United States
Securities and Exchange Commission
Washington, DC 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2006

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)

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the Registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [ X ]

Indicate by check mark if the Registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [ X ]

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. [ X ]

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act.

Large accelerated filer [ ] Accelerated filer [ X ]
Non-accelerated filer [ ]

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

As of March 31, 2006 the aggregate market value of the voting and
nonvoting common equity (based upon the closing price on the New York Stock
Exchange) held by non-affiliates was approximately $450,000,000. The number
of shares of common stock ($0.10 par value) outstanding as of December 5,
2006 was 9,140,772.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement in connection with
the February 8, 2007 Annual Meeting of Stockholders (the "Proxy Statement")
are incorporated by reference into Part III of this Annual Report on
Form 10-K.

Index

Item Page
- ---- ----

PART I
1. Business . . . . . . . . . . . . . . . . . . . . . 4
General Description . . . . . . . . . . . . . 4
Marketing and Sales . . . . . . . . . . . . . 5
Seasonality . . . . . . . . . . . . . . . . . 6
International Activities. . . . . . . . . . . 7
Patents . . . . . . . . . . . . . . . . . . . 7
Raw Materials . . . . . . . . . . . . . . . . 7
Competition . . . . . . . . . . . . . . . . . 7
Research and Development. . . . . . . . . . . 8
Environmental and Other Governmental
Regulations . . . . . . . . . . . . . . . . 8
Employees and Labor Relations . . . . . . . . 8
Available Information . . . . . . . . . . . . 9
1A. Risk Factors . . . . . . . . . . . . . . . . . . . 9
1B. Unresolved Staff Comments. . . . . . . . . . . . . 11
2. Properties . . . . . . . . . . . . . . . . . . . . 11
3. Legal Proceedings. . . . . . . . . . . . . . . . . 11
4. Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . . . 11

PART II
5. Market for Registrant's Common Equity,
Related Stockholder Matters and
Issuer Purchases of Equity Securities. . . . . . 12
6. Selected Financial Data. . . . . . . . . . . . . . 12
7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . 13
7A. Quantitative and Qualitative Disclosures
About Market Risk. . . . . . . . . . . . . . . . 21
8. Consolidated Financial Statements and
Supplementary Data
Consolidated Balance Sheets . . . . . . . . . 22
Consolidated Statements of Income . . . . . . 24
Consolidated Statements of Stockholders'
Investment and Comprehensive Income . . . . 25
Consolidated Statements of Cash Flows . . . . 26
Notes to Consolidated Financial Statements. . 28
Report of Independent Registered
Public Accounting Firm. . . . . . . . . . . 44
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . 46
9A. Controls and Procedures. . . . . . . . . . . . . . 46
9B. Other Information. . . . . . . . . . . . . . . . . 46

PART III
10. Directors and Executive Officers
of the Registrant. . . . . . . . . . . . . . . . 47
11. Executive Compensation . . . . . . . . . . . . . . 48
12. Security Ownership of Certain
Beneficial Owners and Management and
Related Stockholder Matters. . . . . . . . . . . 48
13. Certain Relationships and Related Transactions . . 48
14. Principal Accounting Fees and Services . . . . . . 48

PART IV
15. Exhibits, Financial Statement Schedules. . . . . . 49
Financial Statements. . . . . . . . . . . . . 49
List of Exhibits. . . . . . . . . . . . . . . 49
Signatures. . . . . . . . . . . . . . . . . . 53
Quarterly Financial Data (Unaudited). . . . . 54

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's shares are listed on the New York Stock Exchange under
the symbol LDR. As of September 30, 2006, there were 9,094,190 shares
outstanding.

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

The Company offers its service for measuring the dosages of x-ray,
gamma radiation and other penetrating ionizing radiations to which the
wearer has been exposed, primarily through optically stimulated luminescent
("OSL") badges worn by client personnel. This technology is marketed under
the trade name Luxel+<registered trademark> and InLightTM.

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

While most of the Company's revenues are domestic, these services are
also marketed by Landauer in Canada and by its subsidiaries in other parts
of the world. On October 1, 1998, the Company acquired a 75% interest in
SAPRA-Landauer, Ltda., which provides radiation dosimetry services in
Brazil. On 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 70% owned
joint venture with China National Nuclear Corporation known as Beijing-
Landauer, Ltd., which provides radiation monitoring services in China.

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 ("BV"), 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 certain technologies for a 51% controlling interest in the new
subsidiary named Landauer-Europe, Ltd., formerly LCIE-Landauer, Ltd. LCIE
contributed its radiation monitoring business, all of which is located in
France. Landauer-Europe has its headquarters and laboratory in Fontenay-
aux-Roses, a Paris suburb. Landauer-Europe serves France-based customers
from this location and serves the United Kingdom customers from Oxford,
England. As part of the formation of the new entity, Landauer-Europe
purchased the Philips France radiation monitoring business. In April 2004,

Landauer consummated an agreement with BV to acquire the remaining 49%
minority interest in Landauer-Europe owned by BV's subsidiary, LCIE, for
$10.4 million in cash.

Landauer's radiation monitoring activities also include operations in
Japan through Nagase-Landauer, Ltd., a 50%-owned joint venture, which
commenced operations in 1974.

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.

Landauer's InLight dosimetry system, introduced in 2003, provides
small and mid-sized in-house and commercial laboratories with the ability
to provide in-house radiation monitoring services using OSL technology.
InLight services may involve a customer acquiring or leasing dosimetry
devices as well as analytical reading equipment from the Company. The
system is based on the Company's proprietary technology and instruments,
and dosimetry devices developed by Matsushita Industrial Equipment Company
and allows customers the flexibility to tailor their precise dosimetry
needs.

Landauer's operations include services for the measurement and
monitoring of radon gas (referred to as "sales of radon kits"). Its wholly-
owned subsidiary, HomeBuyer's Preferred, Inc., offers a service, targeted
to corporate employee relocation programs, which provides radon monitoring
and, when necessary, remediation to purchasers of personal residences.
Testing requires the customer to deploy a radon detector and return the
detector to the Company's laboratories for dose determination and
reporting. The Company assists with remediation services on properties
where radon measurements exceed a specified threshold.

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

MARKETING AND SALES

Landauer's dosimetry services are marketed in the U.S. and Canada
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 and China, as well as its wholly owned
subsidiary operating in the United Kingdom and France. Other firms and
individuals market the Company's services on a commission basis, primarily
to small customers.

Worldwide, the Company and its affiliates serve approximately 68,000
customers representing approximately 1.5 million individuals. The customer
base is diverse and fragmented with no single customer representing greater
than 2% of revenue. Typically, a client will contract on a subscription
basis for one year of service in advance, representing monthly, bimonthly
or quarterly badges, readings and reports. Customer relationships in the
radiation monitoring market are generally stable and recurring. Deferred
contract revenue, as shown on the consolidated balance sheet, represents
advance payment for services to be rendered for those customers invoiced in
advance. At September 30, 2006 and 2005, deferred contract revenue was
$13,761,000 and $12,702,000, respectively.

The Company's radiation monitoring services are largely based on the
Luxel+ dosimeter system in which all analyses are performed at the
Company's laboratories in Glenwood, Illinois. Luxel+ employs the Company's
proprietary OSL technology. Recently, the Company introduced the InLight
dosimetry system that enables certain customers to make their own
measurements using OSL technology. InLight is marketed to the smaller
radiation measurement laboratories found at nuclear power plants, military

installations, national research laboratories, and commercial services.
Landauer has positioned the InLight system as both a product line and a
radiation monitoring service in ways that others can directly benefit from
the technical and operational advantage of OSL technology. The resulting
business models include:

. The provision of InLight systems to subsidiary and partner
laboratories.

. The sale of radiation detection monitors, analytical
instruments and custom analytical software to independent
laboratories throughout the world to replace their existing
technologies with an OSL-based radiation dosimetry system.

. Lease and rental options for InLight systems by in-house
laboratories such as nuclear power plants, Department of Energy
facilities and others for their temporary or permanent use in
radiation safety programs; and

. The sale of the MicroStar system, a miniaturized OSL reader
based on InLight technology, to hospitals, laboratories and
others that require specialized radiation measurements for a
variety of purposes.

For most radiation dosimetry laboratories operating around the world
the laboratory must maintain accreditation with a regulatory body to
provide the user with a formal record of dose - a process that is expensive
and time consuming. By combining the implementation of an InLight system
in the laboratory and "dose of record" determination by Landauer or a
Company affiliated and accredited facility, the user can provide its
workers with the periodic radiation safety management infrastructure
without the need to maintain its own accreditation. Additionally,
dosimetry management software options provide the ability to measure
incremental radiation dose of workers at regular intervals over long
periods of time.

For those customers that require the establishment of an on-site
laboratory but do not have the need or ability to maintain inventories of
ready-to-wear devices for their employees, the InLight system allows
providing those devices by Landauer at predetermined intervals. This
option reduces investment in the dosimetry system and adds the convenience
of on-time delivery of devices. InLight also forms the basis for Landauer's
European operations and other future operations that might occur where
local requirements preclude using a U.S. or other foreign-based laboratory.

Radon gas detection kits are marketed directly by the Company
primarily to institutional customers and government agencies. The
HomeBuyer's Preferred<registered trademark> Radon Protection Plan service
agreement is marketed directly by Landauer to companies and to their
corporate relocation service providers for the benefit of purchasers of
residences incident to transfers of personnel.

SEASONALITY

The services provided by the Company to its customers are ongoing and
are of a subscription nature. As such, revenues are recognized in the
periods in which such services are rendered, irrespective of whether
invoiced in advance or in arrears. Given the subscription nature of
Landauer's services, quarterly revenues are fairly consistent. During the
second quarter of each fiscal year, however, the Company provides
additional services for reporting annual radiation dose summaries that
generate increased revenues. The introduction of the Company's InLight
product line may result in some variability in quarter-to-quarter revenue
comparisons given the nature of purchase cycles associated with sales of
radiation dose measurement instruments and detectors.

INTERNATIONAL ACTIVITIES

Information regarding the Company's activities by geographic region
is contained under the footnote "Geographic Information" on page 42 of this
Annual Report on Form 10-K.

PATENTS

The Company holds exclusive worldwide licenses to patent rights for
certain technologies that measure and image radiation exposure to
crystalline materials when stimulated with light. These licenses were
acquired by the Company from Battelle Memorial Institute 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, 2006, 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-based radiation monitoring
services and products sold under the trade names Luxel, Luxel+ and InLight.
Additionally, the Company holds certain patents that relate to various
dosimeter designs, radiation measurement materials and methods, and optical
data storage techniques using aluminum oxide generated from the Company's
research and development activities. These patents expire in 2017 through
2024.

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

RAW MATERIALS

The Company has multiple sources for many of its raw 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. All crystal
materials used in the Company's OSL technology are produced at the
Company's crystal manufacturing facility in Stillwater, Oklahoma. The
InLight dosimetry system and its components are manufactured by Matsushita
Industrial Equipment Company under an exclusive agreement. If the Company
were to lose availability of its Stillwater facility or materials from
Matsushita due to a fire, natural disaster or other disruptions, such loss
could have a material adverse effect on the Company and its operations.

COMPETITION

In the United States, Landauer competes against a number of dosimetry
service providers. One of these providers, Global Dosimetry Solutions, a
division of Mirion Technologies, is a significant competitor with
substantial resources. Other competitors in the United States that provide
dosimetry services tend to be smaller companies, some of which operate on a
regional basis. Outside of the United States, radiation monitoring
activities are conducted by a combination of private entities and
government agencies.

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, as do many large private nuclear power
plants.

The Company competes on the basis of advanced technologies, competent
execution of these technologies, the quality, reliability and price of its
services, and its prompt and responsive performance. The Company's InLight
dosimetry system, while competitive with a number of systems offered by
other companies, is believed to provide the only OSL-based radiation
monitoring system.

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 long-term 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

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 beginning in 1998 and has converted most of
its customers to the new technology. Presently, research efforts seek to
expand the use of OSL, particularly as it applies to radiation measurements
in therapeutic and diagnostic radiology and nuclear medicine as well as to
environmental radiation dosimetry, and investigate the usage of OSL in
optical data storage.

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.

In fiscal 2006, 2005, and 2004, the Company spent $1,769,000,
$1,704,000, and $1,758,000, respectively, on research and development
activities.

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
operations, or competitive position of Landauer.

Many of the Company's technology based services must comply with
various national and international standards that are used by regulatory
and accreditation bodies for approving such services and products. These
accreditation bodies include, for example, the National Voluntary
Laboratory Accreditation Program in the U.S. and governmental agencies,
generally, in international markets. Changes in these standards and
accreditation requirements can result in the Company having to incur costs
to adapt its offerings and procedures. Such adaptations may introduce
quality assurance issues during transition that need to be addressed to
ensure timely and accurate analyses and data reporting. Additionally,
changes affecting radiation protection practices, including new
understandings of the hazards of radiation exposure and amended
regulations, may impact how the Company's services are used by its
customers and may, in some circumstances, cause the Company to alter its
products and delivery of its services.

