....................................................................................................................................................................	23
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.........................................	25
7A.	Quantitative and Qualitative Disclosures About Market Risk...................................................................................................	37
8.	Financial Statements and Supplementary Data	38
	Consolidated Balance Sheets.....................................................................................................................................................	38
	Consolidated Statements of Income...........................................................................................................................................	40
	Consolidated Statements of Comprehensive Income...........................................................................................................	41
	Consolidated Statements of Stockholders’ Equity.................................................................................................................	42
	Consolidated Statements of Cash Flows...................................................................................................................................	43
	Notes to Consolidated Financial Statements...........................................................................................................................	45
	Report of Independent Registered Public Accounting Firm.................................................................................................	67
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.........................................	68
9A.	Controls and Procedures...................................................................................................................................................................	68
9B.	Other Information.................................................................................................................................................................................	68
Part III
10.	Directors, Executive Officers and Corporate Governance.......................................................................................................	69
11.	Executive Compensation.....................................................................................................................................................................	69
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.....................	69
13.	Certain Relationships and Related Transactions, and Director Independence.................................................................	69
14.	Principal Accounting Fees and Services.......................................................................................................................................	69
Part IV
15.	Exhibits, Financial Statement Schedules	70
	Financial Statements.......................................................................................................................................................................	70
	List of Exhibits...................................................................................................................................................................................	70
	Signatures.........................................................................................................................................................................................	72
	Schedule II – Valuation and Qualifying Accounts...................................................................................................................	73

PART I

(Dollars in thousands)

Forward-Looking Statements

Certain matters contained in this report, including the information contained under the heading “Fiscal 2014 Outlook,” 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; 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; the anticipated results of operations of the Company and its subsidiaries or ventures; valuation of the Company’s long-lived assets or business units relative to future cash flows; changes in pricing of 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” and information contained in the Company's reports filed, from time to time, with the SEC. The Company does not undertake, and expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events or changes in the Company’s expectations, except as required by law.

Item 1. Business

General Description

Landauer, Inc. is a Delaware corporation organized on December 22, 1987. As used herein, the “Company”, “we”, “our”, “us” or “Landauer” refers to Landauer, Inc. and its subsidiaries. The Company’s shares are listed on the New York Stock Exchange under the symbol LDR.

Landauer is a leading global provider of technical and analytical services to determine occupational and environmental radiation exposure, the leading domestic provider of outsourced medical physics services, and a provider of radiology related medical products. Since November 2011, the Company has operated in three primary business segments, Radiation Measurement, Medical Physics and Medical Products. Radiation Measurement has been the core business for over 50 years. The Company has provided complete radiation dosimetry services to hospitals, medical and dental offices, universities, national laboratories, nuclear facilities and other industries in which radiation poses a potential threat to employees. Landauer’s services include the manufacture of various types of radiation detection monitors, the distribution and collection of the monitors to and from customers, and the analysis and reporting of exposure findings. These services are provided to approximately 1.8 million individuals globally. In addition to providing analytical services, the Company may lease or sell dosimetry detectors and reading equipment to large customers that want to manage their own dosimetry programs, or into smaller international markets in which it is not economical to establish a direct service.

The majority of the Radiation Measurement revenues are realized from radiation measurement services and other services incidental to radiation dose measurement. The Company enters into agreements with customers to provide them with radiation measurement services, generally for a twelve-month period. Such agreements generally have a high renewal rate, resulting in customer relationships that are generally stable and recurring. As part of its services, the Company provides to its customers radiation detection badges, which are produced and owned by the Company. The badges are worn for a period selected by the customers (“wear period”), which is usually one, two, or three months in duration. At the end of the wear period, the badges are returned to the Company for analysis. The Company analyzes the badges that have been worn and provides its customers with a report indicating their radiation exposures. The Company recycles certain badge components for reuse, while also producing replacement badges on a continual basis.

The Company offers its service for measuring the dosages of x-ray, gamma radiation and other penetrating ionizing radiations to which the wearer has been exposed, primarily through badges, which contain OSL material, which are worn by customer personnel. This technology is marketed under the trade names Luxel+® and InLight®.

A key component of the Company’s dosimetry system is OSL crystal material. Radiation Measurement operates a crystal manufacturing facility in Stillwater, Oklahoma that it acquired in August 1998. The Company’s base OSL material is manufactured utilizing a proprietary process to create aluminum oxide crystals in a unique structure that is able to retain charged electrons following the crystal’s exposure to radiation.

Radiation Measurement’s InLight dosimetry system provides in-house and commercial laboratories with the ability to provide in-house radiation measurement services using OSL technology. InLight services may involve a customer acquiring or leasing dosimetry devices as well as analytical reading equipment from the Company. The system is based on the Company’s proprietary technology and instruments, and dosimetry devices developed in Japan. The InLight system allows customers the flexibility to tailor their precise dosimetry needs.

Radiation Measurement’s RadWatch-RadLight system provides the military and first responder user with a portable, field-ready option for tactical radiation monitoring using OSL technology. RadWatch-RadLight is offered through a partnership agreement with Yamasato, Fujiwara, Higa & Associates, Inc. (“YFH”) doing business as Aquila. RadWatch-RadLight solution fulfills a recognized gap for acquiring a legal dose of record for radiation emergency response teams.

Other radiation measurement-related services (“ancillary services”) augment the basic radiation measurement services that the Company offers, providing administrative and informational tools to customers for the management of their radiation safety programs.

In November 2009 Landauer completed the acquisition of Gammadata Mätteknik AB (“GDM”), a Swedish provider of radon measurement services. GDM is based near Stockholm, Sweden and provides measurement services throughout the Scandinavian region and Europe. In October 2009, Landauer acquired a dosimetry service in Sweden, now called Landauer Persondosimetri AB (“PDM”). As of November 2011, GDM and PDM are now known as Landauer Nordic AB. In December 2010, the Company established an unconsolidated joint venture in Turkey, which provides radiation measurement services. In August 2012 the Company invested $11.8 million for a 49% minority interest in YFH, doing business as Aquila, a small business supplier to the International Atomic Energy Agency as well as the U.S. Military. The Company provides dosimetry parts to Aquila for their military contract.

Medical physics services are provided through the Company’s Landauer Medical Physics (“LMP”) division. In November 2009, Landauer completed its first LMP acquisition by acquiring Global Physics Solutions, Inc. (“GPS”). With primary offices in Illinois and upstate New York, LMP has operations throughout the United States (“U.S”). The Company uses LMP as a platform to expand into the medical physics services market, serving domestic hospitals, radiation therapy centers and imaging centers. LMP is the leading nationwide service provider of clinical physics support, equipment commissioning and accreditation support and imaging equipment testing. Clinical physics support is provided by medical physicists, who individually focus on either imaging or therapeutic medical physics. Imaging physicists are concerned primarily with the radiation delivered by imaging equipment, image quality and compliance with safe practices in nuclear pharmacies. Therapeutic physicists are concerned with the safe delivery of radiation in cancer treatment. Therapeutic physicists contribute to the development of therapeutic

techniques, collaborate with radiation oncologists to design treatment plans, and monitor equipment and procedures to ensure that cancer patients receive the prescribed dose of radiation to the correct location. Both specialties are aligned with critical treatment trends in the continued increased utilization of radiation for the diagnosis and treatment of disease. The ability to target treatments and reduce the impact of surgical procedures is often aided by imaging and therapeutic techniques. In June 2010, Landauer, through its Medical Physics segment, completed the acquisition of the assets of Upstate Medical Physics (“UMP”), a provider of imaging physics services in upstate New York. In addition, four smaller regional practices were also acquired in fiscal 2011 and 2012 to augment the LMP operations. The Company reports the operating results of LMP in the Medical Physics reporting segment.

In November 2011, Landauer completed the acquisition of IZI Medical Products, LLC (“IZI”), which is headquartered in Maryland. The Company completed the acquisition of IZI as a platform to expand into the radiation oncology, radiology, and image guided surgery end markets as its Medical Products segment. IZI is a leading domestic provider of high quality medical consumable accessories used in radiology, radiation therapy, and image guided surgery procedures. IZI’s customer base includes buyers at several stages along the supply chain including distributors, manufacturers of image guided navigation equipment, and product end users such as community hospitals, radiation oncology clinics, mammography clinics, and imaging centers. IZI’s medical accessories range from consumables used with MRI, CT, and mammography technologies to highly engineered passive reflective markers used during image guided surgery procedures. In alignment with treatment trends which increasingly utilize radiation for the diagnosis and treatment of disease, as well as growing demand for minimally invasive procedures, IZI products provide the ability to increase procedural accuracy while decreasing procedural time.

Landauer believes that its business is largely dependent upon the Company’s technical competence, the quality, reliability and price of its services and products, and its prompt and responsive service.

A summary of selected financial data for Landauer for the last five fiscal years is set forth in Item 6 of Part II of this Annual Report on Form 10-K. Financial information about geographic areas and segments is provided in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Marketing and Sales

Landauer’s radiation measurement services and products are marketed in the U.S. and Canada primarily by full-time Company personnel located in five sales regions with support from telesales representatives. The Company’s non-U.S. and Canada radiation measurement services and products are marketed through its wholly owned subsidiaries operating in the United Kingdom, France and Sweden as well as its ventures in Japan and Turkey and its consolidated subsidiaries in Brazil, Australia, Mexico and China. Other firms and individuals market the Company’s radiation measurement products and services on a distributorship or commission basis, generally to small customers or in geographic regions in which the Company does not have a direct presence.

Worldwide, the Company’s Radiation Measurement segment serves approximately 73,000 customers representing approximately 1.8 million individuals annually. The customer base is diverse and fragmented with no single customer representing greater than 2% of revenue. Typically, a customer will contract on a subscription basis for one year of service in advance, representing monthly, bimonthly, quarterly, semi-annual or annual badges, readings and reports. Customer relationships in the radiation measurement market are generally stable and recurring. Details of the Company’s revenue recognition and deferred contract revenue policy are set forth in the “Critical Accounting Policies” section of Item 7 of this Annual Report on Form 10-K.

The Company’s U.S. and Canada radiation measurement services are largely based on the Luxel+ dosimeter system in which all analyses are performed at the Company’s laboratories in Glenwood, Illinois. Luxel+ employs the Company’s proprietary OSL technology. The Company’s InLight dosimetry system enables certain customers to make their own measurements using OSL technology.

For most radiation dosimetry laboratories operating around the world, the laboratory must maintain accreditation with a regulatory body to provide the user with a formal record of dose – a process that is expensive and time consuming. By combining the implementation of an InLight system in the laboratory and “dose of record” determination by Landauer or a Landauer affiliated and accredited facility, the user can provide its workers with the periodic radiation safety management infrastructure without the need to maintain its own accreditation. Additionally,

dosimetry management software options provide the ability to measure the incremental radiation dose of workers at regular intervals over long periods of time.

InLight also forms the basis for Landauer’s operations in Europe, Asia, and Latin America and other future operations that might occur where local requirements preclude using a U.S. or other foreign-based laboratory.

Medical physics outsourced services are marketed to hospitals and free-standing cancer centers or free-standing imaging centers across the United States. LMP medical physicists partner with other healthcare professionals to deliver services to address evolving technology, safety and regulatory needs, with the objective of improving patient outcomes through safe and effective use of radiation in medicine. The services are marketed to radiation oncology and imaging customers by a team of business development professionals supported by LMP’s senior leadership and physicists.

In November 2011, the Company acquired 100% of IZI, which became the Company’s Medical Products segment. IZI products are marketed to buyers at several stages along the supply chain including distributors, manufacturers of image guided navigation equipment, and product end users such as community hospitals, radiation oncology clinics, mammography clinics, and imaging centers. IZI's products are marketed in the U.S. and Canada primarily by full-time Company telesales representatives located in IZI’s Maryland facility. Outside of the U.S. and Canada, the Company primarily utilizes the companies that manufacture image-guided navigation equipment to market and distribute the navigation products. IZI uses distributors to sell its radiology and radiation therapy products.

Seasonality

The services provided by the Company to its radiation measurement customers are on-going and are of a subscription nature. As such, revenues are recognized in the periods in which such services are rendered, irrespective of whether invoiced in advance or in arrears. Given the subscription nature of Radiation Measurement services, quarterly revenues are fairly consistent.

There is no identifiable seasonality to the Company’s Medical Physics or Medical Products segments as their services and products are utilized in radiographic, radiation therapy and surgical procedures that are performed throughout the year.

International Activities

Information regarding the Company’s activities by geographic region is contained under the footnote “Geographic Information” in Item 8 of this Annual Report on Form 10-K.

