LANDAUER INC - 10-K Annual Report

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Securities and Exchange Commission FORM 10-K
Washington, DC 20549

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2002

Commission File Number 1-9788

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

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

2 SCIENCE ROAD, GLENWOOD, ILLINOIS 60425
----------------------------------------------------
(Address of principal executive offices and zip code)

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

Securities registered pursuant to Section 12(b) of the Act:

COMMON STOCK WITH PAR VALUE OF $.10 NEW YORK STOCK EXCHANGE
- ----------------------------------- -----------------------
(Title of each class) (Name of exchange on
which registered)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. Yes [ ] No [ X ]

Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [ X ] No [ ]

As of March 28, 2002, the aggregate market value of the voting and
nonvoting common equities (based upon the closing price on the New York
Stock Exchange) held by non-affiliates was approximately $319,000,000

Certain portions of the Registrant's definitive Proxy Statement in
connection with the February 5, 2003 Annual Meeting of Stockholders (the
"Proxy Statement") are incorporated by reference into Part III of this
Annual Report on Form 10-K.

1

INDEX

Item Page
- ---- ----

PART I

1. Business
General Description. . . . . . . . . . . . . . . . . 3
Marketing and Sales. . . . . . . . . . . . . . . . . 4
Patents. . . . . . . . . . . . . . . . . . . . . . . 4
Raw Materials. . . . . . . . . . . . . . . . . . . . 5
Competition. . . . . . . . . . . . . . . . . . . . . 5
Research and Development . . . . . . . . . . . . . . 5
Environmental and Other Governmental Regulations . . 6
Employees and Labor Relations. . . . . . . . . . . . 6
2. Properties . . . . . . . . . . . . . . . . . . . . . . . 6
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 6
4. Submission of Matters to a Vote of Security Holders. . . 6
4A. Executive Officers of the Registrant . . . . . . . . . . 7

PART II

5. Market for Registrant's Common Stock and
Related Stockholder Matters. . . . . . . . . . . . . . . 7
6. Selected Financial Data. . . . . . . . . . . . . . . . . 8
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . 8
8. Consolidated Financial Statements and Supplementary Data
Consolidated Balance Sheets. . . . . . . . . . . . . 14
Consolidated Statements of Income. . . . . . . . . . 16
Consolidated Statements of Stockholders'
Investment and Comprehensive Income. . . . . . . . 17
Consolidated Statements of Cash Flows. . . . . . . . 19
Notes to Consolidated Financial Statements . . . . . 20
Reports of Independent Accountants . . . . . . . . . 32
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . 34

PART III

10. Directors and Executive Officers of the Registrant . . . 34
11. Executive Compensation . . . . . . . . . . . . . . . . . 34
12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters . . . . . . . 34
13. Certain Relationships and Related Transactions . . . . . 34
14. Controls and Procedures. . . . . . . . . . . . . . . . . 34

PART IV

15. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
Financial Statements . . . . . . . . . . . . . . . . 35
Financial Statement Schedules. . . . . . . . . . . . 35
List of Exhibits . . . . . . . . . . . . . . . . . . 35
Reports on Form 8-K. . . . . . . . . . . . . . . . . 36
Signatures of Registrant and Directors . . . . . . . 37
Certifications . . . . . . . . . . . . . . . . . . . 38
Quarterly Financial Data (Unaudited) . . . . . . . . 40

2

PART I

ITEM 1. BUSINESS

GENERAL DESCRIPTION

Landauer, Inc. is a Delaware corporation organized on December 22,
1987 to carry on the radiation monitoring business previously established
by Tech/Ops, Inc. (Tech/Ops). On February 6, 1991, the Company changed its
name from Tech/Ops Landauer, Inc. to Landauer, Inc. As used herein, the
"Company" or "Landauer" refers to Landauer, Inc. and its subsidiaries.

The Company offers a service for measuring, primarily through
optically stimulated luminescent (OSL) badges worn by client personnel, the
dosages of x-ray, gamma radiation and other penetrating ionizing radiations
to which the wearer has been exposed. This technology is marketed under the
trade name Luxel. While most of the Company's
revenues are domestic, these services are also marketed by Landauer in
Canada and by its subsidiaries and investments in other parts of the
world. As of October 1, 1998, the Company acquired a 75% interest in SAPRA-
Landauer, Ltda., which provides radiation dosimetry services in Brazil. As
of December 28, 1998, SAPRA-Landauer acquired the radiation dosimetry
service business formerly conducted by REM in Sao Paulo, Brazil. During
July 1999, the Chinese government approved the Company's joint venture
agreement with China National Nuclear Corporation to form Beijing-Landauer,
Ltd., which provides radiation monitoring services in China. Landauer, Inc.
owns a 70% interest in Beijing-Landauer.

On April 2, 2002, the Company completed an agreement to merge its
European operations with the radiation monitoring business operated by
Laboratoire Central des Industries Electriques (LCIE), a wholly-owned
subsidiary of Bureau Veritas, a professional services company involved in
quality, health and safety, and environmental management. Under the
agreement, Landauer exchanged its United Kingdom radiation monitoring
business and its technologies for a 51% controlling interest in the new
company named LCIE-Landauer. LCIE contributed its radiation monitoring
business, all of which is located in France. LCIE-Landauer has its
headquarters and laboratory at the current LCIE location in Fontenay-aux-
Roses, a Paris suburb, and will continue to serve the United Kingdom
customers from Oxford, England. Additionally, as part of the formation of
the new entity on April 2, 2002, LCIE-Landauer purchased the Philips France
radiation monitoring business.

Landauer's activities also include the operations of Nagase-Landauer,
Ltd., a 50%-owned joint venture in Japan involved in radiation monitoring
in that country.

The Company's AurionTM service offering provides operational radiation
dose monitoring and allows users immediate information about their
radiation exposure. Based on direct ion storage (DISTM) technology,
calibration of devices and data management are provided as part of the
service. Smart card technology coupled with radio-frequency identification
provides users with the ability to assign devices to multiple users with
minimal administrative overhead. Dose management is provided by Landauer
via the Internet and radiation safety personnel can access a variety of
reports when and where they are needed.

Landauer's InLightTM dosimetry system provides smaller in-house and
commercial laboratories with the ability to offer a complete radiation
monitoring service using OSL technology. The system is based on the
Company's propriety technology and instruments and dosimetry devices
developed by Mitsushita Industrial Equipment Company and allows customers
the flexibility to tailor their precise dosimetry needs.

Landauer's operations include services for detecting radon gas. This
service makes up a small part of revenues.

3

Landauer's wholly-owned subsidiary, HomeBuyer's Preferred, Inc.,
offers a radon monitoring service and, when necessary, remediation to
purchasers of personal residences. The service is targeted to corporate
employee relocation programs that have generally regarded radon as a
serious environmental hazard.

Landauer operates a crystal manufacturing facility in Stillwater,
Oklahoma that it acquired in August 1998. Crystal material is a component
in the Company's OSL technology.

The Company's shares are listed on the New York Stock Exchange. As of
September 30, 2002, there were 8,775,337 shares outstanding. The trading
symbol is LDR.

MARKETING AND SALES

Landauer's dosimetry services are marketed primarily by full-time
Company personnel located in Illinois, California, Connecticut, Georgia,
and Texas. The Company's services are marketed through ventures in Japan,
Brazil, China, the United Kingdom and France. In addition, U.S. sales
personnel market these services in Canada. Other firms and individuals
market the Company's services on a commission basis, primarily to small
customers.

Worldwide, the Company and its affiliates serve more than 60,000
customers representing more than 1.3 million individuals. Typically, a
client will contract for a year's service in advance, representing monthly,
bimonthly or quarterly badges, readings, and reports. Sales are made
principally on a subscription basis. Customer relationships in the
radiation monitoring market served by the Company are generally stable and
recurring. Deferred contract revenue, as shown on the consolidated balance
sheet, represents advance payment for services to be rendered. At
September 30, 2002 and 2001, deferred contract revenue was $11,885,000 and
$10,890,000, respectively.

Radon gas detection kits are marketed primarily to institutional
customers and government agencies.

The HomeBuyer's Preferred Radon Protection Plan
service agreement is marketed to companies and to their corporate
relocation service providers for the benefit of purchasers of residences
incident to transfers of personnel.

PATENTS

The Company holds exclusive worldwide licenses to patent rights for
certain technologies that measure and image radiation exposure to
crystalline materials when stimulated with light. These licenses were
acquired by the Company from Battelle Memorial Institute and Oklahoma State
University as part of collaborative efforts to develop and commercialize a
new generation of radiation dosimetry technology. These licenses expire
from the years 2011 through 2015.

As of September 30, 2002, the Company is using OSL technology to
provide dosimetry services to essentially its entire domestic and many of
its international customers. These licenses and systems represent an
important proprietary component of the OSL commercial service known as
Luxel.

Additionally, the Company holds certain patents that relate to various
dosimeter designs. These patents expire in 2017.

The Company believes that its business is primarily dependent upon the
Company's technical competence, the quality and reliability of its
services, and its prompt and responsive performance.

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

4

RAW MATERIALS

The Company has many sources for most of its materials and supplies,
and believes that the number of sources and availability of items are
adequate. Landauer internally produces certain of its requirements, such as
OSL detector materials and plastic badge holders.

COMPETITION

Landauer has one major competitor in the United States as well as a
number of smaller competitors that operate in the United States.

