ldr-2014093010k

PART I

Forward-Looking Statements

Certain matters contained in this report constitute forward-looking statements that are based on certain assumptions and involve certain risks and uncertainties. These include the following, without limitation: assumptions, risks and uncertainties associated with the Company’s future performance, the Company’s development and introduction of new technologies in general; the ability to protect and utilize the Company’s intellectual property; events or circumstances which result in an impairment of assets, including but not limited to, goodwill and identifiable intangible assets; continued customer acceptance of the InLight technology; the adaptability of optically stimulated luminescence (“OSL”) technology to new platforms and formats; military and other government funding for the purchase of certain of the Company’s equipment and services; the impact on sales and pricing of certain customer group purchasing arrangements; changes in spending or reimbursement for medical products or services; the costs associated with the Company’s research and business development efforts; the usefulness of older technologies and related licenses and intellectual property; the effectiveness of and costs associated with the Company’s IT platform enhancements; the anticipated results of operations of the Company and its subsidiaries or joint 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 60 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 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 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 customer (“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 the customer 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, and 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. 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 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 and RadLight system provides the military and first responder user with a portable, field-ready option for tactical radiation monitoring using OSL technology. RadWatch and RadLight is offered through a joint venture with Yamasato, Fujiwara, Higa & Associates, Inc. (“YFH”) doing business as Aquila Group. RadWatch and 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 October 2009, Landauer acquired a dosimetry service in Sweden, now called Landauer Persondosimetri AB (“PDM”). 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. As of November 2011, GDM and PDM are 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 Group, a small business supplier to the International Atomic Energy Agency and the U.S. Military. The Company provides dosimetry parts to Aquila Group 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 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 increase in 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 of its Medical Products segment. IZI is a provider of high quality medical consumable accessories used in radiology, radiation therapy, and image guided surgical procedures. IZI’s medical accessories range from consumables used with magnetic resonance imaging (“MRI”), computed tomography (“CT”), and mammography technologies to highly engineered passive reflective markers used during image guided surgical 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. In December 2013, the Company completed the acquisition of ilumark GmbH, a German limited liability company (“ilumark”), which provides sterile, single-use retro-reflective navigation markers for image guided surgery systems using passive tracking technology. The Company reports the operating results of IZI and ilumark in the Medical Products reporting segment.

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 11 sales regions. The Company’s non-U.S. and Canadian Radiation Measurement services and products are marketed through its wholly- owned subsidiaries operating in the United Kingdom, France and Sweden, its joint 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 51,000 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 Canadian 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 U.S. The Company’s 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.

Medical Products markets 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. Products are marketed in the U.S. and Canada primarily by full-time Company telesales representatives located in Maryland. 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. The Company 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 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 2023. The OSU patents are specific to the stimulation process, imaging and data interpretation. As of September 30, 2014, 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 of 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 2015 and 2034.

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 required materials, 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 and RadLight analytical instrument sold for military and emergency radiological response applications from its joint venture partner, YFH, on a sole source basis. The Company 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 its sole suppliers 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, Inc., 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 represent 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 companies. Two of its primary competitors are a division of Roper Industries, Inc. and Medtronic, Inc., 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 Memorial Institute 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.

The Company’s Medical Products segment has a product development process, which focuses on identifying products that will increase the accuracy of procedures and reduce procedural time. Current research efforts are focused on radiology products, which reduce radiation exposure to physicians and patients, as well as products that increase the accuracy of imaging by using reference markers.

The Company spent $5.8 million, $4.1 million, and $4.0 million in research and development activities during fiscal 2014, 2013 and 2012, respectively.

Regulatory Matters

Domestic and International Regulations

The Company manufactures and markets products that are medical devices subject to regulation by numerous government agencies, including the U.S. Food and Drug Administration (“FDA”), and similar regulatory bodies outside the U.S. FDA regulations and similar regulations outside the U.S., 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 U.S. regulation. After a device is placed on the market in the U.S., numerous regulatory requirements apply. These include, but are not limited to:

Quality System Regulation (“QSR”), which requires 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. Failure to comply with FDA requirements could result in criminal and civil penalties. The Company is subject to unannounced inspections by the FDA to determine its compliance with 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 Company’s medical device business is subject to unannounced inspections by the FDA to determine our compliance with FDA requirements.”

The Company also acquired a medical physics company in 2009 and a medical device company in 2011. These acquisitions make the Company subject to regulation by the U.S. Department of Health and Human Services and similar local, state and foreign health regulatory agencies. As a result of applicable regulatory requirements the Company’s arrangements with physicians and other health care professionals or entities must be structured appropriately to comply with applicable law, including but not limited to the federal Anti-kickback Statute. The Company may also be subject to certain transparency reporting requirements related to any payments or other transfers of value to physicians or teaching hospitals under the federal Physician Payment Sunshine Act and similar state laws. In addition, the Company may need to comply with applicable requirements of federal and state privacy and data security laws with respect to health care and other personally identifiable information that they may access, use, disclose, create, receive, transmit or maintain when conducting business. Finally, changes in health care delivery and reimbursement structures, particularly those brought about by federal and state health reform in the U.S., may impact the Company. Various penalties and sanctions exist for violations of these laws, including fines, imprisonment and exclusion from doing business with federal agencies in the United States. For additional information regarding healthcare fraud and abuse, reimbursement, privacy and data security 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 United States and state health reform legislative initiatives, and similar initiatives outside the United States, could adversely affect our operations and business condition.”

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

International Regulations. Outside the U.S., similar requirements and procedures related to the marketing of medical devices exist and must be complied with. For example, in the European Union (‘EU”), medical devices must meet minimum standards of performance, safety and quality, and follow one of several conformity assessment routes, depending on their classification. Some of these conformity assessment routes involve an assessment and certification by a notified body. Manufacturers indicate compliance with applicable EU medical device regulations by preparing a Declaration of Conformity and by applying a CE Mark to their medical devices before placing them on the market in the EU. An appropriate quality system is required and manufacturers must report certain product and safety-related information to government agencies of individual EU Member States. Various penalties and sanctions exist in different EU Member States for non-compliance with EU medical device regulations and related requirements, for example with respect to data protection and privacy.