Patents

The Company holds exclusive worldwide licenses to patent rights for certain technologies that measure and image radiation exposure to crystalline materials when stimulated with light. These licenses were acquired by the Company from Battelle Memorial Institute (“Battelle”) and Oklahoma State University (“OSU”) as part of collaborative efforts to develop and commercialize a new generation of radiation dosimetry technology. The underlying patents for these licenses expire in years 2014 through 2023. The Battelle patents address specific OSL materials and basic aspects of use. The OSU patents are specific to the stimulation process, imaging and data interpretation. As of September 30, 2013, the Company is using OSL technology to provide dosimetry services to the majority of its domestic and international customers. Landauer from time to time evaluates the continued need and benefits to licensing certain patent rights and may discontinue such licenses in instances where Landauer does not believe that such licenses remain necessary.

Additionally, the Company holds certain patents, generated from the Company’s research and development activities, that relate to various dosimeter designs, radiation measurement materials and methods, optical data storage techniques using aluminum oxide and marking technologies used in radiology, radiation therapy and image-guided procedures. These patents expire between 2017 and 2033.

Rights to inventions of employees working for the Company are assigned to the Company.

Raw Materials

The Company has multiple sources for most of its raw materials and supplies, and believes that the number of sources and availability of these items are adequate. Landauer internally produces certain of its requirements, such as OSL detector materials and plastic badge holders. All crystal materials used in the Company’s OSL technology are produced at the Company’s crystal manufacturing facility in Stillwater, Oklahoma. The InLight dosimetry system and its components are manufactured by a Japanese company under an exclusive agreement. The Company sources the Radwatch-RadLight analytical instrument sold for military and emergency radiological response applications from YFH on a sole source basis. IZI sources a key component of its medical products from a sole supplier. If the Company were to lose availability of its Stillwater facility or materials from the Japanese company or IZI’s sole supplier due to a fire, natural disaster or other disruptions, such loss could have a material adverse effect on the Company and its operations.

Competition

In the U.S., the Company competes against a number of dosimetry service providers. One of these providers is a division of Mirion Technologies, a significant competitor with substantial resources. Other competitors in the U.S. that provide dosimetry services tend to be smaller companies, some of which operate on a regional basis. Most government agencies in the U.S., such as the Department of Energy and Department of Defense, have their own in-house radiation measurement services, as do many large private nuclear power plants. Outside of the U.S., radiation measurement activities are conducted by a combination of private entities and government agencies.

The Company competes on the basis of advanced technologies, competent execution of these technologies, the quality, reliability and price of its services, and its prompt and responsive performance. The Company’s InLight dosimetry system competes with other dosimetry systems based on the technical advantages of OSL methods combined with an integrated systems approach featuring comprehensive software, automation and value.

Medical physics outsourced services represents a large fragmented market where LMP has many small competitors. In addition, many facilities directly employ full-time physicists as an alternative for obtaining services from an outsourced provider. LMP competes with other outsourced medical physicists by having responsive regional practices that are backed by the safety, stability and standards of a global company. LMP offers a complementary alternative for clients who require support for their full-time staff in meeting patient care needs.

The Medical Products segment generally competes against a limited number of smaller companies. Two of its primary competitors are a division of Roper Industries, Inc., and Medtronics, each of which is a significant competitor with substantial resources.

Research and Development

The Company’s technological expertise has been an important factor in its growth. The Company regularly pursues product improvements to maintain its technical position. The development of OSL dosimetry, announced in 1994, was funded by the Company in its collaborative effort with Battelle and OSU. The Company commercialized this technology beginning in 1998 and has converted most of its customers to the technology. Current research efforts seek to expand the use of OSL, particularly as it applies to radiation measurements in therapeutic and imaging radiology and nuclear medicine as well as to environmental radiation dosimetry. In addition, the Company is evaluating new badge and InLight reader configurations that have military application and is designing a badge that will support global standardization.

The Company also participates regularly in several technical professional societies, both domestic and international, that are active in the fields of health physics and radiation detection and measurement.

IZI has a robust product development process, which focuses on identifying products that will increase the accuracy of procedures and reduce procedural time. Current research efforts are concentrated to radiology products, which reduce radiation exposure to physicians and patients, as well as products that increase the accuracy of imaging by using reference markers.

Over the last three years the company has spent $4.1 million, $4.0 million, and $2.4 million in research and development activities for the fiscal years 2013, 2012 and 2011, respectively.

Regulatory Matters

Domestic Regulations

The Company manufactures and markets products that are medical devices subject to regulation by the U.S. Food and Drug Administration (“FDA”), as well as other regulatory bodies. FDA regulations govern the following activities that the Company performs and will continue to perform: product design and development; document and purchasing controls; production and process controls; acceptance controls; product testing; product manufacturing; product safety; product labeling; product storage; recordkeeping; complaint handling; pre-market clearance; advertising and promotion; and product sales and distribution.

FDA pre-market clearance and approval requirements. Unless an exemption applies, each medical device the Company wishes to commercially distribute in the U.S. will require either prior 510(k) clearance or pre-market approval from the FDA. The FDA classifies medical devices into one of three classes. Devices deemed to pose lower risks are placed in either class I or II, which requires the manufacturer to submit to the FDA a pre-market notification to commercially distribute the device. This process is generally known as 510(k) clearance. Some low- risk devices are exempted from this requirement. Devices deemed by the FDA to pose the greatest risks, such as life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a previously cleared 510(k) device, are placed in class III and require pre-market approval. All of the Company’s current products are either class I or class II devices.

Pervasive and continuing regulation. After a device is placed on the market, numerous regulatory requirements apply. These include, but are not limited to:

·	Quality System Regulation, or QSR, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, documentation and other quality assurance procedures during product design and throughout the manufacturing process;

·	Labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses and against making false and misleading claims; and

·	Medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur.

The FDA has broad post-market and regulatory enforcement powers. The Company is subject to unannounced inspections by the FDA to determine its compliance with the QSR and other regulations. The Company’s subcontractors also may be subject to FDA inspection.

For additional information regarding FDA regulations that impact the Company, please see the following risk factors set forth in Item 1A “Risk Factors” of this annual report:

·	“The Company’s medical device business is subject to many laws and government regulations governing the manufacture and sale of medical devices, including the FDA’s 510(k) clearance process.”

·	“The FDA may change its policies, adopt additional regulations, or revise existing regulations, in particular relating to the 510(k) clearance process.”

·	“The Company’s medical device business is subject to unannounced inspections by the FDA to determine our compliance with FDA requirements.”

Environmental Regulations

The Company believes that it complies with federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment or otherwise protecting the environment. This compliance has not had, nor is it expected to have, a material effect on the capital expenditures, financial condition, liquidity, results of operations, or competitive position of the Company.

Other Governmental Regulations

Many of the Company’s technology-based services must comply with various national and international standards that are used by regulatory and accreditation bodies for approving such services and products. These accreditation bodies include, for example, the National Voluntary Laboratory Accreditation Program in the U.S. and governmental agencies, generally, in international markets. Changes in these standards and accreditation requirements can result in the Company having to incur costs to adapt its offerings and procedures. Such adaptations may introduce quality assurance issues during transition that need to be addressed to ensure timely and accurate analyses and data reporting. Additionally, changes affecting radiation protection practices, including new understandings of the hazards of radiation exposure and amended regulations, may impact how the Company’s services are used by its customers and may, in some circumstances, cause the Company to alter its products and delivery of its services. Finally, other healthcare regulatory and reimbursement factors may impact the Company. For additional information regarding healthcare and reimbursement laws and policies that may impact the Company, please see the following risk factors set forth in Item 1A “Risk Factors” of this annual report:

·	“The current U.S. and state health reform legislative initiatives could adversely affect our operations and business condition.”

·	“The applicable healthcare fraud and abuse laws and regulations, along with the increased enforcement environment, may lead to an enforcement action targeting the Company, which could adversely affect our business.”

Employees and Labor Relations

As of September 30, 2013, the Company employed approximately 650 full-time employees worldwide, of which 132 employees and 34 employees were in the Company’s Medical Physics and Medical Products segments, respectively. The Company believes that it generally maintains good relations with employees at all locations.

Available Information

The Company annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 may be accessed free of charge through Landauer’s website as soon as reasonably practicable after Landauer has electronically filed such material with, or furnished it to, the Securities and Exchange Commission. The address of Landauer’s website is http://www.landauer.com. A copy of any of these reports is available free of charge upon the written request from any shareholder. Requests should be submitted to the following address: Landauer, Inc., Attention: Corporate Secretary, 2 Science Road, Glenwood, Illinois 60425.

Pursuant to Section 303A.12(a), Landauer, Inc. has complied with the New York Stock Exchange requirement to provide an annual CEO certification no later than 30 days following the Company’s annual meeting.

Item 1A. Risk Factors

In addition to factors discussed elsewhere in this Annual Report on Form 10-K, set forth below are certain risks and uncertainties that could adversely affect the Company’s results of operations or financial condition and cause actual results or events to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company.

We rely on a single facility for the primary manufacturing and processing of our dosimetry services and products, and a single facility for the manufacturing and processing of our medical devices.

The Company conducts its primary dosimetry manufacturing and laboratory processing operations and performs significant functions for some of its international operations from a single facility in Glenwood, Illinois. The Company’s IZI subsidiary conducts its medical device manufacturing and operations from a single facility in Baltimore, Maryland. If the Company were to lose availability of either of these primary facilities due to fire, natural disaster or other disruptions, the Company’s operations could be significantly impaired. Despite the Company’s business continuity preparedness efforts, there can be no assurance that such plan could ensure the Company’s ability to rapidly respond to such disaster. Although the Company maintains business interruption insurance, there can be no assurance that the proceeds of such insurance would be sufficient to offset any loss the Company might incur or that the Company would be able to retain its customer base if operations were so disrupted.

Increased IT security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions and services.

Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. While we attempt to mitigate these risks by employing a number of measures, including employee training; comprehensive monitoring of our networks and systems; and maintenance of backup and protective systems, our systems, networks, products, solutions and services remain potentially vulnerable to advanced persistent threats. Depending on their nature and scope, such threats could potentially lead to the compromising of confidential information; improper use of our systems and networks; manipulation and destruction of data; defective products; production downtimes; and operational disruptions, which in turn could adversely affect our reputation, competitiveness, and operating results.

We rely on a single source for the manufacturing of crystal material, a key component in our OSL technology, a single vendor for the manufacturing of InLight products and a single vendor for a key component of our medical devices.

Crystal material is a key component in Landauer’s OSL technology. The Company operates a single crystal manufacturing facility in Stillwater, Oklahoma that currently supplies all OSL crystal radiation measurement material used by the Company. Although multiple sources for raw crystal material exist, there can be no assurance that the Company could secure another source to produce finished crystal materials to Landauer’s specification in the event of a disruption at the Stillwater facility. The InLight dosimetry system and its components are manufactured by Panasonic Communications Company (“Panasonic”) under an exclusive agreement. IZI sources a key component of its medical accessories from a sole supplier. If the Company were to lose availability of its Stillwater facility or materials from Panasonic or IZI’s sole supplier due to a fire, natural disaster or other disruptions, such loss could have a material adverse effect on the Company and its operations.

If we are not successful in the development or introduction of new technologies, our financial condition and results of operations could be materially and adversely affected.

The Company’s radiation measurement business is a mature business and the number of workers being monitored for radiation exposure has not grown in recent years. Additionally, economic pressures can adversely affect the value of occupational measurement perceived by customers or increase pricing pressures. The Company believes that the development and introduction of new technologies and products will be essential to help counter these pressures. The Company regularly pursues product improvements to maintain its technical position. The development and introduction of new technologies, the adaptability of OSL to new platforms and new formats, the usefulness of older technologies and the introduction of new technologies by the competition present various risks to the Company’s business. The failure or lack of market acceptance of a new technology or the inability to respond to market requirements for new technology could adversely affect the Company’s operations or reputation with customers. The cancellation of technology projects or the cessation of use of an existing technology could result in write-downs and charges to the Company’s earnings.

As a medical device accessory provider, introducing new products is critical to growing the Company’s business. If the Company does not manage its new product development projects on time or experiences unforeseen

problems, the launch of those products would be put at risk which could have a negative effect on IZI’s revenue opportunity and the Company’s results of operations. The failure or lack of market acceptance of a new product or the inability to respond to market requirements for new technology could adversely affect the Company’s operations and reputation with customers.

We may fail to adequately protect our customer data.