In much of the world, radiation monitoring activities are conducted by
a combination of private entities and government agencies. The Japanese
market is served by the Company through its 50%-owned joint venture,
Nagase-Landauer, Ltd. In early 1995, the Company began offering radiation
monitoring services to customers in Canada following approval of the
Company's devices by Canadian authorities. The Company began offering
service to customers in China during fiscal 2000. Customers in Brazil are
served through the Company's joint venture, SAPRA-Landauer, Ltda., while
customers in the United Kingdom and France are served through the Company's
joint venture LCIE-Landauer by its headquarters in suburban Paris, France
and sales office in Oxford, England.

In the United States, most government agencies, such as the Department
of Energy and Department of Defense, have their own in-house radiation
monitoring services. Additionally, many large private nuclear power plants
also have their own in-house radiation monitoring services.

The Company competes on the basis of advanced technologies, competent
execution of these technologies, the quality and reliability of its
services, and its prompt and responsive performance.

The Company's InLightTM dosimetry system, while competitive with a
number of systems offered by other companies, provides the only OSL-based
radiation protection monitoring system available.

The AurionTM operational radiation monitoring service competes with
several electronic devices available throughout the world. Landauer has
focused its marketing efforts for Aurion to include value added services
for calibration, data management and administrative ease in assignment of
devices to multiple users.

Radon gas detection services represent a market where Landauer has
many large and small competitors, many of whom use short-term charcoal
detectors rather than the Company's alpha-track detectors.

The HomeBuyer's Preferred Radon Protection Plan
represents a product sold exclusively to the corporate relocation market
through firms providing relocation services and directly to corporate
customers.

RESEARCH AND DEVELOPMENT

Present research seeks to expand the use of OSL, particularly as it
applies to radiation measurements in therapeutic and diagnostic radiology
and nuclear medicine as well as environmental radiation dosimetry. The
InLightTM dosimeter system recently released for commercial application
will enable the Company's subsidiaries and other small dosimetry
laboratories an economical approach to practice the OSL technology.

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 Oklahoma State University. The Company
commercialized this technology over the past three years and has converted
nearly all of its customers to the new technology.

5

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 monitoring.

ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATIONS

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

The U.S. Postal Service has studied the feasibility of irradiating
letters and packages to protect the public from exposure to certain
biological compounds and determined that there are other more practical
methods available to achieve the desired result. Accordingly, it is not
currently expected that use of irradiation in connection with the mails
will become widespread to the extent that it impacts the Company's ability
to continue providing its service to customers that use the U.S. mails.

EMPLOYEES AND LABOR RELATIONS

As of September 30, 2002, the Company employed approximately 425 full-
time employees worldwide. Landauer believes its relations with its
employees are good.

ITEM 2. PROPERTIES

Landauer owns three adjacent buildings totaling approximately 60,000
square feet in Glenwood, Illinois, about 30 miles south of Chicago. The
properties house the Company's administrative offices, laboratory, assembly
and reading operations and warehouse. 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. The Company maintains a
crystal growth facility in Stillwater, Oklahoma and maintains small offices
and/or locations in Japan, the United Kingdom, Brazil, China, and France.

ITEM 3. LEGAL PROCEEDINGS

At September 30, 2002, Landauer was involved in various legal
proceedings, but believes that these matters will be resolved without a
material effect on its liquidity, results of operation, or financial
position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

6

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company are as follows:

Name of Officer Age Position

Brent A. Latta 59 President and Chief
Executive Officer
James M. O'Connell 55 Vice President,
Finance, Treasurer,
Secretary, and
Chief Financial Officer
R. Craig Yoder 50 Senior Vice President,
Marketing and Technology
Joseph M. Zlotnicki 46 Vice President - International
Robert M. Greaney 49 Vice President - Operations

All of the Company's executive officers have been employed by the
Company for more than ten years. Mr. Latta, who joined the Company in April
1987 as Vice President, had for more than five years previously been Vice
President, Marketing of Sherwood Medical Company, a manufacturer and
distributor of medical products. Prior to being elected President and Chief
Executive Officer in 1998, Mr. Latta served as the Vice President Marketing
of the Company. Mr. O'Connell, prior to joining the Company in September
1990, served in various financial capacities in the telecommunications,
manufacturing and financial services industries. Dr. Yoder was elected to
his position after serving as the Company's Vice President of Operations
since 1994 and Technology Manager since joining in 1983. Prior to joining
the Company, he was a member of the senior technical staff at Pennsylvania
Power and Light, and at Battelle Pacific Northwest Laboratory. Mr.
Zlotnicki was elected to his position in 2000 and has served Landauer for
more than ten years, most recently as Manager of Corporate Development.
Prior to joining Landauer, Mr. Zlotnicki worked ten years for Amersham
International. Mr. Greaney was elected to his position in February 2001. He
has held positions of increasing responsibility involving operations and
project management since joining the Company in 1973.

There are no family relationships between any director or executive
officer and any other director or executive officer of the Company.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS

The Company's Common Stock was traded on the American Stock Exchange
from 1988 through January 14, 2002. The Company's Common Stock began
trading on the New York Stock Exchange on January 15, 2002. A summary of
market prices of the Company's Common Stock is set forth in the table on
page 40 of this Annual Report on Form 10-K. On December 20, 2002, there
were approximately 600 shareholders of record. The Company believes that
there are approximately 2,000 beneficial owners of its Common Stock. There
were no sales of unregistered securities during fiscal 2002.

The Company has paid regular quarterly cash dividends since January
1990. The Company has also paid special cash dividends in 1990 and 1992. On
November 6, 2002, the Company announced that it had increased the regular
quarterly cash dividend by 7% to $0.375 per share for the first quarter of
fiscal 2003. This increase represents an annual rate of $1.50 per share
compared with $1.40 paid in fiscal 2002. A summary of cash dividends paid
for the last two years is set forth in the table on page 40 of this Annual
Report on Form 10-K.

7

ITEM 6. SELECTED FINANCIAL DATA

A summary of selected financial data for the last six years is set
forth on page 41 of the Company's Annual Report to Stockholders
accompanying this Annual Report on Form 10-K.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

FISCAL 2002 COMPARED TO FISCAL 2001

Net revenues for fiscal 2002 were $58,608,000 compared with revenues
of $53,028,000 reported for fiscal 2001, a gain of 10.5%. Revenue growth
for fiscal 2002 reflected higher pricing for dosimetry services, increased
demand for ancillary products and the services this technology offers to
our customers, and account gains in key market segments. Also contributing
to revenue growth, beginning in the second half of the fiscal year was the
consolidation of the operations of LCIE-Landauer, the Company's 51%-owned
operating unit in France and the United Kingdom.

Costs and expenses in fiscal 2002 grew at a slightly lower rate than
revenues despite costs associated with the formation of LCIE-Landauer,
moving the Company's listing to the New York Stock Exchange, and ongoing
investment in the development of new products and markets. Gross margins
increased moderately from 64.7% in fiscal 2001 to 65.1% in fiscal 2002.

Net other income was more than $1,100,000 greater than in fiscal 2001
reflecting the recognition of a $786,000 gain arising from the exchange of
a portion of the Company's United Kingdom business for a controlling
interest in LCIE-Landauer. Higher investment and joint venture income also
contributed to the increase. The Company's effective tax rate was 37.3% for
fiscal 2002, slightly higher than a year ago at 36.5%.

As a result, net income for fiscal 2002 increased $1,856,000 or 13%,
to $16,180,000. Diluted earnings per share increased from $1.64 in fiscal
2001 to $1.83 in fiscal 2002. Excluding the gain on the formation of LCIE-
Landauer, net income for fiscal 2002 was $15,669,000 or $1.77 per diluted
share, an increase of 9.4% compared with fiscal 2001.

Certain reclassifications have been made in the financial statements
for comparative purposes. These reclassifications have no effect on the
results of operation or financial position.

FISCAL 2001 COMPARED TO FISCAL 2000

Net revenues for fiscal 2001 were $53,028,000 compared with revenues
of $47,174,000 reported for fiscal 2000, a gain of 12.4%. Revenue growth
for fiscal 2001 reflected improved pricing for the value provided by
Luxel, stronger demand for the ancillary products and
services this technology offers to our customers and account gains in key
market segments. Also contributing to revenue growth was the acquisition of
a small dosimetry service provider early in the year.

Costs and expenses in fiscal 2001 grew at a slightly lower rate than
revenues. Gross margins increased moderately and operating expense
increased, primarily the result of our ongoing investment in the
development of new products, markets and technologies.

Net other income was almost 25% lower than in fiscal 2000 reflecting
lower investment income and lower venture income. Although income taxes
were higher, the Company's effective tax rate was lower than a year ago at
36.5%.

8

As a result, net income for fiscal 2001 increased $1,562,000 or 12.2%,
to $14,324,000. Diluted earnings per share increased from $1.47 in fiscal
2000 to $1.64 in fiscal 2001.

Certain reclassifications have been made in the financial statements
for comparative purposes. These reclassifications have no effect on the
results of operation or financial position.

FOURTH QUARTER RESULTS OF OPERATIONS

Revenues in the fourth quarter of fiscal 2002 were 13.3% higher than
reported in the same period in fiscal 2001. Revenue growth for the quarter
reflected improved pricing as well as incremental volume, and includes the
impact of the consolidation of the operations of LCIE-Landauer, the
Company's 51%-owned operating unit in France and the United Kingdom. Net
income for the quarter of $4,173,000 represented a 9.8% increase compared
with the same period in 2001. Diluted income per share for the fourth
quarters of 2002 and 2001 was $.47 and $.43, respectively.