Environmental Regulations

The Company believes that it complies with international, 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.

Employees and Labor Relations

As of September 30, 2014, the Company employed approximately 600 full-time employees worldwide, of which 151 employees and 33 employees were in the Company’s Medical Physics and Medical Products segments,

respectively. None of the Company’s employees are represented by labor organizations. 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 have identified material weaknesses in our internal control over financial reporting which could, if not remediated, result in material misstatements in our financial statements.

We have identified material weaknesses in our internal control over financial reporting and have concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2014. Under standards established by the Public Company Accounting Oversight Board, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In response to the identified material weaknesses, our management, with oversight from our audit committee, has dedicated significant resources and efforts to improve our control environment and risk assessment and to remedy the identified material weaknesses. We are currently evaluating the impact of the material weaknesses and are in the process of taking corrective actions. We believe that these actions will support the improvement of our internal control over financial reporting.

We intend to continue to devote significant time and attention to these remediation efforts. As we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to address the material weaknesses or determine to modify our remediation plan. If the Company is unable to successfully remediate these material weaknesses and if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected and the Company may be unable to maintain compliance with applicable stock exchange listing requirements.

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 a 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 technologies 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 the Medical Products segment 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 technologies 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 government enforcement actions or potential litigation from our customers and could face risk for loss or breach of customer data under state privacy laws or applicable data privacy laws outside the U.S. 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 2011, the Company acquired IZI. In August 2012, the Company acquired a 49% minority interest in YFH, doing business as Aquila Group, a small business supplier to the International Atomic Energy Agency as well as the U.S. Military. In December 2013, the Company acquired ilumark. 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.

During 2012, the Company 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, located in New Mexico. 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, including outside the U.S. 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 competition, 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, including outside the U.S. 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 its 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 and 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 its 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 it determines 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, which were amended in June 2014. The maximum leverage ratio covenant is 3.50 to 1.00 for the remaining loan. The minimum fixed charge coverage ratio covenant is 1.10 to 1.00 for the remaining loan. The facility’s interest rate is 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 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.

Several of the Company’s products are medical devices that are subject to extensive regulation in the U.S. by the federal government, including by the FDA, various state agencies, and other government agencies outside the U.S. 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. In addition, certain states have registration or licensing requirements and may impose other regulatory requirements similar to those imposed by the FDA. 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. Similar reporting requirements and risks exist and apply to the Company’s activities outside the U.S.

In September 2013, the FDA issued a final rule creating the Unique Device Identification (“UDI”) System that will be phased in over seven years. The UDI System will require manufacturers to mark certain medical devices distributed in the United States with unique identifiers. The FDA expects that the UDI System will help track products during recalls and improve patient safety. The Company is taking the necessary steps to meet the requirements of the UDI System. The labeling and identification of our products will be updated to meet this new unique identifier approach.

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 it 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 or premarket approval. Any modification to an exempt device could potentially subject the exempt device to the 510(k) clearance requirements or premarket approval. 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.

Similar risks exist and apply to the Company’s activities in the EU. Notified bodies or government agencies may challenge the Company’s classification, certification or marketing of medical devices in the EU, and may request additional clinical evidence to support their continued marketing. The Company may not be able to sufficiently address all concerns or questions raised by notified bodies or government agencies in the EU, and may not be able to maintain or place its products on the EU market.

Proposed new EU medical device regulations, and changed enforcement practices, could adversely affect our marketing of medical devices in the EU.

New EU medical device regulations intended to replace the existing EU legal framework are under consideration and may become applicable to medical devices placed on the EU market. The requirements imposed by the proposed new EU medical device requirements, and related implementing regulations or guidelines, may be more stringent and comprehensive than existing requirements, and, if adopted, could adversely affect our marketing of medical devices in the EU. In addition, notified bodies and government agencies in the EU may change their enforcement practices, both with respect to the existing and proposed new regulations, including by performing unannounced inspections to determine compliance with applicable regulation, and by imposing different or more stringent penalties or sanctions. These and other regulatory and enforcement developments in the EU may also have a material adverse effect on our business and reputation.

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, and similar initiatives outside the United States, 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 began 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 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, privacy, and data security 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 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, as well as similar regulations outside the U.S. 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, and similar regulations outside the U.S., 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, Germany, 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; changes in a specific country’s or region’s political, social or economic conditions; political and economic unrest; trade barriers; exchange controls; expropriation; restrictions on the Company’s ability to own or operate subsidiaries; the burden of complying with numerous and potentially conflicting laws; 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 monthly 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 companies. Two of its primary competitors are a division of Roper Industries, Inc., and Medtronic, 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 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 in Chicago Heights, Illinois 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 laboratories in Australia, Brazil, China, France, Mexico, Sweden, and Turkey, as well as a sales office in England. The Company leases offices in New York, North Carolina and Missouri for its Medical Physics operations, and leases manufacturing and office space in Maryland and office space in Germany 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, 2014, 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
2014
	First	$	53.51	$	47.14	$	0.55
	Second	$	53.20	$	43.23	$	0.55
	Third	$	48.80	$	41.35	$	0.55
	Fourth	$	44.53	$	32.78	$	0.55
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

The Board of Directors continually reviews the appropriateness of the quarterly cash dividends policy and its status is reviewed based on future earnings, capital requirements and financial condition. In December 2014, the Board of Directors declared a fiscal 2015 first quarter cash dividend of $0.55 per common share.

