OVERVIEW

Landauer is a leading provider of analytical services to determine occupational and environmental radiation exposure. For over 50 years, the Company has provided complete radiation dosimetry services to hospitals, medical and dental offices, universities, national laboratories, nuclear facilities and other industries in which radiation poses a potential threat to employees. Landauer's services include the manufacture of various types of radiation detection monitors, the distribution and collection of the monitors to and from clients, and the analysis and reporting of exposure findings. These services are provided to approximately 69,000 customers representing approximately 1.6 million individuals in the U.S., Japan, France, the United Kingdom, Brazil, Canada, China, Australia, Mexico and other countries. In addition to providing analytical services, the Company may lease or sell dosimetry detectors and reading equipment to large customers that want to manage their own dosimetry programs, or into smaller international markets in which it is not economical to establish a direct service.

Landauer operates a mature business, and growth in numbers of customers is modest. In recent years, the Company's strategy has been to expand into new international markets, primarily by partnering with existing dosimetry service providers with a prominent local presence. In addition, the Company has been developing new platforms and formats for its OSL technology, such as InLight, to gain access to markets where the Company previously did not have a significant presence, such as smaller in-house and commercial laboratories. Revenue growth in recent years has occurred as a result of entry into new markets through joint ventures and acquisitions, modest unit growth, sale of InLight equipment and badges, and new ancillary services and products. The Company believes pricing in the domestic market has become more competitive and opportunities to continue to obtain regular price increases from its customers may be more limited in the future.

RESULTS OF OPERATIONS

FISCAL 2008 COMPARED TO FISCAL 2007

Revenues for fiscal 2008 were $89,954,000, an increase of 7.5% compared with revenues of $83,716,000 for fiscal 2007. Domestic revenue growth for fiscal 2008 was $1,735,000, or 2.7%, attributable primarily to continued growth of domestic InLight equipment and services. International revenue increased $4,503,000, or 24.0%, as a result of growth in volume in most regions, lead by increased InLight service revenues; revenues attributable to the addition of a new 56.25% owned subsidiary in Mexico; and favorable currency exchange rates. Favorable currency, primarily the strengthening of the Euro and Brazilian Real against the dollar, contributed approximately $2,064,000 of the revenue growth.

The domestic InLight equipment increase was driven primary by a sale to the Canadian government agency responsible for occupational monitoring and radiation emergency preparedness for the citizens of Canada. The Company completed a $2,000,000 contract during the quarter ended March 31, 2008 with the agency, under which $1,850,000 of product was delivered. Approximately, $1,100,000 of the product delivered requires additional processing by Landauer to be fully utilized for its intended purpose. Per the terms of the agreement, the Canadian agency has the option to obtain additional processing of the dosimetry materials from the Company or to exchange the materials for finished product. Consistent with the Staff Accounting Bulletin No. 104 "Revenue Recognition," the Company recorded $1,100,000 of deferred revenue related to the portion of the sale that requires additional performance by the Company. The contract also contains terms for other services. Revenues for those services will be recognized as they are provided.

Total cost of sales for fiscal 2008 was $28,914,000, an increase of $1,387,000, or 5.0%, compared with cost of sales of $27,527,000 for fiscal 2007. Gross margins for fiscal 2008 were 67.9% of revenues, compared with 67.1% in fiscal 2007. The improvement was a result primarily of increased revenues without a corresponding increase to the fixed cost structure, as well as lower depreciation expense.

Selling, general and administrative expenses for fiscal 2008 were $26,589,000, an increase of $1,878,000 or 7.6%, compared with selling, general and administrative expenses of $24,711,000 for fiscal 2007. Factors contributing to the increase in selling, general and administrative costs include: $695,000 for domestic sales and marketing resources; $1,800,000 for incentive compensation programs; and approximately $700,000 for foreign operations, primarily relating to increased foreign exchange rates and the addition of a new subsidiary in Mexico. These increases were partially offset by $1,409,000 in reduced expense spending for our project to reengineer business processes and to replace the Company's information technology systems that support improved business relationship management and the order-to-cash cycle.