Revenues in the fourth quarter of fiscal 2001 were 10.4% higher than
reported in the same period in fiscal 2000. Revenue growth for the quarter
reflected improved pricing as well as incremental volume, primarily
achieved through the acquisition of a small dosimetry service provider
early in fiscal 2001. Net income for the quarter of $3,799,000 represented
a 12% increase compared with the same period in 2000. Diluted income per
share for the fourth quarters of 2001 and 2000 was $.43 and $.39,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

Landauer's cash flows, as shown in the statement of cash flows, can
differ from year to year as a result of the Company's operating, investing,
and financing activities. Investments in short-term instruments with
maturity of greater than three months are classified separately from cash
and equivalents, and investments with maturities of greater than one year
are classified as noncurrent assets.

Investing activities included acquisitions of property, plant and
equipment (including amortizable dosimetry device components) and amounted
to $4,656,000 and $3,219,000, respectively, in fiscal 2002 and 2001. In
September 2000, the Company invested $2,550,000 to acquire certain assets
of the Eberline Analytical Corporation. Cash paid for income taxes was
$10,096,000 in 2002 and $7,127,000 in fiscal 2001.

At September 30, 2002, the Company had no significant long-term
liabilities and its requirement for cash flow to support investing
activities is generally limited. Capital expenditures for fiscal 2003 are
expected to amount to $8,200,000, principally for equipment and information
technology infrastructure. The Company anticipates that funds for these
capital improvements will be provided from operations.

The Company presently maintains bank lines of credit totaling
$5,000,000. In the opinion of management, resources are adequate for
projected operations and capital spending programs, as well as continuation
of the regular cash dividend program.

Landauer requires limited working capital for its operations since
many of its customers pay for annual services in advance. Such advance
payments amounted to $11,885,000 and $10,890,000, respectively, as of
September 30, 2002 and 2001, and are included in deferred contract revenue.
While these amounts represent approximately one-half of current
liabilities, such amounts generally do not represent a cash requirement.

Landauer offers radiation monitoring services in the United Kingdom,
Canada, Japan, Brazil, China, and France. The Company's operations in these
markets do not depend on significant capital resources.

9

The Company is exposed to market risk, including changes in foreign
currency exchange rates and interest rates. As discussed in Note 1,
"Summary of Significant Accounting Policies" to the consolidated financial
statements, the financial statements of the Company's non-U.S. subsidiaries
are remeasured into U.S. dollars using the U.S. dollar as the functional
currency. The market risk associated with foreign currency exchange rates
is not material in relation to the Company's financial position, results of
operations, or cash flows. The Company does not have any significant trade
accounts receivable, trade accounts payable, commitments or borrowings in a
currency other than that of the reporting units functional currency. As
such, the Company does not use derivative financial instruments to manage
the exposure in its non-U.S. operations.

NEW ACCOUNTING PRONOUNCEMENTS

On October 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 142 that requires that goodwill and certain
intangible assets no longer be amortized to earnings, but be reviewed
periodically for impairment. For acquisitions completed prior to June 30,
2001, the amortization of goodwill and certain intangible assets has ceased
beginning in fiscal year 2002. The Company did not recognize goodwill
amortization expense in fiscal 2002. Goodwill amortization expense
aggregated $190,000 in fiscal 2001 and $197,000 in fiscal 2000. Diluted EPS
increased by approximately $0.02 in 2002 due to the reduction in
amortization expense. The provisions of SFAS No. 142 that pertain to
impairment of goodwill and certain intangible assets have superseded the
impairment related provisions included in SFAS No. 121. As a result of
applying the new impairment provisions of SFAS No. 142, no impairment loss
was indicated. Goodwill and other intangible assets at September 30, 2002
consisted of the following:

ACCUMU-
LATED
GROSS AMORTI- NET
(DOLLARS IN THOUSANDS) AMOUNT ZATION AMOUNT
- ---------------------- ------ ------- ------

Intangible Assets Continuing
to be Amortized:

Customer Lists. . . . . . . . . . . . . $2,681 $ 300 $2,381
(Useful Life of 10 Years)

Licenses & Patents. . . . . . . . . . . 811 218 593
(useful Life of 10-15 Years)

Other Intangibles . . . . . . . . . . . 669 223 446
------ ----- ------

Total . . . . . . . . . . . . . . . $4,161 $ 741 $3,420
====== ===== ======

Goodwill No Longer Being Amortized. . . $5,181
------
Total Goodwill & Other Intangible
Assets. . . . . . . . . . . . . . . . $8,601
======

Estimated annual aggregate amortization expense related to these
intangible assets will be approximately $355,000 for each of the next five
years.

10

In June 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 143, "Accounting for Asset Retirement Obligations." The provisions
of this statement are required to be applied starting with fiscal years
beginning after June 15, 2002. This statement addresses financial
accounting and reporting obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. The
adoption of SFAS No. 143 has no impact on the Company's financial
statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 defines
impairment for long-lived assets and provides guidance on the measurement
of asset impairments. The adoption of SFAS No. 144 has no impact on the
Company's financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No., 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections." SFAS No. 145 eliminates the exception to applying
APB Opinion 30 to all gains and losses related to extinguishments of debt.
The adoption of SFAS No. 145 has no impact on the Company's financial
statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement requires that
a liability for costs associated with an exit or disposal activity be
recognized when the costs are incurred rather than at the date of a
commitment to the exit or disposal plan. This statement will be applied
prospectively to exit or disposal activities that are initiated after
December 31, 2002. The adoption of SFAS No. 146 has no impact on the
Company's financial statements.

INFLATION

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

COMPUTER SOFTWARE MODIFICATIONS

During 1996, the Company established an internal task force to review
the extent to which the Company's computer software, computer hardware and
non-information technology system were year 2000 compliant. This task
force, assisted in certain instances by outside consultants, completed an
internal assessment of the systems with a view to determining whether any
remediation or replacement was necessary for the continued operation of
such systems. The Company focused its compliance efforts on software,
hardware and non-information technology systems.

The Company completed remediation, installation and compliance testing
of all of its mission critical software and hardware systems. The Company
experienced no significant adverse consequences as a result of year 2000
compliance issues.

The total cost of remediation and replacement of its non-compliant
systems amounted to $2,069,000, of which $606,000 was capitalized.

11

FORWARD LOOKING STATEMENTS

Certain matters contained in this report are forward-looking
statements, including, without limitation, statements concerning the
development and introduction of new technologies, the adaptability of OSL
to new platforms and new formats, the usefulness of older technologies, the
cost associated with the Company's business development and research
efforts, the Company's business plans, foreign exchange risks, government
regulations, changes in postal and delivery practices, the Company's market
position, the risks of conducting business internationally, the effects of
changing economic and competitive conditions, and pending accounting
announcements. The words "believe", "expect", anticipate", and "estimate"
and other similar expressions generally identify forward-looking
statements. All forward-looking statements contained herein are based
largely on the Company's current expectations and are subject to a number
of risks and uncertainties that could cause actual results to differ
materially from the forward-looking statements.

CRITICAL ACCOUNTING POLICIES

The Securities and Exchange Commission (SEC) issued statements
regarding disclosure by companies within their management's discussion and
analysis of financial condition and results of operations. In those
statements, the SEC encouraged companies to identify critical accounting
policies. 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. In response to the SEC statements, management has
identified the following critical accounting policies used in the
preparation of our financial statements and accompanying notes.

REVENUE RECOGNITION AND DEFERRED CONTRACT REVENUE

The Company recognizes revenues and the related costs for its services
in the periods for which such services are provided. Many customers pay for
these services in advance. The amounts recorded as deferred contract
revenue in the consolidated balance sheet represent customer deposits
invoiced in advance during the preceding twelve months for services
rendered over the succeeding twelve months, and are net of services
rendered through the respective consolidated balance sheet date. Such
advance billings amounted to $11,885,000 and $10,890,000, respectively, as
of September 30, 2002 and September 30, 2001, are included in deferred
contract revenue, and are stated net of services rendered through the
respective consolidated balance sheet dates. Management believes that the
amount of deferred revenue shown at the respective consolidated balance
sheet dates fairly represents the level of business activity it expects to
conduct with customers invoiced under this arrangement.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Management judgments and estimates are utilized in connection with
establishing an allowance for the possibility that portions of the
Company's accounts receivable balances may become uncollectable.
Specifically, management analyzes accounts in relation to receivable aging
trends, economic factors, and changes in customer payment history in
establishing this allowance. Accounts receivable are reduced by this
allowance of $482,000 as of September 30, 2002 and $368,000 as of
September 30, 2001, amounted to $13,620,000 and $11,713,000, respectively,
as of September 30, 2002 and September 30, 2001.

12

PROPERTY, PLANT & EQUIPMENT

Plant and equipment are recorded at cost and are depreciated on a
straight-line basis over the estimated useful lives, which are primarily
thirty years for buildings and three to eight years for equipment. Landauer
assesses the carrying value of its property plant and equipment and the
remaining useful lives whenever events or circumstances indicate the
carrying value may not be recoverable or the estimated useful life may no
longer be appropriate. Factors considered important which could trigger
this review included competitive conditions, government regulations and
technological changes. Maintenance and repairs are charged to expense, and
renewals and betterments are capitalized.