EMPLOYEES AND LABOR RELATIONS

As of September 30, 2006, the Company employed approximately 420
full-time employees worldwide. As a matter of policy, Landauer seeks to
maintain good relations with employees at all locations.

AVAILABLE INFORMATION

As a reporting company, Landauer is subject to the informational
requirements of the Securities Exchange Act of 1934 (the "Exchange Act")
and, accordingly, files its annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). The
public may read and copy any materials filed with the SEC at the SEC's
Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please
call the SEC at (800) SEC-0330 for further information on the Public
Reference Room. As an electronic filer, Landauer's public filings are
maintained on the SEC's Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC. The address of that website is
http://www.sec.gov. In addition, Landauer's annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Exchange Act may be accessed free of charge through Landauer's website
as soon as reasonably practicable after Landauer has electronically filed
such material with, or furnished it to, the SEC. The address of Landauer's
website is http://www.landauerinc.com.

A copy of the Company's Annual Report on Form 10-K is available free
of charge upon the written request of any shareholder.

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

ITEM 1A. RISK FACTORS

In addition to factors discussed elsewhere in this Annual Report on
Form 10-K, the following are important factors that could cause actual
results or events to differ materially from those contained in any forward-
looking statements made by or on behalf of the Company.

WE RELY ON A SINGLE FACILITY FOR THE MANUFACTURING AND PROCESSING OF OUR
PRODUCTS AND SERVICES.

Landauer conducts its primary manufacturing and laboratory processing
operations and performs significant functions for some of its international
operations from a single facility in Glenwood, Illinois. If the Company
were to lose availability of its primary facility due to fire, natural
disaster or other disruptions, the Company's operations could be
significantly impaired. Although the Company maintains business
interruption insurance, there can be no assurance that the proceeds of such
insurance would be sufficient to offset any loss the Company might incur or
that the Company would be able to retain its customer base if operations
were so disrupted.

WE RELY ON A SINGLE FACILITY FOR THE MANUFACTURING OF CRYSTAL MATERIAL, A
KEY COMPONENT IN OUR OSL TECHNOLOGY, AND A SINGLE VENDOR FOR THE
MANUFACTURING OF INLIGHT PRODUCTS.

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

IF WE ARE UNABLE TO DEVELOP NEW TECHNOLOGIES, OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS COULD BE MATERIALLY AND ADVERSELY AFFECTED.

Landauer's technological expertise has been an important factor in
its growth. The Company regularly pursues product improvements to maintain
its technical position. The development and introduction of new
technologies, the adaptability of OSL to new platforms and new formats, the
usefulness of older technologies as well as the introduction of new
technologies by the competition present various risks to the Company's
business. The failure or lack of market acceptance of a new technology or
the inability to respond to market requirements for new technology could
adversely affect the Company's operations or reputation with customers. The
cancellation of technology projects or the cessation of use of an existing
technology can result in write-downs and charges to the Company's earnings.
In the normal course of its business, Landauer must record and process
significant amounts of data quickly and accurately and relies on various
computer and telecommunications equipment and software systems. Any failure
of such equipment or systems could adversely affect the Company's
operations.

BECAUSE A PORTION OF OUR BUSINESS IS CONDUCTED OUTSIDE OF THE UNITED
STATES, ADVERSE INTERNATIONAL DEVELOPMENTS COULD NEGATIVELY IMPACT OUR
BUSINESS AND RESULTS OF OPERATIONS.

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

OUR BUSINESS IS SUBJECT TO EXTENSIVE DOMESTIC AND FOREIGN GOVERNMENT
REGULATIONS, WHICH COULD INCREASE OUR COSTS, CAUSE US TO INCUR LIABILITIES
AND ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.

Regulation, present and future, is a constant factor affecting the
Company's business. The radiation monitoring industry is subject to
federal, state, and international governmental regulation. Unknown matters,
new laws and regulations, or stricter interpretations of existing laws or
regulations may materially affect Landauer's business or operations in the
future and/or could increase the cost of compliance.

Many of the Company's technology-based services must comply with
various national and international standards that are used by regulatory
and accreditation bodies for approving such services and products. Changes
in these standards and accreditation requirements can result in the Company
having to incur costs to adapt its offerings and procedures. Such
adaptations may introduce quality assurance issues during transition that
need to be addressed to ensure timely and accurate analyses and data
reporting. Additionally, changes affecting radiation protection practices,
including new understandings of the hazards of radiation exposure and
amended regulations, may impact how the Company's services are used by its
customers and may, in some circumstances, cause the Company to alter its
products and delivery of its services.

FLUCTUATIONS IN CURRENCY EXCHANGE RATES COULD ADVERSELY AFFECT OUR RESULTS.

other than that of the reporting unit's functional currency. As such, the
Company does not currently use derivative financial instruments to manage
the exposure in its non-U.S. operations.

WE MAY FACE COMPETITORS, SEVERAL OF WHICH HAVE GREATER FINANCIAL AND OTHER
RESOURCES.

The Company competes on the basis of advanced technologies, competent
execution of these technologies, the quality, reliability and price of its
services and its prompt and responsive performance. In much of the world,
radiation monitoring activities are conducted by a combination of private
entities and governmental agencies. The Company's primary competitor in the
United States is large and has substantial resources. The Company also
faces competitive pressures from a number of smaller competitors.

ITEM 1B. UNRESOLVED STAFF COMMENTS

At September 30, 2006, the Company does not have any unresolved
written comments from the Commission staff regarding its periodic or
current reports under the Act.

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, information
technology resources, 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 laboratories in Japan, through its
joint venture with Nagase-Landauer, Ltd., Brazil, China, and France, as
well as a sales office in Oxford, England.

ITEM 3. LEGAL PROCEEDINGS

The Company is a party, from time to time, to various legal
proceedings, lawsuits and other claims arising in the ordinary course of
its business. The Company does not believe that any such litigation pending
as of September 30, 2006, if adversely determined, would have a material
effect on its business, financial position, results of operations, or cash
flows.

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

There were no matters submitted to a vote of security holders during
the three months ended September 30, 2006.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company's common stock is traded on the New York Stock Exchange
under the trading symbol LDR, since its listing in January 2002.
Previously, the Company's common stock was traded on the American Stock
Exchange. A summary of market prices of the Company's common stock is set
forth in the table on page 54 of this Annual Report on Form 10-K. As of
December 5, 2006, there were approximately 600 shareholders of record.
There were no sales of unregistered securities of the Company and no
repurchases of equity securities of the Company during fiscal 2006 by the
Company.

On November 9, 2006, the Company announced that it had increased the
regular quarterly cash dividend by 6% to $0.475 per share for the first
quarter of fiscal 2007. This increase represents an annual rate of $1.90
per share compared with $1.80 paid in fiscal 2006. A summary of cash
dividends paid for the last two years is set forth in the table on page 54
of this Annual Report on Form 10-K.

ITEM 6. SELECTED FINANCIAL DATA

FIVE YEAR SELECTED FINANCIAL DATA
LANDAUER, INC. AND SUBSIDIARIES

(Dollars in Thousands, Except Per Share Data)
---------------------------------------------
For the years
ended September 30, 2002 2003(1) 2004(2) 2005(3) 2006(4)
- ------------------- ------- ------- ------- ------- -------
OPERATING RESULTS
- -----------------

Net revenues . . . . . . . $58,608 $64,818 $69,809 $75,221 $79,043
Operating income . . . . . 24,399 23,857 27,720 26,551 29,505
Net income . . . . . . . . 16,180 15,019 17,770 17,208 19,046
Diluted net income
per share. . . . . . . . $ 1.83 $ 1.69 $ 1.98 $ 1.90 $ 2.09
Cash dividends
per share. . . . . . . . $ 1.40 $ 1.50 $ 1.60 $ 1.70 $ 1.80

Total assets . . . . . . . $60,257 $64,238 $77,518 $85,859 $90,674

- ----------

(1) Fiscal 2003 includes an asset impairment charge of $2,750,000 related
to the Company's Aurion product line, offset by $500,000 lower
incentive compensation expense. The resulting decline in operating
income of $2,250,000 reduced net income by $1,356,000 (after income
tax benefit of $894,000) or $0.15 per diluted share.

(2) The Company acquired the remaining 49% minority interest in
Landauer-Europe in fiscal 2004.

(3) Fiscal 2005 includes a management reorganization charge of
$2,300,000, reducing net income by $1,386,000 (after income tax
benefit of $914,000) or $0.15 per diluted share.

(4) Fiscal 2006 includes reorganization charges and management transition
charges of $1,650,000, reducing net income by $994,000 (after income
tax benefit of $656,000) or $0.11 per diluted share.

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

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, 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 1.5 million individuals in the U.S.,
Japan, France, the United Kingdom, Brazil, Canada, China, Australia and
other countries.

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 increased prices for certain services, entry into
new markets through joint ventures and acquisitions, modest unit growth,
and new ancillary services and products. The Company believes pricing in
the domestic market has become more competitive and may not be able to
continue to obtain price increases from its customers.

RESULTS OF OPERATIONS

FISCAL 2006 COMPARED TO FISCAL 2005

Revenues for fiscal 2006 were $79,043,000 an increase of 5.1%
compared with revenues of $75,221,000 for fiscal 2005. Domestic revenue
growth for fiscal 2006 was $2,910,000, or 4.8%, from gains in the core
radiation monitoring business, strong performance for the HomeBuyer's
Preferred subsidiary, and a doubling of domestic InLight revenue
predominantly through the sale of equipment. International revenue
increased $912,000, or 6.4%, supported by growth in most markets led by
InLight services in France.

Total cost of revenues for fiscal 2006 were $28,734,000, an increase
of $426,000 or 1.5%, compared with cost of revenues of $28,308,000 for
fiscal 2005. Gross margins for fiscal 2006 were 63.6% of revenues,
compared with 62.4% in fiscal 2005. The improvement in gross margin is due
primarily to reductions in labor, operating supplies and postage costs as a
result of the profit improvement program initiated in the second quarter of
fiscal 2006, partially offset by increased depreciation expense.

Selling, general and administrative expenses for fiscal 2006 were
$19,154,000, an increase of $1,092,000 or 6.1%, compared with selling,
general and administrative expenses of $18,062,000 for fiscal 2005. The
increase is primarily driven by higher incentive compensation expense from
equity based compensation programs under SFAS 123R.

During fiscal 2006, the Company recognized $1,650,000 for
reorganization expense and management transition costs. In the second
quarter of 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 of 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 the Company's former chief
financial officer and the resignation of the vice president of operations.
During fiscal 2005, Landauer recognized reorganization expense in the
amount of $2,300,000 associated with various organizational changes,
including early retirement incentives and related pension benefit expenses
arising from the retirement of the Company's former chief executive
officer, recruitment expenses related to the recent election of a new chief
executive officer and severance and other costs related to additional
personnel changes. These charges had the following impact on results in
fiscal 2006 and 2005, respectively:

2006 2005
------------ ------------

Operating income . . . . $ (1,650,000) $ (2,300,000)
Tax benefit. . . . . . . 656,000 914,000
------------ ------------
Net income . . . . . . . $ (994,000) $ (1,386,000)
============ ============
Diluted earnings
per share. . . . . . . $ (0.11) $ (0.15)

Operating income for fiscal 2006 was $29,505,000 an increase of
$2,954,000 or 11.1%, compared with operating income of $26,551,000 for
fiscal 2005. Operating income as a percentage of revenue were 37.3% in
fiscal 2006 compared to 35.3% in fiscal 2005. The improvement was driven
by lower reorganization expense as outlined above and reductions in the
operating cost structure as a result of the profit improvement plan
initiated in the second quarter of fiscal 2006.

Net other income, including equity in income of joint venture, for
fiscal 2006 was $1,492,000 an increase of $111,000 or 8.0%, compared with
other income of $1,381,000 for fiscal 2005. The increase in other income
is due to increases in interest and investment income offset partially by
lower Nagase-Landauer, Ltd. equity earnings, due to a charge for the write-
down of accounts receivable. The Company's share of the charge was
$237,000.

Income tax expense for fiscal 2006 and 2005 was $11,783,000 and
$10,623,000, respectively. The effective tax rate was 38.0% in both fiscal
2006 and 2005.

Net income for the year just ended was $19,046,000, an increase of
10.7% compared with net income of $17,208,000 for fiscal 2005 with
resulting diluted earnings per share for the current year at $2.09 compared
with $1.90 reported a year ago.