During the 2007 fiscal year, the Company implemented a plan to support long-term profitability and growth. This plan supported investment in two initiatives to improve focus and build shareholder value. First, the Company expanded sales and marketing resources to better reach markets targeted by the Company for growth. Secondly, the Company accelerated its program to re-engineer business processes. An important part of the program is replacing the Company's information technology system. The information systems initiative was initially expected to cost $9,000,000 to $10,000,000 over the life of the project, with approximately $2,000,000 to $3,000,000 to be expensed and $7,000,000 to $8,000,000 to be capitalized. The project was initiated during fiscal 2007 and was targeted to be completed during fiscal 2008. The project has extended beyond its initial timeline due to increased customization of the software to capture the unique business requirements of the Company. Due to the timeline extension, the information system initiative is expected currently to cost $14,500,000 to $16,500,000 over the life of the project with approximately $3,000,000 to $4,000,000 to be expensed and $12,500,000 to $13,500,000 to be capitalized.

The project is now targeted to be ready during calendar 2009.

As part of the IT initiative in the 2007 fiscal year, management completed an evaluation of the usefulness of investments made in legacy information systems' hardware and software having a net book value of approximately $4,600,000. Of these assets, approximately $3,500,000 were determined to be either impaired or subject to accelerated depreciation. This resulted in a fiscal 2008 charge of $376,000 ($225,000, after-tax) for accelerated depreciation and a fiscal 2007 charge of $2,875,000 ($1,725,000, after-tax), of which $2,185,000 was for impaired assets.

Operating income for fiscal 2008 was $34,075,000, an increase of $5,472,000, or 19.1%, compared with operating income of $28,603,000 for fiscal 2007. The increase in operating income was due to the growth in revenue and gross profit, reduced spending in fiscal 2008 for the systems initiative and reduced impact of the charge for accelerated depreciation and impaired assets.

Net other income, including equity in income of joint venture, for fiscal 2008 was $2,356,000, an increase of $129,000, or 5.8%, compared with net other income of $2,227,000 for fiscal 2007. The increase in net other income was primarily due to increases in interest and investment income. Nagase-Landauer, Ltd. equity earnings were approximately $1,400,000 million in both fiscal 2008 and 2007.

Income tax expense for fiscal 2008 and 2007 was $13,118,000 and $11,413,000, respectively. The effective tax rate was 36.0% and 37.0% in fiscal 2008 and 2007, respectively. The decline in the effective tax rate was driven by a number of factors including the increased impact of foreign and state tax credits and foreign source income.

Net income for the 2008 fiscal year was $22,983,000, an increase of 19.0%, compared with net income of $19,316,000 for fiscal 2007, with resulting diluted earnings per share for the current year of $2.47, compared with $2.10 reported a year ago.

FISCAL 2007 COMPARED TO FISCAL 2006

Revenues for fiscal 2007 were $83,716,000, an increase of 5.9%, compared with revenues of $79,043,000 for fiscal 2006. Domestic revenue growth for fiscal 2007 was $962,000, or 1.5%, attributable primarily to strong performance of the HomeBuyer's Preferred subsidiary and continued growth of domestic InLight dosimeter services. International revenue increased $3,711,000, or 24.6%, as a result of growth in volume in most regions, lead by increased InLight service revenues; revenues attributable to the addition of a new 51% owned subsidiary in Australia; and favorable currency exchange rates. Favorable currency, primarily the strengthening of the Euro against the dollar, contributed approximately $1,250,000 of the revenue growth.

Total cost of sales for fiscal 2007 was $27,527,000, a decline of $1,207,000, or 4.2%, compared with cost of sales of $28,734,000 for fiscal 2006. Gross margins for fiscal 2007 were 67.1% of revenues, compared with 63.6% in fiscal 2006. The improvement was a result of the profit improvement plan initiated in the second quarter of fiscal 2006 resulting in a reduction in labor and related expenses and material costs, and reduced depreciation expense due to certain investments in manufacturing and lab operations equipment becoming fully depreciated.

Selling, general and administrative expenses for fiscal 2007 were $24,711,000, an increase of $5,557,000, or 29.0%, compared with selling, general and administrative expenses of $19,154,000 for fiscal 2006. Factors contributing to the increase in selling, general and administrative costs included: $2,114,000 in spending to re-engineer business processes and to replace the Company's information technology systems that support improved customer relationship management and the order-to-cash cycle; $920,000 in higher spending for salaries and benefits; $908,000 of increased cost in other foreign operations, primarily relating to increased foreign exchange rates; $802,000 of increased spending for professional fees primarily for investments in support of certain strategic initiatives and increased spending related to tax services; and $489,000 incremental operating expenses from the addition of the new 51% owned subsidiary in Australia.

