##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009.
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission File No. 0-14902
 MERIDIAN BIOSCIENCE, INC.
       Title of each class
    
    Name of each exchange of which registeredCommon Shares, No Par Value
    
    The NASDAQ Stock Market LLC(NASDAQ Global Select Market)
    YES þ NO o
  YES o NO þ
  YES þ NO o
  YES o NO o
 - - -
 YES o NO þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  YES o NO þ




---



##### 



PagePart IItem 1 Business
    
    
    4Item 1A Risk Factors
    
    
    14Item 1B Unresolved Staff Comments
    
    
    21Item 2 Properties
    
    
    21Item 3 Legal Proceedings
    
    
    22Item 4 Submission of Matters to a Vote of Security Holders
    
    
    22Part IIItem 5 Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity
Securities
    
    
    22Item 6 Selected Financial Data
    
    
    23Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 7A Quantitative and Qualitative Disclosures about Market Risk
    
    
    41Item 8 Financial Statements and Supplementary Data
    
    
    42Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    72Item 9A Controls and Procedures
    
    
    73Item 9B Other Information
    
    
    73Part IIIItem 10 Directors, Executive Officers and Corporate Governance
    
    
    74Item 11 Executive Compensation
    
    
    74Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    74Item 13 Certain Relationships and Related Transactions, and Director Independence
    
    
    74Item 14 Principal Accountant Fees and Services
    
    
    74Item 15 Exhibits and Financial Statement Schedules
    
    
    75Exhibit 10.16Exhibit 10.23Exhibit 10.38Exhibit 10.39Exhibit 13Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32




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.
 
  BUSINESS
 Overview
  Operating Segments
   - 4 -




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##### Table of Contents



www.meridianbioscience.com http://www.sec.gov
 US Diagnostics Operating Segment
 Overview
    - 5 -




---



##### Table of Contents



H.
pylori difficile
 Market Trends
   Sales and Marketing
   - 6 -




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##### Table of Contents



Products and Markets
  Card ® TM TM ®
 Card ® TM C. difficile Card ® C. difficile TM C. difficile C. difficile Card ® TM
 TM ® Heliobacter pylori H. pylori
  - 7 -




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##### Table of Contents



Research and Development
 ä ä Card Ò
 ® ® ® ®
 Card ® Card ®
 illumi TM C. difficile
  - 8 -




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##### Table of Contents



Manufacturing
  Intellectual Property, Patents, and Licenses
  Number of
    
    
    % of consolidated salesproducts
    
    
    2009
    
    
    2008Product FamilyH. pylori
    
    
    2
    
    
    
    12
    %
    
    
    11
    %Upper respiratory
    
    
    2
    
    
    
    4
    %
    
    
    1
    %Other
    
    
    8
    
    
    
    2
    %
    
    
    2
    %Total patented products
    
    
    12
    
    
    
    18
    %
    
    
    14
    %
 H. pylori
  Government Regulation
  510(k) clearance
  - 9 -




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European Diagnostics Operating Segment
   Life Science Operating Segment
 Overview
    - 10 -




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Products, Markets and Growth Strategies
     - 11 -




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Research and Development
  Manufacturing and Government Regulation
   Competition
 Diagnostics
    - 12 -




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##### Table of Contents



C. difficile illumi gene TM C.
difficile illumi gene TM C. difficile, C. difficile .
 Life Science
   Acquisitions
  International Markets
   - 13 -




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Environmental
  
  RISK FACTORS
  Risks Affecting Growth and Profitability of our Business
 We may be unable to develop new products and services or acquire products and services on favorable
terms.
     - 14 -




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We may be unable to successfully integrate operations or to achieve expected cost savings from
acquisitions we make.
  Revenues for our diagnostic operating segments may be impacted by our reliance upon two key
distributors, seasonal factors and sporadic outbreaks, and changing diagnostic market conditions.
 Key Distributors
   Seasonal Factors and Sporadic Outbreaks
   - 15 -




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Changing Diagnostic Market Conditions
  We could be adversely affected by healthcare reform legislation.
  Revenues for our Life Science operating segment may be impacted by customer concentrations and
buying patterns.
     - 16 -




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##### Table of Contents



Intense competition could adversely affect our profitability.
  C.
difficile C. difficile C. difficile illumigene TM
 We are dependent on international sales, and our financial results may be adversely impacted by
foreign currency, regulatory or other developments affecting international markets.
  Risks Affecting our Manufacturing Operations
 We are subject to comprehensive regulation, and our ability to earn profits may be restricted by
these regulations.
   - 17 -




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Significant interruptions in production at our principal manufacturing facilities and/or
third-party manufacturing facilities would adversely affect our business and operating results.
  We are dependent on sole-source suppliers for certain critical components and products. A supply
interruption could adversely affect our business.
    - 18 -




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Risks Related to Intellectual Property and Product Liability
 We may be unable to protect or obtain proprietary rights that we utilize or intend to utilize.
  Product infringement claims by other companies could result in costly disputes and could limit our
ability to sell our products.
  If product liability lawsuits are successfully brought against us, we may incur substantial
liabilities and may have to limit or cease sales of our products.
   - 19 -




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Other Risks Affecting Our Business
 Our business could be negatively affected if we are unable to attract, hire, and retain key
personnel.
  Our bank credit agreement imposes restrictions with respect to our operations.
   We face other risks related to the current credit crisis.
   - 20 -




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Risks Related to Our Common Stock
  
  UNRESOLVED STAFF COMMENTS
  
  PROPERTIES
      - 21 -




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LEGAL PROCEEDINGS
  
  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
  
  MARKET FOR REGISTRANTS COMMON  EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 Refer to Forward Looking Statements following the Index in front of the Form 10-K and Item 1A
Risk Factors on Pages 14 through 21 of this Annual Report.
       - 22 -




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##### Table of Contents



SELECTED FINANCIAL DATA
  
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF OPERATIONS
 Refer to Forward Looking Statements following the Index in front of this Form 10-K and Item 1A
Risk Factors on pages 14 through 21 of this Annual Report.
 Overview:
 C.
difficile H. pylori
  Upper Respiratory Products
  ® ® ® ® ®
  - 23 -




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Foodborne Products
 Card ® TM Card ®
 C. difficile products
 C. difficile illumi gene TM C. difficile C.
difficile illumi gene TM
 H. pylori products
 H. pylori
  - 24 -




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##### Table of Contents



Life Science Operating Segment
  All Segments
     - 25 -




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Gross profit
    
    
    63
    %
    
    
    62
    %
    
    
    61
    %Operating expenses
    
    
    30
    %
    
    
    30
    %
    
    
    32
    %Operating income
    
    
    33
    %
    
    
    32
    %
    
    
    28
    %
 Operating Segments:
   Results of Operations:
 Fourth Quarter
  ® ® ® ®
  - 26 -




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##### Table of Contents



Fiscal Year
     2009 vs
    
    
    2008 vs2008
    
    
    20072009
    
    
    2008
    
    
    2007
    
    
    Change
    
    
    ChangeNet Earnings US GAAP basis
    
    $
    32,759
    
    
    $
    30,202
    
    
    $
    26,721
    
    
    
    8
    %
    
    
    13
    %Tax benefit not expected to recur in
the future
    
    
    
    
    
    
    
    
    
    
    (2,425
    )
    
    
    
    %
    
    
    100
    %Excluding tax benefit
    
    $
    32,759
    
    
    $
    30,202
    
    
    $
    24,296
    
    
    
    8
    %
    
    
    24
    %
 2009
    
    
    2008
    
    
    2007
    
    
    Change
    
    
    ChangeNet Earnings per Basic Common Share US GAAP basis
    
    $
    0.81
    
    
    $
    0.75
    
    
    $
    0.67
    
    
    
    8
    %
    
    
    12
    %Tax benefit not expected to recur in
the future
    
    
    
    
    
    
    
    
    
    
    (0.06
    )
    
    
    
    %
    
    
    100
    %Excluding tax benefit
    
    $
    0.81
    
    
    $
    0.75
    
    
    $
    0.61
    
    
    
    8
    %
    
    
    23
    %
 2009
    
    
    2008
    
    
    2007
    
    
    Change
    
    
    ChangeNet Earnings per Diluted Common Share US GAAP basis
    
    $
    0.80
    
    
    $
    0.74
    
    
    $
    0.66
    
    
    
    8
    %
    
    
    12
    %Tax benefit not expected to recur in
the future
    
    
    
    
    
    
    
    
    
    
    (0.06
    )
    
    
    
    %
    
    
    100
    %Excluding tax benefit
    
    $
    0.80
    
    
    $
    0.74
    
    
    $
    0.60
    
    
    
    8
    %
    
    
    23
    %
  - 27 -




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Fiscal Year Ended September 30, 2009 Compared to Fiscal Year Ended September 30, 2008 and
Fiscal Year Ended September 30, 2008 Compared to Fiscal Year Ended September 30, 2007.
 2009
    
    
    2008vs.
    
    
    vs.2008
    
    
    2007Sales Breakdown
    
    2009
    
    
    2008
    
    
    2007
    
    
    Inc (Dec)
    
    
    Inc (Dec)US Diagnostics
    
    $
    98,970
    
    
    $
    88,419
    
    
    $
    74,845
    
    
    
    12
    %
    
    
    18
    %European Diagnostics
    
    
    25,870
    
    
    
    27,980
    
    
    
    23,563
    
    
    
    (8
    )%
    
    
    19
    %Life Science
    
    
    23,434
    
    
    
    23,240
    
    
    
    24,555
    
    
    
    1
    %
    
    
    (5
    )%Consolidated
    
    $
    148,274
    
    
    $
    139,639
    
    
    $
    122,963
    
    
    
    6
    %
    
    
    14
    %International US Diagnostics
export
    
    $
    5,657
    
    
    $
    6,643
    
    
    $
    6,558
    
    
    
    (15
    )%
    
    
    1
    %Life Science export
    
    
    9,911
    
    
    
    9,807
    
    
    
    8,570
    
    
    
    1
    %
    
    
    14
    %European Diagnostics
    
    
    25,870
    
    
    
    27,980
    
    
    
    23,563
    
    
    
    (8
    )%
    
    
    19
    %Total
    
    $
    41,438
    
    
    $
    44,430
    
    
    $
    38,691
    
    
    
    (7
    )%
    
    
    15
    %% of total sales
    
    
    28
    %
    
    
    32
    %
    
    
    31
    %
 ® ®
 Card ® E. coli
 H. pylori
  - 28 -




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##### Table of Contents



C.
difficile illumi gene TM C. difficile
 C. difficile Card Ò ® ®
  2009 vs.
    
    
    2008 vs.2008
    
    
    20072009
    
    
    2008
    
    
    2007
    
    
    Inc (Dec)
    