We may fail to adequately protect our customer data. In the normal course of operations, we collect and maintain confidential data from our customers. Our failure to adequately preserve the security of this data, whether due to technological failures or errors in or deviations from our data maintenance policies and procedures, could result in data loss or corruption. If we fail to adequately maintain and protect our customer data, we could be exposed to potential litigation from our customers and could face risk for loss or breach of customer data under state privacy laws. Additionally, our reputation could be harmed, and we could lose existing and have difficulty attracting new customers, all of which could adversely affect our operating results.

If we are unable to successfully execute business development activities and diversification such as the acquisition and integration of strategic businesses, our on-going business and results of operations may be adversely affected.

A principal growth strategy of the Company is to explore opportunities to selectively enhance its business through development activities, such as strategic acquisitions, investments and alliances. In furtherance of this objective, in November 2009, the Company acquired GPS and Landauer Nordic AB. In November 2011, the Compnay acquired IZI. In August 2012 the Company acquired a 49% minority interest in YFH, doing business as Aquila, a small business supplier to the International Atomic Energy Agency as well as the U.S. Military. The Company may not be able to identify appropriate acquisition candidates or successfully negotiate, finance or integrate acquisitions. Covenants in the Company’s revolving credit facility may also limit the amount and types of indebtedness that it may incur to finance acquisitions. If the Company is unable to make further acquisitions, it may be unable to realize its growth strategy. Additionally, if the Company is unable to successfully manage acquisition risks, future earnings may be adversely affected. Acquisitions and other business development activities involve various significant challenges and risks, including the following:

·	Difficulty in acquiring desired businesses or assets on economically acceptable terms;

·	Difficulty in integrating new employees, business systems and technology;

·	Difficulty in consolidating facilities and infrastructure;

·	Potential need to operate and manage new lines of business;

·	Potential loss of key personnel;

·	Diversion of management’s attention from on-going operations;

·	Realization of satisfactory returns on investments; and

·	Disputes with strategic partners, due to conflicting priorities or conflicts of interest.

Development activities could result in the incurrence of debt, contingent liabilities, interest and amortization expenses or periodic impairment charges related to goodwill and other intangible assets as well as significant charges related to integration costs. If the Company is unable to successfully integrate and manage businesses that it acquires within expected terms and in a timely manner, its business and results of operations could be adversely affected.

Unforeseen problems with the stabilization and maintenance of our equipment and information systems could interfere with our operations.

In the normal course of its business, the Company must record and process significant amounts of data quickly and accurately and relies on various computer and telecommunications equipment and information technology systems. Any failure of such equipment or systems could adversely affect the Company’s operations.

The Company has recently implemented a new enterprise resource planning solution to manage certain business operations of its’ Order to Cash, Procure to Pay, and Radiation Measurement - Reporting and Analysis business processes. The Company will continue to incur additional costs associated with stabilization and ongoing development of the new solution. As new applications and functionality are added in order to increase the efficiency of the Company workforce and business processes, unforeseen problems could arise. Such problems could adversely impact the Company’s operations, including the ability to perform the following in a timely manner: customer quotes, customer orders, product shipment, customer services and support, order billing and tracking, contractual obligations fulfillment and other related operations.

Certain of our operations are conducted through joint ventures in which we rely significantly on our joint venture partners.

A substantial portion of the Company’s operations are conducted through joint ventures with third parties. In Australia, Brazil, China, and Mexico, the Company has a controlling interest in the related joint ventures. The Company has a 50% interest in Nagase-Landauer, Ltd. located in Japan and Epsilon-Landauer located in Turkey as well as a 49% interest in YFH. In all of these joint ventures and others, the Company relies significantly on the services and skills of its joint venture partners to manage and conduct the local operations and ensure compliance with local laws and regulations. If the joint venture partners were unable to perform these functions adequately, the Company’s operations in such regions could be adversely affected.

There can be no assurances that our operations will generate cash flows in an amount sufficient to enable us to pay our indebtedness.

The Company’s ability to make scheduled payments on its existing or future debt obligations and fund operations will depend on its future financial and operating performance. While the Company believes it will continue to have sufficient cash flows to operate its businesses, there can be no assurances that its operations will generate sufficient cash flows to enable it to pay its remaining indebtedness or to fund its other liquidity needs. If the Company cannot make scheduled payments on its debt, the Company will be in default and, as a result, among other things, all outstanding principal and interest under its revolving credit facility will automatically be due and payable which could force the Company to liquidate certain assets or substantially restructure or alter its business operations or debt obligations. Moreover, if the Company is unable to obtain additional capital or if its current sources of financing are reduced or unavailable, the Company may be required to eliminate or reduce the scope of its plans for expansion and growth and this could affect its overall operations.

If we experience decreasing prices for our goods and services and we are unable to reduce our expenses, our results of operations could suffer.

The Company may experience decreasing prices for the goods and services it offers due to customer consolidation, increased influence of hospital group purchasing organizations, and pricing pressure experienced by its customers from managed care organizations, the Medicare and Medicaid programs and other third-party payers. Decreasing prices may also be due to increased market power of its customers as the medical industry consolidates and increased competition among dosimetry and physics services providers. If the prices for its goods and services decrease and it is unable to reduce its expenses, the Company’s results of operations could be adversely affected.

The Company may also experience decreasing prices for the products offered by its medical device business due to potential changes in the reimbursement levels of hospitals and other customers. The customers and the other entities with which the Company has a business relationship are affected by changes in statutes, regulations and limitations in governmental spending for Medicare, Medicaid and other programs. Recent government actions and future legislative and administrative changes could limit government spending for the Medicare and Medicaid programs, limit payments to hospitals and other providers, increase emphasis on competition, consolidation, or integrated delivery systems, impose price controls, initiate new and expanded value-based reimbursement programs and/or create other programs that potentially could have an adverse effect on the Company’s customers and the other entities with which it has a business relationship. If the Company’s pricing experiences significant downward pressure, its business will be less profitable and its results of operations could be adversely affected.

We may be subject to future impairment losses due to potential declines in the fair value of our assets.

As a result of acquisitions and capital expenditures, the Company has goodwill, intangible assets and fixed assets on our balance sheets. The Company tests goodwill, intangible assets and fixed assets for impairment on a periodic basis as required and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The events or changes that could require the Company to test our goodwill, intangible assets and fixed assets for impairment include a reduction in the Company’s stock price and market capitalization, changes in estimated future cash flows, changes in rates of growth in the Company’s industry or in any of the Company’s reporting units.

The potential for goodwill impairment is increased during a period of economic uncertainty. To the extent the Company acquires a company at a negotiated price based on anticipated future performance, subsequent market conditions may result in the acquired business performing at a lower level than was anticipated at the time of the acquisition. Any of these charges would reduce our operating results and could cause the price of our common stock to decline. A slowing recovery in the U.S., a prolonged recovery or second recession in Europe, and slowing growth in the global economy may result in declining performance that would require the Company to examine goodwill for potential additional impairment.

The Company will continue to evaluate the carrying value of the remaining goodwill, intangible assets and fixed assets, and if they determine in the future that there is a potential further impairment, the Company may be required to record additional losses, which could materially and adversely affect operating results.

Restrictions in our revolving credit facility could adversely affect our business, financial condition, and results of operations.

The Company has a committed $175.0 million, secured revolving credit facility syndicated with a group of commercial banks that expires on August 2, 2018.

The facility also contains certain financial covenants, but no net worth covenant. The maximum leverage ratio covenant is a range of 3.50 to 1.00 for the period of September 30, 2013 through June 30, 2015, and to a maximum 3.25 to 1.00 for the periods September 30, 2015 and thereafter. The minimum fixed charge coverage ratio covenant is a range of 1.10 to 1.00 for the period of September 30, 2013 through June 30, 2015, and to a minimum 1.15 to 1.00 for the periods September 30, 2015 and thereafter. Interest rate equal to LIBOR plus a margin of between 1.25% and 2.50% and for the base rate a margin of between 0.25% and 1.50%.

If the Company has significant borrowings under the facility and it violates a covenant or an event of default occurs and the lenders accelerate the maturity of any outstanding borrowings and terminate their commitment to make future loans, it could have a material adverse effect on the Company’s business, results of operations and financial condition. There can be no assurance that the Company will be able to comply with its financial or other covenants or that any covenant violations will be waived. In addition, if the Company fails to comply with its financial or other covenants, it may need additional financing in order to service or extinguish its indebtedness. In the future, the Company may not be able to obtain financing or refinancing on terms acceptable to it, if at all.

Our radiation-measurement and technology-based services business is subject to extensive domestic and foreign government regulations, which could increase our costs, cause us to incur liabilities and adversely affect our results of operations.

Regulation, present and future, is a constant factor affecting the Company’s business. The radiation measurement industry is subject to federal, state and international governmental regulation. Unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may materially affect the Company’s business or operations in the future and/or could increase the cost of compliance. The equipment commissioning business of LMP, which the Company first acquired in November 2009, and the employment of physicists and other healthcare professionals also are subject to federal, state and international governmental regulation and licensing requirements.

Many of the Company’s technology-based services must comply with various domestic and international standards that are used by regulatory and accreditation bodies for approving such services and products. The failure of the Company to obtain accreditation for its services and products may adversely affect the Company’s business, require the Company to alter its products or procedures or adversely affect the market perception of the effectiveness of its services and products. Changes in these standards and accreditation requirements may also result in the Company having to incur substantial costs to adapt its offerings and procedures to maintain accreditations and approvals. Such adaptations may introduce quality assurance issues during transition that need to be addressed to ensure timely and accurate analyses and data reporting. Additionally, changes affecting radiation protection practices, including new understandings of the hazards of radiation exposure and amended regulations, may impact how the Company’s services are used by its customers and may, in some circumstances, cause the Company to alter its products and delivery of its services.

The Company’s medical device business is subject to many laws and government regulations governing the manufacture and sale of medical devices, including the FDA’s 510(k) clearance process.

IZI’s products are medical devices that are subject to extensive regulation in the U.S. by the federal government, including by the FDA. The FDA regulates virtually all aspects of a medical device’s design, development, testing, manufacturing, labeling, storage, record keeping, adverse event reporting, sale, promotion, distribution and shipping. The Company must report to the FDA when evidence suggests that one of its devices may have caused or contributed to death or serious injury or has malfunctioned and the device or a similar device would be likely to cause or contribute to death or serious injury if the malfunction were to recur. If such adverse event occurred, the Company could incur substantial expense and harm to its reputation and the Company’s business and results of operations could be adversely affected.

Before a new medical device can be marketed in the U.S., it must first receive either premarket approval or 510(k) clearance from the FDA, unless an exemption exists. The same rule applies when a manufacturer plans to market a medical device for a new use. The process can be costly and time-consuming. The FDA is expected to respond to a section 510(k) notification in 90 days, but often takes much longer. The premarket approval process usually takes six months to three years, but may take longer. The Company cannot assure that any new medical devices or new use for an existing medical device that IZI develops will be cleared or approved in a timely or cost-effective manner, if cleared or approved at all. Even if such devices are cleared or approved, the products may not be cleared or approved for all indications. Because medical devices may only be marketed for cleared or approved indications, this could significantly limit the market for that product and may adversely affect the Company’s results of operations.

Currently, all IZI medical devices have been cleared through the 510(k) clearance process or are exempt from this requirement. Any modification to a 510(k) device that could significantly affect its safety or efficacy, or that would constitute a significant change in its intended use, will require a new clearance process. Any modification to an exempt device could potentially subject the exempt device to the 510(k) clearance requirements. The FDA requires device manufacturers to make their own determination regarding whether a modification requires a new clearance; however, the FDA can review and invalidate a manufacturer’s decision not to file for a new clearance. The Company cannot guarantee that the FDA will agree with its decisions not to seek clearances for particular device modifications or that it will be successful in obtaining 510(k) clearances for modifications. Any such additional clearance processes with the FDA could delay the Company’s ability to market a modified product and may adversely affect the Company’s results of operations.

The FDA may change its policies, adopt additional regulations, or revise existing regulations, in particular relating to the 510(k) clearance process.

The FDA also may change its policies, adopt additional regulations, or revise existing regulations, each of which could prevent or delay premarket approval or 510(k) clearance of a device, or could impact the Company’s ability to market its currently cleared devices. The Company anticipates significant changes in the near future that will affect the way the 510(k) clearance program will operate. On August 3, 2010, the FDA released for public comment two internal working group reports with numerous recommendations to improve the 510(k) process and utilize science in regulatory decision making to encourage innovation yet maintain predictability of the clearance

process. In July, 2011, the Institute of Medicine, which was asked by the FDA to evaluate and make recommendations on the 510(k) program, released its report entitled “Medical Devices and the Public’s Health, The FDA 510(k) Clearance Process.” The report contained numerous and broad recommendations that, if followed, will have a significant impact on the medical device industry. Also in July, 2011, the FDA issued a draft guidance titled “510(k) Device Modifications: Deciding When to Submit a 510(k) for a Change to an Existing Device.” This draft guidance document was withdrawn on July 17, 2012 in accordance with Section 510(n)(2)(B) of the Federal Food, Drug, and Cosmetic Act as amended by Food and Drug Administration Safety and Innovation Act. An existing 1997 guidance on the same topic therefore remains in effect, but any future reforms could require the Company to file new 510(k)s and could increase the total number of 510(k)s to be filed. The Company cannot predict what effect these reforms will have on its ability to obtain 510(k) clearances in a timely manner. The Company also cannot predict the nature of other regulatory reforms and their resulting effects on its business.