GOODWILL AND OTHER INTANGIBLE ASSETS

The Company's intangible assets are comprised of goodwill, purchased
customer lists, licenses and patents. On October 1, 2001, the Company
adopted SFAS No. 142 which requires that goodwill and certain intangible
assets no longer be amortized to earnings, but be reviewed periodically for
impairment. For acquisitions completed prior to June 30, 2001, the
amortization of goodwill and certain intangible assets has ceased beginning
in fiscal year 2002. The provisions of SFAS No. 142 that pertain to
impairment of intangible assets have superseded the impairment related
provisions included in SFAS No. 121, beginning in fiscal year 2002. Under
SFAS No. 142, the impairment review of goodwill and other intangible assets
that are not being amortized must be based generally on fair values,
instead of projected future undiscounted cash flows. The fair values of
these assets were calculated based on discounted cash flow analyses. As a
result of initially applying the new impairment provisions of SFAS No. 142,
no impairment loss was required. Purchased customer lists are recorded at
cost and are amortized on a straight-line basis over the estimated useful
lives, which are primarily ten 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 15 years.

13

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS
LANDAUER, INC. AND SUBSIDIARIES

(Dollars in Thousands)
As of September 30, Notes 2002 2001
- ------------------- ----- ------- -------

ASSETS

Current assets:
Cash and cash equivalents . . . . . 1 $ 7,627 $ 7,055
Short-term investments. . . . . . . 1 317 387
Receivables, net of allowance for
doubtful accounts of $482 in
2002 and $368 in 2001 . . . . . . 13,620 11,713
Inventories . . . . . . . . . . . . 1 2,135 1,693
Prepaid expenses. . . . . . . . . . 773 707
Prepaid income taxes. . . . . . . . 1 & 5 2,358 --
------- -------
Total current assets. . . . . . . . . 26,830 21,555
------- -------
Property, plant and equipment,
at cost: . . . . . . . . . . . . . . 1
Land and improvements . . . . . . . 538 538
Buildings and improvements. . . . . 3,768 3,519
Equipment . . . . . . . . . . . . . 33,198 31,360
------- -------
37,504 35,417
Less: accumulated depreciation
and amortization. . . . . . . . . 19,325 18,917
------- -------
Net property, plant and equipment . . 18,179 16,500
------- -------

Equity in joint venture . . . . . . . 3 2,806 2,331
Goodwill and other intangible
assets, net of amortization . . . . 1 & 4 8,601 7,216
Dosimetry devices, net of
amortization. . . . . . . . . . . . 3,546 2,585
Other assets. . . . . . . . . . . . . 295 363
------- -------

TOTAL ASSETS. . . . . . . . . . . . . $60,257 $50,550
======= =======

14

CONSOLIDATED BALANCE SHEETS - CONTINUED
LANDAUER, INC. AND SUBSIDIARIES

(Dollars in Thousands)
As of September 30, Notes 2002 2001
- ------------------- ----- ------- -------

LIABILITIES AND
STOCKHOLDERS' INVESTMENT

Current liabilities:
Accounts payable. . . . . . . . . . $ 1,789 $ 627
Dividends payable . . . . . . . . . 3,071 3,055
Deferred contract revenue . . . . . 1 11,885 10,890
Accrued compensation and
related costs . . . . . . . . . . 2,505 2,242
Accrued pension costs . . . . . . . 8 1,922 1,831
Accrued taxes on income . . . . . . 1 & 5 1,753 306
Other accrued expenses. . . . . . . 2,264 1,842
------- -------
Total current liabilities . . . . . . 25,189 20,793
------- -------

Minority interest . . . . . . . . . . 462 114

Commitments and contingencies . . . . 6 & 9 -- --

STOCKHOLDERS' INVESTMENT. . . . . . . 7 & 10
Preferred stock . . . . . . . . . . . -- --
Common stock. . . . . . . . . . . . . 878 873
Premium paid in on common stock . . . 10,946 9,876
Cumulative translation adjustments. . (855) (826)
Retained earnings . . . . . . . . . . 23,637 19,720
------- -------
Total stockholders' investment. . . . 34,606 29,643
------- -------

TOTAL LIABILITIES AND
STOCKHOLDERS' INVESTMENT. . . . . . $60,257 $50,550
======= =======

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

15

CONSOLIDATED STATEMENTS OF INCOME
LANDAUER, INC. AND SUBSIDIARIES

(Dollars in Thousands, Except per Share)
For the years ended
September 30, Notes 2002 2001 2000
- ------------------- ----- -------- -------- --------

Net revenues. . . . . . . $ 58,608 $ 53,028 $ 47,174
Costs and expenses:
Cost of sales . . . . . 20,462 18,716 16,959
Selling, general, and
administrative. . . . 1 13,747 12,438 10,379
Impairment in value
of assets . . . . . . 11 -- -- 520
-------- -------- --------
34,209 31,154 27,858

Operating income. . . . . 24,399 21,874 19,316
Equity in income of
joint venture . . . . . 3 735 502 759

Other income. . . . . . . 1,137 256 240
-------- -------- --------
Income before taxes . . . 26,271 22,632 20,315
Income taxes. . . . . . . 1 & 5 (9,811) (8,269) (7,519)
-------- -------- --------
Income before minority
interest. . . . . . . . 16,460 14,363 12,796
Minority interest . . . . (280) (39) (34)
-------- -------- --------
Net income. . . . . . . . $ 16,180 $ 14,324 $ 12,762
======== ======== ========
Net income per share: . . 2
Basic . . . . . . . . . . $ 1.85 $ 1.65 $ 1.47
Diluted . . . . . . . . . $ 1.83 $ 1.64 $ 1.47
======== ======== ========

16

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
AND COMPREHENSIVE INCOME

LANDAUER, INC. AND SUBSIDIARIES
(Dollars in Thousands)

18

CONSOLIDATED STATEMENTS OF CASH FLOWS
LANDAUER, INC. AND SUBSIDIARIES

(Dollars in Thousands)
For the years ended
September 30, 2002 2001 2000
- ------------------- -------- -------- --------

Cash flow from operating activities:
Net income. . . . . . . . . . . . .$ 16,180 $ 14,324 $ 12,762
Non-cash expenses, revenues,
and gains reported in income:
Non-cash gain from exchange
of assets . . . . . . . . . . . (786) -- --
Depreciation and amortization . . 4,370 4,475 4,025
Equity in income of joint
venture . . . . . . . . . . . . (735) (502) (759)
Compensatory effect of stock
options . . . . . . . . . . . . 1,075 1,130 41
Deferred income taxes . . . . . . 1,216 (291) 1,139
-------- -------- --------
5,140 4,812 4,446
-------- -------- --------
Net increase in other current assets. (4,703) (529) (1,535)
Net increase in current liabilities . 2,660 853 2,519
Net increase in net long-term assets. (1,763) (1,680) (1,650)
-------- -------- --------
(3,806) (1,356) (666)
-------- -------- --------
Net cash generated from
operating activities. . . . . . . . 17,514 17,780 16,542

Cash flow from investing activities:
Acquisition of investments. . . . . (877) -- (2,550)
Acquisition of property, plant
and equipment . . . . . . . . . . (4,656) (3,219) (3,799)
-------- -------- --------
Net cash used by investing
activities. . . . . . . . . . . . . (5,533) (3,219) (6,349)
Cash flow from financing activities:
Dividend received from foreign
affiliate . . . . . . . . . . . . 334 1,645 400

Advance from joint venture partner. 504 -- --
Dividends paid. . . . . . . . . . . (12,247) (12,152) (12,116)
-------- -------- --------
Net cash used by financing activities (11,409) (10,507) (11,716)
-------- -------- --------
Net increase (decrease) in cash . . . 572 4,054 (1,523)
Opening balance - cash and
cash equivalents. . . . . . . . . . 7,055 3,001 4,524
-------- -------- --------
Ending balance - cash and
cash equivalents. . . . . . . . . .$ 7,627 $ 7,055 $ 3,001
======== ======== ========
Supplemental Disclosure of
Cash Flow Information:
Cash paid for income taxes. . . . .$ 10,096 $ 7,127 $ 5,302
======== ======== ========
Supplemental Non-cash Investing
and Financing Information:
Dividend declared . . . . . . . . .$ 3,071 $ 3,055 $ 3,031
Foreign currency translation
adjustment. . . . . . . . . . . . (29) (454) (107)
======== ======== ========

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

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LANDAUER, INC. AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the
accounts of Landauer, Inc.; HomeBuyer's Preferred, Inc., its wholly-owned
subsidiary; SAPRA-Landauer, Ltda., its 75%-owned subsidiary; Beijing-
Landauer, Ltd., its 70%-owned subsidiary; and LCIE-Landauer, its 51%-owned
subsidiary, ("Landauer" or the "Company"). Nagase-Landauer, Ltd. (50%-
owned) is a Japanese corporation that is accounted for on the equity basis.
All material intercompany transactions have been eliminated.

The cost of purchased businesses included in the accompanying
consolidated financial statements exceeded the fair value of net
identifiable tangible and intangible assets at the date of acquisition in
the amount of $8,430,000. As of September 30, 2002 and 2001, accumulated
amortization was $3,249,000 and $3,084,000, respectively. On October 1,
2001, the Company adopted SFAS No. 142 that requires the goodwill and
certain intangible assets no longer be amortized to earnings, but be
reviewed periodically for impairment. For acquisitions completed before
June 30, 2001, the amortization of goodwill and certain intangible assets
has ceased beginning in fiscal year 2002. The Company did not recognize
goodwill amortization expense in fiscal 2002. Goodwill amortization expense
aggregated $190,000 in fiscal 2001 and $197,000 in fiscal 2000. Diluted EPS
increased by approximately $0.02 in 2002 due to the reduction in
amortization expense. The provisions of SFAS No. 142 that pertain to
impairment of goodwill and certain intangible assets have superseded the
impairment related provisions included in SFAS No. 121. As a result of
applying the new impairment provisions of SFAS No. 142, no impairment loss
was indicated. Please refer to footnote 4 for additional information.