    
    Inc (Dec)Gross Profit
    
    $
    92,783
    
    
    $
    86,480
    
    
    $
    74,940
    
    
    
    7
    %
    
    
    15
    %Gross Profit Margin
    
    
    63
    %
    
    
    62
    %
    
    
    61
    %
    
    
    1
    %
    
    
    1
    %
   - 29 -




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##### Table of Contents



Research &
    
    
    Selling &
    
    
    General &
    
    
    Total OperatingDevelopment
    
    
    Marketing
    
    
    Administrative
    
    
    Expenses2007 Expenses
    
    $
    6,085
    
    
    $
    17,124
    
    
    $
    16,701
    
    
    $
    39,910% of Sales
    
    
    5
    %
    
    
    14
    %
    
    
    14
    %
    
    
    32
    %Fiscal 2008
Increases
(Decreases):US Diagnostics
    
    
    307
    
    
    
    1,523
    
    
    
    (293
    )
    
    
    1,537European Diagnostics
    
    
    
    
    
    
    423
    
    
    
    389
    
    
    
    812Life Science
    
    
    (209
    )
    
    
    (300
    )
    
    
    380
    
    
    
    (129
    )2008 Expenses
    
    $
    6,183
    
    
    $
    18,770
    
    
    $
    17,177
    
    
    $
    42,130% of Sales
    
    
    4
    %
    
    
    13
    %
    
    
    12
    %
    
    
    30
    %% Increase (Decrease)
    
    
    2
    %
    
    
    10
    %
    
    
    3
    %
    
    
    6
    %Fiscal 2009
Increases
(Decreases):US Diagnostics
    
    
    2,331
    
    
    
    930
    
    
    
    (732
    )
    
    
    2,529European Diagnostics
    
    
    
    
    
    
    (321
    )
    
    
    (20
    )
    
    
    (341
    )Life Science
    
    
    (86
    )
    
    
    (144
    )
    
    
    (84
    )
    
    
    (314
    )2009 Expenses
    
    $
    8,428
    
    
    $
    19,235
    
    
    $
    16,341
    
    
    $
    44,004% of Sales
    
    
    6
    %
    
    
    13
    %
    
    
    11
    %
    
    
    30
    %% Increase (Decrease)
    
    
    36
    %
    
    
    2
    %
    
    
    -5
    %
    
    
    4
    %
 C. difficile
   - 30 -




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Operating Income
  Other Income and Expense
  Income Taxes
  Impact of Inflation
   - 31 -




---



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Liquidity and Capital Resources:
 Comparative Cash Flow Analysis
    th
  - 32 -




---



##### Table of Contents



Capital Resources
   Student Loan Auction-Rate Securities
   - 33 -




---



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- 34 -




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Known Contractual Obligations:
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    YearsOperating leases (1)
    
    $
    1,489
    
    
    $
    610
    
    
    $
    749
    
    
    $
    130
    
    
    $
    Purchase obligations (2)
    
    
    13,688
    
    
    
    12,917
    
    
    
    771
    
    
    
    
    
    
    
    Uncertain income tax
positions liability and
interest (3)
    
    
    572
    
    
    
    572
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    15,749
    
    
    $
    14,099
    
    
    $
    1,520
    
    
    $
    130
    
    
    $
    
 (1)
    
    Meridian and its subsidiaries are lessees of (i) office and warehouse buildings in Cincinnati,
Florida, Belgium, and France; (ii) automobiles for use by the diagnostic direct sales forces in the US
and Europe; and (iii) certain office equipment such as facsimile machines and copier machines across
all business units, under operating lease agreements that expire at various dates.(2)
    
    Meridians purchase obligations are primarily outstanding purchase orders for inventory and
service items. These contractual commitments are not in excess of expected production requirements
over the next twelve months.(3)
    
    As of September 30, 2009, our liabilities for uncertain tax positions and related interest and
penalties were $470 and $102, respectively. Due to inherent uncertainties in the timing of settlement
of tax positions, we are unable to estimate the timing of the effective settlement of these
obligations. Other Commitments and Off-balance Sheet Arrangements:
 License Agreements
    - 35 -




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##### Table of Contents



Derivative financial instruments
   
 Off-balance sheet arrangements
  Market Risk Exposure:
 Foreign Currency Risk
   - 36 -




---



##### Table of Contents



Concentration of Customers/Products Risk
 TM TM Card ®
  Critical Accounting Policies:
  Revenue Recognition
    - 37 -




---



##### Table of Contents



Inventories
  Intangible Assets
     - 38 -




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Income Taxes
      - 39 -




---



##### Table of Contents



Fair Value Measurements
        - 40 -




---



##### Table of Contents



Recent Accounting Pronouncements:
 
 
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   - 41 -




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##### Table of Contents



FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  Managements Report on Internal Control over Financial Reporting
    
    
    43Report of Independent Registered Public Accounting Firm
    
    
    44Consolidated Statements of Operations for the years ended September 30, 2009, 2008 and 2007
    
    
    46Consolidated Statements of Cash Flows for the years ended September 30, 2009, 2008 and 2007
    
    
    47Consolidated Balance Sheets as of September 30, 2009 and 2008
    
    
    48Consolidated Statements of Shareholders Equity for the years ended September 30, 2009, 2008 and 2007
    
    
    50Notes to Consolidated Financial Statements
    
    
    51Schedule No. II  Valuation and Qualifying Accounts for the years ended September 30, 2009, 2008 and
2007
    
    
    80
   - 42 -




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##### Table of Contents



Managements Report on Internal Control over Financial Reporting
    Internal Control 
Integrated Framework,
  /s/ John A. KraeutlerChief Executive OfficerNovember 30, 2009/s/ Melissa LuekeMelissa LuekeExecutive Vice President and
Chief Financial Officer November 30, 2009  - 43 -




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Internal ControlIntegrated Framework
    - 44 -




---



##### Table of Contents



Internal ControlIntegrated Framework
      - 45 -




---



##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)
  For the Year Ended September 30,
    
    2009
    
    
    2008
    
    
    2007Net Sales
    
    $
    148,274
    
    
    $
    139,639
    
    
    $
    122,963Cost of Sales
    
    
    55,491
    
    
    
    53,159
    
    
    
    48,023Gross Profit
    
    
    92,783
    
    
    
    86,480
    
    
    
    74,940Operating Expenses:Research and development
    
    
    8,428
    
    
    
    6,183
    
    
    
    6,085Selling and marketing
    
    
    19,235
    
    
    
    18,770
    
    
    
    17,124General and administrative
    
    
    16,341
    
    
    
    17,177
    
    
    
    16,701Total operating expenses
    
    
    44,004
    
    
    
    42,130
    
    
    
    39,910Operating Income
    
    
    48,779
    
    
    
    44,350
    
    
    
    35,030Other Income (Expense):Interest income
    
    
    456
    
    
    
    1,533
    
    
    
    1,642Interest expense
    
    
    
    
    
    
    
    
    
    
    (38
    )Other, net
    
    
    88
    
    
    
    109
    
    
    
    48Total other income
    
    
    544
    
    
    
    1,642
    
    
    
    1,652Earnings Before Income Taxes
    
    
    49,323
    
    
    
    45,992
    
    
    
    36,682Income Tax Provision
    
    
    16,564
    
    
    
    15,790
    
    
    
    9,961Net Earnings
    
    $
    32,759
    
    
    $
    30,202
    
    
    $
    26,721Earnings Per Share Data:Basic earnings per common share
    
    $
    0.81
    
    
    $
    0.75
    
    
    $
    0.67Diluted earnings per common share
    
    $
    0.80
    
    
    $
    0.74
    
    
    $
    0.66Common shares used for basic earnings
per common share
    
    
    40,390
    
    
    
    40,093
    
    
    
    39,584Effect of dilutive stock options
    
    
    720
    
    
    
    936
    
    
    
    1,154Common shares used for diluted earnings
per common share
    
    
    41,110
    
    
    
    41,029
    
    
    
    40,738Dividends declared per common share
    
    $
    0.65
    
    
    $
    0.53
    
    
    $
    0.40Anti-dilutive Securities:Common share options
    
    
    138
    
    
    
    67
    
    
    
    
   - 46 -




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands)
 Meridian Bioscience, Inc. and Subsidiaries
 For the Year Ended September 30,
    
    2009
    
    
    2008
    
    
    2007Cash Flows From Operating ActivitiesNet earnings
    
    $
    32,759
    
    
    $
    30,202
    
    
    $
    26,721Non-cash items:Depreciation of property, plant and equipment
    
    
    2,781
    
    
    
    2,857
    
    
    
    2,764Amortization of intangible assets
    
    
    1,579
    
    
    
    1,612
    
    
    
    1,635Stock based compensation
    
    
    1,092
    
    
    
    1,772
    
    
    
    2,632Deferred income taxes
    
    
    (500
    )
    
    
    976
    
    
    
    800Tax reserve adjustment
    
    
    
    
    
    
    
    
    
    
    (2,425
    )Loss on disposition of fixed assets
    
    
    109
    
    
    
    9
    
    
    
    5Unrealized gain on auction-rate securities and rights, net
    
    
    (10
    )
    
    
    
    
    
    
    Change in accounts receivable, inventory, and prepaid expenses
    
    
    (5,353
    )
    
    
    (5,147
    )
    
    
    (3,011
    )Change in accounts payable, accrued expenses, and income
taxes payable
    
    
    269
    
    
    
    (2,967
    )
    
    
    (2,145
    )Other, net
    
    
    (234
    )
    
    
    569
    
    
    
    (374
    )Net cash provided by operating activities
    
    
    32,492
    
    
    
    29,883
    
    
    
    26,602Cash Flows From Investing ActivitiesAcquisition earnout payments
    
    
    (7
    )
    
    
    (157
    )
    
    
    (971
    )Purchases of property, plant and equipment
    
    
    (3,643
    )
    
    
    (4,219
    )
    
    
    (3,211
    )Proceeds from dispositions of property, plant and equipment
    
    
    5
    
    
    
    4
    
    
    
    4Purchases of investments
    
    
    
    
    
    
    (7,750
    )
    
    
    Proceeds from sales of investments
    
    
    475
    
    
    
    
    
    
    
    4,000Purchases of intangibles and other assets
    
    
    (110
    )
    
    
    (1,108
    )
    
    
    (265
    )Net cash used for investing activities
    
    
    (3,280
    )
    
    
    (13,230
    )
    
    
    (443
    )Cash Flows From Financing ActivitiesRepayment of debt obligations
    
    
    
    
    
    
    
    
    