As part of the IT initiative which began in the 2007 fiscal year, management completed an evaluation of the usefulness of investments made in legacy information systems' hardware and software having a net book value of approximately $4,600,000. Of these assets, approximately $3,500,000 was determined to be either impaired or subject to accelerated depreciation. This resulted in a charge of $2,875,000 ($1,725,000, after-tax), of which $2,185,000 was for impaired assets.

During fiscal 2006, the Company recognized $1,650,000 ($994,000, after-tax) for reorganization expense and management transition costs. In the second quarter of fiscal 2006, the Company initiated programs to reorganize several departments and functions to eliminate redundant positions, require employees to meet established performance criteria, and significantly alter or eliminate some benefit programs. The implementation of these programs resulted in a pre-tax charge in the amount of $600,000 primarily related to severance payments, extended employee benefits and related separation costs. In September 2006, Landauer recognized an additional reorganization charge of $1,050,000 for management transition expenses primarily related to early retirement incentives and associated pension benefit expenses arising from the retirement of two of the Company's executive officers.

The charges discussed above had the following impact on results in fiscal 2007 and 2006, respectively:

                                              2007          2006
                                          -----------   -----------

Operating income . . . . . . . . . . . .  $(2,875,000)  $(1,650,000)
Tax benefit. . . . . . . . . . . . . . .    1,150,000       656,000
                                          -----------   -----------
Net income . . . . . . . . . . . . . . .  $(1,725,000)  $  (994,000)
                                          ===========   ===========
Diluted earnings per share . . . . . . .  $     (0.19)  $     (0.11)
                                          ===========   ===========

Operating income for fiscal 2007 was $28,603,000, a decline of $902,000, or 3.1%, compared with operating income of $29,505,000 for fiscal 2006. The decline in operating income was due primarily to the spending in fiscal 2007 for the systems initiative and the impact of the charge for accelerated depreciation and impaired assets.

Net other income, including equity in income of joint venture, for fiscal 2007 was $2,227,000, an increase of $735,000, or 49.3%, compared with net other income of $1,492,000 for fiscal 2006. The increase in net other income was due to increases in interest and investment income and higher Nagase-Landauer, Ltd. equity earnings. Fiscal 2006 equity earnings included a $237,000 charge for the write-down of accounts receivable, which represents the Company's 50% equity share of the charge.

Income tax expense for fiscal 2007 and 2006 was $11,413,000 and $11,783,000, respectively. The effective tax rate was 37.0% and 38.0% in fiscal 2007 and 2006, respectively. The decline in the effective tax rate was driven by a number of factors including the increased impact of foreign source income.

Net income for the 2007 fiscal year was $19,316,000, an increase of 1.4%, compared with net income of $19,046,000 for fiscal 2006, with resulting diluted earnings per share for the current year of $2.10 compared with $2.09 reported a year ago.

FOURTH QUARTER RESULTS OF OPERATIONS

Revenues for the fourth fiscal quarter of 2008 were $22,500,000, an increase of $1,166,000, or 5.5%, compared with $21,334,000 in the fourth fiscal quarter of 2007. Domestic revenue for the 2008 fourth quarter was approximately flat with the fourth quarter of the prior year. International revenue in the fourth fiscal quarter of 2008 increased $1,113,000, or 22.1%, supported by growth in volume in most regions, the addition of a new 56.25% owned subsidiary in Mexico and approximately $260,000 from favorable currency exchange rates. Cost of sales for the fourth quarter of fiscal 2008 was $7,269,000, compared to $6,710,000 for fiscal 2007. Selling, general and administrative costs for the fourth quarter of fiscal 2008 were approximately flat with the fourth quarter of the prior year, due primarily to decreases in spending for the Company's systems initiative, offset by employee related expenses and international spending. There were no accelerated depreciation charges in the fourth quarter of fiscal 2008.

Operating income for the fourth fiscal quarter of 2008 was $7,972,000, an increase of $1,094,000, or 15.9%, compared with $6,878,000 in the fourth fiscal quarter of 2007. Net other income for the fourth quarter decreased by $88,000 to $438,000 in fiscal 2008 due primarily to lower Nagase-Landauer, Ltd. equity earnings. Income tax expense and the effective tax rates, respectively, were $2,859,000 and 34.0% in fiscal fourth quarter 2008, and $2,761,000 and 37.3% in the fiscal fourth quarter 2007. The lower effective tax rate in the fourth fiscal quarter of 2008 compared to the rate in the fourth quarter of fiscal 2007 was due to the year-end adjustments to the provision for foreign and state tax credits as well as the resolution of certain tax positions.