Certain of the Company's foreign investments, where the U.S. dollar is
not the functional currency, are subject to currency translation
adjustments in accordance with SFAS No. 52.

CASH EQUIVALENTS

Cash equivalents include investments with an original maturity of
three months or less. Primarily all investments are short-term money market
instruments.

INVESTMENTS

Investments having an original maturity of longer than three months
but less than one year are classified as current assets. Those having an
original maturity of longer than one year are classified as noncurrent
assets.

INVENTORIES

Inventories of material utilized in the construction of dosimeter
badges are valued at cost utilizing a first-in, first-out method.

20

REVENUES AND DEFERRED CONTRACT REVENUE

The Company recognizes revenues and the related costs for its services
in the periods for which such services are provided. Many customers pay for
these services in advance. The amounts recorded as deferred contract
revenue in the consolidated balance sheet represent customer deposits
invoiced in advance during the preceding twelve months for services to be
rendered over the succeeding twelve months, and are net of services
rendered through the respective consolidated balance sheet date. Management
believes that the amount of deferred contract revenue shown at the
respective consolidated balance sheet date fairly represents the level of
business activity it expects to conduct with customers invoiced under this
arrangement.

RESEARCH AND DEVELOPMENT

The cost of research and development programs is charged to selling,
general and administrative expense as incurred and amounted to
approximately $941,000 in 2002, $694,000 in 2001, and $522,000 in 2000. In
addition, during fiscal 2000 the Company received a $500,000 technology
cost reimbursement from its 50%-owned Japanese subsidiary, Nagase-Landauer.
The payment reimburses a portion of costs incurred by the parent company in
developing and implementing the Luxel technology.

DEPRECIATION, AMORTIZATION AND MAINTENANCE

Plant and equipment are depreciated on a straight-line basis over
their estimated useful lives, which are primarily thirty years for
buildings and three to eight years for equipment. Dosimetry devices
(principally badges) are amortized on a straight-line basis over their
estimated lives, which are three to five years. Maintenance and repairs are
charged to expense, and renewals and betterments are capitalized.

ADVERTISING

The Company expenses the costs of advertising as incurred.

INCOME TAXES

Landauer files income tax returns in the jurisdictions in which it
operates. For financial statement purposes, provisions for federal and
state income taxes have been computed in accordance with the provisions of
SFAS No. 109 entitled "Accounting for Income Taxes."

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

Certain reclassifications have been made in the financial statements
for comparative purposes. These reclassifications have no effect on the
results of operations or financial position.

2. INCOME PER COMMON SHARE

Earnings per share computations have been made in accordance with the
provisions of SFAS No. 128, "Earnings Per Share." Basic earnings per share
were computed by dividing net income by the weighted average number of
shares of common stock outstanding during each year. Diluted earnings per
share were computed by dividing net income by the weighted average number
of shares of common stock that would have been outstanding assuming
dilution during each year.

21

Following is a table that shows the weighted average number of shares
of common stock for the years ended September 30:

(Amounts in Thousands) 2002 2001 2000
- ---------------------- ------ ------ ------

Weighted Average Number of Shares
of Common Stock Outstanding . . . . 8,756 8,693 8,661

Options Issued to Executives. . . . . 99 54 24
------ ------ ------
Weighted Average Number of Shares
of Common Stock Assuming Dilution . 8,855 8,747 8,685
====== ====== ======

Following is a table that provides net income and earnings per share
for the years ended September 30:

(Dollars in Thousands,
Except Per Share) 2002 2001 2000
- ---------------------- ------- ------- -------

Net Income: . . . . . . . . . . . . . $16,180 $14,324 $12,762
Basic EPS:. . . . . . . . . . . . . . $ 1.85 $ 1.65 $ 1.47
Diluted EPS:. . . . . . . . . . . . . $ 1.83 $ 1.64 $ 1.47
======= ======= =======

3. EQUITY IN JOINT VENTURE

The 50% interest in the common stock of Nagase-Landauer, Ltd., a
Japanese corporation located in Tokyo and engaged in providing radiation
monitoring services in Japan, is accounted for on the equity basis. The
related equity in earnings of this joint venture is included in its own
caption in the accompanying Statements of Income.

Condensed unaudited results of operations for Nagase-Landauer, Ltd.
for the years ended September 30, are as follows, converted into U.S.
dollars at the then-current rate of exchange:

(Dollars in Thousands) 2002 2001 2000
- ---------------------- ------- ------- -------

Revenues. . . . . . . . . . . . . . . $12,790 $12,169 $13,509
Income Before Income Taxes. . . . . . 2,642 1,728 2,910
Net Income. . . . . . . . . . . . . . 1,470 1,005 1,519
======= ======= =======

Average Exchange Rate (/$) . . . 125.9 119.4 106.4
======= ======= =======

Condensed unaudited balance sheets for the years ended September 30,
2002 and 2001 are as follows:

(Dollars in Thousands) 2002 2001
- ---------------------- ------- -------

Current Assets. . . . . . . . . . . . $ 9,685 $ 7,949
Other Assets. . . . . . . . . . . . . 1,943 1,915
------- -------
Total Assets. . . . . . . . . . . . . $11,628 $ 9,864
======= =======

Liabilities . . . . . . . . . . . . . $ 6,016 $ 5,202
Stockholders' Investment. . . . . . . 5,612 4,662
------- -------
Total liabilities and
Stockholders' Investment. . . . . . $11,628 $ 9,864
======= =======

22

4. GOODWILL AND OTHER INTANGIBLE ASSETS

On October 1, 2001, the Company adopted SFAS No. 142 "Goodwill and
Other Intangible Assets." SFAS No. 142 requires that goodwill and certain
intangible assets no longer be amortized to earnings, but be reviewed
periodically for impairment. SFAS No. 142 requires transitional disclosure
of what reported income before extraordinary items and net income would
have been in all periods presented, exclusive of amortization expense
recognized in those periods related to goodwill and intangible assets that
are no longer being amortized. Similarly, adjusted per-share amounts also
are required to be disclosed for all periods presented.

The amortization expense and net income of the Company for 2002 and
the prior two years are shown in the table below.

(Dollars in Thousands,
Except Per Share) 2002 2001 2000
- ---------------------- ------- ------- -------

Reported Net Income . . . . . . . . . $16,180 $14,324 $12,762
Add Back Goodwill Amortization. . . . -- 131 135
------- ------- -------
Adjusted Net Income . . . . . . . . . $16,180 $14,455 $12,897
======= ======= =======
Reported EPS - Basic. . . . . . . . . $ 1.85 $ 1.65 $ 1.47
Goodwill Amortization . . . . . . . . -- 0.02 0.02
------- ------- -------
Adjusted EPS - Basic. . . . . . . . . $ 1.85 $ 1.67 $ 1.49
======= ======= =======
Reported EPS - Diluted. . . . . . . . $ 1.83 $ 1.64 $ 1.47
Goodwill Amortization . . . . . . . . -- 0.02 0.02
------- ------- -------
Adjusted EPS - Diluted. . . . . . . . $ 1.83 $ 1.66 $ 1.49
======= ======= =======

The components of goodwill and other intangible assets for the years
ended September 30, 2002 and 2001 are as follows:

(Dollars in Thousands) 2002 2001
- ---------------------- ------- -------

Goodwill. . . . . . . . . . . . . . . $ 5,181 $ 5,298
(No Longer Amortized)
Customer List, Net of Amortization. . 2,381 865
(Useful Life of 10 Years)
Licenses and Patents, Net of
Amortization. . . . . . . . . . . . 593 643
(Useful Life of 10-15 Years)
Other Intangibles, Net of
Amortization. . . . . . . . . . . . 446 410
------- -------
Total . . . . . . . . . . . . . . . . $ 8,601 $ 7,216
======= =======

The intangible asset amounts noted above are presented net of
accumulated amortization of $3,990,000 at September 30, 2002 and $3,738,000
at September 30, 2001. Amortization of intangible assets was $271,000,
$558,000, and $314,000 for the years ended September 30, 2002, 2001 and
2000, respectively. Estimated annual aggregate amortization expense related
to intangible assets will be approximately $355,000 for each of the next
five years.

In September 2000, the Company invested $2,550,000 to acquire certain
assets, including a customer list of Eberline Analytical Corporation, a
division of ThermoRetec Corporation. The Company began providing dosimetry
services to the former Eberline customers in October 2000. The acquisition
was accounted for as a purchase, and the customer list is amortized over a
ten-year period.

23

On April 2, 2002, the Company completed an agreement to merge its
European operations with Laboratoire Central des Industries Electriques
(LCIE), a wholly-owned subsidiary of Bureau Veritas, a professional
services company involved in quality, health and safety, and environmental
management. Under the agreement, Landauer exchanged its United Kingdom
radiation monitoring business with annual revenues of approximately
$1,500,000 and its technologies for a 51% controlling interest in the new
company named LCIE-Landauer. LCIE contributed its radiation monitoring
business that has current annual revenues of more than $3,000,000, all of
which is located in France. The Company recognized a gain of $786,000
arising from this transaction. LCIE-Landauer has its headquarters and
laboratory at the current LCIE location in Fontenay-aux-Roses, a Paris
suburb, and will continue to serve United Kingdom customers from Oxford,
England. Additionally, as part of the formation of the new entity on
April 2, 2002, LCIE-Landauer purchased the Philips France radiation
monitoring business for $877,000. This Philips business unit had annual
revenues of approximately $800,000 in 2001. Results of operations related
to the acquisitions had no significant effect on the financial statements
for the year ended September 30, 2002. Total consideration for these
acquisitions aggregated approximately $2,000,000, which was allocated
principally to working capital and customer lists. The $1,681,000 allocated
to customer list is amortized over 10 years. As of September 30, 2002, the
Company has a $504,000 payable due to Bureau Veritas.