    
    (29
    )Dividends paid
    
    
    (26,260
    )
    
    
    (21,256
    )
    
    
    (15,836
    )Proceeds and tax benefits from exercises of stock options
    
    
    1,624
    
    
    
    4,563
    
    
    
    2,574Net cash used for financing activities
    
    
    (24,636
    )
    
    
    (16,693
    )
    
    
    (13,291
    )Effect of Exchange Rate Changes on Cash and Equivalents
    
    
    157
    
    
    
    (63
    )
    
    
    184Net Increase in Cash and Equivalents
    
    
    4,733
    
    
    
    (103
    )
    
    
    13,052Cash and Equivalents at Beginning of Period
    
    
    49,297
    
    
    
    49,400
    
    
    
    36,348Cash and Equivalents at End of Period
    
    $
    54,030
    
    
    $
    49,297
    
    
    $
    49,400
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CONSOLIDATED BALANCE SHEETS (dollars in thousands)
 Meridian Bioscience, Inc. and Subsidiaries
 As of September 30,
    
    2009
    
    
    2008AssetsCurrent Assets:Cash and equivalents
    
    $
    54,030
    
    
    $
    49,297Investment in auction-rate securities and rights
    
    
    7,285
    
    
    
    Accounts receivable, less allowances of $247 in
2009 and $230 in 2008
    
    
    26,981
    
    
    
    25,098Inventories
    
    
    23,284
    
    
    
    19,945Prepaid expenses and other current assets
    
    
    3,632
    
    
    
    3,382Deferred income taxes
    
    
    1,935
    
    
    
    1,736Total current assets
    
    
    117,147
    
    
    
    99,458Property, Plant and Equipment, at Cost:Land
    
    
    894
    
    
    
    892Buildings and improvements
    
    
    19,718
    
    
    
    16,977Machinery, equipment and furniture
    
    
    30,997
    
    
    
    26,458Construction in progress
    
    
    1,586
    
    
    
    3,391Subtotal
    
    
    53,195
    
    
    
    47,718Less: accumulated depreciation and amortization
    
    
    32,721
    
    
    
    28,043Net property, plant and equipment
    
    
    20,474
    
    
    
    19,675Other Assets:Goodwill
    
    
    9,866
    
    
    
    9,861Other intangible assets, net
    
    
    7,317
    
    
    
    8,786Restricted cash
    
    
    1,000
    
    
    
    1,000Investments in auction-rate securities and rights
    
    
    
    
    
    
    7,480Other assets
    
    
    193
    
    
    
    171Total other assets
    
    
    18,376
    
    
    
    27,298Total assets
    
    $
    155,997
    
    
    $
    146,431
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CONSOLIDATED BALANCE SHEETS (dollars in thousands)
 Meridian Bioscience, Inc. and Subsidiaries
 As of September 30,
    
    2009
    
    
    2008Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable
    
    $
    6,901
    
    
    $
    4,777Accrued employee compensation costs
    
    
    5,338
    
    
    
    6,777Other accrued expenses
    
    
    3,803
    
    
    
    3,616Income taxes payable
    
    
    710
    
    
    
    891Total current liabilities
    
    
    16,752
    
    
    
    16,061Deferred Income Taxes
    
    
    1,340
    
    
    
    1,881Commitments and ContingenciesShareholders Equity:Preferred stock, no par value, 1,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common shares, no par value, 71,000,000 shares authorized, 40,493,313
and 40,313,656 issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    91,668
    
    
    
    89,107Retained earnings
    
    
    45,515
    
    
    
    39,016Accumulated other comprehensive income
    
    
    722
    
    
    
    366Total shareholders equity
    
    
    137,905
    
    
    
    128,489Total liabilities and shareholders equity
    
    $
    155,997
    
    
    $
    146,431
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (Dollars and shares in thousands except per share data)
 Meridian Bioscience, Inc. and Subsidiaries
 Accum OtherCommon
    
    
    Additional
    
    
    
    
    
    
    Comp
    
    
    CompShares
    
    
    Paid-in
    
    
    Retained
    
    
    Income
    
    
    IncomeIssued
    
    
    Capital
    
    
    Earnings
    
    
    (Loss)
    
    
    (Loss)
    
    
    TotalBalance at September 30, 2006
    
    
    39,236
    
    
    $
    74,950
    
    
    $
    19,490
    
    
    $
    (90
    )
    
    
    
    
    
    $
    94,350Cash dividends paid  $0.40 per share
    
    
    
    
    
    
    
    
    
    
    (15,836
    )
    
    
    
    
    
    
    
    
    
    
    (15,836
    )Exercise of stock options
    
    
    336
    
    
    
    2,950
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,950Stock compensation expense
    
    
    
    
    
    
    2,632
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,632Debenture conversions
    
    
    275
    
    
    
    1,677
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,677Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    26,721
    
    
    
    
    
    
    $
    26,721
    
    
    
    26,721Hedging activity, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (283
    )
    
    
    (283
    )
    
    
    (283
    )Other comprehensive income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (244
    )
    
    
    (244
    )
    
    
    (244
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    981
    
    
    
    981
    
    
    
    981Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    27,175Balance at September 30, 2007
    
    
    39,847
    
    
    
    82,209
    
    
    
    30,375
    
    
    
    364
    
    
    
    
    
    
    
    112,948Adoption of FASB Interpretation No. 48
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    
    
    
    
    (305
    )Cash dividends paid  $0.53 per share
    
    
    
    
    
    
    
    
    
    
    (21,256
    )
    
    
    
    
    
    
    
    
    
    
    (21,256
    )Exercise of stock options
    
    
    467
    
    
    
    5,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,126Stock compensation expense
    
    
    
    
    
    
    1,772
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,772Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    30,202
    
    
    
    
    
    
    $
    30,202
    
    
    
    30,202Hedging activity, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    273
    
    
    
    273
    
    
    
    273Unrealized loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (270
    )
    
    
    (270
    )
    
    
    (270
    )Other comprehensive income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )
    
    
    (4
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    3Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    30,204Balance at September 30, 2008
    
    
    40,314
    
    
    
    89,107
    
    
    
    39,016
    
    
    
    366
    
    
    
    
    
    
    
    128,489Cash dividends paid  $0.65 per share
    
    
    
    
    
    
    
    
    
    
    (26,260
    )
    
    
    
    
    
    
    
    
    
    
    (26,260
    )Exercise of stock options
    
    
    180
    
    
    
    1,476
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,476Stock compensation expense
    
    
    
    
    
    
    1,092
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,092Cost of S-8 registration statement
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    32,759
    
    
    
    
    
    
    $
    32,759
    
    
    
    32,759Hedging activity, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )
    
    
    (3
    )Transfer of investments to trading status
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    270
    
    
    
    270
    
    
    
    270Other comprehensive income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (190
    )
    
    
    (190
    )
    
    
    (190
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    279
    
    
    
    279
    
    
    
    279Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    33,115Balance at September 30, 2009
    
    
    40,494
    
    
    $
    91,668
    
    
    $
    45,515
    
    
    $
    722
    
    
    
    
    
    
    $
    137,905
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Meridian Bioscience, Inc. and Subsidiaries
 (dollars and shares in thousands, except per share data)
 (1) Summary of Significant Accounting Policies
 (a)
    
    Nature of Business Meridian is a fully-integrated life science company whose principal
businesses are (i) the development, manufacture and distribution of diagnostic test kits
primarily for certain respiratory, gastrointestinal, viral and parasitic infectious diseases,
(ii) the manufacture and distribution of bulk antigens, antibodies, and reagents used by
researchers and other diagnostic manufacturers and (iii) the contract development and
manufacture of proteins and other biologicals for use by biopharmaceutical and biotechnology
companies engaged in research for new drugs and vaccines.
 (b)
    
    Principles of Consolidation The consolidated financial statements include the accounts of
Meridian Bioscience, Inc. and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated. Unless the context requires otherwise, references to
Meridian, we, us, our, or our company refer to Meridian Bioscience, Inc. and its
subsidiaries.
 (c)
    
    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, 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.
Significant estimates are discussed in Notes 1 (f), 1 (g), 1 (h), 1 (i), 1 (k), 1 (l), 6 and 7
(b).
 (d)
    
    Foreign Currency Translation Assets and liabilities of foreign operations are translated
using year-end exchange rates with gains or losses resulting from translation included as a
separate component of accumulated other comprehensive income or loss. Revenues and expenses
are translated using exchange rates prevailing during the year. We also recognize foreign
currency transaction gains and losses on certain assets and liabilities that are denominated
in the Euro currency. These gains and losses are included in other income and expense in the
accompanying consolidated statements of operations.
 (e)
    
    Cash, Cash Equivalents and Investments The primary objectives of our investment activities
are to preserve capital and provide sufficient liquidity to meet operating requirements and
fund strategic initiatives such as acquisitions. We maintain a written investment policy that
governs the management of our investments in fixed income securities. This policy, among
other things, provides that we may purchase only high credit-quality securities, that have
short-term ratings
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of at least A-1 and P-1 or better, and long-term ratings of at least A-2 and A or better, by Moodys and Standard & Poors, respectively, at
the time of purchase. We consider short-term investments with original maturities of 90 days or
less to be cash equivalents, including overnight repurchase agreements, investments in municipal
variable rate demand notes that have a seven-day put feature and institutional money market
funds. Our investments in repurchase agreements at September 30, 2008 were with a commercial
bank pursuant to an overnight sweep/liquidity arrangement with our operating cash accounts. Our
investments in variable rate demand notes at September 30, 2008 contained a seven-day put
feature.
 Our investment portfolio includes the following components:
 September 30, 2009
    
    
    September 30, 2008Cash and
    
    
    
    
    
    
    Cash andEquivalents
    
    
    Other
    
    
    Equivalents
    
    
    OtherTaxable investments Repurchase agreements
    
    $
    
    
    
    $
    
    
    
    $
    6,711
    
    
    $
    Money market funds
    
    
    29,032
    
    
    
    
    
    
    
    
    
    
    
    Tax-exempt investments Money market funds
    
    
    10,383
    
    
    
    
    
    
    
    12,848
    
    
    
    Variable rate demand notes
    
    
    
    
    
    
    
    
    
    
    23,948
    
    
    
    Student loan auction-rate securities
    
    
    
    
    
    
    7,285
    
    
    
    
    
    
    
    7,480Cash on hand Non-interest bearing Restricted
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000Unrestricted
    
    
    8,027
    
    
    
    
    
    
    
    1,260
    
    
    
    Interest bearing  unrestricted
    
    
    6,588
    
    
    
    
    
    
    
    4,530
    
    
    
