##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2008
 OR
 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 number 0-14902
 MERIDIAN BIOSCIENCE, INC.
 Incorporated under the laws of Ohio
    
    31-0888197(I.R.S. Employer Identification No.)
 
  þ o
  o þ o o
   o þ
  Class
    
    
    Outstanding April 30, 2008Common Stock, no par value
    
    
    40,156,216
   Page 1 of 26




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##### 



MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
 Page(s)PART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated Statements of Operations
Three Months Ended March 31, 2008 and 2007
Six Months Ended March 31, 2008 and 2007
    
    
    3Consolidated Statements of Cash Flows
Six Months Ended March 31, 2008 and 2007
    
    
    4Consolidated Balance Sheets
March 31, 2008 and September 30, 2007
    


5-6Consolidated Statement of Changes in Shareholders Equity
Six Months Ended March 31, 2008
    
    
    7Notes to Consolidated Financial Statements
    

    8-16Item 2.
    
    Managements Discussion and Analysis of
Financial Condition and Results of Operations
    

    17-23Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4.
    
    Controls and Procedures
    
    
    23PART II.
    
    OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    24Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    24Item 6.
    
    Exhibits
    
    
    25Signature
    
    
    
    
    26EX-31.1EX-31.2EX-32
  The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation
for forward-looking statements accompanied by meaningful cautionary statements. Except for
historical information, this report contains forward-looking statements which may be identified by
words such as estimates, anticipates, projects, plans, seeks, may, will, expects,
intends, believes, should and similar expressions or the negative versions thereof and which
also may be identified by their context. Such statements, whether expressed or implied, are based
upon current expectations of the Company and speak only as of the date made. The Company assumes no
obligation to publicly update any forward-looking statements. These statements are subject to
various risks, uncertainties and other factors that could cause actual results to differ
materially, including, without limitation, the following: Meridians continued growth depends, in
part, on its ability to introduce into the marketplace enhancements of existing products or new
products that incorporate technological advances, meet customer requirements and respond to
products developed by Meridians competition. While Meridian has introduced a number of internally
developed products, there can be no assurance that it will be successful in the future in
introducing such products on a timely basis. Ongoing consolidations of reference laboratories and
formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Costs
and difficulties in complying with laws and regulations administered by the United States Food and
Drug Administration can result in unanticipated expenses and delays and interruptions to the sale
of new and existing products. Changes in the relative strength or weakness of the US dollar can
change expected results. One of Meridians main growth strategies is the acquisition of companies
and product lines. There can be no assurance that additional acquisitions will be consummated or
that, if consummated, will be successful and the acquired businesses successfully integrated into
Meridians operations. In addition to the factors described in this paragraph, Part I, Item 1A Risk
Factors of our Form 10-K contains a list of uncertainties and risks that may affect the financial
performance of the Company.
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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
 Three Months
    
    Six MonthsEnded March 31,
    
    Ended March 31,2008
    
    2007
    
    2008
    
    2007NET SALES
    
    $
    36,249
    
    
    $
    32,094
    
    
    $
    70,096
    
    
    $
    60,814COST OF SALES
    
    
    15,134
    
    
    
    13,256
    
    
    
    27,229
    
    
    
    24,364Gross profit
    
    
    21,115
    
    
    
    18,838
    
    
    
    42,867
    
    
    
    36,450OPERATING EXPENSES:Research and development
    
    
    1,514
    
    
    
    1,718
    
    
    
    3,050
    
    
    
    3,033Sales and marketing
    
    
    4,548
    
    
    
    4,064
    
    
    
    9,238
    
    
    
    8,259General and administrative
    
    
    4,315
    
    
    
    4,207
    
    
    
    8,648
    
    
    
    8,251Total operating expenses
    
    
    10,377
    
    
    
    9,989
    
    
    
    20,936
    
    
    
    19,543Operating income
    
    
    10,738
    
    
    
    8,849
    
    
    
    21,931
    
    
    
    16,907OTHER INCOME (EXPENSE):Interest income
    
    
    396
    
    
    
    357
    
    
    
    851
    
    
    
    752Interest expense
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (38
    )Other, net
    
    
    53
    
    
    
    27
    
    
    
    (27
    )
    
    
    91Total other income (expense)
    
    
    449
    
    
    
    376
    
    
    
    824
    
    
    
    805Earnings before income taxes
    
    
    11,187
    
    
    