Net income for the fiscal fourth quarter of 2008 was $5,484,000, compared with net income of $4,610,000 for fourth quarter fiscal 2007, with resulting diluted earnings per share for the 2008 quarter of $0.59 compared with $0.50 reported in the fiscal fourth quarter of 2007.

OUTLOOK FOR FISCAL 2009

Landauer's business plan for fiscal 2009 currently anticipates aggregate revenue growth for the year to be in the range of 3 - 5%. The Company anticipates a net income increase in the range of 6 - 8%.

LIQUIDITY AND CAPITAL RESOURCES

Landauer generated $12,869,000 in cash during fiscal year 2008 to end the year with $33,938,000 in cash on hand. The Company had no outstanding borrowings throughout the year.

Cash flows provided by operating activities for fiscal 2008 were $34,651,000, an increase of $6,646,000, or 23.7%, from fiscal 2007. The increase was due primarily to increased net income, increased deferred contract revenue and other operating activity.

Investing activities included acquisitions of property, plant and equipment in the amounts of $7,533,000, $7,386,000 and $3,498,000 in fiscal 2008, 2007 and 2006, respectively. The Company capitalized approximately $5,700,000 for its systems initiative in fiscal 2008. In addition, Landauer invested $498,000 in fiscal 2008 for our acquisition of 56.25% ownership in a subsidiary in Mexico. Capital expenditures for fiscal 2009 are expected to be approximately $6,000,000 to $8,000,000 principally for the development of supporting software systems and computer hardware. The Company anticipates that funds for these capital improvements will be provided from operations.

The Company's financing activities are comprised of credit facility activities and payments of cash dividends to shareholders and minority partners, offset partially by proceeds from the exercise of stock options. During fiscal 2008, 2007 and 2006, the Company paid cash dividends of $18,270,000, or $2.00 per share; $17,163,000, or $1.90 per share; and $16,044,000, or $1.80 per share, respectively, and such amounts have been provided from operations.

Cash paid for income taxes was $10,213,000, $13,191,000 and $12,713,000 in fiscal 2008, 2007 and 2006, respectively.

The Company maintained a credit facility, which expired in March 2007. In October 2007, the Company negotiated a new credit facility, which expires on October 31, 2009. The new credit facility permits borrowing up to $15,000,000. To date, no borrowings have been made under this facility. Information regarding the credit facility is contained in Note 7, "Credit Facility," of the consolidated financial statements.

In the opinion of management, cash flows from operations and the Company's borrowing capacity under its line of credit are adequate for projected operations and capital spending programs, as well as continuation of the regular cash dividend program. From time to time, the Company may have the opportunity to make investments for acquisitions or other purposes, and borrowings can be made under the current credit facility to fund such investments.

Landauer requires limited working capital for its operations since many of its customers pay for services in advance. Such advance payments, reflected on the balance sheets as "Deferred Contract Revenue", amounted to $15,626,000 and $13,832,000, respectively, as of September 30, 2008 and 2007. While these amounts represent approximately 46% and 49% of current liabilities, respectively as of September 30, 2008 and 2007, such amounts generally do not represent a cash requirement.

All customers are invoiced in accordance with the Company's standard terms, with payment generally due thirty days from date of invoice. Reflecting the Company's invoicing practices and that a significant portion of the Company's revenues are subject to health care industry reimbursement cycles, domestic days of sales outstanding for the Company averaged 82 and 90 days over the course of fiscal 2008 and 2007, respectively.

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

The Company is exposed to market risk, including changes in foreign currency exchange rates. The financial statements of the Company's non-U.S. subsidiaries are remeasured into U.S. dollars using the U.S. dollar as the 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 currencies. As such, the Company does not use derivative financial instruments to manage the exposure in its non-U.S. operations.