    Total
    
    $
    54,030
    
    
    $
    8,285
    
    
    $
    49,297
    
    
    $
    8,480
 Our investments in tax-exempt variable rate demand notes, prior to their complete liquidation in
October 2008, and student loan auction-rate securities, prior to the settlement agreement with
UBS discussed below, were accounted for as available-for-sale. As such, unrealized holding
gains and losses were reported as a component of other comprehensive income or loss within
shareholders equity until realized, except where losses were considered to be
other-than-temporary, in which case they would have been recorded to other income and expense,
net. As of September 30, 2008, we did not have any losses that were considered
other-than-temporary, and accumulated other comprehensive income included $270 of unrealized
holding losses related to student loan auction-rate securities.
 Our investment portfolio includes student loan auction-rate securities, which are long-term
student loan revenue bonds whose interest rates are reset every 35 days via a Dutch auction
process. All of our auction-rate securities are backed by pools of student loans originated
under the Federal Family Education Loan Program (FFELP). FFELP student loans are guaranteed by
State guarantors who have reinsurance agreements with the US Department of Education. All of
our student loan auction-rate securities were rated
Aaa and AAA by Moodys and Standard & Poors, respectively, at the time of purchase, and have
continued to maintain these credit ratings through the present time.
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The Dutch auction process historically provided the necessary liquidity mechanism to either
purchase or sell these securities. Beginning in mid-February 2008, liquidity issues in the US
credit markets resulted in the failure of auctions across a broad spectrum of tax-exempt
securities, including student loan revenue bonds. Auctions for the student loan revenue bonds
that we hold have continued to fail through the present time. The consequence of a failed
auction is that we do not have access to the principal amount of our investments. Issuers are
still required to make interest payments when due in the event of failed auctions. We have not
experienced any missed interest payments to date.
 Our auction-rate securities were purchased through UBS Financial Services, Inc. During November
2008, we accepted an offer from UBS, AG (UBS) of Auction Rate Security Rights. These rights
permit us to require UBS between June 30, 2010 and July 2, 2012 (the exercise period) to
purchase our auction-rate securities at par value. In exchange, UBS is granted the right, at
their sole discretion, to sell or otherwise dispose of our auction-rate security investments
until July 2, 2012 as long as we receive a payment of par value upon the sale or disposition.
In addition, the rights permit us to establish a demand revolving credit line in an amount equal
to the par value of the securities at a net no cost. We are still able to sell the auction-rate
securities on our own, but in such a circumstance, we would lose the par value support from UBS.
 Upon executing the settlement agreement with UBS, we recognized the Auction Rate Security Rights
as a stand-alone financial instrument and elected the fair value option. We also transferred
the student loan auction-rate securities from the available-for-sale classification, to the
trading classification. Upon transfer to the trading classification, $270 in unrealized losses
as of September 30, 2008, were transferred from accumulated other comprehensive income to other
income and expense. Adjustments to the fair value of student loan auction-rate securities and
Auction Rate Security Rights are recorded to other income and expense in each accounting period.
As of September 30, 2009, the fair value of the student-loan auction rate securities was $6,708
compared to a par value of $7,275. As of September 30, 2009, the fair value of the Auction Rate
Security Rights was $577. The student loan auction-rate securities and Auction Rate Security
Rights are included in current assets in the accompanying consolidated balance sheet based on
the earliest exercise date of June 30, 2010.
 (f)
    
    Inventories Inventories are stated at the lower of cost or market. Cost is determined on a
first-in, first-out basis (FIFO) for substantially all of our inventories.
 We establish reserves against cost for excess and obsolete materials, finished goods whose shelf
life may expire before sale to customers, and other identified exposures. Such reserves were
$1,025 and $1,103 at September 30, 2009 and 2008, respectively. We estimate these reserves
based on assumptions about future
demand and market conditions. If actual demand and market conditions were to be less favorable
than such estimates, additional inventory write-downs would be required and recorded in the
period known. Such adjustments would negatively affect gross profit margin and overall results
of operations.
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(g)
    
    Property, Plant and Equipment Property, plant and equipment are stated at cost. Upon
retirement or other disposition of property, plant and equipment, the cost and related
accumulated depreciation are removed from the accounts and the resulting gain or loss is
reflected in earnings. Maintenance and repairs are expensed as incurred. Depreciation is
computed on the straight-line method in amounts sufficient to write-off the cost over the
estimated useful lives as follows:
   (h)
    
    Intangible Assets Goodwill and other intangible assets with indefinite lives are subject to
an annual impairment review (or more frequently if impairment indicators arise) by applying a
fair-value based test. Fair value is determined via a market approach from three
perspectives. These three perspectives are (i) an allocation of our actual enterprise value
(defined as market capitalization plus debt) to each of the reporting units based on revenue
and EBITDA contributions to consolidated results; (ii) an allocation of implied enterprise
values to each of our reporting units based on average and median EBITDA multiples from a
comparable group of companies; and (iii) a review of enterprise value to EBITDA multiples from
recent industry merger and acquisition transactions. We perform our annual impairment review
as of June 30, the end of our third fiscal quarter. We have no intangible assets with
indefinite lives other than goodwill. There have been no impairments from these analyses for
fiscal 2009, 2008 or 2007.
 During fiscal 2009, the change in goodwill was an increase of $5. This change consisted of an
increase related to the OEM Concepts earnout obligations for calendar 2008 (Life Science
operating segment). During fiscal 2008, the change in goodwill was a decrease of $103. This
change consisted of an increase related to the OEM Concepts earnout obligations for calendar
2007 and the first nine months of calendar 2008 in the amount of $7 (Life Science operating
segment), offset by a decrease of $110 related to recognition of acquired tax benefits (US
Diagnostics operating segment).
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A summary of Meridians acquired intangible assets subject to amortization, as of September 30,
2009 and 2008 is as follows.
 Wtd Avg
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008Amort
    
    
    Gross
    
    
    
    
    
    
    GrossPeriod
    
    
    Carrying
    
    
    Accum.
    
    
    Carrying
    
    
    Accum.As of September 30,
    
    (Yrs)
    
    
    Value
    
    
    Amort.
    
    
    Value
    
    
    Amort.Core products and cell lines
    
    
    15
    
    
    $
    4,698
    
    
    $
    2,892
    
    
    $
    4,698
    
    
    $
    2,602Manufacturing technologies
    
    
    14
    
    
    
    6,057
    
    
    
    4,780
    
    
    
    6,057
    
    
    
    4,440Trademarks, licenses and patents
    
    
    8
    
    
    
    2,772
    
    
    
    1,974
    
    
    
    2,663
    
    
    
    1,843Customer lists and supply
agreements
    
    
    13
    
    
    
    11,040
    
    
    
    7,604
    
    
    
    11,039
    
    
    
    6,786$
    24,567
    
    
    $
    17,250
    
    
    $
    24,457
    
    
    $
    15,671
 The actual aggregate amortization expense for these intangible assets for fiscal 2009,
2008, and 2007 was $1,579, $1,612, and $1,632, respectively. The estimated aggregate
amortization expense for these intangible assets for each of the five succeeding fiscal years is
as follows: fiscal 2010  $1,412, fiscal 2011  $1,298, fiscal 2012  $1,153, fiscal 2013-
$1,153 and fiscal 2014  $746.
 Long-lived assets, excluding goodwill and identifiable intangibles with indefinite lives, are
reviewed for impairment when events or circumstances indicate that such assets may not be
recoverable at their carrying value. Whether an event or circumstance triggers an impairment is
determined by comparing an estimate of the assets future cash flows to its carrying value. If
impairment has occurred, it is measured by a fair-value based test.
 Our ability to recover our intangible assets, both identifiable intangibles and goodwill, is
dependent upon the future cash flows of the related acquired businesses and assets. We make
judgments and assumptions regarding future cash flows, including sales levels, gross profit
margins, operating expense levels, working capital levels, and capital expenditures. With
respect to identifiable intangibles and fixed assets, we also make judgments and assumptions
regarding useful lives.
 We consider the following factors in evaluating events and circumstances for possible
impairment: (i) significant under-performance relative to historical or projected operating
results, (ii) negative industry trends, (iii) sales levels of specific groups of products
(related to specific identifiable intangibles), (iv) changes in overall business strategies and
(v) other factors.
 If actual cash flows are less favorable than projections, this could trigger impairment of
intangible assets and other long-lived assets. If impairment were to occur, this would
negatively affect overall results of operations.
 (i)
    
    Revenue Recognition Revenue is generally recognized from sales when product is shipped and
title has passed to the buyer. Revenue for the US Diagnostics operating segment is reduced at
the date of sale for estimated rebates that will be claimed by customers. Management
estimates accruals for rebate agreements based on historical statistics, current trends, and
other factors. Changes to the accruals are recorded in the
period that they become known. Our rebate accruals were $4,776 at September 30, 2009 and $3,259
at September 30, 2008.
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Life Science revenue for contract services may come from standalone arrangements for process
development and/or optimization work (contract research and development services) or custom
manufacturing, or multiple-deliverable arrangements that include process development work
followed by larger-scale manufacturing (both contract research and development services and
contract manufacturing services). Revenue is recognized based on the nature of the
arrangements, with each of the multiple deliverables in a given arrangement having distinct and
separate fair values. Fair values are determined via consistent pricing between standalone
arrangements and multiple deliverable arrangements, as well as a competitive bidding process.
Contract research and development services may be performed on a time and materials basis or
fixed fee basis. For time and materials arrangements, revenue is recognized as services are
performed and billed. For fixed fee arrangements, revenue is recognized upon completion and
acceptance by the customer. For contract manufacturing services, revenue is generally
recognized upon delivery of product and acceptance by the customer. In some cases, customers
may request that we store on their behalf, clinical grade biologicals that we produce under
contract manufacturing agreements. These cases arise when customers do not have clinical grade
storage facilities or do not want to risk contamination during transport. For such cases,
revenue may be recognized on a bill-and-hold basis pursuant to the satisfaction of criteria in
SEC Staff Accounting Bulletins Nos. 101 and 104 related to bill-and-hold revenue recognition.
 Trade accounts receivable are recorded in the accompanying consolidated balance sheet at
invoiced amounts less provisions for rebates and doubtful accounts. The allowance for doubtful
accounts represents our estimate of probable credit losses and is based on historical write-off
experience. The allowance for doubtful accounts and related metrics, such as days sales
outstanding, are reviewed monthly. Accounts with past due balances over 90 days are reviewed
individually for collectibility. Customer invoices are charged off against the allowance when
we believe it is probable the invoices will not be paid.
 (j)
    