As of January 29, 2015, there were 246 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, 2013	105	$	51.26	-	-
November 1 – November 30, 2013	1,426		47.80	-	-
December 1 – December 31, 2013	3,260		52.16	-	-
Total for quarter ended December 31, 2013	4,791	$	50.84	-	-
January 1 – January 31, 2014	541		52.56	-	-
February 1 – February 29, 2014	-		-	-	-
March 1 – March 31, 2014	-		-	-	-
Total for quarter ended March 31, 2014	541	$	52.56	-	-
April 1 – April 30, 2014	-		-	-	-
May 1 – May 31, 2014	2,001		45.19	-	-
June 1 – June 30, 2014	2,561		43.86	-	-
Total for quarter ended June 30, 2014	4,562	$	44.44	-	-
July 1 – July 31, 2014	562		42.42	-	-
August 1 – August 31, 2014	-		-	-	-
September 1 – September 30, 2014	19,330		34.76	-	-
Total for quarter ended September 30, 2014	19,892	$	34.98	-	-

(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) the S&P Smallcap 600 index, (c) the S&P Smallcap 600 industry index represented by a group of health care services companies, (d) a group of twenty-two health care and equipment services companies discussed in further detail below, (e) a group of life science tool companies composed of ticker symbols QGEN, SIAL, BRKR, PKI, TMO, A, WAT, LIFE, FEIC and MTD, and (f) a group of detection/test and measurement companies composed of ticker symbols ES, OSIS, VAR and ASEI during the period from September 30, 2009 through September 30, 2014.

The Company included the group of health care and equipment services companies as an additional benchmark for investors. Management believes this new peer group will be helpful to investors, because it represents a set of companies based on Landauer’s GICS code (3510 – Health Care Equipment and Services), with annual revenues and capitalizations comparable to Landauer, and whose primary business focuses on either (1) design and manufacturing of medical devices and/or (2) diagnostic, analytic, imaging and/or testing services in the life sciences and health care markets. The resulting group of twenty-two companies is composed of Abaxis, ABIOMED, Accuray, Affymetrix, AngioDynamics, Atrion, BioTelemtry, Cardiovascular Systems, CryoLife, Endologix, Exactech, ICU Medical, LDR Holding, Luminex, Meridian Bioscience, Quidel, Natus Medical, Nxstage Medical, Tornier NV, RTI Surgical, Spectranetics and Vascular Solutions.

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)	2009		2010		2011		2012		2013		2014
Landauer, Inc.	$	100	$	118.10	$	97.03	$	121.90	$	108.98	$	73.74
S&P Smallcap 600 Index		100		114.22		114.46		152.63		200.73		212.26
S&P Smallcap 600 Health Care Services Index		100		102.43		102.59		153.28		177.23		202.28
Health Care Equipment & Services		100		96.14		101.76		120.38		139.29		157.18
Life Sciences Tools		100		113.99		115.06		139.04		194.57		234.67
Detection/Test & Measurement		100		143.17		123.87		155.41		182.03		188.17

Item 6. Selected Financial Data

Five Year Selected Financial Data

Landauer, Inc. and Subsidiaries

For the Years Ended September 30,

Refer to “Restatement and Revision of Prior Period Financial Statements” in Note 1 of the Notes to Consolidated Financial Statements for additional details for a description of the corrections made to previously reported amounts.



(Dollars in Thousands, Except per Share)		2014		2013 (As Restated)		2012		2011		2010
Operating results
Net revenues	$	155,062	$	149,690	$	152,102	$	120,458	$	114,367
Operating (loss) income(1)		(39,987)		3,389		27,707		34,731		34,858
Net (loss) income attributable to Landauer, Inc.		(25,203)		2,782		18,546		24,041		23,774
Basic net (loss) income per share	$	(2.65)	$	0.28	$	1.96	$	2.55	$	2.54
Diluted net (loss) income per share	$	(2.65)	$	0.27	$	1.95	$	2.53	$	2.53
Weighted average diluted shares outstanding		9,524		9,482		9,437		9,477		9,349
Cash dividends per share	$	2.20	$	2.20	$	2.20	$	2.20	$	2.15
Total assets	$	216,586	$	274,706	$	300,271	$	167,156	$	149,165
Short-term debt	$	-	$	-	$	-	$	19,805	$	12,504
Long-term debt	$	133,585	$	142,785	$	141,347	$	-	$	-

(1)Results are impacted by goodwill and intangibles impairment of $62,188 and $22,700 in fiscal 2014 and fiscal 2013, respectively.

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.” See “Restatement and Revision of Prior Period Financial Statements” in Note 1 for a description of the corrections made to previously reported amounts.

Overview

During the first fiscal quarter of 2014, the Company changed the presentation of its reporting segments to separately disclose certain ‘corporate expenses’ that had previously been reported within the Radiation Measurement segment and now reports segment information as three reporting segments: Radiation Measurement, Medical Physics and Medical Products, and one functional group: Corporate.

The Company’s Radiation Measurement segment is a mature business and growth in numbers of customers in existing markets 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 leveraged its OSL technology with product introductions, including 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 and RadLight, and new ancillary opportunities. The continued pressure on the cost structure of our healthcare clients and the 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.

The Company’s Medical Physics segment provides therapeutic and imaging 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. Additional requirements emerging as a result of the Joint Commission are expected to increase customer spending in future years.

The Company’s Medical Products segment is a provider of medical consumable accessories used in radiology, radiation therapy, and image guided surgery procedures. The Company’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. Medical Products’ 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, these products provide the ability to increase procedural accuracy while decreasing procedural time.

Corporate expenses for shared functions, including corporate management, corporate finance and human resources, are recognized in the Corporate functional group. In addition, acquisition and reorganization costs are not allocated to the reporting segments.

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 majority of Radiation Measurement revenues are realized from radiation measurement services and other services incidental to radiation dose measurement. 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. 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 provides equipment and sells badges to smaller distributors and joint ventures. Radiation Measurement segment product revenues are recognized upon delivery of goods when title and risk of loss pass to customers.

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 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 unless there is another discernable pattern as the services are rendered. Fee for service 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, and revenue is recognized upon completion of the project and customer acceptance.