The Company’s medical device business is subject to unannounced inspections by the FDA to determine our compliance with FDA requirements.

FDA inspections can result in inspectional observations on FDA’s Form-483, warning letters or other forms of more significant enforcement action. More specifically, if FDA concludes that the Company is not in compliance with applicable laws or regulations, or that any of IZI’s medical devices are ineffective or pose an unreasonable health risk, the FDA could:

·	require the Company to notify health professionals and others that its devices present unreasonable risk of substantial harm to public health;

·	order the Company to recall, repair, replace or refund the cost of any medical device that it manufactured or distributed;

·	detain, seize or ban adulterated or misbranded medical devices;

·	refuse to provide the Company with documents necessary to export its products;

·	refuse requests for 510(k) clearance or premarket approval of new products or new intended uses;

·	withdraw 510(k) clearances or premarket approvals that are already granted;

·	impose operating restrictions, including requiring a partial or total shutdown of production;

·	enjoin or restrain conduct resulting in violations of applicable law pertaining to medical devices; and/or

·	assess criminal or civil penalties against the Company’s officers, employees or the Company.

If the FDA concludes that the Company failed to comply with any regulatory requirement during an inspection, it could have a material adverse effect on its business and financial condition. The Company could incur substantial expense and harm to its reputation and its ability to introduce new or enhanced products in a timely manner could be adversely affected.

The current United States and state health reform legislative initiatives could adversely affect our operations and business condition.

In both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the health care system in ways that might affect the Company’s business. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the Health Care Reform Law, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. This legislation includes reforms and reductions that could affect Medicare reimbursements and health insurance coverage for certain services and treatments. Effective January 1, 2013, The Health Reform Law also imposed a 2.3% excise tax on the sale of certain medical devices by manufacturers or importers in the U.S. The Health Reform Law continues to be implemented, including with the new American Health Benefit Insurance Exchanges and their qualified health plans, which are scheduled to begin coverage on January 1, 2014. Some states also have pending health reform legislative initiatives. Further, the Joint Select Committee on Deficit Reduction, which was created by the Budget Control Act of 2011, concluded its work in November 2011, and issued a statement that it was not able to make a bipartisan agreement, thus triggering the sequestration process. The sequestration process combined with past and

potential future government shutdowns have resulted and may result in spending reductions and have and could result in reduced Medicare, Medicaid and other Federal health care reimbursements for the Company’s services and products. Changes in reimbursements and coverages, including risk-sharing arrangements and quality-based reimbursement initiatives, could adversely affect hospitals and other medical services and products providers, which could result in reduced demand for certain services and products offered by the Company, including services offered by its Medical Physics business and products manufactured by its Medical Products business. The Company will not know the full effects of the Health Care Reform Law until applicable federal and state agencies issue regulations or guidance under the new law. The Company cannot predict whether or when future healthcare reform initiatives at the Federal or state level or other initiatives affecting its business will be proposed, enacted or implemented or what impact those initiatives may have on its business, financial condition or results of operations. The Company’s customers and the other entities with which it has a business relationship could react to these initiatives and the uncertainty surrounding these proposals by curtailing or deferring investments, including those for the Company’s services and products.

The applicable healthcare fraud and abuse laws and regulations, along with the increased enforcement environment, may lead to an enforcement action targeting the Company, which could adversely affect our business.

The medical device business recently acquired by the Company is subject to healthcare fraud and abuse laws and regulations including, but not limited to, the Federal Anti-Kickback Statute, state anti-kickback statutes, the Federal False Claims Act, and state false claims acts. Additionally, to the extent the Company maintains financial relationships with physicians and other healthcare providers, the Company may be subject to Federal and state physician payment sunshine laws and regulations, which require the Company to track and disclose these financial relationships. These and other laws regulate interactions amongst health care entities and with sources of referrals of business, among other things. The Federal Anti-Kickback Statute is a criminal statute that imposes substantial penalties on persons or entities that offer, solicit, pay or receive payments in return for referrals, recommendations, purchases or orders of items or services that are reimbursable by Federal healthcare programs. The False Claims Act imposes liability on any person or entity that submits or causes to be submitted a claim to the Federal government that he or she knows (or should know) is false. The Health Reform Law further provides that a claim submitted for items or services, the provision of which resulted from a violation of the Anti-Kickback Statute, is “false” under the False Claims Act and certain other false claims statutes.

The Company may be subject to liability under these laws based on the activities of its recently acquired medical device company for its conduct prior to acquisition and may also be subject to liability for any future conduct that is deemed by the government or the courts to violate these laws. Additionally, over the past ten years, partially as the result of the passage of the Health Insurance Portability and Accountability Act of 1996 and of the Health Reform Law, the government has pursued an increasing number of enforcement actions. This increased enforcement environment may increase scrutiny of the Company, directly or indirectly, and could increase the likelihood of an enforcement action targeting the Company. The Company’s Medical Products segment has entered into complex distribution and collaboration agreements, as well as purchase agreements with a number of its customers, including parties that bill Federal healthcare programs for the Company’s products, which may be subject to government scrutiny. Finally, to the extent that any of the agreements are breached or terminated, the Company’s medical device business may experience a decrease in sales, and accordingly, revenue. In addition, to the extent that its customers, many of whom are providers, may be affected by this increased enforcement environment, the Company’s business could correspondingly be affected. It is possible that a review of the Company’s business practices or those of its customers by courts or government authorities could result in a determination with an adverse effect on its business. The Company cannot predict the effect of possible future enforcement actions on the Company.

Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates.

The Company is subject to income and other taxes in the U.S. and several foreign jurisdictions. Significant judgment is required in evaluating our provision for income taxes. During the ordinary course of business, there are many transactions for which the ultimate tax determination is uncertain. For example, there could be changes in the valuation of our deferred tax assets and liabilities; or changes in the relevant tax, accounting, and other laws, regulations, principles and interpretations. The Company is subject to audits in various jurisdictions, and such

jurisdictions may assess additional tax against us. Although the Company believes our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals. The results of an audit or litigation, or the effects of a change in tax policy in the U.S. or international jurisdictions where we do business, could have a material effect on our operating results in the period or periods for which that determination is made.

As a portion of our business is conducted outside of the United States, adverse international developments could negatively impact our business and results of operations.

The Company conducts business in numerous international markets such as Australia, Brazil, Canada, China, France, Japan, Mexico, Sweden, Turkey and the United Kingdom. Foreign operations are subject to a number of special risks, including, among others, currency exchange rate fluctuations; disruption in relations; political and economic unrest; trade barriers; exchange controls; expropriation; and changes in laws and policies, including those governing foreign owned operations.

Fluctuations in currency exchange rates could adversely affect our results.

The Company is exposed to market risk, including changes in foreign currency exchange rates. The financial statements of the Company’s non-U.S. subsidiaries are remeasured into U.S. dollars using the U.S. dollar as the reporting currency. To date, the market risk associated with foreign currency exchange rates has not been material in relation to the Company’s financial position, results of operations or cash flows. These risks could increase, however, as the Company expands in international markets.

Several of our current and potential competitors have significantly greater resources and increased competition could impair sales of our products.

The Company competes on the basis of advanced technologies, competent execution of these technologies, the quality, reliability and price of its services and its prompt and responsive performance. In much of the world, radiation measurement activities are conducted by a combination of private entities and governmental agencies. The Company’s primary radiation measurement and medical physics competitor in the U.S., Global Dosimetry Solutions, a division of Mirion Technologies, is large, has substantial resources, and has been particularly active in recent years in soliciting business from the Company’s customers. IZI generally competes against a limited number of smaller companies. Two of its primary competitors are a division of Roper Industries, Inc., and Medtronics, each of which is a significant competitor with substantial resources.

Our failure to attract, motivate and retain qualified and key personnel to support our business may have a material adverse effect on our business plans, prospects, results of operations and financial condition.

The Company’s success depends, in large part, upon the talent and efforts of key individuals including highly skilled scientists, physicists and engineers, as well as experienced senior management, sales, marketing and finance personnel. Competition for these individuals is intense and there can be no assurance that the Company will be successful in attracting, motivating, or retaining key personnel. The loss of the services of one or more of these senior executives or key employees, or the inability to continue to attract these personnel may have a material effect on its business plans, prospects, results of operations and financial condition. The Company’s continued ability to compete effectively depends on its ability to attract new skilled employees and to retain and motivate its existing employees.

The Medical Physics business involves the delivery of professional services and is highly labor-intensive. Its success depends largely on its general ability to attract, develop, motivate and retain highly skilled licensed medical physicists (“physicists”). Further, the Company must successfully maintain the right mix of physicists with relevant experience and skill sets as the Company continues to grow, as it expands into new service offerings, and as the market evolves. The loss of a significant number of its physicists, the inability to attract, hire, develop, train and retain additional skilled personnel, or not maintaining the right mix of professionals could have a serious negative effect on the Company, including its ability to manage, staff and successfully complete its existing engagements and

obtain new engagements. Qualified physicists are in great demand, and the Company faces significant competition for both senior and junior physicists with the requisite credentials and experience. The Company’s principal competition for talent comes from other outsourced medical physicist firms, hospitals and free-standing radiation therapy centers. Many of these competitors may be able to offer significantly greater compensation and benefits or more attractive lifestyle choices, career paths or geographic locations than those of the Company. Therefore, the Company may not be successful in attracting and retaining the skilled physicists it requires to conduct and expand its operations successfully. Increasing competition for these revenue-generating medical physicists may also significantly increase the Company’s labor costs, which could negatively affect its margins and results of operations.

We could be subject to professional liability lawsuits, some of which we may not be fully insured against or reserved for, which could adversely affect our financial condition and results of operations.

In recent years, physicians, hospitals and other participants in the healthcare industry have become subject to an increasing number of lawsuits alleging medical malpractice and related legal theories such as negligent hiring, supervision and credentialing, and vicarious liability for acts of their employees or independent contractors. In addition, the level and effect of radiation being administered by certain radiation equipment is also attracting increased scrutiny and giving rise to patient safety claims. Many of these lawsuits involve large claims and substantial defense costs. As the Company increases its presence in the healthcare industry, through the Medical Physics business, it could be exposed to litigation or subject to fines, penalties or suspension of services relating to the compliance with regulatory requirements.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company owns three adjacent buildings totaling approximately 59,000 square feet in Glenwood, Illinois, about 30 miles south of Chicago, leases a 24,000 square foot warehouse and leases 6,100 square feet of office space in Chicago. The properties house the Company’s administrative offices, information technology resources, and laboratory, assembly and reading operations. The properties and equipment of the Company are in good condition and, in the opinion of management, are suitable and adequate for the Company’s operations. For its Radiation Measurement operations, the Company leases a crystal growth facility in Stillwater, Oklahoma and maintains laboratories in Australia, Brazil, China, France, Mexico, Sweden, and Turkey, as well as a sales office in England. The Company’s joint venture in Japan, Nagase-Landauer, owns a manufacturing facility which began operating in April 2010. The Company leases offices in New York, North Carolina and Missouri for its Medical Physics operations, and leases manufacturing and office space in Maryland for its Medical Products operations.

Item 3. Legal Proceedings

The Company is a party, from time to time, to various legal proceedings, lawsuits and other claims arising in the ordinary course of its business. The Company does not believe that any such litigation pending as of September 30, 2013, if adversely determined, would have a material effect on its business, financial position, results of operations, or cash flows.

Item 4. Mine Safety Disclosures

Not Applicable

PART II

(Dollars in thousands, except per share data)

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities

The Company’s common stock is traded on the New York Stock Exchange under the trading symbol LDR. The following table indicates the reported high and low market prices of the Company’s common stock and dividends paid per share for each quarterly period during the last two fiscal years:



Year	Quarter		High		Low		Dividends Paid Per Share
2013
	First	$	63.85	$	54.48	$	0.55
	Second	$	66.04	$	55.70	$	0.55
	Third	$	57.35	$	48.21	$	0.55
	Fourth	$	51.73	$	45.89	$	0.55
2012
	First	$	53.40	$	45.69	$	0.55
	Second	$	60.95	$	50.87	$	0.55
	Third	$	57.74	$	47.56	$	0.55
	Fourth	$	61.93	$	54.79	$	0.55

The Company expects to continue paying regular quarterly cash dividends, although there is no assurance as to future dividends because they depend on future earnings, capital requirements and financial condition. In December 2013, the Board of Directors declared a fiscal 2014 first quarter cash dividend of $0.55 per common share.