    9,225
    
    
    
    22,755
    
    
    
    17,712INCOME TAX PROVISION
    
    
    3,888
    
    
    
    3,335
    
    
    
    8,000
    
    
    
    6,249NET EARNINGS
    
    $
    7,299
    
    
    $
    5,890
    
    
    $
    14,755
    
    
    $
    11,463BASIC EARNINGS PER COMMON SHARE
    
    $
    0.18
    
    
    $
    0.15
    
    
    $
    0.37
    
    
    $
    0.29DILUTED EARNINGS PER COMMON SHARE
    
    $
    0.18
    
    
    $
    0.15
    
    
    $
    0.36
    
    
    $
    0.28AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING  BASIC
    
    
    40,070
    
    
    
    39,518
    
    
    
    39,990
    
    
    
    39,400DILUTIVE COMMON STOCK OPTIONS
    
    
    968
    
    
    
    971
    
    
    
    1,012
    
    
    
    961AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING  DILUTED
    
    
    41,038
    
    
    
    40,489
    
    
    
    41,002
    
    
    
    40,361ANTI-DILUTIVE SECURITIES:Common stock options
    
    
    58
    
    
    
    
    
    
    
    29
    
    
    
    17DIVIDENDS DECLARED PER COMMON SHARE
    
    $
    0.14
    
    
    $
    0.11
    
    
    $
    0.25
    
    
    $
    0.18
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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows (Unaudited)
(dollars in thousands)
 2008
    
    2007Six Months Ended March 31,CASH FLOWS FROM OPERATING ACTIVITIES:Net earnings
    
    $
    14,755
    
    
    $
    11,463Non-cash items:Depreciation of property, plant and equipment
    
    
    1,418
    
    
    
    1,371Amortization of intangible assets and deferred costs
    
    
    865
    
    
    
    818Stock based compensation
    
    
    734
    
    
    
    774Deferred income taxes
    
    
    1,107
    
    
    
    832(Gain) Loss on disposition of fixed assets
    
    
    (1
    )
    
    
    2Change in accounts receivable, inventory, and prepaid expenses
    
    
    (3,627
    )
    
    
    (1,140
    )Change in accounts payable, accrued expenses, and income
taxes payable
    
    
    (1,928
    )
    
    
    (5,773
    )Other
    
    
    (595
    )
    
    
    (51
    )Net cash provided by operating activities
    
    
    12,728
    
    
    
    8,296CASH FLOWS FROM INVESTING ACTIVITIES:Acquisitions of property, plant and equipment
    
    
    (1,775
    )
    
    
    (1,680
    )Proceeds from sales of property, plant and equipment
    
    
    12
    
    
    
    Purchase of intangibles
    
    
    (231
    )
    
    
    (265
    )Acquisition earnout payments
    
    
    (157
    )
    
    
    (971
    )(Purchases) proceeds from sales of short-term investments
    
    
    (7,750
    )
    
    
    4,000Net cash provided by (used for) investing activities
    
    
    (9,901
    )
    
    
    1,084CASH FLOWS FROM FINANCING ACTIVITIES:Repayment of debt obligations
    
    
    
    
    
    
    (29
    )Dividends paid
    
    
    (10,003
    )
    
    
    (7,220
    )Proceeds and tax benefits from exercises of stock options
    
    
    2,528
    
    
    
    1,392Net cash used for financing activities
    
    
    (7,475
    )
    
    
    (5,857
    )Effect of Exchange Rate Changes on Cash and Equivalents
    
    
    264
    
    
    
    57Net Increase (Decrease) in Cash and Equivalents
    
    
    (4,384
    )
    
    
    3,580Cash and Equivalents at Beginning of Period
    
    
    49,400
    
    
    
    36,348Cash and Equivalents at End of Period
    
    $
    45,016
    
    
    $
    39,928
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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets (Unaudited)
(dollars in thousands)
 ASSETS
 March 31,
    
    September 30,2008
    
    2007CURRENT ASSETS:Cash and equivalents
    
    $
    45,016
    
    
    $
    49,400Accounts receivable, less allowances of $230 and $258
    
    
    22,584
    
    
    
    22,651Inventories
    
    
    21,292
    
    
    
    18,171Prepaid expenses and other current assets
    
    
    3,935
    
    
    
    2,147Deferred income taxes
    
    
    1,638
    
    
    