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 Medical Products segment recognizes revenues upon shipment or delivery of goods when title and risk of loss pass to customers.

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, 3 to 8 years for equipment, 5 to 10 years for internal software and 30 months to 8 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. Any change in the carrying value or estimated useful lives of property, plant, equipment and other assets could materially impact the Company’s financial position and results of operation.

The Company capitalizes costs of software which is acquired, internally developed, or modified solely to meet the Company’s internal needs. 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 $1.0 million and $2.4 million for fiscal 2014 and 2013, 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 4 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.

Goodwill and certain intangible assets with indefinite lives are reviewed annually for impairment and more frequently if an event occurs or circumstances change that would require the Company to perform and interm review. The Company has three segments, Radiation Measurement, Medical Physics and Medical Products. The Company aggregates its business components into reporting units to test for goodwill impairment. The Radiation Measurement and Medical Physics segments are comprised of one reporting unit each. The Medical Products segment is comprised of two reporting units – IZI Medical Products and ilumark.

Goodwill impairment testing first requires a comparison between the carrying value and fair value of a reporting unit with associated goodwill. Carrying value is based on the assets and liabilities associated with the operations of that reporting unit. The Company estimates the fair value of the reporting units using the income approach and the market approach. If the Company believes that the fair value of a reporting unit exceeds its carrying value by a substantial margin, the Company may perform a qualitative analysis instead.

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.

The Company estimated the fair value of the Medical Physics and ilumark reporting units as of September 30, 2014 using the income approach and the market approach, and no impairment charges resulted. 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 reporting units and then discounting these cash flows to present value reflecting the relevant risks associated with the reporting unit 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.

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. 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.

The Company completed a qualitative goodwill impairment assessment of the Radiation Measurement reporting unit as of September 30, 2014 to determine if it was likely that the fair value of this reporting unit was less than its carrying value. The estimated fair value of the Radiation Measurement reporting unit substantially exceeded its

carrying value at September 30, 2014. Due to this substantial margin, as well as the Company’s belief that there has been no adverse event or change in circumstances affecting the fair value of this reporting unit, the Company determined that a qualitative analysis was appropriate. The Company has reviewed events and circumstance that may impact the Radiation Measurement reporting unit’s specific operating and financial position or performance as well as the economic and industry environment in which it operates. In addition, through a series of sensitivity analyses, the Company determined the circumstances by which the fair value of this reporting unit would fall below its carrying value. Based on the qualitative analysis, there have been no triggering events that would suggest that the fair value of the Radiation Measurement reporting unit is below its carrying value.

The Company completed an impairment test for the IZI Medical Products reporting unit as of June 30, 2014 when it became apparent that anticipated revenue and profitability trends in the IZI Medical Products reporting unit were not being achieved to the extent forecasted. Based on the testing performed, the Company recorded a non-cash impairment charge of $62.2 million, of which $41.4 million related to goodwill and $20.8 million related to intangible assets.

Intangible assets represent purchased assets that lack physical substance but can be distinguished from goodwill. 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. 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 statement 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. As of September 30, 2014, the Company no longer asserts that earnings and profit are indefinitely in foreign jurisdictions. The Company’s change in assertion on earnings and profit indefinitely reinvested in foreign jurisdictions did not result in any significant incremental U.S. Federal and state tax liability.

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. Changes in circumstances or judgment about tax positions may cause a change in the Company’s uncertain tax position. Variations in the actual outcome of these future tax consequences could materially impact the Company’s financial position, results of operations or cash flows. 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 defined benefit pension and other postretirement benefit plans were frozen as of March 2009. The pension expenses and benefit obligations recorded for the Company’s defined benefit plans are dependent on actuarial assumptions. 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. During fiscal 2014, the Company adopted the RP-2014 mortality tables and the Mortality Improvement Scale MP-2014 published by the Society of Actuaries’ Retirement Plans Experience Committee. The adoption of the updated mortality tables and the mortality improvement scale increased the Company’s pension liability more than $3.0 million. 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 4.72% for both pension and other benefits in fiscal 2014 and 3.77% for both pension and other benefits in fiscal 2013. For fiscal 2014 expense, the long-term rate of return of plan assets was 6.50%, unchanged from fiscal 2013. 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, 2014 was 4.14%, 3.77%, 4.12% and 2.98% for Pension, Key Executive SERP, Manager SERP and Directors plans, respectively, under “Pension Benefits” in the “Defined Benefit Plans” footnote of this Annual Report on Form 10-K. The weighted-average discount rate used to determine benefit obligations under “Other Benefits” was 3.40% at September 30, 2014. Comparatively, the weighted-average discount rate used to determine benefit obligations at September 30, 2013 was 4.72% for all plans, 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 the restricted stock and performance shares granted under the new plan is based on the Company’s closing stock price on the grant date. Stock-based compensation expense for restricted stock is cliff vested and recognized ratably over the vesting period. 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 cliff vested and 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. The Company also retains the discretion to make additional awards to executives at other times for recruiting or retention purposes. Stock-based compensation for these awards can be either cliff or graded vested depending on the agreement, and 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, 2014 and September 30, 2013

Revenues for fiscal 2014 were $155.1 million, an increase of $5.4 million, or 3.6%, compared with revenues of $149.7 million for fiscal 2013. The Radiation Measurement segment increased $4.2 million due to higher international equipment sales and service revenue growth. The Medical Physics segment increased $1.4 million due to increased imaging and radiation therapy services. The Medical Products segment decreased $0.2 million as a result of continued pressure on Spherz product pricing partially offset by $0.8 million from a modest acquisition in Germany.

Gross margin was 52.2% for fiscal 2014, compared with 52.5% for fiscal 2013. Approximately 1.0% of the decline in gross margin was driven by increased staffing expenses in the Medical Physics segment to support additional contracts in the imaging and therapy divisions, and 0.6% of the decline in gross margin was due to the Medical Products segment, driven by Spherz price pressure. The decrease in gross margins in the Medical Physics and Medical Products segments more than offset higher gross margins in the Radiation Measurement segment due to a favorable product mix.