As of November 28, 2013, there were 273 shareholders of record.

Issuer Purchases of Equity Securities



Period	Total Number of Shares Purchased^(a)		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, 2012	-	$	-	-	-
November 1 – November 30, 2012	1,100		59	-	-
December 1 – December 31, 2012	9,715		58	-	-
Total for quarter ended December 31, 2012	10,815	$	58	-	-
January 1 – January 31, 2013	-		-	-	-
February 1 – February 29, 2013	88		59	-	-
March 1 – March 31, 2013	-		-	-	-
Total for quarter ended March 31, 2013	88	$	59	-	-
April 1 – April 30, 2013	-		-	-	-
May 1 – May 31, 2013	-		-	-	-
June 1 – June 30, 2013	-		-	-	-
Total for quarter ended June 30, 2013	-	$	-	-	-
July 1 – July 31, 2013	249		48	-	-
August 1 – August 31, 2013	410		47	-	-
September 1 – September 30, 2013	4,987		51	-	-
Total for quarter ended September 30, 2013	5,646	$	51	-	-

(a)

This column includes the deemed surrender of existing shares of the Company’s 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.

The Company funds its share repurchases with cash on hand and cash generated from operations.

Performance Graph

The following graph reflects a comparison of the cumulative total return (change in stock price plus reinvested dividends) assuming $100 invested in: (a) Landauer’s common stock, (b) a group of detection/test and measurement companies composed of ticker symbols LDR, ES, OSIS, VAR, ASEI, (c) the S&P 600 industry index represented by a group of health care services companies, (d) a group of life science tool companies composed of ticker symbols LDR, QGEN, SIAL, BRKR, PKI, TMO, A, WAT, LIFE, FEIC and MTD and (e) the S&P 600 industry index represented by a group of health care services companies during the period from September 30, 2008 through September 30, 2013. The comparisons in the following table are historical and are not intended to forecast or be indicative of possible future performance of Landauer’s common stock.



	Value of Investment at September 30,
(Dollars)	2008		2009		2010		2011		2012		2013
Landauer, Inc.	$	100	$	78	$	93	$	76	$	96	$	85
Detection/Test and Measurement		100		78		104		89		110		130
S&P Smallcap 600 Index		100		90		102		102		136		179
Life Science Tools		100		91		102		101		122		173
S&P Health Care Services		100		99		101		101		151		175

Item 6. Selected Financial Data

Five Year Selected Financial Data

Landauer, Inc. and Subsidiaries

For the Years Ended September 30,



(Dollars in Thousands, Except per Share)	2013		2012		2011		2010		2009
Operating results
Net revenues	$	150,200	$	152,400	$	120,458	$	114,367	$	93,827
Operating income⁽¹⁾		4,120		28,170		34,883		34,637		32,518
Net income attributable to Landauer, Inc.		4,836		19,270		24,538		23,674		23,366
Basic net income per share	$	0.50	$	2.04	$	2.60	$	2.53	$	2.51
Diluted net income per share	$	0.49	$	2.03	$	2.58	$	2.52	$	2.49
Weighted average diluted shares outstanding		9,482		9,437		9,477		9,349		9,366
Cash dividends per share	$	2.20	$	2.20	$	2.20	$	2.15	$	2.10
Total assets	$	276,833	$	302,125	$	168,656	$	150,696	$	125,205
Short-term debt	$	-	$	-	$	19,805	$	12,504	$	-
Long-term debt	$	142,785	$	141,347	$	-	$	-	$	-

(1)In fiscal 2013 results are impacted by goodwill impairment of $22,700.

Non-GAAP Financial Measures

The tables below include financial measures of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share. These are non-generally accepted accounting principles (“GAAP”) measures. Management believes that such measures supplement evaluations using operating income, net income and diluted earnings per share and other GAAP measures, and are a useful indicator for investors. These indicators can help readers gain a meaningful understanding of the Company’s core operating results and future prospects without the effect of non-recurring and non-cash items and the Company’s ability to generate cash flows from operations that are available for taxes, capital expenditures and debt repayment. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the U.S.

The Company uses these non-GAAP financial measures for internal budgeting and other managerial purposes, such as when publicly providing the Company’s business outlook and as a measurement for potential acquisitions. A limitation associated with Adjusted EBITDA is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s business. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. Management compensates for these limitations by also relying on the comparable GAAP financial measure of operating income, which includes depreciation and amortization.

These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP, but they should not be considered a substitute for, or superior to, GAAP results. The Company intends to continue to provide these non-GAAP financial measures as part of its future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in the Company’s financial reporting.



	For the Years Ended September 30,
(Dollars in Thousands, Except per Share)	2013		2012		2011		2010		2009
Adjusted EBITDA
Net income attributable to Landauer, Inc.	$	4,836	$	19,270	$	24,538	$	23,674	$	23,366
Add back:
Net financing costs		3,744		2,969		270		-		-
Depreciation and amortization		14,924		11,631		7,991		6,681		5,845
Provision for income taxes		(1,216)		8,040		11,527		11,893		11,071
Earnings before interest, taxes, depreciation and amortization (EBITDA)		22,288		41,910		44,326		42,248		40,282
Adjustments:
Non-cash stock-based compensation		2,634		2,434		1,481		1,287		2,152
IT platform enhancements		206		2,155		1,185		963		837
Acquisition, reorganization and nonrecurring costs		1,392		4,299		1,489		2,028		416
Non-cash goodwill impairment charge		22,700		-
Abandonment charges		-		3,443		-		-		-
Pension curtailment and transition		-		-		-		-		2,236
Sub-total adjustments		26,932		12,331		4,155		4,278		5,641
Adjusted EBITDA	$	49,220	$	54,241	$	48,481	$	46,526	$	45,923

Adjusted Net Income
Net income attributable to Landauer, Inc.	$	4,836	$	19,270	$	24,538	$	23,674	$	23,366
Sub-total adjustments		26,932		12,331		4,155		4,278		5,641
Income benefit (taxes) on adjustments		7,299		(3,527)		(1,305)		(1,412)		(1,799)
Adjustments, net		34,231		8,804		2,850		2,866		3,842
Adjusted net income	$	39,067	$	28,074	$	27,388	$	26,540	$	27,208
Adjusted Net Income per Diluted Share	$	4.12	$	2.97	$	2.89	$	2.84	$	2.90

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with Item 6. “Selected Financial Data” and our annual audited consolidated financial statements and related notes thereto. 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” and Item 1A. “Risk Factors.”

In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial information but not presented in our financial statements prepared in accordance with US GAAP. Some of this data is considered “non-GAAP financial measures.” For such measures, we have provided supplemental explanations and reconciliations in Item 6. “Selected Financial Data” under the heading “Non-GAAP Financial Measures.”

Overview

The Company operates in three reportable segments: Radiation Measurement, Medical Physics and Medical Products.

The Company’s Radiation Measurement segment is a mature business and growth in numbers of customers is modest. In recent years, the Company’s strategy has been to expand into new international markets, primarily by partnering with existing dosimetry service providers with a prominent local presence. In addition, the Company has been developing new platforms and formats for its OSL technology, such as InLight®, Radwatch® and Radlight® to gain access to markets where the Company previously did not have a significant presence, such as smaller in-house and commercial laboratories, nuclear power facilities, tactical military and first responder measurement and hospitals to support measurement of patient exposure to radiation. Revenue growth in recent years has occurred as a result of entry into new markets through joint ventures and acquisitions, modest unit growth, sale of InLight equipment and badges, Radwatch-Radlight, and new ancillary opportunities to obtain regular price increases from its customers. The continued economic downturn and uncertain impact of healthcare reform has resulted in increased pricing pressure with the Company's healthcare customer base, which is expected to continue into the future.

Through its LMP operations, the Company provides therapeutic and imaging physics services to the medical community. LMP is the leading nationwide provider of medical physics services to hospitals, free standing imaging centers and radiation therapy centers. Medical physics services is a large fragmented market. Market growth is expected to be driven by the utilization of radiation in the provision of healthcare; trends towards outsourcing of services in healthcare settings; and a tightening domestic supply of qualified medical physicists. The Company reports these operating results in the Medical Physics reporting segment.

In November 2011, the Company completed the acquisition of IZI and formed the Medical Products segment. IZI is a leading global provider of high quality medical consumable accessories used in radiology, radiation therapy, and image guided surgery procedures. IZI’s customer base includes buyers at several stages along the supply chain including distributors, manufacturers of image guided navigation equipment, and product end users such as community hospitals, radiation oncology clinics, mammography clinics, and imaging centers. IZI’s medical accessories range from consumables used with MRI, CT, and mammography technologies to highly engineered passive reflective markers used during image guided surgery procedures. In alignment with treatment trends which increasingly utilize radiation for the diagnosis and treatment of disease, as well as growing demand for minimally invasive procedures, IZI products provide the ability to increase procedural accuracy while decreasing procedural time.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that management make assumptions and estimates that affect the results of operations and the amounts of assets and liabilities reported in the financial statements as well as related disclosures. Critical accounting policies are those that are most important to the portrayal of a company’s financial condition and results, 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. Below are the critical accounting policies which have been applied in the preparation of the Company’s financial statements and accompanying notes.

Revenue Recognition and Deferred Contract Revenue

The source of Radiation Measurement segment revenues for the Company is radiation measuring and measurement services including other services incidental to measuring and monitoring. The measuring and monitoring services provided by the Company to its customers are of a subscription nature and are continuous. The Company views its business in the Radiation Measurement segment as services provided to customers over a period of time and the wear period is the period over which those services are provided. Badge production, wearing of badges, badge analysis, and report preparation are integral to the benefit that the Company provides to its customers. These services are provided to customers on an agreed-upon recurring basis (monthly, bi-monthly, quarterly, semi-annually or annually) that the customer chooses for the wear period. Revenue is recognized on a straight-line basis, adjusted for changes in pricing and volume, over the wear period as the service is continuous and no other discernible pattern of recognition is evident. Revenues are recognized over the periods in which the customers wear the badges irrespective of whether invoiced in advance or in arrears. To a lesser degree the company does provide equipment and sells badges to smaller distributors and joint ventures. These product sales are recognized at time of shipment.

The Company, through its Medical Physics segment, offers full scope medical physics services to hospitals and radiation therapy centers. Services offered include, but are not limited to, clinical physics support in radiation oncology, commissioning services, special projects support and imaging physics services. Delivery of the medical physics services can be of a contracted, recurring nature or as a discrete project with a defined service outcome. Recurring services often are provided on the customer's premises by a full-time employee or fraction of a full-time employee. These services are recognized as revenue on a straight-line basis over the life of the contract. Fee for service projects’ revenue is recognized when the service is delivered.

Contracted services are billed on an agreed-upon recurring basis, either in advance or arrears of the service being delivered. Customers may be billed monthly, quarterly, or at some other regular interval over the contracted period. The amounts recorded as deferred revenue represent invoiced amounts in advance of delivery of the service. Management believes that the amount of deferred contract revenue fairly represents remaining business activity with customers invoiced in advance. Fee for service revenue is typically associated with much shorter contract periods, or with discrete individual projects. Invoicing is usually done after completion of the project and customer acceptance thereof.

The Medical Products segment offers a broad product portfolio ranging from consumables used with MRI, CT, and Mammography technologies to highly engineered consumable passive reflective markers used during Image Guided Surgery procedures. The Company recognizes revenue upon product shipment, provided that a purchase order has been received or a contract has been executed, there are no uncertainties regarding customer acceptance, the sales price is fixed and determinable and collection is deemed probable.

The amounts recorded as deferred contract revenue in the consolidated balance sheets represent invoiced amounts in advance of delivery of the service, and are net of services rendered through the respective consolidated balance sheet date. Such advance billings amounted to $13.2 million and $14.9 million, respectively, as of September 30, 2013 and 2012.

Property, Plant & Equipment and Other Assets

Maintenance and repairs are charged to expense and renewals and betterments are capitalized. Plant and equipment and other assets, primarily dosimetry badges, are recorded at cost and are depreciated or amortized on a straight-line basis over the estimated useful lives, which are primarily 30 years for buildings, three to eight years for equipment, five to ten years for internal software and thirty months to eight years for other assets. The Company assesses the carrying value and the remaining useful lives of its property, plant, equipment, and other assets when events or circumstances indicate the carrying value may not be recoverable or the estimated useful life may no longer be appropriate. Factors that could trigger this review include competitive conditions, government regulations and technological changes.