    Research and Development Costs Research and development costs are charged to expense as
incurred. Research and development costs include, among other things, salaries and wages for
research scientists, materials and supplies used in the development of new products, costs for
development of instrumentation equipment, costs for clinical trials, and costs for facilities
and equipment.
 (k)
    
    Income Taxes The provision for income taxes includes federal, foreign, state, and local
income taxes currently payable and those deferred because of temporary differences between
income for financial reporting and income for tax purposes. We prepare estimates of permanent
and temporary differences between income for financial reporting purposes and income for tax
purposes. These differences are
adjusted to actual upon filing of our tax returns, typically occurring in the third and fourth
quarters of the current fiscal year for the preceding fiscal years estimates.
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We account for uncertain tax positions using of a benefit recognition model with a two-step
approach: (i) a more-likely-than-not recognition criterion and (ii) a measurement attribute that
measures the position as the largest amount of tax benefit that is greater than 50% likely of
being ultimately realized upon ultimate settlement. If it is not more likely than not that the
benefit will be sustained on its technical merits, no benefit is recorded. We recognize accrued
interest related to unrecognized tax benefits as a portion of our income tax provision in the
consolidated statements of operations. See Note 6.
 (l)
    
    Stock-based Compensation We recognize compensation expense for all share-based awards made
to employees, based upon the fair value of the share-based award on the date of the grant. We
measure and recognize compensation expense based on grant-date fair value for stock option
awards granted after July 1, 2005, and the non-vested portions of stock option awards granted
prior to July 1, 2005. See Note 7(b).
 (m)
    
    Comprehensive Income (Loss) Comprehensive income (loss) represents the net change in
shareholders equity during a period from sources other than transactions with shareholders.
Our comprehensive income or loss is comprised of net earnings, foreign currency translation,
changes in the fair value of forward exchange contracts accounted for as cash flow hedges, and
changes in the fair value of available-for-sale (AFS) fixed income securities. Components of
beginning and ending accumulated other comprehensive income or loss, and related activity, are
shown in the following table:
 ForeignCurrency
    
    
    
    
    
    
    UnrealizedTranslation
    
    
    Cash Flow
    
    
    Loss on AFS
    
    
    IncomeAdjustment
    
    
    Hedges
    
    
    Securities
    
    
    Taxes
    
    
    TotalBalance at September 30, 2008
    
    $
    831
    
    
    $
    3
    
    
    $
    (270
    )
    
    $
    (198
    )
    
    $
    366Currency translation
    
    
    279
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    279Reclassifications to earnings of hedging activity
    
    
    
    
    
    
    (112
    )
    
    
    
    
    
    
    
    
    
    
    (112
    )Net unrealized gains on hedging instruments
    
    
    
    
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    109Transfer of investments from available-for-sale
to trading classification
    
    
    
    
    
    
    
    
    
    
    270
    
    
    
    
    
    
    
    270Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (190
    )
    
    
    (190
    )Balance at September 30, 2009
    
    $
    1,110
    
    
    $
    
    
    
    $
    
    
    
    $
    (388
    )
    
    $
    722
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Income taxes are allocable to components of accumulated other comprehensive income for fiscal 2009 and fiscal 2008
as shown in the following table:
 ForeignCurrency
    
    
    
    
    
    
    UnrealizedTranslation
    
    
    Cash Flow
    
    
    Loss on AFS
    
    
    IncomeAdjustment
    
    
    Hedges
    
    
    Securities
    
    
    TaxesBalance at September 30, 2008
    
    $
    (292
    )
    
    $
    (1
    )
    
    $
    95
    
    
    $
    (198
    )Fiscal 2009 activity
    
    
    (96
    )
    
    
    1
    
    
    
    (95
    )
    
    
    (190
    )Balance at September 30, 2009
    
    $
    (388
    )
    
    $
    
    
    
    $
    
    
    
    $
    (388
    )
 (n)
    
    Supplemental Cash flow Information Supplemental cash flow information is as follows for
fiscal 2009, 2008 and 2007:
 Year Ended September 30,
    
    2009
    
    
    2008
    
    
    2007Cash paid for Income taxes
    
    $
    17,472
    
    
    $
    15,365
    
    
    $
    12,412Interest
    
    
    
    
    
    
    
    
    
    
    37Non-cash items Debenture conversions
    
    
    
    
    
    
    
    
    
    
    1,775
 (o)
    
    Recent Accounting Pronouncements Effective October 1, 2008, we adopted the FASBs framework
for measuring fair value, including a hierarchy that prioritizes the inputs to valuation
techniques into three broad levels. This fair value hierarchy gives the highest priority to
quoted prices in active markets for identical assets and liabilities and the lowest priority
to unobservable inputs. See Note 5.
 In October 2008, the FASB issued clarifying guidance related to financial assets when the market
is inactive, such as the case with debt securities that were issued via the auction-rate
markets. This guidance was effective upon issuance and was taken into consideration in the
valuation of our investments in student loan auction-rate securities and the UBS Auction Rate
Security Rights.
 In connection with the UBS settlement discussed in Note 1(e), we adopted the fair value option
which permits an entity to choose to measure certain financial instruments and other items at
fair value where such financial instruments and other items are not currently required to be
measured at fair value. For financial instruments and other items where the fair value option
is elected, unrealized gains and losses are reported in earnings at each subsequent reporting
date.
 In April 2009, the FASB amended the other-than-temporary impairment guidance in US GAAP for debt
securities to make the guidance more operational and to improve the presentation and disclosure
of other-than temporary impairments on debt and equity securities in the financial statements.
As discussed above, we have elected the fair value option for our auction-rate securities.
Thus, this amendment had no effect on our statements of operations or financial position.
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In April 2009, the FASB amended its standards to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies, as well as in
annual financial statements. We have provided the additional disclosures required.
 In May 2009, the FASB amended its standards to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before financial statements are
issued or are available to be issued. This amendment defines the period after the balance sheet
date during which management of a reporting entity should evaluate events or transactions that
may occur for potential recognition or disclosure in the financial statements, and the
circumstances under which an entity should recognize events or transactions occurring after the
balance sheet date in our financial statements. This amendment is effective for fiscal years
and interim periods ending after June 15, 2009. We adopted this standard as of June 30, 2009,
with the only impact being the provision of additional disclosures in this 10-K. Further, in
connection with preparation of the consolidated financial statements, we evaluated subsequent
events after the balance sheet date of September 30, 2009 through November 25, 2009, the last
business day before the date our consolidated financial statements included in this Annual
Report on Form 10-K, were filed with the SEC.
 In June 2009, the FASB amended its standards to establish the Accounting Standards Codification
(the Codification) as the source of generally accepted accounting principles (GAAP) recognized
by the FASB to be applied by nongovernmental entities. Following this amendment, the FASB will
not issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task
Force Abstracts. Instead, it will issue Accounting Standards Updates. Once in effect, all
guidance contained in the Codification carries an equal level of authority. The GAAP hierarchy
will be modified to include only two levels of GAAP: authoritative and non-authoritative. All
non-grandfathered, non-SEC accounting literature not included in the Codification will become
non-authoritative. This amendment is effective for interim or annual periods ending after
September 15, 2009. We adopted this standard as of June 30, 2009, with the only impact being
the removal of certain references in our financial statements to technical accounting
literature.
 (p)
    
    Shipping and Handling costs Shipping and handling costs invoiced to customers are included
in net sales. Costs to distribute products to customers, including inbound freight costs,
warehousing costs, and other shipping and handling activities are included in cost of goods
sold.
 (q)
    
    Non-income Government-Assessed Taxes We classify all non-income, government-assessed taxes
(sales, use, and value-added) collected from customers and remitted by us to appropriate
revenue authorities, on a net basis (excluded from net sales) in the accompanying consolidated
statements of operations.
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##### Table of Contents



(2) Inventories
  As of September 30,
    
    2009
    
    
    2008Raw materials
    
    $
    6,079
    
    
    $
    5,354Work-in-process
    
    
    5,916
    
    
    
    5,723Finished goods
    
    
    12,314
    
    
    
    9,971Gross Inventory
    
    $
    24,309
    
    
    $
    21,048Reserves
    
    
    (1,025
    )
    
    
    (1,103
    )Net Inventory
    
    $
    23,284
    
    
    $
    19,945
 (3) Bank Credit Arrangements
  (4) Hedging Transactions
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(5) Fair Value Measurements
       - 61 -




---



##### Table of Contents



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalBalances as of September 30, 2009Cash and equivalents
    
    $
    54,030
    
    
    $
    
    
    
    $
    
    
    
    $
    54,030Student loan auction-rate securities
    
    
    
    
    
    
    
    
    
    
    6,708
    
    
    
    6,708UBS Auction Rate Security Rights
    
    
    
    
    
    
    
    
    
    
    577
    
    
    
    577Total
    
    $
    54,030
    
    
    $
    
    
    
    $
    7,285
    
    
    $
    61,315
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalBalances as of September 30, 2008Cash and equivalents
    
    $
    49,297
    
    
    $
    
    
    
    $
    
    
    
    $
    49,297Student loan auction-rate securities
    
    
    
    
    
    
    
    
    
    
    7,480
    
    
    
    7,480Total
    
    $
    49,297
    
    
    $
    
    
    
    $
    7,480
    
    
    $
    56,777
  Student loan
    
    
    UBS Auctionauction-rate
    
    
    Rate Securitysecurities
    
    
    Rights
    
    
    Total Level 3Balance at September 30, 2008
    
    $
    7,480
    
    
    $
    
    
    
    $
    7,480Acquire UBS Auction Rate Security Rights
    
    
    
    
    
    
    660
    
    
    
    660Proceeds from redemptions of
auction-rate securities
    
    
    (475
    )
    
    
    
    
    
    
    (475
    )Unrealized losses included in current
period earnings
    
    
    (297
    )
    
    
    (83
    )
    
    
    (380
    )Total
    
    $
    6,708
    
    
    $
    577
    
    
    $
    7,285
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(6) Income Taxes
 (a)
    
    Earnings before income taxes, and the related provision for income taxes for the years ended
September 30, 2009, 2008 and 2007 were as follows: Year Ended September 30,
    
    2009
    
    
    2008
    
    
    2007Domestic
    
    $
    46,504
    
    
    $
    42,187
    
    
    $
    33,324Foreign
    
    
    2,819
    
    
    
    3,805
    
    
    
    3,358Total
    
    $
    49,323
    
    
    $
    45,992
    
    
    $
    36,682Provision (credit) for income taxes Federal Current provision
    
    $
    15,094
    
    
    $
    14,307
    
    
    $
    11,179Temporary differencesFixed asset basis differences and depreciation
    
    
    16
    
    
    
    (108
    )
    