Selling, general and administrative expenses for fiscal 2014 were $54.9 million, an increase of $3.8 million, or 7.4%, compared with selling, general and administrative expenses of $51.1 million for fiscal 2013. The increase was due to a $1.7 million increase in research and development costs, primarily to support the Verifii next generation dosimetry platform, higher legal, audit and other expenses of $1.4 million and increased bad debt expense of $1.1 million.

During the third quarter of fiscal 2014, revenue and profitability trends in our IZI Medical Products reporting unit were not being achieved to the extent forecasted, and early budget reviews also indicated future sales growth and margins may be less than expected. The forecast for the IZI Medical Products reporting unit was updated based on the most recent financial results and our best estimates of future operations. The updated forecast reflected slower growth in revenues and lower margins, primarily due to anticipated continued competitive pricing pressure. As a result, the Company performed an impairment analysis of goodwill and intangible assets in the IZI Medical Products reporting unit, which indicated that the carrying amounts of these assets exceeded their fair values. The Company recorded a pretax charge of $41.4 million to reduce the carrying amount of goodwill and a pretax charge of $20.8 million to reduce the carrying amount of intangible assets. During fiscal 2013, the Company recorded a $22.7 million pretax goodwill impairment charge for this same reporting unit. The impairment charges were non-cash in nature and do not affect the Company’s liquidity or debt covenant compliance.

Acquisition, reorganization and nonrecurring costs were $3.8 million for fiscal 2014 and consisted of $3.5 million for severance related to changes in selected management roles and $0.3 million of costs related to acquisitions.

Operating loss for fiscal 2014 was $40.0 million, compared with operating income of $3.4 million for fiscal 2013. The difference was due primarily to increased impairment charges of $39.5 million, increased selling, general and administrative expenses of $3.8 million, and increased acquisition, reorganization and nonrecurring costs of $2.4 million, offset by an increase in gross profit of $2.3 million as a result of higher revenue and favorable product mix.

Equity in income of joint ventures for fiscal 2014 was $2.9 million, a decrease of $0.4 million, or 12.1%, compared with equity in income of joint ventures of $3.3 million for fiscal 2013. The decrease in equity income resulted from a $0.3 million decrease in equity income from the Nagase joint venture due to the unfavorable impact of foreign exchange.

Interest expense, net for fiscal 2014 was $3.4 million, a decrease of $0.9 million, or 20.9%, compared with interest expense of $4.3 million for fiscal 2013. The decrease was due to a reduction in long-term borrowings during fiscal 2014.

The effective tax rate was 39.0%, or ($15.8) million benefit, and (18.1%), or ($0.6) million benefit, for fiscal 2014 and 2013, respectively. The fiscal 2014 effective tax rate decreased due primarily to the mix of domestic and foreign earnings, permanently reinvested earnings, income from investments and permanent differences.

Net loss attributed to Landauer, Inc. for fiscal 2014 was $25.2 million, compared with net income of $2.8 million for fiscal 2013. The difference was due primarily to increased impairment charges of $39.5 million, increased selling, general and administrative expenses of $3.8 million, and increased acquisition, reorganization and nonrecurring costs of $2.4 million, partially offset by an increase in gross profit of $2.3 million and an increase in income tax benefit of $15.2 million.

Radiation Measurement Segment

Radiation Measurement revenues for fiscal 2014 were $113.6 million, an increase of $4.2 million, or 3.8%, compared with revenues of $109.3 million for fiscal 2013. The increase was due primarily to product and service revenue growth in Europe of $3.4 million and a custom equipment sale in Canada of $1.7 million partially offset by lower revenue in China of $1.7 million due to significant equipment sales in fiscal 2013. Domestic Radiation Measurement revenues increased $0.9 million due to InLight product sales.

Radiation Measurement operating income for fiscal 2014 was $38.2 million, a decrease of $0.5 million, or 1.3%, compared with operating income of $38.7 million for fiscal 2013. The increase in gross profit as a result of higher sales was more than offset by increases in research and development expenses of $1.5 million, primarily related to Verifii next generation dosimetry platform development, bad debt expense of $1.1 million, and professional and consulting fees of $0.6 million.

Medical Physics Segment

Medical Physics revenues were $32.2 million for fiscal 2014, an increase of $1.3 million, or 4.2%, compared with revenues of $30.9 million for fiscal 2013. The increase in revenue is primarily attributable to increased imaging and radiation therapy services.

Medical Physics operating income for fiscal 2014 was $1.8 million, a decrease of $1.7 million, or 48.6%, compared with operating income of $3.5 million for fiscal 2013. The increase in revenues was more than offset by increased staffing expenses of $2.9 million to support additional contracts in the imaging and therapy divisions and to support the increasing demand for our outsourced enterprise radiation safety solutions.

Medical Products Segment

Medical Products revenues for fiscal 2014 were $9.3 million, a decrease of $0.2 million, or 2.1%, compared with revenues of $9.5 million for fiscal 2013. The $0.2 million decrease is a result of continued pressure on Spherz product pricing partially offset by $0.8 million from a modest acquisition in Germany.

Medical Products operating loss for fiscal 2014 was $62.6 million, compared to an operating loss of $21.8 million for fiscal 2013. Operating loss included impairment charges of $62.2 million and $22.7 million for fiscal 2014 and 2013, respectively. The additional increase in operating loss, not related to impairment charges, of $0.9 million was due primarily to lower Spherz price and higher research and development expense.

Corporate, General and Administrative Expenses

Corporate, general and administrative expenses reflect costs associated with supporting the Company, including executive management and administrative functions such as accounting, treasury, legal, human resources, and information technology management, as well as other costs required to support the Company. Corporate expenses for fiscal 2014 were $17.5 million, an increase of $0.5 million as compared to $17.0 million for fiscal 2013. The increase was due to a $2.4 million increase in restructuring and other non-recurring expenses, primarily severance, and legal, audit and other expenses, partially offset by a decrease in incentive compensation for executive management.