CONTRACTUAL OBLIGATIONS

      As of September 30, 2008, the expected resources required for
scheduled payment of contractual obligations were as follows:

                                    Scheduled payments by fiscal year
                               -------------------------------------------
                                                                    There-
(Dollars in Thousands)        Total      2009   2010-11   2012-13   after
----------------------       -------   -------  -------   -------  -------

Purchase obligations (1) . . $ 8,742   $ 8,742  $     -   $     -  $     -
Dividends (2). . . . . . . .   4,686     4,686        -         -        -
Pension and postretirement
  benefits (3) . . . . . . .   4,799     1,061      775       749    2,214
Operating leases (4) . . . .   1,074       359      404       104      207
Other non-current
  liabilities (5). . . . . .     452       452        -         -        -
                             -------   -------  -------   -------  -------

                             $19,753   $15,300  $ 1,179   $   853  $ 2,421
                             =======   =======  =======   =======  =======

(1) Includes accounts payable under other agreements to purchase goods or services including open purchase orders; also includes remaining contractual obligations associated with the Company's IT system upgrade.

(2) Cash dividends in the amount of $0.50 per share were declared on August 29, 2008.

(3) Includes required contributions to the Company's defined benefit pension plan in fiscal 2009 and estimated future benefit payments for the supplemental key executive retirement plans and a terminated retirement plan that provides certain retirement benefits payable to non-employee directors. The amounts are actuarially determined, which includes the use of assumptions, and may vary significantly from expectations.

(4) The Company has several small operating leases that are generally short-term in nature; it has no material operating or capital leases.

(5) Represents estimated payments in the next fiscal year for the Company's uncertain tax positions recorded at September 30, 2008 in accordance with FIN No. 48. The Company is not able to reasonably estimate the timing of the long-term payments or the amount by which the FIN No. 48 liability will increase or decrease over a longer period of time. Therefore, any payments beyond fiscal 2009 have not been included in the table.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.

SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 is effective for the Company for fiscal year 2009. FSP SFAS No. 157-2 delays the effective date of SFAS No. 157 by one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. FSP SFAS No. 157-1 amends SFAS No. 157 to exclude leasing transactions covered by SFAS No. 13. The Company has evaluated SFAS No. 157 and does not expect it to have a material impact on the Company's financial position, results of operations and financial disclosures.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, including an Amendment of FASB Statement No. 115." SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value on an instrument-by-instrument basis, with unrealized gains and losses related to these financial instruments reported in earnings at each subsequent reporting date. SFAS No. 159 also establishes presentation and disclosure requirements to facilitate comparisons between companies that choose different measurement attributes for similar assets and liabilities.

SFAS No. 159 is effective for the Company for fiscal year 2009. The Company does not expect to change its measurement of certain assets and liabilities to fair value as permitted by SFAS No. 159. Therefore the Company does not expect SFAS No. 159 to have a material impact on its financial position, results of operations and financial disclosures. However, the Company intends to re-evaluate its opportunity to elect the fair value option in the future when other eligible items are recognized.

In March 2007, the FASB ratified the Emerging Issues Task Force (EITF) Issue No. 06-10, "Accounting for the Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements." The EITF affirmed as a final consensus that an employer should recognize a liability for the postretirement benefit related to a collateral assignment split-dollar life insurance arrangement.

The Issue is effective for the Company for fiscal year 2009, including interim periods within the fiscal year. The Company does not expect EITF No. 06-10 to have a material impact on its financial position, results of operations and financial disclosures.

In December 2007, the FASB issued SFAS No. 141R, "Business Combinations," and SFAS No. 160 "Noncontrolling Interests in Consolidated Financial Statements." These standards aim to improve, simplify, and converge internationally the accounting for and reporting of business combinations and noncontrolling interests in consolidated financial statements. The provisions of SFAS No. 141R and SFAS No. 160 are effective, and should be applied prospectively, for the Company beginning in fiscal 2010. The Company will apply SFAS No. 141R for any business combinations beginning in fiscal 2010. The Company is currently evaluating the impact of SFAS No. 160 to its financial position, results of operations and financial disclosures.

In April 2008, the FASB issued Staff Position No. FAS 142-3, "Determination of the Useful Life of Intangible Assets" (FSP No. 142-3). The FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, "Goodwill and Other Intangible Assets." Additionally, the FSP requires disclosures regarding the extent to which the expected future cash flows associated with intangible assets are affected by the entity's intent and/or ability to renew or extend the arrangement. FSP No. 142-3 is effective for the Company beginning with its quarter ending December 31, 2009. The Company has evaluated FSP No. 142-3 and does not expect it to have a material impact on its financial position, results of operations and financial disclosures.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles." SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with US generally accepted accounting principles. SFAS No. 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." The Company does not expect SFAS No. 162 to change its current accounting and reporting practices or materially impact its consolidated financial statements.

In June 2008, the FASB issued FSP No. EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are . . .