    
    (105
    )Intangible asset basis differences and amortization
    
    
    (363
    )
    
    
    (249
    )
    
    
    (249
    )Currently non-deductible expenses and reserves
    
    
    (134
    )
    
    
    (286
    )
    
    
    238Stock based compensation
    
    
    (373
    )
    
    
    (610
    )
    
    
    (678
    )Other, net
    
    
    48
    
    
    
    231
    
    
    
    (258
    )Tax contingency reserve adjustment
    
    
    
    
    
    
    
    
    
    
    (2,425
    )Subtotal
    
    
    14,288
    
    
    
    13,285
    
    
    
    7,702State and local
    
    
    1,385
    
    
    
    1,303
    
    
    
    1,250Foreign
    
    
    891
    
    
    
    1,202
    
    
    
    1,009Total
    
    $
    16,564
    
    
    $
    15,790
    
    
    $
    9,961
 (b)
    
    The following is a reconciliation between the statutory US income tax rate and the effective
rate derived by dividing the provision for income taxes by earnings before income taxes: Year Ended September 30,
    
    2009
    
    
    2008
    
    
    2007Computed income taxes at statutory rate
    
    $
    17,263
    
    
    
    35.0
    %
    
    $
    16,097
    
    
    
    35.0
    %
    
    $
    12,839
    
    
    
    35.0
    %Increase (decrease) in taxes resulting from State and local income taxes
    
    
    904
    
    
    
    1.8
    
    
    
    902
    
    
    
    2.0
    
    
    
    835
    
    
    
    2.3Federal and state tax credits
    
    
    (189
    )
    
    
    (0.4
    )
    
    
    (34
    )
    
    
    (0.1
    )
    
    
    (213
    )
    
    
    (0.6
    )Foreign tax rate differences
    
    
    (43
    )
    
    
    (0.1
    )
    
    
    196
    
    
    
    0.4
    
    
    
    170
    
    
    
    0.5Valuation allowance reversal  France
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309
    )
    
    
    (0.8
    )Qualified domestic production
incentives
    
    
    (870
    )
    
    
    (1.8
    )
    
    
    (715
    )
    
    
    (1.6
    )
    
    
    (290
    )
    
    
    (0.8
    )Tax exempt interest
    
    
    (100
    )
    
    
    (0.2
    )
    
    
    (417
    )
    
    
    (0.9
    )
    
    
    (418
    )
    
    
    (1.1
    )Tax contingency reserve adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,425
    )
    
    
    (6.6
    )US book-to-return and uncertain tax
position activity
    
    
    (412
    )
    
    
    (0.8
    )
    
    
    (177
    )
    
    
    (0.4
    )
    
    
    (344
    )
    
    
    (0.9
    )Other, net
    
    
    11
    
    
    
    0.1
    
    
    
    (62
    )
    
    
    (0.1
    )
    
    
    116
    
    
    
    0.2$
    16,564
    
    
    
    33.6
    %
    
    $
    15,790
    
    
    
    34.3
    %
    
    $
    9,961
    
    
    
    27.2
    %
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(c)
    
    The components of net deferred tax assets (liabilities) were as follows: As of September 30,
    
    2009
    
    
    2008Deferred tax assets Valuation reserves and non-deductible expenses
    
    $
    1,043
    
    
    $
    951Stock compensation expense not deductible
    
    
    1,762
    
    
    
    1,527Net operating loss carryforwards
    
    
    948
    
    
    
    865Inventory basis differences
    
    
    886
    
    
    
    779Other
    
    
    6
    
    
    
    6Subtotal
    
    
    4,645
    
    
    
    4,128Less valuation allowance
    
    
    (470
    )
    
    
    (466
    )Deferred tax assets
    
    
    4,175
    
    
    
    3,662Deferred tax liabilities Fixed asset basis differences and depreciation
    
    
    (656
    )
    
    
    (639
    )Intangible asset basis differences and amortization
    
    
    (2,263
    )
    
    
    (2,680
    )Other
    
    
    (661
    )
    
    
    (488
    )Deferred tax liabilities
    
    
    (3,580
    )
    
    
    (3,807
    )Net deferred tax assets (liabilities)
    
    $
    595
    
    
    $
    (145
    )
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2009
    
    
    2008Unrecognized income tax benefits beginning of year
    
    $
    779
    
    
    $
    856Additions for tax positions related to the current year
    
    
    115
    
    
    
    123Additions for tax positions of prior years
    
    
    109
    
    
    
    125Reductions for tax positions of prior years
    
    
    (287
    )
    
    
    (13
    )Settlements
    
    
    
    
    
    
    (20
    )Expirations of statute of limitations
    
    
    (144
    )
    
    
    (292
    )Unrecognized income tax benefits at end of year
    
    $
    572
    
    
    $
    779
   (7) Employee Benefits
 (a)
    
    Savings and Investment Plan We have a profit sharing and retirement savings plan covering
substantially all full-time US employees. Profit sharing contributions to the plan, which are
discretionary, are approved by the Board of Directors. The plan permits participants to
contribute to the plan through salary reduction. Under terms of the plan, we match 50% of an
employees contributions, up to maximum match of 3% of eligible compensation. Our
discretionary and matching contributions to the plan amounted to approximately $1,188, $1,214,
and $1,132, during fiscal 2009, 2008 and 2007, respectively.
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##### Table of Contents



(b)
    
    Stock-Based Compensation Plans We have one active stock-based compensation plan, the 2004
Equity Compensation plan, which became effective December 7, 2004, as amended (the 2004
Plan) and an Employee Stock Purchase Plan (the ESP Plan), which became effective October 1,
1997. Effective October 1, 1997, we began selling shares of stock to our full-time and
part-time employees under the ESP Plan up to the number of shares equivalent to a 1% to 15%
payroll deduction from an employees base salary plus an additional 5% dollar match of this
deduction by Meridian.We may grant new shares for options or restricted shares for up to 3,000 shares under the 2004
Plan, of which we have granted 1,483 through September 30, 2009. Options may be granted at
exercise prices not less than 100% of the closing market value of the underlying common shares
on the date of grant and have maximum terms up to ten years. Vesting schedules are established
at the time of grant and may be set based on future service periods, achievement of performance
targets, or a combination thereof. All options contain provisions restricting their
transferability and limiting their exercise in the event of termination of employment or the
disability or death of the optionee. We have granted options for 5,407 shares under similar
plans that have expired.On November 14, 2007, we granted 252 options to certain employees subject to attainment of a
specified earnings target for fiscal 2008. As the target was not met and the options forfeited,
they have been excluded from the tables below. On November 12, 2008, we granted approximately
94 restricted shares to certain employees subject to attainment of a specified earnings target
for fiscal 2009. Dividends were paid on these restricted shares throughout fiscal 2009. The
target was not met and these restricted shares have been forfeited.We recognize compensation expense for all share-based payments made to employees, based upon the
fair value of the share-based payment on the date of the grant. We measure and recognize
compensation expense based on grant-date fair value for stock option awards granted after July
1, 2005 and the non-vested portions of stock option awards granted prior to July 1, 2005.The amount of stock-based compensation expense reported was $1,092, $1,772, and $2,632 in fiscal
2009, fiscal 2008, and fiscal 2007, respectively. The total income tax benefit recognized in
the income statement for these stock-based compensation arrangements was $367, $610, and $678,
for fiscal 2009, fiscal 2008, and fiscal 2007, respectively. We expect future stock
compensation expense for unvested options as of September 30, 2009 to be $937, which will be
recognized during fiscal years 2010 through 2013.We recognize compensation expense only for the portion of shares that we expect to vest. As
such, we apply estimated forfeiture rates to our compensation expense calculations. These rates
have been derived using historical forfeiture data, stratified by several employee groups.
During fiscal 2009, fiscal 2008, and
fiscal 2007, we recorded $42, $235 and $210, respectively, in stock compensation expense to
adjust estimated forfeiture rates to actual.
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We have elected to use the Black-Scholes option pricing model to determine grant-date fair
value, with the following assumptions: (i) expected share price volatility based on implied
volatility calculations using options for Meridian and a peer-group of companies; (ii) expected
life of options based on contractual lives, employees historical exercise behavior and
employees historical post-vesting employment termination behavior; (iii) risk-free interest
rates based on treasury rates that correspond to the expected lives of the options; and (iv)
dividend yield based on the expected yield on underlying Meridian common stock.
 Year ended September 30,
    
    2009
    
    
    2008
    
    
    2007Risk-free interest rates
    
    
    3.75
    %
    
    
    4.56
    %
    
    
    4.64
    %Dividend yield
    
    
    2.41
    %
    
    
    1.45
    %
    
    
    1.96
    %Life of option
    
    
    6.30-8.20 yrs.
    
    
    
    5.70-7.30 yrs.
    
    
    
    5.80-7.50 yrs.Share price volatility
    
    
    57
    %
    
    
    44
    %
    
    
    44
    %Forfeitures (by
employee group)
    
    
    0%-13
    %
    
    
    0%-17
    %
    
    
    0%-20
    %
 A summary of the status of our stock option plans at September 30, 2009 and changes during the
year is presented in the table and narrative below:
 Wtd Avg
    
    
    Wtd Avg
    
    
    AggregateExercise
    
    
    Remaining
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life (Yrs)
    
    
    ValueOutstanding beginning of period
    
    
    1,548
    
    
    $
    9.95Grants
    
    
    62
    
    
    
    22.68Exercises
    
    
    (180
    )
    
    
    6.97Forfeitures
    
    
    (22
    )
    
    
    20.27Cancellations
    
    
    (7
    )
    
    
    18.46Outstanding end of period
    
    
    1,401
    
    
    $
    10.69
    
    
    
    4.9188
    
    
    $
    20,896Exercisable end of period
    
    
    648
    
    
    $
    11.17
    
    
    
    5.2482
    
    
    $
    9,283
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A summary of the status of our nonvested shares as of September 30, 2009, and changes during
the year ended September 30, 2009, is presented below:
 Weighted-AverageGrant DateShares
    
    
    Fair ValueNonvested beginning of period
    
    
    1,019
    
    
    $
    4.79Granted
    
    
    62
    
    
    
    11.05Vested
    
    
    (306
    )
    
    
    6.54Forfeited
    
    
    (22
    )
    
    
    8.74Nonvested end of period
    
    
    753
    
    
    $
    4.44
 The weighted average grant-date fair value of options granted was $22.68, $14.58, and $7.10 for
fiscal 2009, 2008, and 2007, respectively. The total intrinsic value of options exercised was
$2,560, $11,405 and $5,526, for fiscal 2009, 2008, and 2007, respectively. The total grant-date
fair value of options that vested during fiscal 2009, 2008, and 2007 was $2,019, $1,674 and
$721, respectively.Cash received from options exercised was $1,243, $2,668, and $1,318 for fiscal 2009, 2008, and
2007, respectively. Tax benefits realized and recorded to additional paid-in capital from
option exercises totaled $233, $2,458, and $1,632 for fiscal 2009, 2008, and 2007 respectively.
 (8) Major Customers and Segment Data
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##### Table of Contents