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

Revenues for fiscal 2013 were $149.7 million, a decrease of $2.4 million, or 1.6%, compared with revenues of $152.1 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 $1.7 million on higher international sales, primarily of equipment, offset by declines in domestic badge revenues.

Cost of sales for fiscal 2013 was $71.1 million, an increase of $5.7 million, or 8.7%, compared with cost of sales of $65.4 million for fiscal 2012. The cost of sales increase was due to expenses related to the Company’s IT platform enhancement that went live during fiscal 2012, increased support costs of $3.2 million, increased IT systems depreciation of $1.3 million, as well as a higher cost of sales associated with the international product sales discussed above.

Selling, general and administrative expenses for fiscal 2013 were $51.1 million, a decrease of $0.1 million, compared with selling, general and administrative expenses of $51.2 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 year 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 fiscal 2013, 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 did not affect the Company’s liquidity or debt covenant compliance.

Fiscal 2013 acquisition, reorganization and nonrecurring costs were $1.4 million and consisted of $0.6 million in corporate reorganization expenses, $0.4 million in reserves for escheatment liability and $0.4 million of costs related to acquisitions.

Operating income for fiscal 2013 was $3.4 million, a decrease of $24.3 million, or 87.7%, compared with operating income of $27.7 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 $1.6 million to prior year was due primarily to decreased Medical Products revenue of $4.0 million, IT platform enhancement expenses of $4.5 million and increased international costs of $1.8 million, offset by $1.7 million of increased Radiation Measurement revenue and non-recurring acquisition costs of $3.2 million and asset abandonments of $2.5 million in fiscal 2012.

Equity in income of joint ventures for fiscal 2013 was $3.3 million, an increase of $0.2 million compared with equity in income of joint ventures of $3.1 million for fiscal 2012. Interest expense for fiscal 2013 was $4.3 million, an increase of $0.9 million, or 26.5%, compared with interest expense of $3.4 million for fiscal 2012.

The effective tax rate was (18.1%), or ($0.6) million benefit, and 29.8%, or $8.2 million expense, for fiscal 2013 and 2012, respectively. The fiscal 2013 effective tax rate decreased due primarily to the book impairment of goodwill, an increased realization of certain U.S. tax credits and mix of earnings by jurisdiction with differing tax rates.

Net income attributed to Landauer, Inc. for fiscal 2013 was $2.8 million, a decrease of $15.7 million, or 85.4%, compared with net income of $18.5 million for fiscal 2012. The decrease in net income attributable to Landauer, Inc. was due primarily to a goodwill impairment charge of $22.7 million, decreased Medical Products revenue of $4.0 million, IT platform enhancement expenses of $4.5 million, partially offset by non-recurring acquisition costs of $3.2 million and asset abandonments of $2.5 million in fiscal 2012 and a reduction in income tax expense of $8.8 million.

Radiation Measurement Segment

Radiation Measurement revenues for fiscal 2013 were $109.3 million, an increase of $1.7 million, or 1.7%, compared with revenues of $107.6 million for fiscal 2012. Revenues increased $3.0 million primarily on higher international equipment sales in China and EMEA, partially offset by declines in domestic badge revenues of $1.0 million.

Radiation Measurement operating income for fiscal 2013 was $38.7 million, a decrease of $4.7 million, or 10.8%, compared with operating income of $43.4 million for fiscal 2012. The revenue increase of $1.7 million was partially offset by IT platform enhancement increases of $3.2 million, IT systems depreciation of $2.3 million, increased international equipment costs of $1.8 million on higher sales and increased customer service support of $1.0 million, offset by prior year IT platform expenses of $2.0 million and decreased material costs of $0.3 million.

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 decrease was due to the decline in the Spherz selling price and the volume of shipments.

Medical Products operating loss for fiscal 2013 was $21.8 million, a decrease of $26.9 million compared with operating income of $5.1 million for fiscal 2012. The decrease was primarily attributable to the third quarter goodwill impairment charge of $22.7 million, the revenue decrease of $4.0 million and additional tradename amortization of $0.4 million.

Corporate, General and Administrative Expenses

Corporate, general and administrative expenses reflect costs associated with supporting the Company, including executive management and administrative functions such as accounting, treasury, legal, human resources, and information technology management, as well as other costs required to support the Company. Corporate expenses for fiscal 2013 were $17.0 million, a decrease of $5.1 million as compared to $22.1 million for fiscal 2012. The decrease was due primarily to non-recurring acquisition costs of $3.2 million and asset abandonments of $2.5 million in fiscal 2012.

Liquidity and Capital Resources

Cash and cash equivalents decreased $1.9 million to $6.8 million during fiscal 2014. 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 2014, the Company had $41.4 million available under the loan agreement and was in compliance with all covenants.

Cash provided by operating activities for fiscal 2014 was $36.7 million, a 43.4% increase compared to $25.3 million for fiscal 2013. The increase in operating cash flow was primarily driven by decreases in accounts receivable and other operating assets and increases in accounts payable and other operating liabilities. The Company has invested in resources to accelerate customer collections. In addition, working capital has improved due to the timing of inventory purchases.

Cash used by investing activities for fiscal 2014 was $7.2 million, compared to $11.7 million for fiscal 2013. Spending on property, plant and equipment decreased from $9.1 million during fiscal 2013 to $4.2 million during fiscal 2014 due to lower information technology expenditures. Investing activities for fiscal 2014 also included the acquisition of ilumark for $1.8 million, net of cash acquired.

Financing activities for fiscal 2014 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 2014, the Company funded cash dividends of $21.0 million, or $2.20 per share. During fiscal 2013, the Company funded cash dividends of $20.9 million, or $2.20 per share. The Company has no indefinite reinvestment assertions on its foreign earnings and profits, as of September 30, 2014. During fiscal 2013, if the Company were to repatriate cash from its 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.