FISCAL 2005 COMPARED TO FISCAL 2004

Revenues reported for fiscal 2005 were $75,221,000, an increase of
7.8% compared with revenues of $69,809,000 reported for fiscal 2004.
Domestic revenue growth for fiscal 2005 was $2,923,000 or 5.0%, and was
attributable to gains in pricing, unit volume and ancillary service fees
for the Company's core radiation monitoring business and growth in InLight
equipment sales. International revenue growth was $2,489,000, or 21.3%,
for the year and reflected favorable currency translation, pricing gains
and unit volume, primarily in InLight services, in most foreign markets.

Total cost of revenue for fiscal 2005 were $28,308,000 an increase of
$2,856,000 or 11.2%, compared with cost of revenue of $25,452,000 for
fiscal 2004. Gross margins for fiscal 2005 were 62.4% of revenues,
compared with 63.5% in fiscal 2004. The decline in gross margin is due
primarily to increases in depreciation, direct labor and postage costs.

Selling, general and administrative expenses for fiscal 2005 were
$18,062,000 an increase of $1,425,000 or 8.6%, compared with selling,
general and administrative expenses of $16,637,000 for fiscal 2004. The
increase was primarily driven by increased costs associated with foreign
operations, higher professional fees and outside service costs for
Sarbanes-Oxley compliance, information services support and marketing
studies.

In September 2005, Landauer recognized expense in the amount of
$2,300,000 associated with various organizational changes, including early
retirement incentives and related pension benefit expenses arising from the
retirement of the Company's former chief executive officer, recruitment
expenses related to the recent election of a new chief executive officer
and severance and other costs related to additional personnel changes. The
resulting decline in operating income by $2,300,000 reduced net income by
$1,386,000 (after income tax benefit of $914,000) and lowered fiscal 2005
diluted earnings per share by $0.15.

Net other income, including equity in income of joint venture, was
higher in 2005 primarily due to higher Nagase-Landauer, Ltd. earnings
compared with 2004. Landauer's 2004 acquisition of the remaining equity in
Landauer-Europe resulted in lower minority interest expense compared with a
year ago. The effective tax rate for fiscal 2005 was 38.0% compared with
37.4% for fiscal 2004 as a result of higher state income taxes and lower
foreign tax credits.

Net income for fiscal 2005 was $17,208,000, a decrease of 3.2%
compared with net income of $17,770,000 for fiscal 2004 with resulting
diluted earnings per share for fiscal 2005 at $1.90 compared with $1.98
reported in fiscal 2004.

FOURTH QUARTER RESULTS OF OPERATIONS

Revenues for the fourth fiscal quarter of 2006 were $20,184,000, an
increase of $1,194,000, or 6.3% compared with $18,990,000 a year ago.
Revenue growth during the fourth quarter of fiscal 2006 was attributable to
modest gains in domestic revenue, strong performance for the HomeBuyer's
Preferred subsidiary, and international growth driven by InLight services
and currency. Cost of revenues for the fourth quarter of fiscal 2006 were
$6,673,000 a decrease of $208,000, or 3.0% compared to $6,881,000 for
fiscal 2005. The decline is primarily due to reductions in labor costs
from the profit improvement plan initiated in the second quarter of the
fiscal year. Selling, general and administrative costs for the fourth
quarter of 2006 were $4,812,000, an increase of $288,000, or 6.4% compared
to $4,524,000 in fiscal 2005, due primarily to compensation related costs.
Reorganization costs primarily for management transition costs were
$1,050,000 and $2,300,000 in the fourth quarter of fiscal 2006 and 2005,
respectively.

Operating income for the fourth fiscal quarter of 2006 was $7,649,000,
an increase of $2,364,000, or 44.7% compared with $5,285,000 a year ago.
Other income for the fourth quarter decreased by $166,000 to $188,000 in
fiscal 2006 due primarily to lower Nagase-Landauer, Ltd. equity earnings,
which included a charge related to the write-down of accounts receivable,
of which the Company's share was $237,000. Income tax expense and the
effective tax rates were $3,131,000 and 40.0% in fiscal fourth quarter
2006, and $2,490,000 and 44.2% in the fiscal fourth quarter 2005,
respectively. The higher effective tax rate in 2005 was due to a change in
the estimated annual effective tax rate due to higher state taxes and lower
foreign tax credits.

Net income for the quarter just ended was $4,670,000, an increase of
50.5% compared with net income of $3,104,000 for fourth quarter 2005 with
resulting diluted earnings per share for the current quarter at $0.51
compared with $0.34 reported a year ago.

OUTLOOK FOR FISCAL 2007

Landauer's business plan for fiscal 2007 currently anticipates
aggregate revenue growth for the year to be in the range of 4 - 5%. The
Company anticipates this will translate into a net income increase in the
range of 6 - 8% excluding the impact of the fiscal 2006 restructuring
charge and management transition costs. However, this performance could be
impacted by investments necessary to support the acceleration of long-term
growth.

LIQUIDITY AND CAPITAL RESOURCES

Landauer generated $5,822,000 in cash during fiscal year 2006 to end
the year with $15,420,000 in cash on hand. The Company made payments of
$2,599,000 on its line of credit, ending the year with a balance of
$1,649,000.

Cash flows provided by operating activities for fiscal 2006 was
$24,013,000, an increase of $2,856,000, or 13.5%, from fiscal 2005. The
increase is due primarily to lower cash expenses and dividends received
from Nagase-Landauer, Ltd.

Investing activities included acquisitions of property, plant and
equipment in the amounts of $3,498,000, $4,068,000 and $4,773,000 in fiscal
2006, 2005 and 2004, respectively. In addition, the Company acquired the
remaining 49% of Landauer-Europe for $10,404,000 in fiscal 2004. Cash paid
for income taxes was $12,713,000, $10,501,000 and $10,156,000 in fiscal
2006, 2005 and 2004, respectively. Capital expenditures for fiscal 2007
are expected to be approximately $9,200,000, 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 2006, 2005 and 2004, the Company paid cash dividends of
$16,044,000, or $1.80 per share; $15,002,000, or $1.70 per share; and
$13,990,000, or $1.60 per share, respectively, and such amounts have been
provided from operations.

As described in Note 6 to the financial statements, the Company
maintains a credit facility, which expires in March 2007. As amended, the
credit facility permits borrowing up to $15,000,000, with an option for the
Company to increase to $25,000,000. In April 2004, the Company borrowed
$7,724,000 to acquire the remaining 49% minority interest in Landauer-
Europe. At September 30, 2006 and 2005, outstanding borrowings under the
credit agreement were $1,649,000 and $4,048,000, respectively. The
borrowings are classified as current liabilities and are denominated in
euros, which is the functional currency of Landauer-Europe. In the event
the credit facility is not renewed at maturity, it is expected that cash on
hand, cash flows from operations, and the Company's borrowing capacity will
be sufficient to satisfy the obligation. 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. The Company intends to
renew the credit facility prior to expiration.

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 sheet as "Deferred Contract Revenue", amounted to
$13,761,000 and $12,702,000, respectively, as of September 30, 2006 and
2005. While these amounts represent approximately 48% and 43% of current
liabilities, respectively as of September 30, 2006 and 2005, 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.
Considering the Company's invoicing practices and that a significant
portion of the Company's revenues are subject to health care industry
reimbursement cycles, the average days of sales outstanding for the Company
have ranged from 43 to 83 days over the course of fiscal 2006 and fiscal
2005.

Landauer offers radiation monitoring services in the United Kingdom,
Canada, Japan, Brazil, China, 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 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 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, 2006, the resources required for scheduled
payment of contractual obligations were as follows:

Scheduled payments by fiscal year
-------------------------------------------
(Dollars in There-
Thousands) Total 2007 2008-09 2010-11 after
- ----------- ------- ------- ------- ------- -------

Notes payable (1). . . . . $ 1,649 $ 1,649 $ -- $ -- $ --
Interest payable (2) . . . 38 38 -- -- --
Operating leases (3) . . . 458 329 129 -- --
Purchase obligations (4) . 4,232 4,232 -- -- --
Postretirement
benefits (5) . . . . . . 3,825 1,274 526 606 1,419
Dividends (6). . . . . . . 4,092 4,092 -- -- --
------- ------- ------- ------- -------
$14,294 $11,614 $ 655 $ 606 $ 1,419
======= ======= ======= ======= =======
- ----------
(1) Notes payable pertain to the line of credit with a maturity date of
March 25, 2007. The credit agreement is annually renewable upon
agreement of the parties.

(2) Interest payable is computed through the March 25, 2007 line of
credit maturity date using 4.81%, the rate at which the line of
credit is fixed through maturity.

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

(4) Includes accounts payable under other agreements to purchase goods
or services including open purchase orders.

(5) Includes required contributions to the Company's defined benefit
pension plan in fiscal 2007 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.

(6) Cash dividends in the amount of $0.45 per share were declared on
September 12, 2006 and paid on October 6, 2006.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes" ("FIN No. 48"). FIN No. 48 clarifies the accounting for uncertainty
in income taxes recognized in an enterprise's financial statements in
accordance with FASB Statement No. 109, "Accounting for Income Taxes."
This interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN No. 48 also
provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition. FIN
No. 48 is effective for fiscal years beginning after December 15, 2006, and
will become effective for the Company in fiscal 2008. The Company is
currently evaluating the impact to its financial position and results of
operations.

In July 2006, the Securities and Exchange Commission ("SEC") approved
comprehensive changes in the requirements for disclosing executive and
director compensation, related person transactions, director independence
and other corporate governance matters, and security ownership of officers
and directors. These changes affect disclosure in proxy statements, annual
reports and registration statements, as well as the current reporting of
compensation arrangements. The new disclosures will be required for the
Company's Annual Report on Form 10-K and Proxy Statement for the fiscal
year ending September 30, 2007.

In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 158, "Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106, and 132(R)." The Statement requires companies to
recognize on their balance sheet the funded status of their defined benefit
pension and other postretirement benefit plans and to recognize changes in
the funded status of these plans through comprehensive income in the year
in which the changes occur. The Statement also requires companies to
measure the plan assets and its obligations as of the end of the employer's
fiscal year. The provisions of SFAS No. 158 will be effective for the
Company at the end of fiscal 2007. The effect on the Company's financial
statements is dependent upon assumptions used and actual returns on assets
at the time of adoption. The Company is currently evaluating the impact to
its financial position and results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin ("SAB")
No. 108, "Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements." SAB No.
108 requires companies to quantify the impact of all correcting
misstatements, focusing on both the balance sheet and income statement
impact of misstatements, on the current year financial statements. SAB No.
108 is effective for fiscal years ending after November 15, 2006. SAB No.
108 is currently expected to have no impact on the Company's consolidated
financial statements.

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 fiscal years beginning after November 15, 2007. The Company does not
believe that SFAS No. 157 will have a material impact on its consolidated
financial statements.

INFLATION

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

FORWARD LOOKING STATEMENTS

Certain matters contained in this report, including the information
contained under the heading "Outlook for Fiscal 2007" in Item 7 of this
report, constitute forward-looking statements that are based on certain
assumptions and involve certain risks and uncertainties. These include the
following, without limitation: assumptions, risks and uncertainties
associated with the company's development and introduction of new
technologies in general; introduction and customer acceptance of the
InLight technology; the adaptability of optically stimulated luminescence
(OSL) technology to new platforms and formats, such as Luxel+; the costs
associated with the company's research and business development efforts;
the usefulness of older technologies; the anticipated results of operations
of the company and its subsidiaries or ventures; valuation of the company's
long-lived assets or business units relative to future cash flows; changes
in pricing of products and services; changes in postal and delivery
practices; the company's business plans; anticipated revenue and cost
growth; the risks associated with conducting business internationally;
other anticipated financial events; the effects of changing economic and
competitive conditions; foreign exchange rates; government regulations;
accreditation requirements; and pending accounting pronouncements. These
assumptions may not materialize to the extent assumed, and risks and
uncertainties may cause actual results to be different from anticipated
results. These risks and uncertainties also may result in changes to the
company's business plans and prospects, and could create the need from time
to time to write down the value of assets or otherwise cause the company to
incur unanticipated expenses. Additional information may be obtained by
reviewing the information set forth in Item 1A. "Risk Factors" and Item 7A.
"Quantitative and Qualitative Disclosures About Market Risk" and
information contained in the Company's reports filed, from time to time,
with the SEC.

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. Management has identified the following critical
accounting policies used in the preparation of the Company's financial
statements and accompanying notes.

REVENUE RECOGNITION AND DEFERRED CONTRACT REVENUE

Substantially all of the services provided by the Company to its
customers are of a subscription nature and are continuous. The Company
views its business as services provided to customers over a period of time
and the wear period is the period over which those services are provided.
Badge production, wearing of badges, badge analysis, and report preparation
are integral to the benefit that the Company provides to its customers.
These services are provided to customers on an agreed-upon recurring basis
(monthly, bi-monthly or quarterly) that the customer chooses for the wear
period. Revenue is recognized on a straight-line basis, adjusted for
changes in pricing and volume, over the wear period as the service is
continuous and no other discernible pattern of recognition is evident.
Revenues are recognized over the periods in which the customers wear the
badges irrespective of whether invoiced in advance or in arrears. 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 $13,761,000 and $12,702,000,
respectively, as of September 30, 2006 and September 30, 2005. 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.