The Company capitalizes costs of software which is acquired, internally developed, or modified solely to meet the Company’s internal needs. In accordance with Financial Accounting Standards Boards (“FASB”) authoritative guidance, internal and external costs incurred to develop internal-use computer software during the application development stage are capitalized. Costs incurred during the preliminary project stage as well as training costs and

maintenance costs during the post implementation-operation stage are expensed. Capitalized costs of software amounted to $2.4 million and $10.3 million for fiscal 2013 and 2012, respectively.

Goodwill and Other Intangible Assets

The Company’s intangible assets include purchased customer lists, licenses, patents, trademarks, tradenames and goodwill. Purchased customer lists are recorded at cost and are amortized on a straight-line basis over estimated useful lives, which range from 10 to 15 years. Patents and licenses are also recorded at cost and are amortized on a straight-line basis over their useful lives, which range from 10 to 20 years. Tradenames have both definite lives up to 10 years and indefinite lives. The Company acquired goodwill primarily from its acquisitions of Landauer-Europe, SAPRA-Landauer, LMP and IZI as well as other smaller investments. Goodwill has an indefinite life.

FASB authoritative guidance requires that goodwill and certain intangible assets with indefinite lives be reviewed annually for impairment. The Company has three segments (reporting units), Radiation Measurement, Medical Physics and Medical Products. The Company performs an impairment test for each of its segments with goodwill annually. An impairment test is also performed for goodwill and other intangible assets that are not being amortized whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Triggering events include, but are not limited to, a current-period operating or cash flow loss; a product, technology, or service introduced by a competitor; or a loss of key personnel. When such events or changes in circumstances occur, the Company performs a financial analysis of future undiscounted cash flows projections by asset or asset group.

Pursuant to our policy, the Company performed the annual goodwill impairment test as of September 30, 2012 and determined that no impairment of goodwill existed as of that date. During the third quarter of fiscal 2013, it became apparent that recent changes implemented to the Medical Products segment had not yet achieved anticipated upward sales trends to the extent forecasted. Early budget reviews also indicated future sales growth may be less than expected. The Company updated the forecasted results of operations for the Medical Products operating segment based on the third quarter fiscal 2013 financial results and the best estimates of future operations. The updated forecast reflected a slower growth in revenues for the Medical Products segment due to anticipated continued pricing pressures from certain competitors greater than the anticipated growth from existing and new product sales. As a result, the Company concluded a triggering event occurred, and in connection with the preparation of the financial statements for the quarter ended June 30, 2013, the Company performed an impairment analysis with respect to the carrying value of goodwill in the Medical Products segment.

In accordance with FASB ASC Topic 350, the Company aggregates their business components into segments and test for goodwill impairment. Goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is to identify potential impairment by comparing the fair value of a segment with its net book value (or carrying amount), including goodwill. If the fair value of a segment exceeds its carrying amount, goodwill of the segment is considered not to be impaired and the second step of the impairment test is unnecessary. If the carrying amount of the segment exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the segment’s goodwill with the carrying amount of that goodwill. If the carrying amount of the segment’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the segment is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the segment had been acquired in a business combination, and the fair value of the segment was the purchase price paid to acquire the segment.

Based on the result of the first step of the goodwill impairment analysis, the Company determined that the fair value of the Medical Products segment was less than its carrying value as of June 30, 2013 and, as such, the Company applied the second step of the goodwill impairment test to this segment. Based on the result of this second step of the goodwill impairment analysis, the Company recorded a $22.7 million non-cash pretax charge to reduce the carrying value of goodwill in the Medical Products segment. As a result of the charge recognized during the third quarter of fiscal 2013, the carrying amount of the goodwill in the Medical Products segment was reduced to $41.4 million at June 30, 2013. Determining the fair value of a segment requires the Company’s management to make significant judgments, estimates and assumptions. These estimates and assumptions could have a significant

impact on whether or not an impairment charge is recognized and also the magnitude of any such charge. In estimating the fair value of the Medical Products segment, the Company considered the income approach and the market approach. The income approach recognizes that the value of an asset is premised upon the expected receipt of future economic benefits. This approach involves projecting the cash flows the asset is expected to generate. Fair value indications are developed in the income approach by discounting expected future cash flows available to the investor at a rate which reflects the risk inherent in the investment. The market approach is primarily comprised of comparable companies. This approach compares the subject segment to selected reasonably similar companies whose securities are actively traded in the public markets. Comparing revenue growth and EBITDA margins allows the Company to project an indicated range of fair values. In determining the fair value of the Medical Products segment, the Company has relied on a combination of the income approach and the market approach. For companies providing services similar to those provided by the Company, the income and market approaches will generally provide the most reliable indications of value because the value of such companies is more dependent on their ability to generate earnings than on the value of the individual assets.

In the income approach, the Company utilized a discounted cash flow analysis, which involved estimating the expected after-tax cash flows that will be generated by the Medical Products segment and then discounting these cash flows to present value reflecting the relevant risks associated with the segment and the time value of money. This approach requires the use of significant estimates and assumptions, including long-term projections of future cash flows, market conditions, discount rates reflecting the risk inherent in future cash flows, revenue growth, perpetual growth rates and profitability, among others. In estimating future cash flows for the Medical Products segment, the Company relied on an internally generated 10 year forecasts built around previous estimates and modified for recent weaknesses and business assumptions. The Company’s forecast is based on the Company’s historical experience, current backlog, expected market demand, and other industry information. The Company’s discounted cash flow analysis assumed an 11% weighted average cost of capital discount rate considering the segment as an independent standalone entity not part of the Company’s enterprise. In the market approach, we selected reasonably similar companies whose securities are actively traded in the public markets. Comparing revenue growth and EBITDA margins allows the Company to project an indicated range of fair values. These multiples were then applied to the operating data for the Medical Products segment and adjusted for factors to arrive at an indication of value.

While the Company believes that the estimates and assumptions underlying the valuation methodology are reasonable, different estimates and assumptions could result in different outcomes. The table below presents the decrease in the fair value of the Medical Products segment from the fourth quarter fiscal 2013 model given a one percent increase in the discount rate or a one percent decrease in the long term assumed annual revenue growth rate.



(Dollars in Thousands)		Decrease in Fair Value of the Medical Products Segment
Discount rate - increase by 1%	$	8,000
Long-term growth rate - decrease by 1%	$	4,000

As described above, a goodwill impairment analysis requires significant judgments, estimates and assumptions. The results of this impairment analysis are as of a point in time. There is no assurance that the actual future earnings or cash flows of the Company’s segments will not decline significantly from our projections. Any significant decline in our operations could result in additional goodwill impairment charges. After taking into account the $22.7 million impairment charge, the carrying values of goodwill for each of our segments as of September 30, 2013 are as follows:



(Dollars in Thousands)	Radiation Measurement		Medical Physics		Medical Products		Total
Goodwill at September 30, 2012	$	20,037	$	22,611	$	64,069	$	106,717
Effects of foreign currency		419		0		0		419
Accumulated goodwill impairment		0		0		(22,700)		(22,700)
Goodwill at September 30, 2013	$	20,456	$	22,611	$	41,369	$	84,436

Intangible assets represent purchased assets that lack physical substance but can be distinguished from goodwill. The Company’s intangible assets, net of accumulated amortization, totaled $37.6 million at September 30, 2013 and consist of customer lists, trademarks and trade names, licenses and patents as well as other intangibles. The Company uses valuation techniques in estimating the initial fair value of acquired intangible assets. These valuations are primarily based on the present value of the estimated net cash flows expected to be derived from the intangible assets, discounted for assumptions such as future customer attrition. The Company evaluates intangible assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Therefore, changes such as higher or earlier-than-expected customer attrition or obsolescence of technology may result in higher future amortization charges or an impairment charge for intangible assets. As part of the goodwill impairment analysis discussed above, the Company also reviewed the Medical Products segment intangible assets and did not identify any impairment. Information regarding the value of goodwill and other intangible assets is presented under the footnote “Goodwill and Other Intangible Assets” in Item 8 of this Annual Report on Form 10‑K.

Income Taxes

The Company estimates the income tax provision for income taxes that are currently payable, and records deferred tax assets and liabilities for the temporary differences in tax consequences between the financial statements and tax returns. Temporary differences result from, among other events, revenues, expenses, gains, or losses that are included in taxable income of an earlier or later year than the year in which they are recognized in financial income. These deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. To the extent that deferred tax assets will not likely be recovered from future taxable income, a valuation allowance is established against such deferred tax assets. The Company maintains cash indefinitely reinvested in foreign jurisdictions.

Management exercises significant judgment in the valuation of its current and deferred tax assets and liabilities. The Company recognizes the financial statement effects of its tax positions in its current and deferred tax assets and liabilities when it is more likely than not that the position will be sustained upon examination by a taxing authority. Management considers, among other factors, the Company’s current and past performance, the market environment in which the Company operates, and tax planning strategies. Further, the Company provides for income tax issues not yet resolved with federal, state, local, and foreign tax authorities. The Company assesses and updates its tax positions when significant changes in circumstances occur, which may cause a change in judgment about the likelihood of realizing the deferred items. Variations in the actual outcome of these future tax consequences could materially impact the Company’s financial position, results of operations or cash flows. Any change to the Company’s policy on cash indefinitely reinvested in foreign jurisdictions would not likely result in any significant incremental U.S. Federal and state income tax liability. Further information regarding the Company’s income taxes is contained under the footnote “Income Taxes” in Item 8 of this Annual Report on Form 10-K.

Defined Benefit Pension and Other Postretirement Benefit Plans

The pension expenses and benefit obligations recorded for the Company’s defined benefit plans are dependent on actuarial assumptions. The defined benefit pension and other postretirement benefit plans were frozen as of March 2009. These assumptions include discount rates, expected return on plan assets, interest costs, expected compensation increases, benefits earned, mortality rates, and other factors. Management reviews the plan assumptions on an annual basis to ensure that the most current, relevant information is considered. If actual results vary considerably from those that are expected or if future changes are made to these assumptions, the amounts recognized for these plans could change significantly.

The weighted-average assumed discount rates used to determine plan expenses were 3.77% for both pension and other benefits in fiscal 2013 and 4.60% for both pension and other benefits in fiscal 2012. For fiscal 2013 expense, the long-term rate of return of plan assets was 6.50%, unchanged from fiscal 2012. In establishing the rate, management considered the historical rates of return and the current and planned asset classes of the plan investment portfolio. The weighted-average discount rate used to determine benefit obligations at September 30, 2013 was 4.72% compared to the September 30, 2012 rate of 3.77%, adjusted to reflect the single rate that, when applied to the projected benefit disbursements from the plan, would result in the same discounted value as the array of rates that make up the Citigroup Pension Discount Curve as of September 30.

The Company recognizes on its balance sheet the amount by which the projected benefit obligations of its defined benefit plans exceed the fair value of plan assets. Subsequent changes in the funded status of the plans as a result of future transactions and events, amortization of previously unrecognized costs, and changes to actuarial assumptions are recognized as an asset or a liability and amortized as components of net periodic pension cost or accumulated other comprehensive income. An increase or decrease in the assumptions or economic events outside of management’s control could have a material effect on the Company’s results of operations or financial condition. Information regarding these plans is contained under the footnote “Employee Benefit Plans” in Item 8 of this Annual Report on Form 10-K.

Stock-Based Compensation

The Company measures and recognizes compensation cost at fair value for all stock-based awards, net of the estimated impact of forfeited awards. The Company has not granted stock options subsequent to fiscal 2005. The fair values of options were estimated using a Black-Scholes option pricing model. In addition to stock options, key employees and/or non-employee directors are eligible to receive performance shares and restricted stock. Upon the adoption of the Company’s Incentive Compensation Plan in February 2008, the fair value of performance shares and restricted stock granted under the new plan is based on the Company’s closing stock price on the grant date. The terms of performance share awards allow the recipients of such awards to earn a variable number of shares based on the achievement of the performance goals specified in the awards. Stock-based compensation expense associated with performance share awards is recognized based on management’s best estimates of the achievement of the performance goals specified in such awards and the resulting number of shares that are expected to be earned. The Company evaluates on a quarterly basis the progress towards achieving the performance criteria. The cumulative effect on current and prior periods of a change in the estimated number of performance share awards expected to be earned is recognized as compensation cost or as a reduction of cost in the period of the revised estimate. Compensation expense for restricted stock is recognized ratably over the vesting period.