On June 30, 2014 the Company and its subsidiaries Global Physics Solutions, Inc. and IZI Medical Products, LLC (collectively, the “Borrowers”), entered into a First Amendment to Amended and Restated Credit Agreement (the “Amendment”) with BMO Harris Bank N.A., as administrative agent (the “Administrative Agent”), and the lenders that are party thereto (collectively, the “Lenders”). The Amendment amended the Amended and Restated Credit Agreement entered into among the Borrowers, the Administrative Agent and the Lenders on August 2, 2013 (the “Credit Agreement”).

The Amendment amended, among other things, (i) the definition of Capital Expenditures and EBITDA and (ii) kept the fixed charge coverage ratio covenant and the leverage ratio covenant constant (1.10 to 1.00 and 3.50 to 1.00, respectively) through the remainder of the term of the Credit Agreement instead of tightening to 1.15 to 1.00 and 3.25

to 1.00, respectively, at September 30, 2015. In connection with the Amendment, the Company paid certain amendment fees to the Lenders and certain other fees and expenses to the Administrative Agent.

On December 18, 2014, the Borrowers, entered into a Consent and Amendment in respect of the Credit Agreement with the Administrative Agent and the Lenders. The Company and the Lenders and the Administrative Agent have agreed to consent, on a one time basis only, to a delay in the delivery of audited financial statements and related deliveries for fiscal 2014. The Company shall provide its annual audited financial statements and related deliveries for fiscal 2014 only within 120 days after the end of fiscal 2014. The Company shall provide unaudited financial statements and related deliveries for fiscal 2014 within 90 days after the end of fiscal 2014. In connection with the Consent, the Company paid a non-refundable consent fee to the Lenders.

On January 28, 2015, the Borrowers, entered into a second Consent and Amendment in respect of the Credit Agreement with the Administrative Agent and the Lenders. The Company and the Lenders and the Administrative Agent have agreed to consent, on a one time basis only, to a delay in the delivery of audited financial statements and related deliveries for fiscal 2014. The Company shall provide its annual audited financial statements and related deliveries for fiscal 2014 no later than February 11, 2015.

Borrowings under the credit agreement are classified as long-term debt. The balance outstanding under the Company’s credit agreement was $133.6 million and $142.8 million as of September 30, 2014 and 2013, respectively. Interest expense on the borrowings was $4.0 million, $4.3 million and $3.6 million for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. The weighted average interest rate for the base and LIBOR rate was 2.6%, 2.9% and 3.03% for fiscal 2014, 2013 and 2012, respectively. The applicable interest rate for the base and LIBOR rate separately was 4.5% and 2.654% per annum at September 30, 2014 and 4.75% and 2.682% per annum at September 30, 2013.

Contractual Obligations

As of September 30, 2014, the expected resources required for scheduled payment of contractual obligations were as follows:



	Scheduled Payments by Fiscal Year
(Dollars in Thousands)	Total		2015		2016-17		2018-19		Thereafter
Long-term debt (1)	$	133,585	$	-	$	-	$	133,585	$	-
Estimated interest on long-term debt		17,366		3,474		6,946		6,946
Capital leases		50		18		30		2		-
Operating leases		6,205		1,216		2,174		1,830		985
Purchase obligations (2)		11,774		11,774		-		-		-
Dividends (3)		5,329		5,329		-		-		-
Pension and postretirement benefits (4)		4,214		398		797		847		2,172
Severance (5)		2,969		2,731		238		-		-
Other short-term liabilities		42		42		-		-		-
Other long-term liabilities		1,026		165		861		-		-
Total obligations	$	182,560	$	25,147	$	11,046	$	143,210	$	3,157

(1)Includes estimated interest expense calculated using the variable interest rate at September 30, 2014 of 2.6% 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 22, 2014.

(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.

(5)Includes the current and long-term portions of accrued severance. The long-term portion is included in other-noncurrent liabilities on the balance sheet.

The Company is not able to reasonably estimate the ultimate timing of the payments or the amount by which its uncertain tax positions of $3.3 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, 2014, 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 monthly 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 2014 by approximately $0.7 million and $1.3 million, respectively. Historically, the Company believes that adverse changes in foreign exchange rates have not materially impacted its financial condition.

The Company is subject to interest rate risk related to borrowings under the credit facility. The variable rate identified is based on LIBOR plus a calculated margin. Further information on the credit facility is contained under Note 11 (“Credit Facility”) in Item 8 of this Annual Report on Form 10-K.