5. INCOME TAXES

The components of the provision for income taxes for the years ended
September 30, 2002, 2001 and 2000 are as follows:

2002
-------------------------------
(Dollars in Thousands) Current Deferred Total
- ---------------------- ------- -------- -------

Federal . . . . . . . . . . . . . . . $ 7,014 $ 992 $ 8,006
State . . . . . . . . . . . . . . . . 1,581 224 1,805
------- ------- -------
Total . . . . . . . . . . . . . . $ 8,595 $ 1,216 $ 9,811
======= ======= =======

2001
-------------------------------
(Dollars in Thousands) Current Deferred Total
- ---------------------- ------- -------- -------

Federal . . . . . . . . . . . . . . . $ 6,766 $ (230) $ 6,536
State . . . . . . . . . . . . . . . . 1,794 (61) 1,733
------- ------- -------
Total . . . . . . . . . . . . . . $ 8,560 $ (291) $ 8,269
======= ======= =======

2000
-------------------------------
(Dollars in Thousands) Current Deferred Total
- ---------------------- ------- -------- -------

Federal . . . . . . . . . . . . . . . $ 5,132 $ 915 $ 6,047
State . . . . . . . . . . . . . . . . 1,249 223 1,472
------- ------- -------
Total . . . . . . . . . . . . . . $ 6,381 $ 1,138 $ 7,519
======= ======= =======

24

The provision for taxes on income in each period differs from that
which would be computed by applying the statutory U.S. federal income tax
rate to the income before taxes. The following is a summary of the major
items affecting the provision:

(Dollars in Thousands) 2002 2001 2000
- ---------------------- ------- ------- -------

Statutory Federal Income Tax Rate . . 35% 35% 35%
Computed Tax Provision at
Statutory Rate. . . . . . . . . . . $ 9,195 $ 7,921 $ 7,110
Increases (Decreases) Resulting From:
State Income Tax Provision,
Net of Federal Benefit. . . . . . 1,173 1,126 957
Other . . . . . . . . . . . . . . . (557) (778) (548)
------- ------- -------
Income Tax Provision in the
Statement of Income . . . . . . . . $ 9,811 $ 8,269 $ 7,519
======= ======= =======

The Company recognizes certain income and expense items in different
years for financial and tax reporting purposes. Temporary differences are
primarily attributable to (a) utilization of accelerated depreciation
methods for tax purposes, (b) amortization of badge holder and software
development costs, (c) limitations on deductibility of pension costs,
(d) accrued benefit claims, vacation pay, and other compensation-related
costs, and (e) reserves for obsolete inventory.

Significant components of deferred taxes are as follows:

(Dollars in Thousands) 2002 2001
- ---------------------- ------- -------

Deferred Tax Assets:
Badge Holder Amortization . . . . . $ 667 $ 660
Pension Accrual . . . . . . . . . . 896 882
Compensation Expense. . . . . . . . 459 379
Inventory Reserve . . . . . . . . . 209 204
Other . . . . . . . . . . . . . . . 485 530
------- -------
$ 2,716 $ 2,655
======= =======
Deferred Tax Liabilities:
Depreciation. . . . . . . . . . . . $ 964 $ 194
Software Development. . . . . . . . 3,212 2,705
------- -------
$ 4,176 $ 2,899
======= =======

Management does not believe that a valuation allowance is required for
the net deferred tax asset.

6. LINE OF CREDIT

The Company maintains an external source of liquidity in the form of a
$5,000,000 unsecured line of credit maturing September 30, 2003. The credit
facility contains covenants for net worth and debt to equity ratios. Draws
thereunder bear interest at the prime rate in effect from time-to-time at
the lending bank. There is no outstanding liability as of the balance sheet
dates, and the Company is in compliance with these covenants.

25

7. CAPITAL STOCK

Landauer has two classes of capital stock, preferred and common, with
a par value of $.10 per share for each class. As of September 30, 2002 and
2001, there were 8,775,337 and 8,729,031 shares of common stock issued and
outstanding (20,000,000 shares are authorized), respectively. There are no
shares of preferred stock issued (1,000,000 shares are authorized). Cash
dividends of $1.40 per share were paid in fiscal 2002. At September 30,
2002, there were accrued and unpaid dividends of $3,071,000.

Landauer has reserved 1,450,000 shares of common stock for grants
under its stock bonus and option plans. Recipients of grants or options
must execute a standard form of noncompetition agreement. As of
September 30, 2002, there have been no bonus shares issued.

8. EMPLOYEE BENEFIT PLANS

Landauer maintains a noncontributory defined benefit pension and
retirement plan covering substantially all full-time employees. The Company
also maintains a Supplemental Key Executive Retirement Plan that provides
for certain retirement benefits payable to key officers and managers. While
charges for the supplemental plan are expensed annually, the plan is not
separately funded. The Company maintains a directors' retirement plan that
provides for certain retirement benefits payable to non-employee directors.
The directors' plan was terminated in 1997.

The following table sets forth the status of these plans at
September 30, 2002 and 2001 in accordance with SFAS Nos. 87 and 132:

Other
Retirement
Pension Benefits
---------------- ---------------
(Dollars in thousands) 2002 2001 2002 2001
- ---------------------- ------- ------ ------ ------

Change in Benefit Obligation:
Benefit obligation at
beginning of year . . . . . $ 9,410 $8,447 $ 813 $ 594
Service Cost. . . . . . . . . 564 499 72 64
Interest Cost . . . . . . . . 702 630 60 53
Amendments. . . . . . . . . . -- -- -- 103
Actuarial Loss. . . . . . . . 1,511 103 77 27
Benefits Paid . . . . . . . . (270) (269) (38) (28)
------- ------ ------ ------
Benefit Obligation at
End of Period . . . . . . . $11,917 $9,410 $ 984 $ 813
======= ====== ====== ======

Change in Plan Assets:
Fair Value of Assets at
Beginning of Year . . . . . $ 7,185 $7,966 $ -- $ --
Actual Return on Plan Assets. (447) (553) -- --
Employer Contribution . . . . 491 41 39 28
Benefits Paid . . . . . . . . (270) (269) (39) (28)
------- ------ ------ ------
Fair Value of Assets at
End of Period . . . . . . . $ 6,959 $7,185 $ -- $ --
======= ====== ====== ======

26

Other
Retirement
Pension Benefits
---------------- ---------------
(Dollars in thousands) 2002 2001 2002 2001
- ---------------------- ------- ------- ------ ------

Reconciliation of Funded Status:
Funded Status . . . . . . . . $(4,958) $(2,225) $ (984) $ (813)
Unrecognized Transition
Obligation (Asset). . . . . (31) (37) 227 250
Unrecognized Prior Service
Cost. . . . . . . . . . . . 132 150 69 86
Unrecognized Net Actuarial
(Gain) Loss . . . . . . . . . 2,832 302 (31) (112)
------- ------- ------ ------
Accrued Benefit Cost. . . . . . $(2,025) $(1,810) $ (719) $ (589)
======= ======= ====== ======

Components of Net Periodic
Benefit Cost:
Service Cost. . . . . . . . . $ 564 $ 499 $ 72 $ 64
Interest Cost . . . . . . . . 702 630 60 53
Expected Return on Plan
Assets. . . . . . . . . . . (575) (627) -- --
Amortization of Transition
Obligation (Asset). . . . . (6) (6) 22 23
Amortization of
Prior Service Cost. . . . . 18 18 17 17
Recognized Net Actuarial
(Gain) Loss . . . . . . . . 4 (7) (3) (8)
------- ------- ------ ------
Net Periodic Benefit Cost . . $ 707 $ 507 $ 168 $ 149
======= ======= ====== ======

Weighted average assumptions as of September 30:

Other
Retirement
Pension Benefits
---------------- ---------------
(Dollars in thousands) 2002 2001 2002 2001
- ---------------------- ------- ------- ------ ------

Discount Rate at Beginning
of Year . . . . . . . . . . . 7.50% 7.50% 7.50% 7.50%
Discount Rate at End of Year. . 6.75% 7.50% 6.75% 7.50%
Expected Return on Plan Assets. 8.00% 8.00% 0.00% 0.00%
Rate of Compensation Increase . 5.50% 5.50% 6.00% 6.00%

Plan assets for the defined benefit pension plan include marketable
equity securities, corporate and government debt securities, and cash and
short-term investments. The Supplemental Key Executive Retirement Plan and
the directors' retirement plan are not separately funded.

27

Landauer maintains a 401(k) savings plan covering substantially all
full-time employees. Qualified contributions made by employees to the plan
are partially matched by the Company. $130,000, $127,000, and $91,000 was
provided to expense for the years ended September 30, 2002, 2001, and 2000,
respectively, under this plan.

Landauer has adopted SFAS No. 106, "Accounting for Postretirement
Benefits Other than Pensions" to account for the Company's unfunded retiree
medical expense reimbursement plan. Under the terms of the plan that covers
retirees with ten or more years of service, the Company will reimburse
retirees to age 70 for (i) a portion of the cost of coverage under the
then-current medical and dental insurance plans if the retiree is under age
65, or (ii) all or a portion of the cost of Medicare and supplemental
coverage if the retiree is over age 64. The assumption for health-care cost
trend rates was 6% for those younger than 65, and 5% for those 65 and
older. The effect of a one percent increase on service and interest costs
and postretirement benefit obligation would be
$15,000 and $98,000, respectively. For a one percent decrease, the effect
would be a reduction to service and interest costs and postretirement
benefit obligation of $13,000 and $86,000, respectively.