Year Ended September 30,
    
    2009
    
    
    2008
    
    
    2007Customer A
    
    $
    37,876
    
    
    
    (26
    )%
    
    $
    31,285
    
    
    
    (22
    )%
    
    $
    24,444
    
    
    
    (20
    )%Customer B
    
    $
    19,063
    
    
    
    (13
    )%
    
    $
    16,160
    
    
    
    (12
    )%
    
    $
    13,340
    
    
    
    (11
    )%
   Year Ended September 30,
    
    2009
    
    
    2008
    
    
    2007Italy
    
    $
    8,289
    
    
    $
    8,942
    
    
    $
    7,838France
    
    
    2,939
    
    
    
    3,263
    
    
    
    3,070United Kingdom
    
    
    2,373
    
    
    
    2,655
    
    
    
    1,987Belgium
    
    
    1,875
    
    
    
    1,865
    
    
    
    1,558Holland
    
    
    1,828
    
    
    
    2,138
    
    
    
    1,610Other countries
    
    
    8,566
    
    
    
    9,117
    
    
    
    7,500Total European Operating Segment
    
    $
    25,870
    
    
    $
    27,980
    
    
    $
    23,563
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##### Table of Contents



US
    
    
    EuropeanDiagnostics
    
    
    Diagnostics
    
    
    Life Science
    
    
    Elim (1)
    
    
    TotalFiscal Year 2009 Net sales Third-party
    
    $
    98,970
    
    
    $
    25,870
    
    
    $
    23,434
    
    
    $
    
    
    
    $
    148,274Inter-segment
    
    
    10,700
    
    
    
    6
    
    
    
    715
    
    
    
    (11,421
    )
    
    
    Operating income
    
    
    39,490
    
    
    
    4,459
    
    
    
    4,728
    
    
    
    102
    
    
    
    48,779Depreciation and amortization
    
    
    2,680
    
    
    
    92
    
    
    
    1,588
    
    
    
    
    
    
    
    4,360Capital expenditures
    
    
    2,082
    
    
    
    81
    
    
    
    1,480
    
    
    
    
    
    
    
    3,643Total assets
    
    
    131,586
    
    
    
    18,221
    
    
    
    55,592
    
    
    
    (49,402
    )
    
    
    155,997Fiscal Year 2008 Net sales Third-party
    
    $
    88,419
    
    
    $
    27,980
    
    
    $
    23,240
    
    
    $
    -
    
    
    $
    139,639Inter-segment
    
    
    11,563
    
    
    
    2
    
    
    
    543
    
    
    
    (12,108
    )
    
    
    Operating income
    
    
    36,095
    
    
    
    5,397
    
    
    
    3,186
    
    
    
    (328
    )
    
    
    44,350Depreciation and amortization
    
    
    2,745
    
    
    
    111
    
    
    
    1,614
    
    
    
    
    
    
    
    4,470Capital expenditures
    
    
    2,193
    
    
    
    39
    
    
    
    1,987
    
    
    
    
    
    
    
    4,219Total assets
    
    
    126,808
    
    
    
    15,955
    
    
    
    49,619
    
    
    
    (45,951
    )
    
    
    146,431Fiscal Year 2007 Net sales Third-party
    
    $
    74,845
    
    
    $
    23,563
    
    
    $
    24,555
    
    
    $
    
    
    
    $
    122,963Inter-segment
    
    
    8,872
    
    
    
    
    
    
    
    532
    
    
    
    (9,404
    )
    
    
    Operating income
    
    
    26,454
    
    
    
    4,930
    
    
    
    3,795
    
    
    
    (149
    )
    
    
    35,030Depreciation and amortization
    
    
    2,641
    
    
    
    110
    
    
    
    1,648
    
    
    
    
    
    
    
    4,399Capital expenditures
    
    
    1,645
    
    
    
    52
    
    
    
    1,514
    
    
    
    
    
    
    
    3,211Total assets
    
    
    115,297
    
    
    
    13,600
    
    
    
    45,410
    
    
    
    (41,609
    )
    
    
    132,698
 (1)
    
    Eliminations consist of intersegment transactions. Year Ended September 30,
    
    2009
    
    
    2008
    
    
    2007Segment operating income
    
    $
    48,779
    
    
    $
    44,350
    
    
    $
    35,030Interest income
    
    
    456
    
    
    
    1,533
    
    
    
    1,642Interest expense
    
    
    
    
    
    
    
    
    
    
    (38
    )Other, net
    
    
    88
    
    
    
    109
    
    
    
    48Consolidated earnings before
income taxes
    
    $
    49,323
    
    
    $
    45,992
    
    
    $
    36,682
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(9) Commitments and Contingencies
 (a)
    
    Royalty Commitments We have entered into various license agreements that require payment of
royalties based on a specified percentage of the sales of licensed products (1% to 8%). These
royalty expenses are recognized on an as-earned basis and recorded in the year earned as a
component of cost of sales. Annual royalty expenses associated with these agreements were
approximately $572, $600, and $739, respectively, for the fiscal years ended September 30,
2009, 2008 and 2007.Meridian entered into a license agreement in October 2006 with a third party that provides
rights to a molecular technology for infectious disease testing in the United States, Europe,
and other geographic markets. The agreement, as amended during fiscal 2009, calls for payments
of up to approximately $800 based on the achievement of certain milestones and on-going
royalties once products are available for commercial sale. Payments made during product
development are expected to occur over a five-year period, which began in fiscal 2007.
Payments of $104, $0 and $169 were made during fiscal 2009, fiscal 2008 and fiscal 2007,
respectively, related to this license.During the fourth quarter of fiscal 2007, we began seeking recovery of approximately $1,400 of
past royalties paid and interest under a license agreement around certain rapid diagnostic
testing technology. This license agreement covered patent rights that were narrowed in scope
via other litigation with the licensor that did not involve Meridian. We strongly believe that
the licensed patent, as reissued, does not cover any of our products. We also ceased further
royalty payments under this license agreement. The licensor to this agreement disputes our
position that the patent, as reissued, does not cover our products. Although we believe that
our position is very strong, we are unable to predict the outcome of this matter. No provision
has been made in the accompanying financial statements for on-going royalties, if any, nor has
any accrual or income been recorded for recovery of past royalties paid.(b)
    
    Purchase Commitments We have purchase commitments primarily for inventory and service items
as part of the normal course of business. Commitments made under these obligations are
$12,917, $624, and $147 for fiscal 2010, 2011, and 2012, respectively. No commitments have
been made beyond fiscal 2012.(c)
    
    Operating Lease Commitments Meridian and its subsidiaries are lessees of (i) office and
warehouse buildings in Cincinnati, Florida, Belgium, and France; (ii) automobiles for use by
the direct sales forces in the US and Europe; and (iii) certain office equipment such as
facsimile machines and copier machines across all business units, under operating lease
agreements that expire at various dates. Amounts charged to expense under operating leases
were $775, $674 and $696 for fiscal 2009, 2008 and 2007, respectively. Operating lease
commitments for each of the five succeeding fiscal years are as follows: fiscal 2010  $610,
fiscal 2011  $384, fiscal 2012  $225, fiscal 2013  $140, and fiscal 2014  $130.(d)
    
    Litigation We are a party to various litigation matters from time to time that we believe
are in the normal course of business. The ultimate resolution of these matters is not
expected to have a material adverse effect
on our financial position, results of operations or cash flows. No provision has been made in
the accompanying consolidated financial statements for these matters.
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##### Table of Contents



(e)
    
    Indemnifications In conjunction with certain contracts and agreements, we provide routine
indemnifications whose terms range in duration and in some circumstances are not explicitly
defined. The maximum obligation under some such indemnifications is not explicitly stated
and, as a result, cannot be reasonably estimated. We have not made any payments for these
indemnifications and no liability is recorded at September 30, 2009 or September 30, 2008. We
believe that if we were to incur a loss on any of these matters, the loss would not have a
material effect on our financial condition.
 (10) Quarterly Financial Data (Unaudited)
  For the Quarter Ended in Fiscal 2009
    
    December 31
    
    
    March 31
    
    
    June 30
    
    
    September 30Net sales
    
    $
    34,293
    
    
    $
    33,280
    
    
    $
    38,240
    
    
    $
    42,461Gross profit
    
    
    23,344
    
    
    
    20,974
    
    
    
    23,323
    
    
    
    25,142Net earnings
    
    
    8,076
    
    
    
    7,251
    
    
    
    8,502
    
    
    
    8,930Basic earnings per common share
    
    
    0.20
    
    
    
    0.18
    
    
    
    0.21
    
    
    
    0.22Diluted earnings per common share
    
    
    0.20
    
    
    
    0.18
    
    
    
    0.21
    
    
    
    0.22Cash dividends per common share
    
    
    0.14
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
 For the Quarter Ended in Fiscal 2008
    
    December 31
    
    
    March 31
    
    
    June 30
    
    
    September 30Net sales
    
    $
    33,847
    
    
    $
    36,249
    
    
    $
    33,068
    
    
    $
    36,475Gross profit
    
    
    21,752
    
    
    
    21,115
    
    
    
    21,287
    
    
    
    22,326Net earnings
    
    
    7,456
    
    
    
    7,299
    
    
    
    7,763
    
    
    
    7,684Basic earnings per common share
    
    
    0.19
    
    
    
    0.18
    
    
    
    0.19
    
    
    
    0.19Diluted earnings per common share
    
    
    0.18
    
    
    
    0.18
    
    
    
    0.19
    
    
    
    0.19Cash dividends per common share
    
    
    0.11
    
    
    
    0.14
    
    
    
    0.14
    
    
    
    0.14
 (11) Stock Split
  
  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS  ON ACCOUNTING AND FINANCIAL DISCLOSURE
   - 72 -




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CONTROLS AND PROCEDURES
   
  OTHER INFORMATION
   - 73 -




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EQUITY COMPENSATION PLAN INFORMATION
  (c)(a)
    
    
    (b)
    
    
    Number ofNumber of
    
    
    Weighted-
    
    
    securities remainingSecurities to be
    
    
    average exercise
    
    
    available for futureissued upon
    
    
    price of
    
    
    issuance underexercise of
    
    
    outstanding
    
    
    equity compensationoutstanding
    
    
    options,
    
    
    plans (excludingoptions, warrants
    
    
    warrants and
    
    
    securities reflectedPlan Category
    
    and rights
    
    
    rights
    
    
    in column (a))Equity compensation plans
approved by security
holders(1)
    