    1,376Total current assets
    
    
    94,465
    
    
    
    93,745PROPERTY, PLANT AND EQUIPMENT:Land
    
    
    908
    
    
    
    890Buildings and improvements
    
    
    17,037
    
    
    
    16,907Machinery, equipment and furniture
    
    
    25,962
    
    
    
    24,619Construction in progress
    
    
    1,659
    
    
    
    1,290Subtotal
    
    
    45,566
    
    
    
    43,706Less: accumulated depreciation and amortization
    
    
    26,851
    
    
    
    25,395Net property, plant and equipment
    
    
    18,715
    
    
    
    18,311OTHER ASSETS:Goodwill
    
    
    9,965
    
    
    
    9,964Other intangible assets, net
    
    
    8,828
    
    
    
    9,457Restricted cash
    
    
    1,000
    
    
    
    1,000Investments in auction rate securities
    
    
    7,518
    
    
    
    Other assets
    
    
    221
    
    
    
    221Total other assets
    
    
    27,532
    
    
    
    20,642TOTAL ASSETS
    
    $
    140,712
    
    
    $
    132,698
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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(dollars in thousands)
 LIABILITIES AND SHAREHOLDERS EQUITY
 March 31,
    
    September 30,2008
    
    2007CURRENT LIABILITIES:Accounts payable
    
    $
    5,667
    
    
    $
    4,704Accrued employee compensation costs
    
    
    4,456
    
    
    
    7,541Purchase business combination liability
    
    
    
    
    
    
    152Other accrued expenses
    
    
    5,216
    
    
    
    4,008Income taxes payable
    
    
    1,071
    
    
    
    662Total current liabilities
    
    
    16,410
    
    
    
    17,067DEFERRED INCOME TAXES
    
    
    2,532
    
    
    
    2,683COMMITMENTS 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,
40,125,451 and 39,847,391 shares issued, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    86,308
    
    
    
    82,209Retained earnings
    
    
    34,822
    
    
    
    30,375Accumulated other comprehensive income
    
    
    640
    
    
    
    364Total shareholders equity
    
    
    121,770
    
    
    
    112,948TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    140,712
    
    
    $
    132,698
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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
 
 Consolidated Statement of Changes in Shareholders Equity (Unaudited)
(dollars and shares in thousands)
 AccumulatedCommon
    
    Additional
    
    
    
    
    
    Other
    
    
    
    
    
    TotalShares
    
    Paid-in
    
    Retained
    
    Comprehensive
    
    Comprehensive
    
    ShareholdersIssued
    
    Capital
    
    Earnings
    
    Income (Loss)
    
    Income (Loss)
    
    EquityBalance at September 30, 2007
    
    
    39,847
    
    
    $
    82,209
    
    
    $
    30,375
    
    
    $
    364
    
    
    
    
    
    
    $
    112,948Adoption of FASB Interpretation No. 48
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    
    
    
    
    (305
    )Dividends paid
    
    
    
    
    
    
    
    
    
    
    (10,003
    )
    
    
    
    
    
    
    
    
    
    
    (10,003
    )Exercise of stock options, net of tax
    
    
    278
    
    
    
    3,365
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,365Stock based compensation
    
    
    
    
    
    
    734
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    734Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    14,755
    
    
    
    
    
    
    $
    14,755
    
    
    
    14,755Hedging activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (374
    )
    
    
    (374
    )
    
    
    (374
    )Unrealized loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (233
    )
    
    
    (233
    )
    
    
    (233
    )Other comprehensive income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    (151
    )
    
    
    (151
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,034
    
    
    
    1,034
    
    
    
    1,034Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    15,031Balance at March 31, 2008
    
    
    40,125
    
    
    $
    86,308
    
    
    $
    34,822
    
    
    $
    640
    
    
    
    
    
    
    $
    121,770
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MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
(Unaudited)
 Basis of Presentation:
     Significant Accounting Policies :
 (a) Revenue Recognition 
  Revenue Arrangements with Multiple
Deliverables
 Page 8 of 26




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(b) Comprehensive Income 
    Three Months
    
    Six MonthsEnded March 31,
    
    Ended March 31,2008
    
    2007
    
    2008
    
    2007Net earnings
    
    $
    7,299
    
    
    $
    5,890
    
    
    $
    14,755
    
    
    $
    11,463Hedging activity
    
    
    (299
    )
    
    
    6
    
    
    