Forfeitures of awards are estimated at the time of grant and stock-based compensation cost is recognized only for those awards expected to vest. The Company uses historical experience to estimate projected forfeitures. The Company recognizes the cumulative effect on current and prior periods of a change in the forfeiture rate, or actual forfeitures, as compensation cost or as a reduction of cost in the period of the revision. If revisions are made to management’s assumptions and estimates or if actual results vary considerably from those that are expected, stock-based compensation expense could change significantly, impacting the Company’s results of operations or financial condition. Further information regarding the Company’s stock-based awards is presented under the footnote “Stock-Based Compensation” in Item 8 of this Annual Report on Form 10‑K.

Results of Operations

Comparison of the Fiscal Years Ended September 30, 2013 and September 30, 2012

Revenues for fiscal 2013 were $150.2 million, a decrease of $2.2 million, or 1.4%, compared with revenues of $152.4 million for fiscal 2012. The Medical Products segment decreased by $4.0 million due to the decline in the Spherz selling price and shipments and the Radiation Measurement segment increased $1.9 million on higher international sales, primarily of equipment, offset by declines in domestic badge revenues.

Cost of sales for fiscal 2013 was $71.0 million, an increase of $5.6 million, or 8.6%, compared with cost of sales of $65.4 million for fiscal 2012. The cost of sales increase was due to the IT expenses related to the Company’s IT platform enhancement that went live a little over a year ago. Increased support costs of $3.2 million, increased IT systems depreciation of $1.3 million as well as international cost increases of $1.8 million on higher equipment shipments.

Selling, general and administrative expenses for fiscal 2013 were $51.0 million, a decrease of $0.1 million, compared with selling, general and administrative expenses of $51.1 million for fiscal 2012. Increases in customer service support of $1.0 million as well as increased IT systems depreciation of $1.0 million were offset by prior years IT system enhancement costs of $2.0 million. Service cost reductions in Medical Physics of $1.3 million offset increases in Medical Products of $0.7 million and Radiation Measurement of $0.3 million.

During the third quarter of fiscal 2013, it became apparent that anticipated revenue trends in our Medical Products segment were not being achieved to the extent forecasted. Early budget reviews also indicated future sales growth may be less than expected. The Company updated the forecasted results of operations for our Medical Products operating segment based on the most recent financial results and our best estimates of future operations. The updated forecast reflects a slower growth in revenues for the Medical Products segment due to anticipated continued pricing pressures from certain competitors greater than the anticipated growth from existing and new product sales. As a result of these lowered actual and forecasted results, the Company performed a goodwill impairment test, which indicated the value of the Medical Products goodwill was less than its book value. The Company recorded a $22.7 million pretax charge for the impairment of goodwill to reduce the carrying value of goodwill in the Company’s Medical Products segment. The impairment charge was non-cash in nature and does not affect the Company’s liquidity or debt covenant compliance.

Acquisition, reorganization and nonrecurring costs were $1.4 million and consisted of $0.6 million in corporate reorganization expenses, $0.4 million reserves for escheatment liability and $0.4 million of costs related to acquisitions.

Operating income for fiscal 2013 was $4.1 million, a decrease of $24.1 million, or 85.5%, compared with operating income of $28.2 million for fiscal 2012. The decrease in operating income was due primarily to the $22.7 million goodwill impairment charge to reduce the carrying value of goodwill in our Medical Products segment. The remaining variance of $1.0 million to prior year relates to Medical Products revenue decrease of $4.0 million offset by $1.9 million of increased Radiation Measurement revenue. Increased cost of sales due to the IT platform enhancement of $4.5 million and increased international costs of $1.8 million offset by cost savings of $0.8 million and selling, general and administrative expenses higher by $0.9 million.

Equity in income of joint ventures for fiscal 2013 was $3.9 million, an increase of $0.7 million, or 21.9%, compared with equity in income of joint ventures of $3.2 million for fiscal 2012. Interest expense for fiscal 2013 was $4.2 million, an increase of $0.9 million, or 27.2%, compared with interest expense of $3.3 million for fiscal 2012.

The effective tax rate was (27.2%), or ($1.2) million benefit, and 28.6%, or $8.0 million expense, for fiscal 2013 and 2012, respectively. The fiscal 2013 effective tax rate decreased due primarily to an increased realization of certain U.S. tax credits and mix of earnings by jurisdiction.

Net income for fiscal 2013 was $4.8 million, a decrease of $14.5 million, or 75.1%, compared with net income of $19.3 million for fiscal 2012. The decrease in net income was due primarily to a goodwill impairment charge of $22.7 million, decreased Medical Products revenue of $4.0 million offset by $1.9 million of increased Radiation Measurement revenue. Increased cost of sales was due primarily to the IT platform enhancement of $4.5 million and increased international costs of $1.8 million and higher selling, general and administrative expense of $0.9 million offset by cost savings of $0.8 million. Income taxes offset the decreases by $9.2 million.

EBITDA for fiscal 2013 was $22.3 million, a 46.8% decrease compared with $41.9 million in the prior year. The decrease was due primarily to a non-cash charge for goodwill impairment. Adjusted EBITDA for fiscal 2013 was $49.2 million, a 9.2% decrease compared with $54.2 million in the prior year. A reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Non-GAAP diluted earnings per share is included herein under Part II, Section 6.

Radiation Measurement Segment

Radiation Measurement revenues for fiscal 2013 were $109.8 million, an increase of $1.9 million, or 1.8%, compared with revenues of $107.9 million for fiscal 2012. Revenues increased $3.0 million primarily on higher international equipment sales of $3.0 million due to tenders in China and EMEA while domestic Inlight equipment decreases were offset by increases in Radwatch products. In addition, the segment had decreased domestic service badge revenue of $1.0 million and foreign exchange losses of $0.1 million.

Radiation Measurement operating income for fiscal 2013 was $22.4 million, an increase of $0.9 million, or 4.2%, compared with operating income of $21.5 million for fiscal 2012. The revenue increase of $1.9 million was partially offset by IT platform enhancement increases of $3.2 million, IT systems depreciation of $2.3 million and increased international equipment costs of $1.8 million on higher sales and increased customer service support of $1.0 million offset by prior year non-recurring acquisition costs of $3.2 million and asset abandonments of $2.5 million and prior year IT Platform expenses of $2.0 million and decreased material costs of $0.3 million.

Corporate expenses for shared functions are recognized in Radiation Measurement segment where they have been reported historically. Acquisition, reorganization and nonrecurring costs are not allocated to the segment. As the Company’s business model evolves in increased complexity, management may determine it will be necessary to change this reporting practice to reflect any appropriate allocations.

Medical Physics Segment

Medical Physics revenues were $30.9 million for both fiscal 2013 and 2012.

Medical Physics operating income for fiscal 2013 was $3.5 million, an increase of $2.2 million, or 169.2%, compared with operating income of $1.3 million for fiscal 2012. The increase in operating income was primarily due to operating efficiencies in the core Medical Physics business as well as segment administration cost reductions.

Medical Products Segment

Medical Products revenues for fiscal 2013 were $9.5 million, a decrease of $4.0 million, or 29.6%, compared with revenues of $13.5 million for fiscal 2012. The Medical Products segment decreased by $4.0 million due to the decline in the Spherz selling price and shipments. While the Company continues to experience pricing pressure on its Spherz product line, the Company currently anticipates that the planned expansion of certain other product lines in its Medical Products segment may mitigate the impact of the Spherz pricing pressure on the results of operations of its Medical Products segment.

Medical Products operating loss for fiscal 2013 was $21.8 million, a decrease of $27.1 million, or 511.3%, compared with operating income of $5.3 million for fiscal 2012. The decrease was primarily attributable to the third quarter goodwill impairment charge of $22.7 million and the revenue decrease of $4.0 million due to the decline in Spherz selling price and shipments and additional tradename amortization of $0.4 million.

Comparison of the Fiscal Years Ended September 30, 2012 and September 30, 2011

Revenues for fiscal 2012 were $152.4 million, an increase of $31.9 million, or 26.5%, compared with revenues of $120.5 million for fiscal 2011. The Medical Physics segment and the Radiation Measurement segment

contributed an increase of $10.3 million and $8.1 million, respectively. The contribution of the new Medical Products segment increased revenues by $13.5 million. Consolidated revenue for the fiscal year ended September 30, 2012 was negatively affected $2.0 million by currency fluctuation, as compared with the prior year, principally due to weakness in the Euro against the U.S. dollar.

Cost of sales for fiscal 2012 was $65.4 million, an increase of $17.9 million, or 37.6%, compared with cost of sales of $47.5 million for fiscal 2011. The increase in cost of sales was primarily driven by $8.3 million associated with acquired companies purchased subsequent to the prior year, $3.5 million in cost of sales associated with sales from the Company’s ongoing military and first responder initiatives, $1.5 million in cost of sales associated with international revenue increases, $0.7 million increase in depreciation related to the Company’s IT platform enhancements and the impact of the mix of lower margin equipment sales within Radiation Measurement. Gross margins were 57.1% for fiscal 2012, compared with 60.6% for fiscal 2011. The decrease in the gross margin rate was primarily due to a shift in the mix of cost of sales resulting from the overall growth of the Medical Physics segment, which has lower margins compared to the Radiation Measurement and Medical Products segments, along with lower margin equipment sales, including Radwatch System sales to the military and First Responder markets, in the Radiation Measurement segment.

Selling, general and administrative expenses for fiscal 2012 were $51.1 million, an increase of $14.5 million, or 39.7%, compared with selling, general and administrative expenses of $36.6 million for fiscal 2011. The selling, general and administrative expenses increase was due to $6.3 million associated with acquired companies purchased subsequent to the prior year, $2.4 million due to performance against incentive compensation plans associated with improved operating performance in fiscal 2012 versus targets, $1.7 million in expenses related to the Company’s IT platform enhancements, $1.5 million for investment in research and development in support of military and first responder initiatives, $1.4 million investment in customer facing organizations and $0.8 million for expenses supporting international growth.

For fiscal 2012, total operating expenses were $58.8 million compared to $38.1 million for fiscal 2011. Before $4.3 million of non-recurring acquisition expenses, $3.4 million for asset abandonments, $2.2 million of IT platform enhancement related expenses and $2.4 million of non-cash stock based compensation expenses, were $46.5 million, or 30.5% of total revenues for fiscal 2012. This compares with the $33.9 million, or 28.2% of total revenues, reported for fiscal 2011, before $1.5 million of non-recurring acquisition expenses, $1.2 million of IT platform enhancement related expenses, and $1.5 million of non-cash stock based compensation expenses.

Operating income for fiscal 2012 was $28.2 million, a decrease of $6.7 million, or 19.2%, compared with operating income of $34.9 million for fiscal 2011. The decrease in operating income was primarily driven by a $6.2 million increase in non-recurring acquisition and reorganization costs and asset abandonment charges incurred in fiscal 2012. An additional decline of $8.4 million in Radiation Measurement operating income, due primarily to the higher operating expenses, was partially offset by an increase in operating income of $1.8 million in the Medical Physics segment and the addition of the Medical Products segment which contributed $5.3 million in operating income. Operating income, adjusted for non-recurring acquisition and reorganization expenses, asset abandonment charges, IT platform enhancement related expenses, and non-cash stock based compensation expenses, for fiscal 2012 was $40.5 million, a 3.7% increase compared with operating income, adjusted for these items on a relative basis, of $39.0 million for fiscal 2011.

Equity in income of joint ventures for fiscal 2012 was $3.2 million, an increase of $1.0 million, or 45.2%, from the prior year. Other expense, including interest expense, for fiscal 2012 was $3.2 million, an increase of $2.9 million from the prior year, due to interest expense associated with borrowings to acquire IZI in the first fiscal quarter of 2012.

The effective tax rate was 28.6% and 31.4% for fiscal 2012 and 2011, respectively. The fiscal 2012 effective tax rate decreased due primarily to an increased realization of the Foreign Tax Credit and an increased research and development credit by a foreign affiliate.

Net income for fiscal 2012 was $19.3 million, a decrease of $5.2 million, or 21.5%, compared with $24.5 million for fiscal 2011. Excluding the costs associated with the acquisitions and reorganization costs, asset abandonment charges, IT platform enhancement and non-cash stock based compensation, adjusted net income was

$28.1 million, as compared to $27.4 million in the prior year. The resulting adjusted diluted earnings per share for the fiscal year ended September 30, 2012 were $2.97 per share, excluding $0.94 per diluted share of acquisition and reorganization costs, asset abandonment charges, IT platform enhancement, and non-cash stock based compensation expenses. This compares with $2.89 per share, excluding $0.31 per diluted share of acquisition, IT platform enhancement, and non-cash stock based compensation expenses, for the fiscal year ended September 30, 2011.