PROPERTY, PLANT & EQUIPMENT

Plant and equipment (including dosimetry badges and software) are
recorded at cost and are depreciated or amortized on a straight-line basis
over the estimated useful lives, which are primarily 30 years for buildings
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 that could trigger this review include competitive conditions,
government regulations and technological changes. Maintenance and repairs
are charged to expense, and renewals and betterments are capitalized.
Landauer capitalizes, as a component of equipment, internal software costs
in accordance with SOP 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". Such costs amounted to $1,427,000,
$1,449,000, and $1,960,000, respectively, for fiscal years 2006, 2005 and
2004.

GOODWILL AND OTHER INTANGIBLE ASSETS

Landauer's intangible assets include purchased customer lists,
licenses, patents and goodwill, an asset with an indefinite life. The
balance of goodwill, net of accumulated amortization, was $13,273,000 at
September 30, 2006 and $13,261,000 at September 30, 2005. The Company
acquired goodwill primarily from its acquisitions of Landauer-Europe and
SAPRA-Landauer as well as other smaller investments. Purchased customer
lists are recorded at cost and are amortized on a straight-line basis over
estimated useful lives, which range from 10 to 15 years. Patents and
licenses are also recorded at cost and are amortized on a straight-line
basis over their useful lives, which range from 10 to 17 years. SFAS No.
142, which requires that goodwill and certain intangible assets with
indefinite lives no longer be amortized to earnings, but be reviewed
periodically for impairment. Under SFAS 142, the impairment review of
goodwill and other intangible assets that are not being amortized generally
must be based on fair values. The Company's methodology for testing
goodwill for impairment includes a review of potential impairment
triggering events, financial analysis of future undiscounted cash flows
projections by investment, and tests of fair market value. As a result of
applying the impairment provisions of SFAS No. 142, no impairment loss was
required.

EMPLOYEE BENEFIT PLANS

In the United States, Landauer maintains a qualified noncontributory
defined benefit pension plan covering substantially all full-time employees
and 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. Additionally, the Company maintains
an unfunded retiree medical expense reimbursement plan.

The pension expenses and benefit obligations recorded for these plans
are dependent on actuarial assumptions. These assumptions include discount
rates, expected return on plan assets, interest costs, expected
compensation increases, benefits earned, mortality rates, and other
factors. If actual results are significantly different than those
forecasted or if future changes are made to these assumptions, the amounts
recognized for these plans could change significantly. The weighted-average
actuarial assumptions used to determine the fiscal 2006 pension expense
included the following: discount rate of 5.75% compared to 6.25% for prior
year; expected return on plan assets of 7.50% compared to 8.00% for prior
year; and rate of compensation increase of 3.50%, lower than the fiscal
2005 rate of 5.17%. The weighted-average assumptions used to determine
benefit obligations at September 30, 2006 were a discount rate of 5.90%
compared to the fiscal 2005 rate of 5.75% and a rate of compensation
increase of 3.50% compared to the prior year rate of 5.17%.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk, including changes in foreign
currency exchange rates and interest 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. To date, the market risk associated
with foreign currency exchange rates has not been material in relation to
the Company's financial position, results of operations, or cash flows.
These risks could increase, however, as the Company expands in
international markets. The Company does not have any significant trade
accounts receivable, trade accounts payable, or commitments in a currency
other than that of the reporting unit's functional currency. A 10% adverse
change in the underlying foreign currency exchange rates would not have a
material impact to our financial condition, and reported results of
operations would decline by approximately $350,000. As such, the Company
does not currently use derivative financial instruments to manage the
exposure in its non-U.S. operations or for trading or speculative purposes.

The Company seeks to manage its exposure to adverse interest rate
changes through its normal operations and does not use any derivative
financial instruments to manage such exposure. The Company uses a line of
credit to provide for a portion of its financing needs. At September 30,
2006, the balance outstanding under this arrangement was $1,649,000.
Interest costs would increase by approximately $16,500 for each percentage
point increase in the rate of interest on this credit facility, assuming
current balances.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS
LANDAUER, INC. AND SUBSIDIARIES

(DOLLARS IN
THOUSANDS)
------------------
AS OF SEPTEMBER 30, NOTES 2006 2005
- ------------------- ------- -------- --------

ASSETS

Current assets:
Cash and cash equivalents. . . . . . . . 1 $ 15,420 $ 9,598
Receivables, net of allowances of
$567 in 2006 and $408 in 2005. . . . . 20,284 17,987
Inventories. . . . . . . . . . . . . . . 1 2,508 2,634
Prepaid expenses and
other current assets . . . . . . . . . 10 1,499 2,703
Prepaid income taxes . . . . . . . . . . 1 & 5 407 1,153
Deferred income taxes. . . . . . . . . . 5 1,859 1,514
-------- --------
Current assets . . . . . . . . . . . . . . 41,977 35,589
-------- --------

Property, plant and equipment, at cost: 1
Land and improvements. . . . . . . . . . 634 634
Buildings and improvements . . . . . . . 4,230 4,073
Equipment. . . . . . . . . . . . . . . . 41,225 38,694
-------- --------
46,089 43,401
Less: accumulated depreciation
and amortization . . . . . . . . . . . (29,673) (25,494)
-------- --------
Net property, plant and equipment. . . . . 16,416 17,907
-------- --------

Equity in joint venture. . . . . . . . . . 3 3,980 4,467
Goodwill and other intangible assets,
net of amortization. . . . . . . . . . . 4 19,650 20,187
Dosimetry devices, net of amortization
of $7,789 in 2006 and $5,911 in 2005 . . 1 6,502 6,537
Deferred income taxes. . . . . . . . . . . 5 1,222 --
Other assets . . . . . . . . . . . . . . . 3 927 1,172
-------- --------

ASSETS . . . . . . . . . . . . . . . . . . $ 90,674 $ 85,859
======== ========

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

CONSOLIDATED BALANCE SHEETS
(CONTINUED)
LANDAUER, INC. AND SUBSIDIARIES

(DOLLARS IN
THOUSANDS)
------------------
AS OF SEPTEMBER 30, NOTES 2006 2005
- ------------------- ------- -------- --------

LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current liabilities:
Accounts payable . . . . . . . . . . . . $ 1,439 $ 1,595
Notes payable. . . . . . . . . . . . . . 6 1,649 4,048
Dividends payable. . . . . . . . . . . . 4,092 3,815
Deferred contract revenue. . . . . . . . 1 13,761 12,702
Accrued compensation and
related costs. . . . . . . . . . . . . 2,815 2,329
Accrued pension costs. . . . . . . . . . 8 923 864
Accrued taxes on income. . . . . . . . . 1 & 5 160 444
Other accrued expenses . . . . . . . . . 3,590 4,036
-------- --------
Current liabilities. . . . . . . . . . . . 28,429 29,833
-------- --------

Non-current liabilities:
Pension and postretirement
obligations. . . . . . . . . . . . . . 8 8,348 7,062
Deferred income taxes. . . . . . . . . . 5 -- 238
-------- --------
Non-current liabilities. . . . . . . . . . 8,348 7,300
-------- --------

Minority interest in subsidiary. . . . . . 198 128

Commitments and contingencies. . . . . . . 9 -- --

STOCKHOLDERS' INVESTMENT 7 & 10
Preferred stock, $.10 par value
per share, authorized 1,000,000
shares; none issued. . . . . . . . . . . -- --
Common stock, $.10 par value per
share, authorized 20,000,000
shares; 9,094,190 and 9,029,793
issued and outstanding,
respectively, in 2006 and 2005 . . . . . 909 903
Premium paid in on common stock. . . . . . 19,641 17,147
Accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . (498) (375)
Retained earnings. . . . . . . . . . . . . 33,647 30,923
-------- --------
Stockholders' investment . . . . . . . . . 53,699 48,598
-------- --------
LIABILITIES AND
STOCKHOLDERS' INVESTMENT . . . . . . . . $ 90,674 $ 85,859
======== ========

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

CONSOLIDATED STATEMENTS OF INCOME
LANDAUER, INC. & SUBSIDIARIES

(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE)
----------------------------
FOR THE YEARS
ENDED SEPTEMBER 30, NOTES 2006 2005 2004
- ------------------- ------ -------- -------- --------

Net revenues . . . . . . . . . . 1 $ 79,043 $ 75,221 $ 69,809
-------- -------- --------

Costs and expenses
Cost of sales. . . . . . . . . 28,734 28,308 25,452
Selling, general, and
administrative . . . . . . . 1 19,154 18,062 16,637
Reorganization charges . . . . 11 1,650 2,300 --
-------- -------- --------
49,538 48,670 42,089
-------- -------- --------

Operating income . . . . . . . . 29,505 26,551 27,720
Equity in income of
joint venture. . . . . . . . . 3 1,141 1,352 1,083
Other income, net. . . . . . . . 351 29 40
-------- -------- --------

Income before taxes. . . . . . . 30,997 27,932 28,843
Income taxes . . . . . . . . . . 1 & 5 (11,783) (10,623) (10,786)
-------- -------- --------

Income before minority
interest . . . . . . . . . . . 19,214 17,309 18,057
Minority interest. . . . . . . . (168) (101) (287)
-------- -------- --------

Net income . . . . . . . . . . . $ 19,046 $ 17,208 $ 17,770
======== ======== ========

Net income per share: 2
Basic. . . . . . . . . . . . . $ 2.11 $ 1.92 $ 2.00
Diluted. . . . . . . . . . . . $ 2.09 $ 1.90 $ 1.98
======== ======== ========

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

<table>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
AND COMPREHENSIVE INCOME
LANDAUER, INC. & SUBSIDIARIES
<caption>
(DOLLARS IN THOUSANDS)
Premium
Paid Accumulated Total
in on Other Stock- Compre-
Common Common Comprehensive Retained holders' hensive
Stock Stock Income (Loss) Earnings Investment Income
-------- -------- ------------- -------- ---------- --------
<s> <c> <c> <c> <c> <c> <c>
Balance September 30, 2003 . . . . . $ 884 $ 12,207 $ (100) $ 25,434 $ 38,425
Options exercised. . . . . . . . . . 11 2,193 -- -- 2,204
Net income . . . . . . . . . . . . . -- -- -- 17,770 17,770 $ 17,770
Foreign currency translation
adjustment . . . . . . . . . . . . -- -- (151) -- (151) (151)
Dividends. . . . . . . . . . . . . . -- -- -- (14,251) (14,251) --
----- -------- ------ -------- -------- --------
Comprehensive Income . . . . . . . . $ 17,619
========
Balance September 30, 2004 . . . . . $ 895 $ 14,400 $ (251) $ 28,953 $ 43,997
Options exercised. . . . . . . . . . 8 2,747 -- -- 2,755
Net income . . . . . . . . . . . . . -- -- -- 17,208 17,208 $ 17,208
Foreign currency translation
adjustment . . . . . . . . . . . . -- -- 111 -- 111 111
Minimum pension liability
adjustment . . . . . . . . . . . . -- -- (235) -- (235) (235)
Dividends. . . . . . . . . . . . . . -- -- -- (15,238) (15,238) --
----- -------- ------ -------- -------- --------
Comprehensive Income . . . . . . . . $ 17,084
========
Balance September 30, 2005 . . . . . $ 903 $ 17,147 $ (375) $ 30,923 $ 48,598
Stock-based compensation
arrangements . . . . . . . . . . . 6 2,494 -- -- 2,500
Net income . . . . . . . . . . . . . -- -- -- 19,046 19,046 $ 19,046
Foreign currency translation
adjustment . . . . . . . . . . . . -- -- (65) -- (65) (65)
Minimum pension liability
adjustment . . . . . . . . . . . . -- -- (58) -- (58) (58)
Dividends. . . . . . . . . . . . . . -- -- -- (16,322) (16,322) --
----- -------- ------ -------- -------- --------
Comprehensive Income . . . . . . . . $ 18,923
========
Balance September 30, 2006 . . . . . $ 909 $ 19,641 $ (498) $ 33,647 $ 53,699
===== ======== ====== ======== ========

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

25
</table>

CONSOLIDATED STATEMENTS OF CASH FLOWS
LANDAUER, INC. & SUBSIDIARIES

(DOLLARS IN THOUSANDS)
FOR THE YEARS ENDED ----------------------------
SEPTEMBER 30, 2006 2005 2004
- ------------------- -------- -------- --------
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . $ 19,046 $ 17,208 $ 17,770

Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation . . . . . . . . . . . . 7,513 6,626 5,197
Amortization . . . . . . . . . . . . 652 642 497
Equity in net income of foreign
affiliate. . . . . . . . . . . . . (1,141) (1,352) (1,083)
Dividends from foreign affiliate . . 1,967 -- 598
Stock-based compensation . . . . . . 888 61 --
Tax benefit from stock-based
compensation arrangements. . . . . 442 887 1,451
Excess tax benefit from stock-
based compensation arrangements. . (244) -- --
Loss on sale and disposition of
assets . . . . . . . . . . . . . . 127 78 87
Increase in accounts receivable,
net. . . . . . . . . . . . . . . . (2,111) (2,979) (1,290)
Increase in other current assets . . (205) (993) (862)
Increase in dosimetry devices
at cost. . . . . . . . . . . . . . (2,409) (3,758) (2,492)
Increase in other long-term assets . (1,633) (222) (294)
Increase (decrease) in accounts
payable and other current
liabilities. . . . . . . . . . . . (830) 2,400 1,075
Increase in deferred contract
revenue. . . . . . . . . . . . . . 1,005 87 89
Increase in long-term liabilities. . 777 2,372 1,184
Increase in minority interest. . . . 169 100 278
-------- -------- --------
Net cash provided by
operating activities . . . . . . 24,013 21,157 22,205
-------- -------- --------

Cash flows used by investing activities:
Acquisition of property, plant
& equipment. . . . . . . . . . . . (3,498) (4,068) (4,773)
Acquisition of minority interests. . -- -- (10,404)
-------- -------- --------
Net cash used by
investing activities . . . . . . (3,498) (4,068) (15,177)
-------- -------- --------

Cash flows used by financing activities:
Proceeds from revolving credit
facilities . . . . . . . . . . . . -- 1,500 8,025
Payments on revolving credit
facilities . . . . . . . . . . . . (2,599) (2,593) (2,763)
Dividends paid to minority interest. (102) (85) (915)
Dividends paid to stockholders . . . (16,044) (15,002) (13,990)
Proceeds from the exercise
of stock options . . . . . . . . . 3,465 111 753
Excess tax benefit from stock-
based compensation arrangements. . 244 -- --
Repayment to affiliate . . . . . . . -- -- (404)
-------- -------- --------
Net cash used by
financing activities . . . . . . (15,036) (16,069) (9,294)
-------- -------- --------

CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
LANDAUER, INC. & SUBSIDIARIES

(DOLLARS IN THOUSANDS)
FOR THE YEARS ENDED ----------------------------
SEPTEMBER 30, 2006 2005 2004
- ------------------- -------- -------- --------

Effects of foreign currency
translation. . . . . . . . . . . . 343 (17) (151)

Net increase (decrease) in cash
and cash equivalents . . . . . . . . . 5,822 1,003 (2,417)
Opening balance -
cash and cash equivalents. . . . . . . 9,598 8,595 11,012
-------- -------- --------
Ending balance -
cash and cash equivalents. . . . . . . $ 15,420 $ 9,598 $ 8,595
======== ======== ========

Supplemental disclosure of
cash flow information:
Cash paid for income taxes . . . . . $ 12,713 $ 10,501 $ 10,156
======== ======== ========

Supplemental non-cash investing
& financing information:
Dividends declared but not paid. . . $ 4,092 $ 3,815 $ 3,577
======== ======== ========

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LANDAUER, INC. AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The accompanying consolidated financial statements include the
accounts of Landauer, Inc.; Landauer-Europe, Ltd. and HomeBuyer's
Preferred, Inc., its wholly-owned subsidiaries; SAPRA-Landauer, Ltda., its
75%-owned subsidiary and Beijing-Landauer, Ltd., its 70%-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.

CASH EQUIVALENTS

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

INVENTORIES

Inventories, principally the components associated with dosimetry
devices, are valued at lower of cost or market utilizing a first-in, first-
out method.

REVENUES AND DEFERRED CONTRACT REVENUE

The source of revenues for the Company is radiation measuring and
monitoring services including other services incidental to measuring and
monitoring. The measuring and monitoring services provided by the Company
to its customers are of a subscription nature and are continuous. The
Company views its business as services provided to customers over a period
of time and the wear period is the period over which those services are
provided. Badge production, wearing of badges, badge analysis, and report
preparation are integral to the benefit that the Company provides to its
customers. These services are provided to customers on an agreed-upon
recurring basis (monthly, bi-monthly or quarterly) that the customer
chooses for the wear period. Revenue is recognized on a straight-line
basis, adjusted for changes in pricing and volume, over the wear period as
the service is continuous and no other discernible pattern of recognition
is evident. Revenues are recognized over the periods in which the customers
wear the badges irrespective of whether invoiced in advance or in arrears.

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.

Other services incidental to measuring and monitoring augment the
basic radiation measurement services that the Company offers, providing
administrative and informational tools to customers for the management of
their radiation detection programs. Other service revenues are recognized
upon delivery of the reports to customers or as other such services are
provided.

The Company sells radiation monitoring products to its customers,
principally InLight products, for their use in conducting radiation
measurements or managing radiation detection programs. Revenues from
product sales are recognized when shipped.

Revenues are shown net of nominal sales allowance adjustments.

RESEARCH AND DEVELOPMENT

The cost of research and development programs is charged to selling,
general and administrative expense as incurred and amounted to
approximately $1,769,000 in fiscal 2006, $1,704,000 in fiscal 2005 and
$1,758,000 in fiscal 2004. Research and development costs include salaries
and allocated employee benefits, third-party research contracts,
depreciation and supplies.

DEPRECIATION, AMORTIZATION AND MAINTENANCE

Property, plant and equipment are recorded at cost. Plant and
equipment are depreciated on a straight-line basis over their estimated
useful lives, which are primarily 30 years for buildings and three to eight
years for equipment. Dosimetry devices (principally badges) and software
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.
Advertising expense amounted to $317,000 in fiscal 2006, $408,000 in fiscal
2005 and $396,000 in fiscal 2004.

INCOME TAXES

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

RECLASSIFICATIONS

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.

STOCK-BASED COMPENSATION

Prior to fiscal 2006, the Company accounted for stock-based
compensation under the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations ("APB 25"), and adopted the
disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation". Under APB 25, as stock options were granted with an exercise
price equal to the market value of the stock on the date of grant, no
stock-based compensation cost was reflected in net income for grants of
stock options prior to fiscal 2006.

Effective October 1, 2005, the Company adopted SFAS No. 123 (Revised
2004), "Share-Based Payment," ("SFAS 123R"), which requires the measurement
and recognition of compensation cost at fair value for all share-based
payments, including stock options. Stock-based compensation for fiscal 2006
includes compensation expense, recognized over the applicable vesting
periods, for new share-based awards granted in fiscal 2006 and for share-
based awards granted prior to, but not yet vested, as of September 30,
2005. Stock-based compensation totaled approximately $888,000 and $61,000
for fiscal 2006 and 2005, respectively. The total income tax benefit
recognized in the consolidated statements of income related to stock-based
compensation was approximately $353,000 and $24,000 during fiscal 2006 and
2005, respectively. No compensation expense or tax benefit was recognized
in fiscal 2004.

Under APB 25, pro-forma expense for stock options was recorded
ratably over the applicable vesting period, which generally ranged from 0
to 4 years. Upon adoption of SFAS 123R, compensation expense is recorded
ratably over the vesting period. Had the fair value based accounting method
for stock-based compensation prescribed by SFAS No. 123 been used, the
Company's net income and earnings per share for fiscal 2005 and 2004 would
have been reduced to the pro-forma amounts illustrated as follows:

(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE) 2005 2004
- --------------------- ------- -------

Net income - as reported . . . . . . . . . . . . $17,208 $17,770
Deduct: Fair value based compensation
expense, net of taxes. . . . . . . . . . . . . (1,849) (1,282)
------- -------

Net income - pro forma . . . . . . . . . . . . . $15,359 $16,488
======= =======

Earnings per share:
Basic - as reported. . . . . . . . . . . . . . $ 1.92 $ 2.00
Basic - pro forma. . . . . . . . . . . . . . . $ 1.71 $ 1.85

Diluted - as reported. . . . . . . . . . . . . $ 1.90 $ 1.98
Diluted - pro forma. . . . . . . . . . . . . . $ 1.70 $ 1.84

The weighted average fair values of option grants were $10.76 and
$8.17 during fiscal 2005 and 2004, respectively. No stock options were
granted in fiscal 2006. The fair value of stock options is estimated using
the Black-Scholes option-pricing model with the following weighted average
assumptions:

2005 2004
-------- --------
Expected volatility. . . . . . . . . . . . . . . 23.73% 24.22%
Risk-free interest rate. . . . . . . . . . . . . 4.27% 4.27%
Expected lives . . . . . . . . . . . . . . . . . 10 years 10 years
Dividend yield . . . . . . . . . . . . . . . . . 3.44% 4.02%

Expected volatility and the expected life of stock options are based
on historical experience. The risk free rate was derived from the implied
yield available on U.S. Treasury zero-coupon issues with a remaining term,
as of the date of grant, equal to the expected term of the option.

In addition to stock options, key employees and/or non-employee
directors are eligible to receive performance shares and restricted stock,
under the Company's 2005 Long-Term Incentive Plan. Performance shares
represent a right to receive shares of common stock upon satisfaction of
performance goals or other specified metrics. Performance shares are paid
out in common stock and will be fully vested upon issuance. The fair value
of performance shares and restricted stock is based on the average of the
Company's high and low stock prices on the date of grant. Compensation
expense for performance shares is recorded ratably over the vesting period,
assuming that achievement of performance goals is deemed probable. The
weighted average fair values of restricted share grants, including
restricted stock and performance shares, were $46.32 and $47.48 during
fiscal 2006 and 2005, respectively. No restricted share awards were granted
in fiscal 2004.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the SEC issued Staff Accounting Bulletin ("SAB")
No. 108, "Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements." SAB
No. 108 requires companies to quantify the impact of all correcting
misstatements, focusing on both the balance sheet and income statement
impact of misstatements, on the current year financial statements. SAB
No. 108 is effective for fiscal years ending after November 15, 2006. SAB
No. 108 is currently expected to have no impact on the Company's
consolidated financial statements.

2. INCOME PER COMMON 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. The Company considered the
impact of SFAS 123R on the computation of diluted shares. The Company
adopted SFAS 123R using the modified prospective method and elected to use
the alternative transition method ("short-cut method") to determine its
pool of windfall tax benefits.

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

(AMOUNTS IN THOUSANDS) 2006 2005 2004
- ---------------------- ------- ------- -------

Weighted average number
of shares of common
stock outstanding. . . . . . . . . 9,045 8,966 8,894
Effect of dilutive securities:
stock-based awards
issued to employees. . . . . . . . 67 72 77
------- ------- -------
Weighted average number
of shares of common
stock assuming dilution. . . . . . 9,112 9,038 8,971
======= ======= =======

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

(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE) 2006 2005 2004
- ---------------------- ------- ------- -------

Net income . . . . . . . . . . . . . $19,046 $17,208 $17,770
Basic EPS. . . . . . . . . . . . $ 2.11 $ 1.92 $ 2.00
Diluted EPS. . . . . . . . . . . $ 2.09 $ 1.90 $ 1.98

3. EQUITY IN JOINT VENTURE

Landauer's 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. During 2006 Landauer
received dividend payments of $1,386,000 and $581,000 for fiscal years 2006
and 2005, respectively. At September 30, 2005, Landauer, Inc. dividends
receivable due from Nagase-Landauer, Ltd. of $581,000 are reported in other
assets. In fiscal 2004, Nagase-Landauer, Ltd. distributed dividends to
Landauer, Inc. in the amount of $598,000.