    (374
    )
    
    
    (33
    )Unrealized loss on investments
    
    
    (233
    )
    
    
    
    
    
    
    (233
    )
    
    
    Income taxes
    
    
    (77
    )
    
    
    (33
    )
    
    
    (151
    )
    
    
    (117
    )Foreign currency translation adjustment
    
    
    753
    
    
    
    89
    
    
    
    1,034
    
    
    
    364Comprehensive income
    
    $
    7,443
    
    
    $
    5,952
    
    
    $
    15,031
    
    
    $
    11,677
 (c) Income Taxes 
  Accounting for Uncertainty in
Income Taxes
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(d) Stock-based Compensation 
 Share-Based
Payment
 (e) Cash, Cash Equivalents and Investments 
 Accounting for Certain Investments
in Debt and Equity Securities
 Page 10 of 26




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March 31, 2008
    
    September 30, 2007Cash and
    
    Other
    
    Cash and
    
    OtherEquivalents
    
    Assets
    
    Equivalents
    
    AssetsTaxable investments Repurchase agreements
    
    $
    5,844
    
    
    $
    
    
    
    $
    7,751
    
    
    $
    Money market funds
    
    
    2,395
    
    
    
    
    
    
    
    
    
    
    
    Tax-exempt investments Money market funds
    
    
    1,105
    
    
    
    
    
    
    
    2,536
    
    
    
    Variable rate demand notes
    
    
    31,524
    
    
    
    
    
    
    
    36,069
    
    
    
    Student loan auction-rate securities
    
    
    
    
    
    
    7,518
    
    
    
    
    
    
    
    Cash on hand Restricted
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000Unrestricted
    
    
    4,148
    
    
    
    
    
    
    
    3,044
    
    
    
    Total
    
    $
    45,016
    
    
    $
    8,518
    
    
    $
    49,400
    
    
    $
    1,000
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(f) New Accounting Pronouncements 
 Business Combinations
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
 (g) Reclassifications 
  Page 12 of 26




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Inventories :
  March 31,
    
    September 30,2008
    
    2007Raw materials
    
    $
    6,468
    
    
    $
    4,816Work-in-process
    
    
    5,434
    
    
    
    5,141Finished goods
    
    
    9,390
    
    
    
    8,214$
    21,292
    
    
    $
    18,171
 Accounting Changes and Error Corrections
 4. Major Customers and Segment Information
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US
    
    
    European
    
    
    LifeDiagnostics
    
    
    Diagnostics
    
    
    Science
    
    
    Eliminations(1)
    
    
    TotalThree Months 
March 31, 2008Net sales -Third-party
    
    $
    23,253
    
    
    $
    7,594
    
    
    $
    5,402
    
    
    $
    
    
    
    $
    36,249Inter-segment
    
    
    3,271
    
    
    
    2
    
    
    
    136
    
    
    
    (3,409
    )
    
    
    Operating income
    
    
    8,747
    
    
    
    1,592
    
    
    
    352
    
    
    
    47
    
    
    
    10,738Total assets (March
31, 2008)
    
    
    120,952
    
    
    
    16,896
    
    
    
    47,071
    
    
    
    (44,207
    )
    
    
    140,712Three Months 
March 31, 2007Net sales -Third-party
    
    $
    19,866
    
    
    $
    6,274
    
    
    $
    5,954
    
    
    $
    
    
    
    $
    32,094Inter-segment
    
    
    2,041
    
    
    
    
    
    
    
    89
    
    
    
    (2,130
    )
    
    
    Operating income
    
    
    6,721
    
    
    
    1,301
    
    
    
    863
    
    
    
    (36
    )
    
    
    8,849Total assets
(September 30,
2007)
    
    
    115,297
    
    
    
    13,600
    
    
    
    45,410
    
    
    
    (41,609
    )
    
    
    132,698Six Months  March
31, 2008Net sales -Third-party
    
    $
    45,472
    
    
    $
    13,693
    
    
    $
    10,931
    
    
    $
    
    
    
    $
    70,096Inter-segment
    
    
    5,571
    
    
    
    2
    
    
    
    278
    
    
    
    (5,851
    )
    
    
    Operating income
    
    
    17,778
    
    
    
    2,751
    
    
    
    1,343
    
    
    
    59
    
    
    
    21,931Six Months  March
31, 2007Net sales -Third-party
    
    $
    38,820
    
    
    $
    11,529
    
    
    $
    10,465
    
    
    $
    
    
    