9. COMMITMENTS AND CONTINGENCIES

The Company is involved in various legal proceedings, but believes
that the outcome of these proceedings will not have a materially adverse
effect on its financial condition.proceedings will not have a materially
adverse effect on its financial condition.

On April 2, 2002, the Company completed an agreement to merge its
European operations with the radiation monitoring business operated by
Laboratoire Central des Industries Electriques (LCIE). Under the terms of
the acquisition agreements, LCIE may, in the fifth and sixth year of the
venture, require Landauer to purchase its interest in LCIE-Landauer at
estimated fair value based on a multiple of EBITDA for the trailing four
quarters. Additionally, Landauer shall have the option to purchase LCIE's
interest in the seventh year of the venture on the same terms as LCIE's
"Put" option. A change in control provision, as defined, may accelerate the
respective Put and Call options and provides for premiums and discounts in
the event such options are exercised as the result of a change in control.

10. STOCK-BASED COMPENSATION PLANS

The Company maintains stock option plans for key employees
("Employees' Plan"). It also maintains a stock option plan for its non-
employee directors. Had compensation cost for these plans been determined
consistent with FASB Statements No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have
been as follows.

(Dollars in thousands,
except per share) 2002 2001 2000
- ----------------------- ------- ------- -------

Net Income: As Reported. $16,180 $14,324 $12,762
Pro Forma. . 16,072 14,292 12,660

Basic EPS: As Reported. $ 1.85 $ 1.65 $ 1.47
Pro forma. . 1.84 1.64 1.46

Diluted EPS: As Reported. $ 1.83 $ 1.64 $ 1.47
Pro forma. . 1.82 1.63 1.46

Because the FASB Statement No. 123 method of accounting has not been
applied to options granted prior to October 1, 1996, the resulting pro
forma compensation cost may not be representative of that to be expected in
future years.

28

The Company may grant options for up to 1,350,000 shares under the
Employees' Plan. The Company may grant options for up to 100,000 shares
under the Directors' Plan. The Company has granted options on 1,012,000 and
52,000 shares, respectively, under these plans through September 30, 2002.
Under each plan, the option exercise price equals the stock's fair market
value on the date of grant. Options granted under the Employees' Plan vest
ratably over four years. The initial grant of options in 1997 under the
Directors' Plan vest ratably over ten years and subsequent grants vest
ratably over four years. The term of all options granted is for a period of
10 years.

Options granted under these plans may be either incentive stock
options or non-qualified options. Options granted through fiscal 2002
become exercisable over a four-year period, ten years for options granted
to directors, at a price not less than fair market value on the date of
grant. The options expire ten years from the date of grant.

During fiscal 2002, options for 55,000 shares were granted and 73,250
options were exercised. As of September 30, 2002, non-qualified options for
435,250 shares had been granted at prices from $16.50 - $37.15 per share.
At year-end, 230,750 shares were exercisable. This plan also provides for
the grant of restricted shares or the grant of stock appreciation rights,
either separately or in relation to options granted. During fiscal 2002,
348 shares vested under previous grants were issued to key employees. As of
September 30, 2002, no stock appreciation rights had been granted. See note
7 for additional information on stock options.

A summary of the status of these plans at September 30, 2002, 2001,
and 2000 and changes for the years then ended is presented in the following
table and narrative:

2002
-------------------
Weighted
(Amounts in Thousands, Average
Except Per Share) Shares Price
- ---------------------- ------ --------

Outstanding at Beginning of Year. . . . . . . 454 $ 22.15
Granted . . . . . . . . . . . . . . . . . . . 55 33.21
Exercised . . . . . . . . . . . . . . . . . . (73) 22.05
---- -------
Outstanding at End of Year. . . . . . . . . . 436 $ 23.63
==== =======
Exercisable at End of Year. . . . . . . . . . 231 $ 22.36
==== =======

Weighted Average Fair Value of Options Granted $ 6.64

2001
-------------------
Weighted
(Amounts in Thousands, Average
Except Per Share) Shares Price
- ---------------------- ------ --------

Outstanding at Beginning of Year. . . . . . . 474 $ 21.11
Granted . . . . . . . . . . . . . . . . . . . 106 19.43
Exercised . . . . . . . . . . . . . . . . . . (111) 15.71
Forfeited . . . . . . . . . . . . . . . . . . (15) 18.34
---- -------
Outstanding at End of Year. . . . . . . . . . 454 $ 22.15
==== =======
Exercisable at End of Year. . . . . . . . . . 218 $ 21.64
==== =======
Weighted Average Fair Value of Options Granted $ 2.13

29

2000
-------------------
Weighted
(Amounts in Thousands, Average
Except Per Share) Shares Price
- ---------------------- ------ --------

Outstanding at Beginning of Year. . . . . . . 419 $ 21.10
Granted . . . . . . . . . . . . . . . . . . . 55 21.16
---- -------
Outstanding at End of Year. . . . . . . . . . 474 $ 21.11
==== =======
Exercisable at End of Year. . . . . . . . . . 285 $ 18.44
==== =======
Weighted Average Fair Value of Options Granted $ 2.91

Following is a table that summarizes information about options
outstanding as of September 30, 2002:

Options Outstanding Options Exercisable
--------------------------------- --------------------
Average Weighted Weighted
Remaining Average Average
Range of Contractual Exercise Exercise
Exercise Prices Shares Life Price Shares Price
- --------------- ------- ----------- -------- ------- --------

$ 16.50-$ 19.00 81,500 3 $ 16.57 75,000 $ 16.50
$ 19.01-$ 22.00 92,000 8 $ 19.35 15,500 $ 19.33
$ 22.01-$ 25.00 41,500 5 $ 23.21 29,000 $ 23.51
$ 25.01-$ 28.00 165,250 6 $ 26.40 111,250 $ 26.43
$ 28.01-$ 31.00 -- -- -- -- --
$ 31.01-$ 34.00 43,000 9 $ 32.11 -- --
$ 34.01+ 12,000 9 $ 37.15 -- --
------- --- ------- ------- -------
435,250 6 $ 23.63 230,750 $ 23.36
======= === ======= ======= =======

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in fiscal 2002, 2001, and 2000:

2002 2001 2000
------ ------ ------

Risk Free Interest Rates. . . . . . . 4.65% 5.85% 6.00%
Expected Dividend Yield . . . . . . . 4.22% 7.21% 6.74%
Expected Life (Years) . . . . . . . . 10 9 9
Expected Volatility . . . . . . . . . 23.30% 22.10% 21.60%

11. IMPAIRMENT IN VALUE OF ASSETS

The Company recognized a non-cash pre-tax charge of $520,000 during
fiscal year 2000, or $0.04 per diluted share, and $2,957,000 during fiscal
1999, or $0.25 per diluted share, for the discontinuation of older
technologies as the Company transitioned customers to Luxel trademark>, a superior radiation measurement technology. Included in the
non-cash charge is $1,000,000 related to accelerated goodwill amortization
and $2,211,000 of additional depreciation and amortization charges
resulting from the change in estimated useful lives of certain fixed
assets. In addition, a $266,000 reserve was applied against certain
inventories.

30

12. NEW ACCOUNTING PRONOUNCEMENTS

In June 2002, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." The provisions of this statement are required to
be applied starting with fiscal years beginning after June 15, 2002. This
Statement addresses financial accounting and reporting obligations
associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The adoption of SFAS No. 143 has no
impact on the Company's financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 defines
impairment for long-lived assets and provides guidance on the measurement
of asset impairments. The adoption of SFAS No. 144 has no impact on the
Company's financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No., 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections." SFAS No. 145 eliminates the exception to applying
APB Opinion 30 to all gains and losses related to extinguishments of debt.
The adoption of SFAS No. 145 has no impact on the Company's financial
statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement requires that
a liability for costs associated with an exit or disposal activity be
recognized when the costs are incurred rather than at the date of a
commitment to the exit or disposal plan. This statement will be applied
prospectively to exit or disposal activities that are initiated after
December 31, 2002. The adoption of SFAS No. 146 has no impact on the
Company's financial statements.

31

REPORTS OF INDEPENDENT ACCOUNTANTS

TO STOCKHOLDERS AND DIRECTORS OF LANDAUER, INC.:

In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, stockholder's investment and
comprehensive income and cash flows for the year ended September 30, 2002
present fairly, in all material respects, the financial position of
Landauer, Inc. and Subsidiaries at September 30, 2002, and the results of
its operations and its cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion. The financial statements of Landauer, Inc. as of
September 30, 2001, and for each of the two years in the period ended
September 30, 2001, were audited by other independent accountants who have
ceased operations. Those independent accountants expressed an unqualified
opinion on those financial statements, before the revision described in
Note 4, in their report dated November 6, 2001.

As discussed above, the financial statements of Landauer, Inc. as of
September 30, 2001, and for each of the two years in the period ended
September 30, 2001, were audited by other independent accountants who have
ceased operations. As described in Note 4, these financial statements have
been revised to include the transitional disclosures required by Statement
of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets," which was adopted by the Company as of October 1, 2001. We audited
the transitional disclosures described in Note 4. In our opinion, the
transitional disclosures for 2001 and 2000 in Note 4 are appropriate.
However, we were not engaged to audit, review, or apply any procedures to
the 2001 or 2000 financial statements of the Company other than with
respect to such disclosures and, accordingly, we do not express an opinion
or any other form of assurance on the 2001 or 2000 financial statements
taken as a whole.