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

(DOLLARS IN THOUSANDS) 2006 2005 2004
- ---------------------- ------- ------- -------

Revenues . . . . . . . . . . . . . . $15,192 $13,892 $13,687
Income before income taxes . . . . . 4,168 4,261 3,838
Net income . . . . . . . . . . . . . 2,282 2,704 2,166
------- ------- -------
Average exchange rate (<yen>/$). . . 116.3 107.3 108.8
======= ======= =======

Condensed unaudited balance sheets for the years ended September 30,
2006 and 2005, converted into U.S. dollars at the then-current rate of
exchange, are as follows:

(DOLLARS IN THOUSANDS) 2006 2005
- ---------------------- ------- -------

Current assets . . . . . . . . . . . . . . . $12,844 $14,754
Other assets . . . . . . . . . . . . . . . . 1,757 1,514
------- -------
Total assets . . . . . . . . . . . . . . . . $14,601 $16,268
======= =======

Liabilities. . . . . . . . . . . . . . . . . $ 6,638 $ 7,334
Stockholders' investment . . . . . . . . . . 7,963 8,934
------- -------
Total liabilities and
stockholders' investment . . . . . . . . . $14,601 $16,268
======= =======

4. GOODWILL AND OTHER INTANGIBLE ASSETS

The components of goodwill and other intangible assets for the years
ended September 30, 2006 and 2005 were as follows:

(DOLLARS IN THOUSANDS) 2006 2005
- ---------------------- ------- -------

Goodwill, net of pre-2002 amortization
of $3,283 in 2006 and $3,281 in 2005
(no longer amortized). . . . . . . . . . . $13,273 $13,261
Customer lists, net of amortization
of $2,000 in 2006 and $1,474 in 2005
(useful life of 10-15 years) . . . . . . . 4,825 5,181
Licenses and patents, net of amortization
of $438 in 2006 and $369 in 2005
(useful life of 10-17 years) . . . . . . . 458 449
Deferred pension costs (not amortized) . . . 962 1,109
Other intangibles, net of amortization
of $445 in 2006 and $390 in 2005
(useful life of 10 years). . . . . . . . . 132 187
------- -------
Total. . . . . . . . . . . . . . . . . . . . $19,650 $20,187
======= =======

The intangible asset amounts noted above are presented net of
accumulated amortization of $6,166,000 at September 30, 2006 and $5,514,000
at September 30, 2005. Amortization of intangible assets was $652,000,
$642,000, and $497,000 for the years ended September 30, 2006, 2005 and
2004, respectively. Estimated annual aggregate amortization expense related
to intangible assets will be approximately $644,000, $638,000, $579,000,
$574,000, and $504,000, respectively, for each of the next five years.

5. INCOME TAXES

The components of the provision for income taxes for the years ended
September 30, 2006, 2005 and 2004 were as follows:

2006

(DOLLARS IN THOUSANDS) Current Deferred Total
- --------------------- ------- -------- -------
Federal. . . . . . . . . . . . . . . . . $10,932 $(1,455) $ 9,477
State. . . . . . . . . . . . . . . . . . 2,657 (351) 2,306
------- ------- -------
Total. . . . . . . . . . . . . . . . . . $13,589 $(1,806) $11,783
======= ======= =======

2005

Current Deferred Total
------- -------- -------
Federal. . . . . . . . . . . . . . . . . $10,916 $(2,151) $ 8,765
State. . . . . . . . . . . . . . . . . . 2,292 (434) 1,858
------- ------- -------
Total. . . . . . . . . . . . . . . . . . $13,208 $(2,585) $10,623
======= ======= =======

2004

Current Deferred Total
------- -------- -------
Federal. . . . . . . . . . . . . . . . . $ 8,757 $ 220 $ 8,977
State. . . . . . . . . . . . . . . . . . 1,765 44 1,809
------- ------- -------
Total. . . . . . . . . . . . . . . . . . $10,522 $ 264 $10,786
======= ======= =======

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 income before taxes. The following is a summary of the major items
affecting the provision:

(DOLLARS IN THOUSANDS) 2006 2005 2004
- ---------------------- ------- ------- -------

Statutory federal income tax rate. . 35% 35% 35%
Computed tax provision at
statutory rate . . . . . . . . . . $10,849 $ 9,776 $10,095
Increases (decreases) resulting from:
State income tax provision
net of federal benefit . . . . . 1,499 1,208 1,176
Other. . . . . . . . . . . . . . . (565) (361) (485)
------- ------- -------
Income tax provision in the statement
of income. . . . . . . . . . . . . $11,783 $10,623 $10,786
======= ======= =======

The Company has adopted SFAS No. 109, "Accounting For Income Taxes."
Accordingly, the Company recognizes certain income and expense items in
different years for financial and tax reporting purposes. These 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) allowances for obsolete inventory.

Significant components of deferred taxes were as follows:

(DOLLARS IN THOUSANDS) 2006 2005
- ---------------------- ------- -------
Deferred tax assets:
Tangible asset amortization. . . . . . . . $ 2,792 $ 1,977
Pension accrual. . . . . . . . . . . . . . 2,693 1,695
Compensation expense . . . . . . . . . . . 643 666
Inventory reserve. . . . . . . . . . . . . 34 43
Medical insurance claims . . . . . . . . . 555 549
Foreign tax credit carryforward. . . . . . 127 414
Other. . . . . . . . . . . . . . . . . . . 861 847
------- -------
$ 7,705 $ 6,191
======= =======
Deferred tax liabilities:
Depreciation . . . . . . . . . . . . . . . $ 1,149 $ 1,285
Software development . . . . . . . . . . . 2,381 2,532
Intangible asset amortization. . . . . . . 823 945
Other. . . . . . . . . . . . . . . . . . . 270 153
------- -------
$ 4,623 $ 4,915
======= =======

Deferred taxes are not provided on the undistributed earnings of
certain subsidiaries operating outside of the United States that have been
or are intended to be permanently reinvested outside of the United States.
If these earnings were distributed, foreign tax credits may become
available under current law to reduce or eliminate the resulting income tax
liability in the United States.

6. NOTES PAYABLE

In April 2004, the Company negotiated a $25 million line of credit
provided by LaSalle Bank, N.A. and borrowed $7,724,000 (euro-denominated)
under this facility as part of funding the acquisition of the remaining 49%
minority interest in Landauer-Europe. The credit facility provides funds
that are to be used for working capital and other general corporate
purposes. The credit agreement is annually renewable upon agreement of the
parties and provides the Company with the option of electing to borrow
funds denominated in U.S. dollars or Euros that bear interest rates based
on the federal funds rate, prime rate, EURIBOR or LIBOR. It also contains
certain covenants, including a covenant for minimum tangible net worth. The
credit agreement was amended, effective March 25, 2005, to extend the
maturity date to March 25, 2006 and reduce the aggregate loan commitment
under the credit facility to $15 million, with an option for the Company to
increase to $25 million. A second amendment was made effective March 25,
2006, to extend the maturity date to March 25, 2007 and increase the
minimum tangible net worth covenant to $22.4 million. The remaining terms
of the amended credit facility are consistent with the original credit
facility. As of September 30, 2006, the Company was in compliance with all
of the covenants contained in the credit agreement.

The outstanding balance under the line of credit of $1,649,000 at
September 30, 2006 is denominated in euros and bears interest at 4.81%
until March 25, 2007, the maturity date of the line of credit. In the event
the credit facility is not renewed at maturity, it is expected that cash on
hand, cash flow from operations, and the Company's borrowing capacity will
be sufficient to satisfy the obligation. The Company funds euro-based debt
service payments from euro-denominated cash flows. The Company intends to
renew the credit facility prior to expiration.

7. CAPITAL STOCK

Landauer has two classes of capital stock, preferred and common, with
a par value of $0.10 per share for each class. As of September 30, 2006 and
2005, there were 9,094,190 and 9,029,793 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 $1.80 per common share were paid in fiscal 2006. At
September 30, 2006, there were accrued and unpaid dividends of $4,092,000.

Landauer has reserved 500,000 shares of common stock under its long-
term incentive plan approved on February 3, 2005. Previously, Landauer had
reserved 1,450,000 shares of common stock for grants under its equity
compensation plans. Upon approval of the new plan in 2005, all shares
reserved under prior plans were cancelled. Recipients of grants or options
must execute a standard form non-compete agreement.

8. EMPLOYEE BENEFIT PLANS

In the United States, Landauer maintains a qualified noncontributory
defined benefit pension 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. Pensions for international employees are generally provided under
government sponsored programs funded by employment taxes.

Plan assets for the qualified defined benefit pension plan include
marketable equity securities, corporate and government debt securities, and
cash and short-term investments. The plan assets are not directly invested
in the Company's common stock. The supplemental key executive retirement
plan and the directors' retirement plan are not separately funded.

Landauer maintains a 401(k) savings plan covering substantially all
U.S. full-time employees. Qualified contributions made by employees to the
plan are partially matched by the Company. For the fiscal years ended
September 30, 2006, 2005 and 2004, $148,000, $143,000, and $141,000,
respectively, were provided to expense under the plan.

Landauer 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, which
covers retirees with ten or more years of service, the Company will
reimburse retirees to age 70, or to age 65 in accordance with plan changes
effective October 1, 2005, 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 assumptions for health-care
cost trend rates were 6% for those younger than 65, and 5% for those 65 and
older.

The Company uses a September 30 measurement date for its plans. The
following tables set forth the status of these combined plans at
September 30, 2006 and 2005.

PENSION OTHER
BENEFITS BENEFITS
---------------- ----------------
(DOLLARS IN THOUSANDS) 2006 2005 2006 2005
- ---------------------- ------- ------- ------- -------

Change in benefit obligation:
Benefit obligation at
beginning of year. . . . . . . $21,349 $17,737 $ 2,007 $ 1,494
Service cost . . . . . . . . . . 1,246 1,031 20 102
Interest cost. . . . . . . . . . 1,153 1,072 82 108
Effects of reorganizations . . . (325) 701 -- --
Plan amendments (1). . . . . . . -- -- (840) --
Actuarial (gain) loss. . . . . . (1,510) 1,106 261 339
Benefits paid. . . . . . . . . . (330) (298) (49) (36)
------- ------- ------- -------
Benefit obligation at
end of year. . . . . . . . . . . $21,583 $21,349 $ 1,481 $ 2,007
======= ======= ======= =======
- --------------------
(1) Plan provisions were changed, effective October 1, 2005 for future
retirees, to increase the minimum age for early retirement under the
plan from 55 to 62 and to reduce the age to which benefits continue
from 70 to 65.

PENSION OTHER
BENEFITS BENEFITS
----------------- ----------------
(DOLLARS IN THOUSANDS) 2006 2005 2006 2005
- ---------------------- -------- -------- ------- -------

Change in plan assets:
Fair value of assets at
beginning of year. . . . . . . $ 10,034 $ 8,942 $ -- $ --
Actual return on plan assets . . 516 547 -- --
Employer contribution. . . . . . 862 843 49 36
Benefits paid. . . . . . . . . . (330) (298) (49) (36)
-------- -------- ------- -------
Fair value of assets at
end of year. . . . . . . . . . . $ 11,082 $ 10,034 $ -- $ --
======== ======== ======= =======

Reconciliation of funded status:
Funded status. . . . . . . . . . $(10,501) $(11,315) $(1,481) $(2,007)
Unrecognized transition
(asset) obligation . . . . . . (6) (12) -- 159
Unrecognized prior service
cost . . . . . . . . . . . . . 1,076 1,232 (555) 17
Unrecognized net actuarial
loss . . . . . . . . . . . . . 3,337 5,027 635 480
-------- -------- ------- -------
Net amount recognized. . . . . . . $ (6,094) $ (5,068) $(1,401) $(1,351)
======== ======== ======= =======

At September 30, 2006, the Company recognized on its balance sheet an
additional minimum pension liability of $1,449,000 along with a related
deferred pension cost reported in intangible assets of $962,000 and minimum
pension liability charge in accumulated other comprehensive income of
$293,000, net of tax. At September 30, 2005, the Company recorded an
additional minimum pension liability of $1,499,000 along with a related
deferred pension cost reported in intangible assets of $1,109,000 and
minimum pension liability charge in accumulated other comprehensive income
of $235,000, net of tax.

At September 30, 2006 and 2005, the accumulated benefit obligation
for all defined benefit pension plans was $18,572,000 and $16,413,000,
respectively, and the accumulated benefit obligation exceeded plan assets
for all pension plans. Information is set forth in the following table:

SEPTEMBER 30,
------------------
(DOLLARS IN THOUSANDS) 2006 2005
- ---------------------- ------- -------

Projected benefit obligation . . . . . . . . $21,583 $21,349
Accumulated benefit obligation . . . . . . . 18,572 16,413
Fair value of plan assets. . . . . . . . . . 11,082 10,034

Components of Net Periodic Benefit Cost:

PENSION OTHER
BENEFITS BENEFITS
---------------- ----------------
(DOLLARS IN THOUSANDS) 2006 2005 2006 2005
- ---------------------- ------- ------- ------- -------
Service cost . . . . . . . . . . . $ 1,246 $ 1,031 $ 20 $ 102
Interest cost. . . . . . . . . . . 1,153 1,072 82 108
Expected return on plan assets . . (772) (724) -- --
Amortization of transition (asset)
obligation . . . . . . . . . . . (6) (6) -- 23
Amortization of prior service cost 156 156 (111) 17
Recognized net actuarial loss. . . 111 104 107 46
Effects of reorganizations . . . . -- 701 -- --
------- ------- ------- -------
Net periodic benefit cost. . . . . $ 1,888 $ 2,334 $ 98 $ 296
======= ======= ======= =======

ASSUMPTIONS

The weighted-average assumptions used to determine benefit obliga-
tions at September 30 were as follows:

PENSION OTHER
BENEFITS BENEFITS
---------------- ----------------
2006 2005 2006 2005
------- ------- ------- -------
Discount rate. . . . . . . . . . . 5.90% 5.75% 5.90% 5.75%
Rate of compensation increase. . . 3.50% 5.17% 3.50% 6.00%

The weighted-average assumptions used to determine net periodic
benefit cost for years ended September 30 were as follows:

PENSION OTHER
BENEFITS BENEFITS
---------------- ----------------
2006 2005 2006 2005
------- ------- ------- -------
Discount rate. . . . . . . . . . . 5.75% 6.25% 5.75% 6.25%
Expected long-term return
on plan assets . . . . . . . . . 7.50% 8.00% 0.00% 0.00%
Rate of compensation increase. . . 3.50% 5.17% 3.50% 6.00%

The expected long-term rate of return of plan assets is based on
historical and projected rates of return for current and planned asset
classes in the plan's investment portfolio. Based on the target asset
allocation for each asset class, the overall expected rate of return for
the portfolio was developed and adjusted for historical and expected
experience of the active portfolio management results compared to the
benchmark returns and for the effect of expenses paid from plan assets. The
Company reviews this long-term assumption on an annual basis.