    
    1,382
    
    
    $
    10.715
    
    
    
    1,868Equity compensation plans
not approved by security
holders
    
    
    19
    
    
    
    8.893
    
    
    
    Total
    
    
    1,401
    
    
    $
    10.691
    
    
    
    1,868
 (1)
    
    1994 Directors Stock Option Plan
1996 Stock Option Plan, as amended in 2001
1999 Directors Stock Option Plan
2004 Equity Compensation Plan, as amended  - 74 -




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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    (1) and (2) FINANCIAL STATEMENTS AND SCHEDULES.
  (b)
    
    (3) EXHIBITS.
 Exhibit Number
    
    Description of Exhibit3.1
    
    Articles of Incorporation, including amendments not related to Company name change
(Incorporated by reference to Registration Statement No. 333-02613 on Form S-3 filed
with the Securities and Exchange Commission on April 18, 1996 and Meridians Form 8-K
filed with the Securities and Exchange Commission on May 16, 2007)3.2
    
    Code of Regulations (Incorporated by reference to Meridians Form 8-K filed with the
Securities and Exchange Commission on July 23, 2008)10.5
    
    Sublicense Agreement dated June 17, 1993 among Johnson & Johnson, the Scripps Research
Institute and Meridian Concerning certain Patent Rights (Incorporated by reference to
Meridians Form 8-K filed with the Securities and Exchange Commission on June 17, 1993)10.6
    
    Assignment dated June 17, 1993 from Ortho Diagnostic Systems Inc. to Meridian
concerning certain Patent Rights (Incorporated by reference to Meridians Form 8-K
filed with the Securities and Exchange Commission on June 17, 1993)10.9
    
    Merger Agreement among Gull Laboratories, Inc., Meridian Diagnostics, Inc. Fresenius AG
and Meridian Acquisition Co. dated as of September 15, 1998 (Incorporated by reference
to Meridians Form 8-K filed with the Securities and Exchange Commission on September
17, 1998)10.10*
    
    Savings and Investment Plan Prototype Adoption Agreement (Incorporated by reference to
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2003)10.14*
    
    1994 Directors Stock Option Plan (Incorporated by reference to Registration Statement
No. 33-78868 on Form S-8 filed with the Securities and Exchange Commission on May 12,
1994)10.15*
    
    1996 Stock Option Plan (Incorporated by reference to Meridians Annual Report on Form
10-K for the Fiscal Year Ended September 30, 1996)10.16*
    
    Salary Continuation Agreement between Meridian Bioscience, Inc. and John A. Kraeutler,
as amended April 24, 2001 and December 29, 2008 (filed herewith)10.17
    
    Merger Agreement Among Gull Laboratories, Inc., Meridian Diagnostics, Inc. Fresenius AG
and Meridian Acquisition Co. dated as of September 15, 1998, as amended on October 22,
1998 (Incorporated by reference to Meridians Report on Form 8-K filed with the
Securities and Exchange Commission on September 17, 1998 and Meridians Report on Form
8-K filed with the Securities and Exchange Commission on November 13, 1998)10.18*
    
    1999 Directors Stock Option Plan (Incorporated by reference to Meridians Proxy
Statement filed with the Securities and Exchange Commission on December 21, 1998)
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Exhibit Number
    
    Description of Exhibit10.20
    
    Dividend Reinvestment Plan (Incorporated by reference to Meridians Annual Report on
Form 10-K for the Fiscal Year Ended September 30, 1999)10.21
    
    Merger Agreement dated September 13, 2000 among Meridian and the Shareholders of Viral
Antigens, Inc. (Incorporated by reference to Meridians Form 8-K filed with the
Securities and Exchange Commission on September 29, 2000)10.23*
    
    Employment Agreement Dated February 15, 2001, as amended December 29, 2008 between
Meridian and John A. Kraeutler (filed herewith)10.24*
    
    Sample Option Agreement Dated October 1, 2001 (Incorporated by reference to Meridians
Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2001)10.26*
    
    1996 Stock Option Plan as Amended and Restated Effective January 23, 2001 (Incorporated
by reference to Meridians Proxy Statement filed with the Securities and Exchange
Commission on December 21, 1998)10.27*
    
    Sample Option Agreement Dated November 19, 2002 (Incorporated by reference to
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2003)10.28*
    
    Agreement Concerning Disability and Death dated September 10, 2003, between Meridian
and William J. Motto (Incorporated by reference to Meridians Annual Report on Form
10-K for the Fiscal Year Ended September 30, 2003)10.29*
    
    Professional Services Agreement dated October 1, 2002 between Meridian and Antonio
Interno (Incorporated by reference to Meridians Annual Report on Form 10-K for the
Fiscal Year Ended September 30, 2003)10.31
    
    Stock Purchase Agreement of OEM Concepts, Inc. by Meridian Bioscience, Inc. dated
January 31, 2005 (Incorporated by reference to Meridians Annual Report on Form 10-K
for the Fiscal Year Ended September 30, 2005)10.32*
    
    Sample Option Agreement dated November 10, 2005 (Incorporated by reference to
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2005)10.33*
    
    2004 Equity Compensation Plan, Amended and Restated through January 22, 2008
(Incorporated by reference to Meridians Proxy Statement filed with the Securities and
Exchange Commission on December 19, 2007)10.34*
    
    Fiscal 2006 Officers Compensation Plan, Amended and Restated through January 19, 2006
(Incorporated by reference to Meridians Form 8-K filed with the Securities and
Exchange Commission on January 19, 2006)10.35*
    
    Sample Option Agreement dated November 14, 2007 (Incorporated by reference to
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2007)10.36*
    
    Fiscal 2007 Officers Performance Compensation Plan (Incorporated by reference to
Meridians Form 8-K filed with the Securities and Exchange Commission on November 21,
2006)10.37
    
    Loan and Security Agreement among Meridian Bioscience, Inc., Meridian Bioscience
Corporation, Omega Technologies, Inc. Meridian Life Science, Inc. and Fifth Third Bank
dated August 1, 2007 (Incorporated by reference to Meridians Annual Report on Form
10-K for the Fiscal Year Ended September 30, 2007)
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##### Table of Contents



Exhibit Number
    
    Description of Exhibit10.37.1
    
    Amended and Restated Revolving Note with Fifth Third Bank dated August 1, (Incorporated
by reference to Meridians Annual Report on Form 10-K for the Fiscal Year Ended
September 30, 2007)10.38*
    
    Sample Time-Based Restricted Stock Agreement dated November 12, 2009 (Filed herewith)10.39*
    
    Sample Performance Award Restricted Stock Agreement dated November 12, 2009 (Filed
herewith)13
    
    2009 Annual Report to Shareholders (1)14
    
    Code of Ethics (Incorporated by reference to Meridians Annual Report on Form 10-K for
the Fiscal Year Ended September 30, 2003)18
    
    Grant Thornton Preferability Letter (Incorporated by reference to Meridians Annual
Report on Form 10-K for the Fiscal Year Ended September 30, 2007)21
    
    Subsidiaries of the Registrant (Filed herewith)23
    
    Consent of Independent Registered Public Accounting Firm (Filed herewith)31.1
    
    Certification of Principal Executive Officer required by Rule 13a-14(a) (Filed herewith)31.2
    
    Certification of Principal Financial Officer required by Rule 13a-14(a) (Filed herewith)32
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
(Filed herewith)
 (1)
    
    Only portions of the 2009 Annual Report to Shareholders specifically are incorporated by
reference in this Form 10-K as filed herewith. A supplemental paper copy of the 2009 Annual Report
to Shareholders has been provided to the Securities and Exchange Commission for informational
purposes only.*
    
    Management Compensatory Contracts   - 77 -




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MERIDIAN BIOSCIENCE, INC.By:
    /s/ John A. KraeutlerDate: November 30, 2009John A. Kraeutler
Chief Executive Officer  - 78 -




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##### Table of Contents



Signature
    
    Capacity
    
    Date/s/ William J. Motto
    
    Chairman of the Board of Directors
    
    November 30, 2009William J. Motto/s/ John A. Kraeutler
    
    Chief Executive Officer, Director
    
    November 30, 2009John A. Kraeutler/s/ Melissa Lueke
    
    Executive Vice President, Chief Financial Officer,
    
    November 30, 2009Melissa Lueke
    
    and Secretary/s/ James M. Anderson
    
    Director
    
    November 30, 2009James M. Anderson/s/ James A. Buzard
    
    Director
    
    November 30, 2009James A. BuzardDirector
    
    November 30, 2009Gary P. Kreider/s/ David C. Phillips
    
    Director
    
    November 30, 2009David C. Phillips/s/ Robert J. Ready
    
    Director
    
    November 30, 2009Robert J. Ready
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Balance at
    
    
    Charged to
    
    
    
    
    
    
    
    
    
    
    Balance atBeginning
    
    
    Costs and
    
    
    
    
    
    
    
    
    
    
    End ofDescription
    
    of Period
    
    
    Expenses
    
    
    Deductions
    
    
    Other (a)
    
    
    PeriodYear Ended September 30, 2009:Allowance for doubtful accounts
    
    $
    230
    
    
    $
    33
    
    
    $
    (26
    )
    
    $
    10
    
    
    $
    247Inventory realizability reserves
    
    
    1,103
    
    
    
    613
    
    
    
    (691
    )
    
    
    
    
    
    
    1,025Valuation allowances  deferred
taxes
    
    
    466
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    470Year Ended September 30, 2008:Allowance for doubtful accounts
    
    $
    258
    
    
    $
    38
    
    
    $
    (70
    )
    
    $
    4
    
    
    $
    230Inventory realizability reserves
    
    
    1,162
    
    
    
    551
    
    
    
    (610
    )
    
    
    
    
    
    
    1,103Valuation allowances  deferred
taxes
    
    
    569
    
    
    
    
    
    
    
    (115
    )
    
    
    12
    
    
    
    466Year Ended September 30, 2007:Allowance for doubtful accounts
    
    $
    408
    
    
    $
    19
    
    
    $
    (200
    )
    
    $
    31
    
    
    $
    258Inventory realizability reserves
    
    
    1,158
    
    
    
    259
    
    
    
    (258
    )
    
    
    3
    
    
    
    1,162Valuation allowances  deferred
taxes
    
    
    888
    
    
    
    
    
    
    
    (390
    )
    
    
    71
    
    
    
    569
 (a)
    
    Balances reflect the effects of currency translation  - 80 -