EBITDA for fiscal 2012 was $41.9 million, a 5.5% decrease compared with $44.3 million in the prior year. The decrease was due primarily to the increase in non-recurring acquisition and reorganization costs, asset abandonment charges, IT platform enhancement and non-cash stock based compensation expenses. Adjusted EBITDA for fiscal 2012 was $54.2 million, an 11.9% increase compared with $48.5 million in the prior year. A reconciliation of net income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Non-GAAP diluted earnings per share is included herein under Part II, Section 6.

The following is a discussion of the Company’s segment operating results.

Radiation Measurement Segment

Radiation Measurement revenues for fiscal 2012 were $107.9 million, an increase of 8.1%, or $8.1 million, from fiscal 2011 of $99.9 million. Of the increase, $6.7 million was related to the impact of higher equipment sales from the Company’s ongoing initiatives with the military market. International Radiation Measurement revenues increased $1.3 million, or 4.5%, from the prior year, driven primarily by organic growth in most regions, including both equipment sales and service revenues, partially offset by $2.0 million of foreign exchange losses.

Radiation Measurement operating income for fiscal 2012 decreased to $21.5 million, a 39.1% decrease from $35.4 million in the prior year, impacted by the increase and mix in lower margin equipment sales both domestically and internationally, including Radwatch System sales to the military, and higher selling, general and administrative expenses. Selling, general and administrative costs for fiscal 2012 increased 42.6%, or $13.9 million, to $46.6 million. The increase was due primarily to a $5.5 million increase in non-recurring acquisition and reorganization costs, asset abandonment charges, IT platform enhancement and non-cash stock based compensation related expenses, a $2.4 million increase in compensation costs, consistent with operating performance expectations and timing of short-term and long-term incentive plans, a $1.5 million increase in research and development activities in connection with the military and first responder initiatives, $0.8 million of increased spending to support international revenue growth, a $1.4 million investment in customer facing organizations, a $0.3 million increase in employee benefit plans and medical expenses, $0.6 million of increased professional fees, and a $1.7 million increase due to the Company’s IT platform enhancement. Radiation Measurement operating income for fiscal 2012 was negatively affected $0.6 million, as compared with the prior year, by currency fluctuation, principally due to weakness in the Euro and the Real against the U.S. dollar.

Radiation Measurement operating income, adjusted for the impact of acquisition related transaction expenses, asset abandonment charges, IT platform enhancement expenses, and non-cash stock based compensation expenses, for fiscal 2012 decreased 16.2%, or $6.4 million, to $33.1 million compared with adjusted operating income of $39.5 million for fiscal 2011.

Corporate expenses for shared functions are recognized in the Radiation Measurement segment where they have been reported historically. Acquisition and reorganization costs are not allocated to the segments. As the Company’s business model evolves in increased complexity, management may determine it necessary to change this reporting practice to reflect any appropriate allocations.

Medical Physics Segment

Medical Physics revenues for fiscal 2012 of $30.9 million increased 50.3%, or $10.3 million, from fiscal 2011 of $20.6 million on $2.2 million of organic growth and $8.1 million due to the impact of acquired companies. The Medical Physics segment operating income of $1.3 million, or 4.3% of revenues, increased $1.8 million as compared to a loss of $0.5 million, or 2.4% of revenues, for fiscal 2011. The improvement in operating income was primarily due to operating efficiencies in the core Medical Physics business and higher episodic equipment commissioning sales leveraging a relatively fixed cost structure, as well as higher volume sales inclusive of acquired companies.

Medical Products Segment

With the acquisition of IZI on November 14, 2011, the Company now operates in a third reportable segment, Medical Products. Revenues for the period from the date of acquisition through September 30, 2012 were $13.5 million. Medical Products operating income was $5.3 million or 39.1% of revenues for the same period. Given the acquisition of IZI was completed during the first quarter of fiscal 2012, there is no direct comparison to the prior fiscal year.

Fiscal 2014 Outlook

The Company’s business plan for fiscal 2014 currently anticipates aggregate revenues for the year to be in the range of $140 to $160 million and reflects the uncertainty of government funding during fiscal 2014 for the military equipment sales opportunities the company has developed.

The business plan also anticipates an effective tax rate for the full fiscal year to be within a range of 28 percent to 32 percent.

Based upon the above assumptions, the Company anticipates reported net income for fiscal 2014 in the range of $16 to $18 million and Adjusted EBITDA expected for fiscal 2014 in the range of $46 to $49 million.

Liquidity and Capital Resources

Cash and cash equivalents decreased $6.4 million to $11.2 million during fiscal 2013. The Company’s primary sources of liquidity are cash flows from operations and funds available under its syndicated credit facility. At the end of fiscal 2013, the Company has $32.0 million available under the loan agreement and in compliance with all covenants.

Cash provided by operating activities for fiscal 2013 was $23.0 million, a 38.7% decrease compared to $37.5 million for fiscal 2012. The decrease in operating cash flow was primarily driven by a decrease in accounts payable, an increase in prepaid taxes and an increase in other assets.

Cash used by investing activities for fiscal 2013 was $8.5 million compared to a use of $126.1 million in fiscal 2012. The primary reason for the increase in fiscal 2012 was the Company’s acquisitions of joint ventures and businesses, primarily IZI, as described under the footnote “Business Combinations” herein. Investing activities included the Company’s acquisitions of property, plant and equipment of $6.4 million and $15.2 million during fiscal 2013 and 2012, respectively.

Financing activities for fiscal 2013 were comprised primarily of long-term borrowings on the credit agreement, repayments of long-term borrowings and payments of cash dividends to shareholders. During fiscal 2013, the Company funded cash dividends of $20.9 million, or $0.55 per share; Fiscal year 2012, the Company funded cash dividends of $20.8 million, or $0.55 per share. If the Company would repatriate cash from its’ indefinitely reinvested foreign jurisdictions it does not anticipate any significant incremental U.S. Federal and state income tax liability.

On August 2, 2013, the Company entered into an amended and restated revolving credit agreement (the “Credit Agreement”) with its group of lenders that provided, among other things, the extension of the expiration date from November 14, 2016 to August 2, 2018 and the accordion feature increased from $25.0 million to $50.0 million.

In addition, the covenants for minimum net worth have been deleted from the Credit Agreement. The leverage ratio covenants have changed to a maximum 3.50 to 1.00 for the period of September 30, 2013 through June 30, 2015, and to a maximum 3.25 to 1.00 for the periods September 30, 2015 and thereafter. The fixed charge ratio covenants have changed to a minimum 1.10 to 1.00 for the period of September 30, 2013 through June 30, 2015, and to a minimum 1.15 to 1.00 for the periods September 30, 2015 and thereafter. The amended terms provide for an interest rate equal to LIBOR plus a margin of between 1.25% and 2.50% and for the base rate a margin of between 0.25% and 1.50% as compared to a Libor margin of between 1.25% and 2.75%, and a base rate margin of between 0.25% and 1.75% in the current credit agreement.

Contractual Obligations

As of September 30, 2013, the expected resources required for scheduled payment of contractual obligations were as follows:



	Schedules payments by fiscal year
(Dollars in Thousands)	Total		2014		2015-16		2017-18		Thereafter
Long-term debt ⁽¹⁾	$	164,385	$	4,320	$	8,640	$	151,425	$	-
Capital leases		97		68		8		8		13
Operating leases		6,421		1,092		1,824		1,623		1,882
Purchase obligations ⁽²⁾		15,033		15,033		-		-		-
Dividends ⁽³⁾		5,419		5,419		-		-		-
Pension and postretirement benefits ⁽⁴⁾		3,822		388		749		750		1,935
Total obligations	$	195,177	$	26,320	$	11,221	$	153,806	$	3,830

(1)Includes estimated interest expense calculated using the variable interest rate at September 30, 2013 of 3.03% for current outstanding borrowing facility amount with no planned repayment.

(2)Includes accounts payable and other agreements to purchase goods or services including open purchase orders; also includes remaining contractual obligations associated with the Company’s IT platform enhancement.

(3)Cash dividends in the amount of $0.55 per share were declared on August 23, 2013.

(4)Includes estimated future benefit payments for supplemental key executive retirement plans and a terminated retirement plan that provides certain retirement benefits payable to non-employee directors. The amounts are actuarially determined, which includes the use of assumptions, and may vary significantly from expectations.

The Company is not able to reasonably estimate the ultimate timing of the payments or the amount by which its uncertain tax positions of $0.6 million will be settled. Therefore, the liability is excluded from the preceding table. Further information regarding the Company’s income taxes is contained under the footnote “Income Taxes” in Item 8 of this Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

At September 30, 2013, the Company had no off-balance sheet financing or other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing or other debt arrangements or for other contractually narrow or limited purposes.

Recent Accounting Pronouncements

See Note 1 to the Consolidated Financial Statements in Item 8 of this Form 10-K.

Inflation

The Company strives to reflect the inflationary impact of materials, labor and other operating costs and expenses in its prices. The market for the services and products that the Company offers, however, is highly competitive, and in some cases has limited the ability of the Company to offset inflationary cost increases.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risk, including changes in foreign currency exchange rates. The financial statements of the Company’s international subsidiaries are remeasured into U.S. dollars using the U.S. dollar as the reporting currency. To date, the market risk associated with foreign currency exchange rates has not been material in relation to the Company’s financial position, results of operations, or cash flows. These risks could increase, however, as the Company expands in international markets and markets becomes more volatile. The Company estimates that a 10% and 20% adverse change in the underlying foreign currency exchange rates would have decreased reported net income in fiscal 2013 by approximately $0.8 million and $1.4 million, respectively. Historically, the Company believes that adverse changes in foreign exchange rates have not materially impacted its financial condition.

Item 8. Financial Statements and Supplementary Data

Consolidated Balance Sheets

Landauer, Inc. and Subsidiaries

As of September 30,



(Dollars in Thousands)	2013		2012
ASSETS
Current assets:
Cash and cash equivalents	$	11,184	$	17,633
Receivables, net of allowances of $600 in 2013 and $1,088 in 2012		38,419		35,165
Inventories		9,539		8,638
Prepaid income taxes (Note 9)		3,132		2,148
Prepaid expenses and other current assets		4,019		3,975
Current assets		66,293		67,559
Property, plant and equipment, at cost:
Land and improvements		591		591
Buildings and improvements		4,341		4,327
Internal software		52,304		50,108
Equipment		50,210		46,349
Total property, plant and equipment cost		107,446		101,375
Accumulated depreciation and amortization		(55,514)		(46,983)
Net property, plant and equipment		51,932		54,392
Equity in joint ventures (Note 7)		23,942		24,108
Goodwill (Note 8)		84,436		106,717
Intangible assets, net of accumulated amortization of $13,605 in 2013 and $9,696 in 2012 (Note 8)		37,161		37,402
Dosimetry devices, net of accumulated depreciation of $9,472 in 2013 and $8,879 in 2012		5,798		6,189
Other assets (Note 3)		7,271		5,758
ASSETS	$	276,833	$	302,125

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,310	$	9,656
Dividends payable		5,419		5,345
Deferred contract revenue		13,181		14,947
Accrued compensation and related costs		8,207		8,260
Other accrued expenses		7,531		7,096
Current liabilities		40,648		45,304
Non-current liabilities:
Long-term debt (Note 10)		142,785		141,347
Pension and postretirement obligations (Note 12)		13,047		17,586
Deferred income taxes (Note 9)		9,817		15,733
Other non-current liabilities		915		1,053
Non-current liabilities		166,564		175,719

Commitments and Contingencies (Note 13)

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; 9,575,926 and 9,493,368 issued and outstanding, respectively, in 2013 and 2012 (Note 11)		958		949
Additional paid in capital		39,465		35,898
Accumulated other comprehensive loss		(4,456)		(5,272)
Retained earnings		32,012		48,142
Landauer, Inc. stockholders’ equity		67,979		79,717
Noncontrolling interest		1,642		1,385
Stockholders’ equity		69,621		81,102
LIABILITIES AND STOCKHOLDERS’ EQUITY	$	276,833	$	302,125

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

Consolidated Statements of Income

Landauer, Inc. and Subsidiaries

For the Years Ended September 30,



(Dollars in Thousands, Except per Share)	2013		2012		2011
Service revenues	$	126,840	$	124,979	$	114,364
Product revenues		23,360		27,421		6,094
Net revenues		150,200		152,400		120,458
Costs and expenses:
Service costs		59,859		53,489		43,241
Product costs		11,161		11,903		4,269
Total cost of sales		71,020


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


Common Stock with Par Value of $.10	New York Stock Exchange
(Title of each class)	(Name of exchange on which registered)


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