Assumed health care cost trend rates at September 30 were:

2006 2005
------- -------
Health care cost trend rate assumed
for next year. . . . . . . . . . . . . . . 12% 12%
Rate to which the cost trend rate
is assumed to decline
(the ultimate trend rate). . . . . . . . . 6% 6%
Year that the rate reaches the
ultimate trend rate. . . . . . . . . . . . 2012 2011

Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change
in assumed health care cost trend rates would have the following effects as
of September 30, 2006:

1-PERCENTAGE- 1-PERCENTAGE-
POINT POINT
(DOLLARS IN THOUSANDS) INCREASE DECREASE
- ---------------------- ------------- -------------
Effect on total of service
and interest cost. . . . . . . . . . . $ 5 $ (5)
Effect on postretirement
benefit obligation . . . . . . . . . . 62 (58)

PLAN ASSETS

Landauer's pension plan weighted-average asset allocations by asset
category at September 30 were as follows:

PLAN ASSETS AT
SEPTEMBER 30
-------------------
ASSET CATEGORY 2006 2005
- -------------- ------- -------

Fixed income . . . . . . . . . . . . . . . . . 55% 53%
Equity securities. . . . . . . . . . . . . . . 44% 46%
Cash equivalents . . . . . . . . . . . . . . . 1% 1%
------- -------
Total. . . . . . . . . . . . . . . . . . . . . 100% 100%
======= =======

The plan's investment strategy supports the objectives of the plan.
These objectives are to maximize returns in order to minimize contributions
within reasonable and prudent levels of risk. To achieve these objectives,
the Company has established a strategic asset allocation policy which is to
maintain approximately one half of plan assets in high quality fixed income
securities such as investment grade bonds and short term government
securities, with the other half containing large capitalization equity
securities. The plan's objective is to periodically rebalance its assets to
approximate weighted-average target asset allocations. Investments are
diversified across classes and within each class to minimize the risk of
large losses.

CONTRIBUTIONS

The Pension Protection Act of 2006 raised the maximum deductible
contribution, to a company's defined benefit pension plan, permitted under
U.S. tax law to 150% of the plan's current liability minus the value of
plan assets. This would increase the Company's allowable contribution for
fiscal 2007 from approximately $1,200,000 to $7,800,000. The Company is
evaluating funding alternatives and it is expected that cash flows from
operations will be sufficient to fund contributions.

ESTIMATED FUTURE BENEFIT PAYMENTS

The following benefit payments, which reflect expected future
service, as appropriate, are expected to be paid:

PENSION OTHER
(DOLLARS IN THOUSANDS) BENEFITS BENEFITS
- ---------------------- -------- --------

2007 . . . . . . . . . . . . . . . . . . . . . $ 400 $ 81
2008 . . . . . . . . . . . . . . . . . . . . . 610 76
2009 . . . . . . . . . . . . . . . . . . . . . 760 80
2010 . . . . . . . . . . . . . . . . . . . . . 761 78
2011 . . . . . . . . . . . . . . . . . . . . . 813 70
Years 2012-2016. . . . . . . . . . . . . . . . 5,590 290

9. COMMITMENTS AND CONTINGENCIES

10. STOCK-BASED COMPENSATION

The Company maintains three stock-based compensation plans for key
employees and/or non-employee directors: (i) the Landauer, Inc. 1996 Equity
Plan, as amended and restated through November 8, 2001 (the "1996 Equity
Plan"); (ii) the Landauer, Inc. 1997 Non-Employee Director's Stock Option
Plan, as amended and restated through November 8, 2001 (the "1997
Director's Plan"); and (iii) the Landauer, Inc. 2005 Long-Term Incentive
Plan (the "2005 LTI Plan"). For future grants, the 2005 LTI Plan replaced
the 1996 Equity Plan and the 1997 Director's Plan. The Company reserved
500,000 shares of its common stock for grant under the 2005 LTI Plan, and
any shares reserved for award and unused under the previous two plans were
cancelled. The Plans provide for grants of options to purchase the
Company's common stock, restricted stock, restricted stock units,
performance shares and units, and stock appreciation rights.

STOCK OPTIONS

Expense related to stock options issued to eligible employees under
the Plans is recognized ratably over the vesting period. Stock options
generally vest over a period of 0 to 4 years and have 10-year contractual
terms.

A summary of stock option activity during fiscal 2006 is presented
below (in thousands, except option prices):

Weighted-
Average
Weighted- Remaining
Number Average Contractual Aggregate
of Exercise Term Intrinsic
Options Price (Years) Value
------- --------- ----------- ---------

Options outstanding
at October 1,
2005 . . . . . . . . 534 $40.88
Exercised. . . . . . . (58) 38.12
Forfeited. . . . . . . (8) 44.11
------ ------

Options outstanding
at September 30,
2006 . . . . . . . . 468 $41.29 7.1 $4,427
====== ====== ====== ======

Options exercisable
at September 30,
2006 . . . . . . . . 450 $41.55 7.2 $4,137
====== ====== ====== ======

At September 30, 2006, unrecognized compensation expense related to
stock options totaled approximately $25,000 and is expected to be
recognized over a weighted-average period of 2.5 months. The intrinsic
value of options exercised totaled approximately $590,000, $2,250,000 and
$3,650,000 during fiscal 2006, 2005 and 2004, respectively.

RESTRICTED SHARE AWARDS

Restricted share awards consist of performance shares and time vested
restricted stock. Expense related to performance shares and restricted
stock is recognized ratably over the vesting period. Restricted stock
issued to eligible employees under the 2005 LTI plan vests over a period
from 3 to 5 years, and performance shares contingently vest over various
periods, depending on the nature of the performance goal.

Restricted share transactions during fiscal 2006 were as follows (in
thousands, except fair values):

Number of Weighted-
Restricted Average
Share Fair
Awards Value
---------- ----------
Restricted share awards
outstanding at
October 1, 2005. . . . . . . . . . . 8 $47.48

Granted. . . . . . . . . . . . . . . . 26 46.32
Vested . . . . . . . . . . . . . . . . (11) 46.76
Forfeited. . . . . . . . . . . . . . . (9) 46.53
------ ------
Restricted share awards
outstanding at
September 30, 2006 . . . . . . . . . 14 $46.57
====== ======

At September 30, 2006, unrecognized compensation expense related to
restricted share awards totaled approximately $494,000 and is expected to
be recognized over a weighted average period of 2.2 years.

Prepaid expenses and other current assets as of September 30, 2005
included $1.8 million related to amounts owed to the Company by the former
Chief Executive Officer related to the exercise of vested options. Such
amount was collected in October 2005.

11. REORGANIZATION CHARGES

In March 2006, the Company recognized expenses of approximately
$600,000 for costs associated with the implementation of a profit
improvement plan. In September 2006, the Company recognized expenses in the
amount of approximately $1,050,000 associated with management
organizational changes, including retirement incentives and related pension
benefit expenses, arising from the retirement of the Company's former chief
financial officer and the resignation of the vice president of operations,
recruitment expenses related to the recent election of a new chief
financial officer, severance charges, and other costs related to additional
personnel changes.

In September 2005, the Company recognized expense in the amount of
$2,300,000 associated with various management organizational changes,
including early retirement incentives and related pension benefit expenses
arising from the retirement of the Company's former chief executive
officer, recruitment expenses related to the recent election of a new chief
executive officer and severance and other costs related to additional
personnel changes.

12. GEOGRAPHIC INFORMATION

The Company operates in a single business segment, radiation
monitoring services. The Company provides these services primarily to
customers in the United States, as well as to customers in other geographic
markets. The following table shows the geographical distribution of
revenues for the fiscal years ended September 30, 2006, 2005 and 2004:

(DOLLARS IN THOUSANDS) 2006 2005 2004
- ---------------------- -------- -------- --------
Domestic . . . . . . . . . . . $ 63,966 $ 61,056 $ 58,133
Europe - France and UK . . . . 10,114 10,068 8,104
Other countries. . . . . . . . 4,963 4,097 3,572
-------- -------- --------
$ 79,043 $ 75,221 $ 69,809
======== ======== ========

Revenues of Nagase-Landauer, Ltd., the Company's joint venture in
Japan, are not consolidated and are not included in the above table.
Audited revenues of Nagase-Landauer, Ltd. for fiscal years 2006, 2005, and
2004 were $15,192,000, $13,892,000, and $13,687,000, respectively. See
Note 3 for additional information on Nagase-Landauer, Ltd.

13. ACQUISITION OF MINORITY INTEREST IN LANDAUER-EUROPE, LTD.

In April 2004, Landauer, Inc. consummated an agreement with Bureau
Veritas ("BV") to acquire the 49% minority interest in Landauer-Europe
owned by BV's subsidiary, Laboratoire Central Industries des Electriques
("LCIE"), for $10.4 million in cash. The purchase price was allocated to
identifiable intangible assets based on estimates of fair value as
determined by an independent third party valuation consultant.
Substantially all of the purchase price, plus deferred tax liabilities
recorded, was allocated to intangible assets including $3.9 million of
customer lists (amortized over the estimated useful life of 15 years) and

goodwill of $7.9 million. Had the acquisition occurred at the beginning of
fiscal 2004, unaudited net income of the Company, on a proforma basis,
would have been as follows (amounts in thousands, except per share data):

Year Ended September 30, 2004
------------------------ --------

Proforma net income. . . . . . . . . . $ 17,887
Diluted earnings per share . . . . . . $ 1.99

The unaudited proforma net income is for illustrative purposes only
and is not necessarily indicative of the financial results had the
acquisition actually occurred at the beginning of fiscal 2004.

Landauer funded the purchase price from a combination of working
capital funds in the amount of $2.7 million and $7.7 million borrowed under
a credit facility obtained in April 2004. See Note 6 for additional
information on the credit facility.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To Stockholders and Board of Directors of Landauer, Inc.:

We have completed integrated audits of Landauer, Inc.'s 2006 and 2005
consolidated financial statements and of its internal control over
financial reporting as of September 30, 2006, and an audit of its 2004
consolidated financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our opinions,
based on our audits, are presented below.

CONSOLIDATED FINANCIAL STATEMENTS
- ---------------------------------

In our opinion, the consolidated financial statements listed in the index
appearing under Item 15(a)(1) present fairly, in all material respects, the
financial position of Landauer, Inc. and its subsidiaries at September 30,
2006 and 2005, and the results of their operations and their cash flows for
each of the three years in the period ended September 30, 2006 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 audits. We conducted our audits of
these statements in accordance with the standards of the Public Company
Accounting Oversight Board (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 of
financial statements 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 audits provide a reasonable basis for our opinion.

As discussed in Notes 1 and 10 to the consolidated financial statements,
the Company began recording share-based compensation expense in accordance
with Statement of Financial Accounting Standards No. 123(R) "Share-Based
Payment" on October 1, 2005.

INTERNAL CONTROL OVER FINANCIAL REPORTING
- -----------------------------------------

Also, in our opinion, management's assessment, included in Management's
Report on Internal Control over Financial Reporting appearing under Item
9A, that the Company maintained effective internal control over financial
reporting as of September 30, 2006, based on criteria established in
INTERNAL CONTROL - INTEGRATED FRAMEWORK issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO), is fairly
stated, in all material respects, based on those criteria. Furthermore, in
our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of September 30, 2006, based
on criteria established in INTERNAL CONTROL - INTEGRATED FRAMEWORK issued
by the COSO. The Company's management is responsible for maintaining
effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting. Our
responsibility is to express opinions on management's assessment and on the
effectiveness of the Company's internal control over financial reporting
based on our audit. We conducted our audit of internal control over
financial reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. An audit of internal control over financial reporting
includes obtaining an understanding of internal control over financial
reporting, evaluating management's assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such
other procedures as we consider necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A company's
internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial
statements.