Item 8. Financial Statements and Supplementary Data

Consolidated Balance Sheets

Landauer, Inc. and Subsidiaries

As of September 30,


(Dollars in Thousands)		2014	2013 (As Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	6,761	$	8,672
Receivables, net of allowances of $1,872 in 2014 and $1,266 in 2013		34,707		37,839
Inventories		6,687		9,729
Deferred income tax asset - current (Note 10)		2,369		1,626
Prepaid income taxes (Note 10)		1,836		3,270
Prepaid expenses and other current assets		1,973		1,869
Current assets		54,333		63,005
Property, plant and equipment, at cost:
Land and improvements		626		591
Buildings and improvements		5,144		4,341
Internal software		50,710		52,304
Equipment		47,530		50,210
Total property, plant and equipment cost		104,010		107,446
Accumulated depreciation and amortization		(57,253)		(55,514)
Net property, plant and equipment		46,757		51,932
Equity in joint ventures (Note 7)		23,835		23,234
Goodwill (Note 8)		43,218		84,436
Intangible assets, net of accumulated amortization of $37,579 in 2014 and $13,754 in 2013 (Note 8)		14,077		37,011
Dosimetry devices, net of accumulated depreciation of $4,353 in 2014 and $4,739 in 2013		3,958		4,156
Deferred income tax assets (Note 10)		18,374		100
Other assets (Note 3)		12,034		10,832
ASSETS	$	216,586	$	274,706
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,248	$	6,310
Dividends payable (Note 12)		5,329		5,419
Deferred contract revenue		14,750		14,509
Accrued compensation and related costs		7,132		8,207
Accrued severance (Note 4)		2,731		-
Other accrued expenses		8,538		8,025
Current liabilities		44,728		42,470
Non-current liabilities:
Long-term debt (Note 11)		133,585		142,785
Pension and postretirement obligations (Note 13)		19,475		13,047
Deferred income taxes (Note 10)		509		7,899
Uncertain income tax liabilities (Note 10)		3,284		3,203
Other non-current liabilities		1,271		290
Non-current liabilities		158,124		167,224
Commitments and Contingencies (Note 14)
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; 9,577,874 and 9,575,926 issued and outstanding, respectively, in 2014 and 2013 (Note 12)		958		958
Additional paid in capital		40,317		39,465
Accumulated other comprehensive loss		(10,148)		(4,408)
(Accumulated deficit) retained earnings		(18,873)		27,412
Landauer, Inc. stockholders’ equity		12,254		63,427
Noncontrolling interest		1,480		1,585
Stockholders’ equity		13,734		65,012
LIABILITIES AND STOCKHOLDERS’ EQUITY	$	216,586	$	274,706

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

Consolidated Statements of Operations

Landauer, Inc. and Subsidiaries

For the Years Ended September 30,



(Dollars in Thousands, Except per Share)	2014		2013 (As Restated)		2012
Service revenues	$	127,698	$	126,528	$	124,800
Product revenues		27,364		23,162		27,302
Net revenues		155,062		149,690		152,102
Costs and expenses:
Service costs		61,649		59,931		53,619
Product costs		12,506		11,163		11,816
Total cost of sales		74,155		71,094		65,435
Gross profit		80,907		78,596		86,667
Selling, general, and administrative		54,904		51,115		51,218
Goodwill and intangible asset impairment charge		62,188		22,700		-
Acquisition, reorganization and nonrecurring costs		3,802		1,392		4,299
Abandonment charges		-		-		3,443
Operating (loss) income		(39,987)		3,389		27,707
Equity in income of joint ventures		2,939		3,251		3,103
Interest expense, net		(3,424)		(4,311)		(3,435)
Other (expense) income, net		(26)		747		205
(Loss) income before taxes		(40,498)		3,076		27,580
Income tax (benefit) expense		(15,800)		(560)		8,206
Net (loss) income		(24,698)		3,636		19,374
Less: Net income attributed to noncontrolling interest		505		854		828
Net (loss) income attributed to Landauer, Inc.	$	(25,203)	$	2,782	$	18,546
Net (loss) income per share attributed to Landauer, Inc. shareholders:
Basic		(2.65)	$	0.28	$	1.96
Weighted average basic shares outstanding		9,524		9,434		9,389
Diluted		(2.65)	$	0.27	$	1.95
Weighted average diluted shares outstanding		9,524		9,482		9,437

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

Consolidated Statements of Comprehensive (Loss) Income

Landauer, Inc. and Subsidiaries

For the Years Ended September 30,



	2014
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net (loss) income	$	(25,203)	$	505	$	(24,698)
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of $2,152		(3,664)		-		(3,664)
Unrealized gains (losses) on available-for-sale securities, net of taxes of $4		34		-		34
Foreign currency translation adjustment, net of taxes of $1,188		(2,110)		(111)		(2,221)
Comprehensive (loss) income	$	(30,943)	$	394	$	(30,549)

	2013 (As Restated)
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	2,782	$	854	$	3,636
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of ($1,790)		3,015		-		3,015
Unrealized gains (losses) on available-for-sale securities, net of taxes of $5		30		-		30
Foreign currency translation adjustment, net of taxes of ($53)		(2,078)		(177)		(2,255)
Comprehensive income	$	3,749	$	677	$	4,426

	2012
(Dollars in Thousands)	Landauer, Inc.		Noncontrolling Interest		Total
Net income	$	18,546	$	828	$	19,374
Other comprehensive income:
Defined benefit pension and postretirement plans activity, net of taxes of $951		(1,757)		-		(1,757)
Unrealized gains (losses) on available-for-sale securities, net of taxes of $2		8		-		8
Foreign currency translation adjustment, net of taxes of $94		(386)		(197)		(583)
Comprehensive income	$	16,411	$


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)


Item		Page
Part I
1.	Business	6
	General Description	6
	Marketing and Sales	8
	Seasonality	9
	International Activities	9
	Patents	9
	Raw Materials	10
	Competition	10
	Research and Development	10
	Regulatory Matters	11
	Employees and Labor Relations	12
	Available Information	13
1A.	Risk Factors	13
1B.	Unresolved Staff Comments	22
2.	Properties	22
3.	Legal Proceedings	22
4.	Mine Safety Disclosures	23
Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
6.	Selected Financial Data	27
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
7A.	Quantitative and Qualitative Disclosures About Market Risk	40
8.	Financial Statements and Supplementary Data	41
	Consolidated Balance Sheets	41
	Consolidated Statements of Operations	43
	Consolidated Statements of Comprehensive Income	44
	Consolidated Statements of Stockholders’ Equity	45
	Consolidated Statements of Cash Flows	46
	Notes to Consolidated Financial Statements	47
	Report of Independent Registered Public Accounting Firm	86
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	88
9A.	Controls and Procedures	88
9B.	Other Information	90
Part III
10.	Directors, Executive Officers and Corporate Governance	91
11.	Executive Compensation	91
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	91
13.	Certain Relationships and Related Transactions, and Director Independence	91
14.	Principal Accounting Fees and Services	91
Part IV
15.	Exhibits, Financial Statement Schedules	92
	Financial Statements	92
	List of Exhibits	92
	Signatures	94
	Schedule II – Valuation and Qualifying Accounts	95