PricewaterhouseCoopers LLP
Chicago, Illinois
November 6, 2002

Arthur Andersen LLP originally issued this report on November 6, 2001.
These independent accountants have ceased operations.They have not
reissued their report in conjunction with this filing.

32

REPORTS OF INDEPENDENT ACCOUNTANTS - CONTINUED

TO THE STOCKHOLDERS AND DIRECTORS OF LANDAUER, INC.:

We have audited the consolidated balance sheets of Landauer, Inc. and
Subsidiaries, a Delaware corporation (see Note 1), as of September 30, 2001
and 2000 and the related consolidated statements of income, stockholders'
investment and comprehensive income, and cash flows for each of the three
years in the period ended September 30, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Landauer, Inc. and Subsidiaries as of September 30, 2001 and 2000, and the
consolidated results of its operations, and the changes in stockholders'
investment and cash flows for each of the three years in the period ended
September 30, 2001 in conformity with accounting principles generally
accepted in the United States.

Arthur Andersen LLP
Chicago, Illinois
November 6, 2001

33

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information contained under the headings Election of Directors and
Beneficial Ownership of Certain Voting Securities in the Proxy Statement
relating to the directors of the Company is incorporated herein by
reference. The information contained in Item 4A hereof relating to the
executive officers of the Registrant is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Except for the information relating to Item 13 hereof and except for
information referred to in Item 402(a)(8) of Regulation S-K, the
information contained under the headings Executive Compensation and
Compensation Committee Report in the Proxy Statement is incorporated herein
by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information contained under the headings Executive Compensation-
Equity Compensation Plan Information and Beneficial Ownership of Certain
Voting Securities in the Proxy Statement is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except for the information relating to Item 11 hereof and except for
information referred to in Item 402(a)(8) of Regulation S-K, the
information contained under the headings Election of Directors, and Certain
Relationships and Related Transactions in the Proxy Statement is
incorporated herein by reference.

ITEM 14. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation
of the Company's management, including the Company's Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective in timely alerting them to material
information required to be included in the Company's periodic filings with
the Securities and Exchange Commission.

There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these internal controls
subsequent to the date of our most recent evaluation.

34

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

A-1. FINANCIAL STATEMENTS

The financial statements of Landauer, Inc. filed as part of this
Annual Report on Form 10-K are indexed at page 7.

A-3. LIST OF EXHIBITS

(3)(a) Certificate of Incorporation of the Registrant, as amended
through February 4, 1993, is incorporated by reference to
Exhibit (3)(a) to the Annual Report on Form 10-K for the
fiscal year ended September 30, 1993.

(3)(b) By-laws of the Registrant are incorporated by reference to
Exhibit (3)(b) to the Annual Report on Form 10-K for the
fiscal year ended September 30, 1992.

(4)(a) Specimen common stock certificate of the Registrant
incorporated by reference to Exhibit (4)(a) to the Annual
Report on Form 10-K for the fiscal year ended September 30,
1997.

(10)(a) The Landauer, Inc. 1996 Equity Plan, as amended and restated
through November 8, 2001, is attached hereto as Exhibit
(10)(a).

(10)(b) Liability Assumption and Sharing Agreement among Tech/Ops,
Inc., Tech/Ops Sevcon, Inc., and the Registrant is incorporated
by reference to Exhibit (10)(d) to the Annual Report on
Form 10-K for the fiscal year ended September 30, 1993.

(10)(c) Form of Indemnification Agreement between the Registrant and
each of its directors is incorporated by reference to
Exhibit (10)(e) to the Annual Report on Form 10-K for the
fiscal year ended September 30, 1993.

(10)(d) Landauer, Inc. Directors' Retirement Plan dated March 21, 1990,
is incorporated by reference to Exhibit (10)(f) to the Annual
Report on Form 10-K for the fiscal year ended September 30,
1996.

(10)(e) Form of Supplemental Key Executive Retirement Plan of Landauer,
Inc., as amended and restated effective October 1, 2002, is
attached hereto as Exhibit (10)(e).

(10)(f) The Landauer, Inc. Incentive Compensation Plan for Executive
Officers is incorporated by reference to Exhibit 10(h) to the
Annual Report on Form 10-K for the fiscal year ended
September 30, 2000.

(10)(g) The Landauer, Inc. 1997 Non-Employee Director's Stock Option
Plan, as amended and restated through November 8, 2001, is
attached hereto as Exhibit (10)(g).

(10)(h) Employment agreements dated February 29, 1996 between the
Registrant and Brent A. Latta, James M. O'Connell and
R. Craig Yoder are incorporated by reference to the Annual
Report on Form 10-K for the fiscal year ended September 30,
1998.

35

(10)(i) Employment agreements dated November 9, 2001 between the
Registrant and Joseph M. Zlotnicki and Robert M. Greaney are
attached hereto as Exhibit (10)(i).

(10)(j) The Landauer, Inc. Executive Special Severance Plan dated
May 22, 2002 is attached hereto as Exhibit (10)(j).

(21) Subsidiaries of the registrant are:

Beijing-Landauer, Ltd. (70%)

Beijing, P.R. China

HomeBuyer's Preferred, Inc. (100%)

2 Science Road

Glenwood, IL 60425-1586

Nagase-Landauer, Ltd. (50%)

Tokyo, Japan

SAPRA-Landauer, Ltda. (75%)

Sao Carlos - SP - Brazil

LCIE-Landauer (51%)

Paris, France

99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibits 10(a), 10(d), 10(f), 10(g), 10(h), 10(i) and 10(j) listed
above are the management contracts and compensatory plans or arrangements
required to be filed as exhibits hereto pursuant to the requirements of
Item 601 of Regulation S-K.

B. REPORTS ON FORM 8-K

On May 22, 2002, Landauer filed a Form 8-K, Item 4, "Changes in
Registrant's Certifying Accountant."

On June 26, 2002, Landauer filed a Form 8-K/a, Item 4, "Changes in
Registrant's Certifying Accountant."

36

SIGNATURES OF REGISTRANT AND DIRECTORS

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

LANDAUER, INC.

By: /s/ Brent A. Latta December 17, 2002
--------------------
Brent A. Latta
President and Chief
Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

SIGNATURE TITLE DATE
- --------- ----- ----

/s/ Brent A. Latta President and Director December 17, 2002
- ----------------------- (Principal Executive
Brent A. Latta Officer)

/s/ James M. O'Connell Vice President, Finance, December 17, 2002
- ----------------------- Treasurer and Secretary
James M. O'Connell (Principal Financial and
Accounting Officer)

/s/ Robert J. Cronin Director December 17, 2002
- -----------------------
Robert J. Cronin

/s/ E. Gail de Planque Director December 17, 2002
- -----------------------
E. Gail de Planque

/s/ Gary D. Eppen Director December 17, 2002
- -----------------------
Gary D. Eppen

/s/ Thomas M. Fulton Director December 17, 2002
- -----------------------
Thomas M. Fulton

/s/ M. Christine Jacobs Director December 17, 2002
- -----------------------
M. Christine Jacobs

/s/ Richard R. Risk Director December 17, 2002
- -----------------------
Richard R. Risk

/s/ Paul B. Rosenberg Director December 17, 2002
- -----------------------
Paul B. Rosenberg

/s/ Michael D. Winfield Director December 17, 2002
- -----------------------
Michael D. Winfield

37

CERTIFICATIONS

I, Brent A. Latta, certify that:

1. I have reviewed this annual report on Form 10-K of Landauer, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this annual report;

4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant
and have:

a. designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;

b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and

c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The Registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors and
the audit committee of Registrant's board of directors (or persons
performing the equivalent functions):

a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and

6. The Registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.

December 17, 2002

/s/ Brent A. Latta
-----------------------------------
President & Chief Executive Officer

38

CERTIFICATIONS

I, James M. O'Connell, certify that:

1. I have reviewed this annual report on Form 10-K of Landauer, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this annual report;

4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant
and have:

a. designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;

b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and

c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The Registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors and
the audit committee of Registrant's board of directors (or persons
performing the equivalent functions):

a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and

6. The Registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.

December 17, 2002

/s/ James M. O'Connell
-----------------------------------
Chief Financial Officer

39

QUARTERLY FINANCIAL DATA (UNAUDITED)

40

SIX YEAR SELECTED FINANCIAL DATA

LANDAUER, INC. AND SUBSIDIARIES

(Dollars in Thousands, Except Per Share)

For the years ended
September 30, 1997 1998 1999 2000 2001 2002
- ------------------- ------- ------- ------- ------- ------- -------

OPERATING RESULTS

Net revenues. . . $39,914 $42,692 $43,800 $47,174 $53,028 $58,608

Operating income. 17,455 18,732 14,756 19,316 21,874 24,399

Net income. . . . 12,019 12,759 9,489 12,762 14,324 16,180

As a percent
of net
revenues . . . 30.1% 29.9% 21.7% 27.1% 27.0% 27.6%

Diluted net
income per
share . . . . . $ 1.39 $ 1.47 $ 1.09 $ 1.47 $ 1.64 $ 1.83

Cash dividends
per share . . . $ 1.20 $ 1.30 $ 1.40 $ 1.40 $ 1.40 $ 1.40

Total assets. . . $43,735 $46,337 $44,624 $47,061 $50,550 $60,257

41