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

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois
December 11, 2006

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation was
performed under the supervision and with the participation of the Company's
management, including the Chief Executive Officer ("CEO") and the Chief
Financial Officer ("CFO") (the Company's principal executive officer and
principal financial officer, respectively), of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as
defined in Rule 13(a)-15(e) and 15d-15(e) under the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"). Based upon that evaluation,
the Company's CEO and CFO concluded that the Company's disclosure controls
and procedures as of September 30, 2006 were effective.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting, as such
term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The
Company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles in the United
States of America. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Management, including the CEO and CFO, has assessed the effectiveness
of the Company's internal control over financial reporting as of
September 30, 2006, based on the criteria described in INTERNAL CONTROL -
INTEGRATED FRAMEWORK issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). Based on its assessment, management
concluded that the Company's internal control over financial reporting was
effective as of September 30, 2006.

Management's assessment of the effectiveness of the Company's
internal control over financial reporting as of September 30, 2006 has been
audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their Report of Independent Registered Public
Accounting Firm which is included in Item 8. "Consolidated Financial
Statements and Supplementary Data" on pages 22-45.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in the Company's internal control over
financial reporting that occurred during the period ended September 30,
2006 that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information pursuant to this Item relating to the directors of the
Company, contained under the headings "Election of Directors" and
"Beneficial Ownership of Common Stock" in the Proxy Statement, is
incorporated herein by reference. Information pursuant to this Item
relating to the Company's Audit Committee and the Company's code of ethics
contained under the heading "Board of Directors and Committees" in the
Proxy Statement is incorporated herein by reference.

The executive officers of the Company are as follows:

NAME OF OFFICER AGE POSITION

William E. Saxelby 50 President and
Chief Executive Officer

Jonathon M. Singer 42 Senior Vice President-
Treasurer, Secretary,
and Chief Financial Officer

Gerard P. Bilek 44 Vice President - Controller

R. Craig Yoder 54 Senior Vice President -
Marketing and Technology

Richard E. Bailey 60 Senior Vice President -
Operations

Mr. Saxelby joined the Company in September 2005 as President and
Chief Executive Officer. Previously, he served as Chief Executive Officer
of Medical Research Laboratories, a manufacturer of defibrillators, prior
to its sale to Welch Allyn in 2003, and consulted with certain private
equity firms between 2003 and 2005. Prior to joining Medical Research
Laboratories, he served as a Corporate Vice President of Allegiance
Healthcare from 1996 to 1999, and from 1978 to 1996 he held executive
positions at Baxter International and its American Hospital Supply
subsidiary.

Mr. Singer joined the Company in October 2006 as Senior Vice
President-Treasurer, Secretary, and Chief Financial Officer. Previously, he
served as Vice President Global Finance, Chief Financial Officer for the
Medical segment of Teleflex Incorporated. From 2004 to 2005, he served as
Vice President, Strategy and Business Development for Teleflex's Medical
segment. From 1998 through 2004, he worked in a number of positions within
the Medical Products and Services business segment of Cardinal Health,
Inc., most recently as its Vice President, Strategy and Business
Development.

Mr. Bilek was elected to his position in October 2006, after serving
as the Company's Controller since 1999. Prior to joining the Company, he
held various financial/accounting positions with increasing levels of
responsibility. He holds an MBA from DePaul University and is a Certified
Public Accountant.

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. Bailey was elected to his position in May 2006. Prior to joining
the Company, he was President and Chief Operating Officer of Dean Foods
Company and held senior executive positions with Philip Morris Company,
Kraft Foods, Inc., and Total Logistic Control.

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

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 "Beneficial Ownership of
Common Stock" and "Equity Compensation Plan Information" 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
"Independence of Directors" in the Proxy Statement is incorporated herein
by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information contained under the heading "Fees Billed by
Independent Auditors" in the Proxy Statement is incorporated herein by
reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

(1) Financial Statements - The financial statements of
Landauer listed under Item 8 herein.

(2) Financial Statement Schedules - None.

(3) Exhibits - The following 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 incorporated by
reference to Exhibit (10)(a) to the Annual Report on
Form 10-K for the fiscal year ended September 30, 2002.

(10)(b) Amendment No. 1 to the Landauer, Inc. 1996 Equity Plan,
as amended and restated through November 8, 2001, is
incorporated by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2006.

(10)(c) 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)(d) 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)(e) 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)(f) Form of Supplemental Key Executive Retirement Plan of
Landauer, Inc., as amended and restated effective
October 1, 2003, is incorporated by reference to
Exhibit (10)(e) to the Annual Report on Form 10-K for
the fiscal year ended September 30, 2003.

(10)(g) 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)(h) The Landauer, Inc. 1997 Non-Employee Director's Stock
Option Plan, as amended and restated through
November 8, 2001, is incorporated by reference to
Exhibit (10)(g) to the Annual Report on Form 10-K for
the fiscal year ended September 30, 2003.

(10)(i) Amendment No. 1 to the Landauer, Inc. 1997 Non-Employee
Director's Stock Option Plan, as amended and restated
through November 8, 2001, is incorporated by reference
to Exhibit 10.2 to the Quarterly Report on Form 10-Q
for the quarter ended March 31, 2006.

(10)(j) 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.

(10)(k) Employment agreement dated November 9, 2002 between
the Registrant and Robert M. Greaney is incorporated
by reference to Exhibit (10)(i) to the Annual Report
on Form 10-K for the fiscal year ended September 30,
2003.

(10)(l) The Landauer, Inc. Executive Special Severance Plan
dated May 22, 2003 is incorporated by reference to
Exhibit (10)(j) to the Annual Report on Form 10-K for
the fiscal year ended September 30, 2003.

(10)(m) The Credit Agreement between Landauer, Inc. and LaSalle
Bank N.A. is incorporated by reference to Exhibit 10.1
to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004.

(10)(n) Form of stock option award pursuant to the Landauer,
Inc. 1996 Equity Plan, as amended and restated through
November 8, 2001, is incorporated by reference to
Exhibit 10(l) to the Annual Report on Form 10-K for the
fiscal year ended September 30, 2004.

(10)(o) The Landauer, Inc. 2005 Long-Term Incentive Plan is
incorporated by reference to Exhibit (10)(m) to the
Annual Report on Form 10-K for the fiscal year ended
September 30, 2005.

(10)(p) Amendment No. 1 to the Landauer, Inc. 2005 Long-Term
Incentive Plan is incorporated by reference to
Exhibit 10.3 to the Quarterly Report on Form 10-Q for
the quarter ended March 31, 2006.

(10)(q) Form of stock option award pursuant to the Landauer,
Inc. 2005 Long-Term Incentive Plan is incorporated by
reference to Exhibit (10)(n) to the Annual Report on
Form 10-K for the fiscal year ended September 30, 2005.

(10)(r) Form of director's restricted share award pursuant to
the Landauer, Inc. 2005 Long-Term Incentive Plan is
incorporated by reference to Exhibit (10)(o) to the
Annual Report on Form 10-K for the fiscal year ended
September 30, 2005.

(10)(s) Form of key employee restricted share award pursuant to
the Landauer, Inc. 2005 Long-Term Incentive Plan is
incorporated by reference to Exhibit (10)(p) to the
Annual Report on Form 10-K for the fiscal year ended
September 30, 2005.

(10)(t) Employment agreement dated September 28, 2005 between
the Registrant and William E. Saxelby is incorporated
by reference to Exhibit (10)(q) to the Annual Report on
Form 10-K for the fiscal year ended September 30, 2005.

(10)(u) Amendment dated September 27, 2005 to the employment
agreement between the Registrant and Brent A. Latta is
incorporated by reference to Exhibit (10)(r) to the
Annual Report on Form 10-K for the fiscal year ended
September 30, 2005.

(10)(v) Amendment dated March 25, 2005 to the Credit Agreement
between Landauer, Inc. and LaSalle Bank N.A. is
incorporated by reference to Exhibit (10)(s) to the
Annual Report on Form 10-K for the fiscal year ended
September 30, 2005.

(10)(w) Second Amendment dated March 25, 2006 to the Credit
Agreement between the Registrant and LaSalle Bank N.A.
is incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K dated March 25, 2006.

(10)(x) Amendment to Employment Agreement dated May 2, 2006
between the Registrant and R. Craig Yoder is
incorporated by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006.

(10)(y) Employment agreement dated September 8, 2006 between
the Registrant and Jonathon M. Singer is incorporated
by reference to Exhibit 10.1 to the Current Report on
Form 8-K dated September 8, 2006.

(10)(z) Form of Performance Stock Grant under the Landauer,
Inc. 2005 Long-Term Incentive Plan is incorporated by
reference to Exhibit 10.1 to the Current Report on
Form 8-K dated February 16, 2006.

(21) Subsidiaries of the registrant are:

Beijing-Landauer, Ltd. (70%)
Beijing, P.R. China

SAPRA-Landauer, Ltda. (75%)
Sao Carlos - SP - Brazil

HomeBuyer's Preferred, Inc. (100%)
Glenwood, IL

Nagase-Landauer, Ltd. (50%)
Tokyo, Japan

Landauer-Europe, Ltd. and subsidiary (100%)
Paris, France
Oxford, United Kingdom

31.1 Certification of William E. Saxelby, President and
Chief Executive Officer, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 filed
herewith.

31.2 Certification of Jonathon M. Singer, Chief Financial
Officer, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 filed herewith.

32.1 Certification of William E. Saxelby, President and
Chief Executive Officer, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 furnished herewith.

32.2 Certification of Jonathon M. Singer, Chief Financial
Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 furnished herewith.

Exhibits 10(a), 10(b), 10(e), 10(f), 10(g), 10(h), 10(i), 10(j),
10(k), 10(l), 10(n), 10(o), 10(p), 10(q), 10(r), 10(s), 10(t), 10(u),
10(x), 10(y), and 10(z) listed above are 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.

SIGNATURES

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/ William E. Saxelby
------------------------------
December 11, 2006 William E. Saxelby
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/ William E. Saxelby President and Director December 11, 2006
William E. Saxelby (Principal Executive Officer)

/s/ Jonathon M. Singer Senior Vice President, December 11, 2006
Jonathon M. Singer Treasurer and Secretary
(Principal Financial and
Accounting Officer)

/s/ Robert J. Cronin Director December 11, 2006
Robert J. Cronin

/s/ E. Gail de Planque Director December 11, 2006
E. Gail de Planque

/s/ Gary D. Eppen Director December 11, 2006
Gary D. Eppen

/s/ Stephen C. Mitchell Director December 11, 2006
Stephen C. Mitchell

/s/ Richard R. Risk Director December 11, 2006
Richard R. Risk

/s/ Thomas M. White Director December 11, 2006
Thomas M. White

/s/ Michael D. Winfield Director December 11, 2006
Michael D. Winfield

<table>

QUARTERLY FINANCIAL DATA (UNAUDITED)

<caption>
(Amounts in Thousands, Except Per Share)
-------------------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -------
<s> <c> <c> <c> <c> <c> <c> <c>

Net revenues 2006 $18,647 $20,621 $19,591 $20,184 $79,043
2005 $18,325 $19,706 $18,200 $18,990 $75,221

Gross profit 2006 $11,214 $13,135 $12,449 $13,511 $50,309
2005 $11,231 $12,444 $11,129 $12,109 $46,913

Operating income (1)(2) 2006 $ 6,060 $ 8,034 $ 7,762 $ 7,649 $29,505
2005 $ 6,720 $ 7,904 $ 6,642 $ 5,285 $26,551

Net income 2006 $ 4,007 $ 5,248 $ 5,121 $ 4,670 $19,046
2005 $ 4,430 $ 5,143 $ 4,531 $ 3,104 $17,208

Diluted net income
per share (1)(2) 2006 $ 0.44 $ 0.58 $ 0.56 $ 0.51 $ 2.09
2005 $ 0.49 $ 0.57 $ 0.50 $ 0.34 $ 1.90

Cash dividends per share 2006 $ 0.450 $ 0.450 $ 0.450 $ 0.450 $ 1.80
2005 $ 0.425 $ 0.425 $ 0.425 $ 0.425 $ 1.70

Common stock price per share 2006 high $ 52.18 $ 52.24 $ 50.25 $ 53.00 $ 53.00
low 43.90 44.42 43.11 44.45 43.11

2005 high $ 50.30 $ 49.16 $ 53.00 $ 54.00 $ 54.00
low 44.60 42.88 44.44 47.38 42.88

Weighted Average Diluted Shares Outstanding
2006 9,104 9,098 9,104 9,142 9,112
2005 9,019 9,025 9,039 9,071 9,038

<fn>

(1) Includes reorganization charges and management transition charges of $1,650,000, reducing net income by
$994,000 (after income tax benefit of $656,000) or $0.11 per diluted share in fiscal year 2006.

(2) Includes reorganization charges of $2,300,000, reducing net income by $1,386,000 (after income tax benefit
of $914,000) or $0.15 per diluted share in the fourth quarter of fiscal year 2005.

54
</table>