    $
    60,814Inter-segment
    
    
    4,261
    
    
    
    
    
    
    
    358
    
    
    
    (4,619
    )
    
    
    Operating income
    
    
    13,811
    
    
    
    2,276
    
    
    
    897
    
    
    
    (77
    )
    
    
    16,907
 (1)
    
    Eliminations consist of intersegment transactions.
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5. Intangible Assets :
  WtdAvg
    
    March 31, 2008
    
    September 30, 2007Amort
    
    Gross
    
    
    
    
    
    GrossPeriod
    
    Carrying
    
    Accumulated
    
    Carrying
    
    Accumulated(Yrs)
    
    Value
    
    Amortization
    
    Value
    
    AmortizationCore products and cell lines
    
    
    15
    
    
    $
    4,698
    
    
    $
    2,457
    
    
    $
    4,698
    
    
    $
    2,313Manufacturing technologies
    
    
    15
    
    
    
    5,907
    
    
    
    4,267
    
    
    
    5,907
    
    
    
    4,089Trademarks, licenses and patents
    
    
    12
    
    
    
    2,501
    
    
    
    1,768
    
    
    
    2,270
    
    
    
    1,694Customer lists and supply agreements
    
    
    13
    
    
    
    10,649
    
    
    
    6,435
    
    
    
    10,641
    
    
    
    5,963$
    23,755
    
    
    $
    14,927
    
    
    $
    23,516
    
    
    $
    14,059
  6. Hedging Transactions :
    Notional
    
    Contract
    
    Estimated Fair
    
    Average ExchangeAmount
    
    Value
    
    Value
    
    Rate
    
    Maturity2,400
    
    $
    3,307
    
    
    $
    3,771
    
    
    
    1.3778
    
    
    FY 2008900
    
    $
    1,289
    
    
    $
    1,401
    
    
    
    1.4322
    
    
    FY 2009
  Page 15 of 26




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##### Table of Contents



Liability DerivativesMarch 31, 2008
    
    
    September 30, 2007Balance Sheet
    
    
    Fair
    
    
    Balance Sheet
    
    
    FairLocation
    
    
    Value
    
    
    Location
    
    
    ValueDerivatives designated as
hedging instruments under SFAS
No. 133Foreign exchange contracts
    
    Accrued expenses
    
    $
    576
    
    
    Accrued expenses
    
    $
    256Total derivatives designated
as hedging instruments under
SFAS No. 133
    
    
    
    
    
    $
    576
    
    
    
    
    
    
    $
    256Total derivatives
    
    
    
    
    
    $
    576
    
    
    
    
    
    
    $
    256
  Location ofGain or(Loss)ReclassifiedfromAmount of Gain or (Loss)
    
    Accumulated
    
    
    
    
    
    Amount of Gain or (Loss)Recognized
    
    OCI into
    
    
    
    
    
    Reclassifieds fromin OCI on
    
    Income
    
    
    
    
    
    Accumulated OCI into IncomeDerivative
    
    (Effective
    
    
    
    
    
    (Effective(Effective Portion)
    
    Portion)
    
    
    
    
    
    Portion1)Three months
    
    Six months
    
    
    
    
    
    Three months
    
    Six monthsended
    
    ended
    
    
    
    
    
    ended
    
    endedMarch 31,
    
    March 31,
    
    
    
    
    
    March 31,
    
    March 31,2008
    
    2007
    
    2008
    
    2007
    
    
    
    
    
    2008
    
    2007
    
    2008
    
    2007Foreign exchange
contracts
    
    $
    (407
    )
    
    $
    (10
    )
    
    $
    (552
    )
    
    $
    (95
    )
    
    Net Sales
    
    $
    (108
    )
    
    $
    (16
    )
    
    $
    (178
    )
    
    $
    (62
    )
 1
    
    No portion of the gain/loss was excluded from other comprehensive income due to
effectiveness testing.  Page 16 of 26




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Refer to Forward Looking Statements following the Index in front of this Form 10-Q .
 Overview :
  Diagnostics
 C. difficile
 ®
 Card ® E. coli
 ®
 C difficile H.
pylori C. difficile H. pylori H. pylori
 Page 17 of 26




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##### Table of Contents



Life Science
  Operating Segments :
   Results of Operations
 Net sales
 Three Months Ended March 31
    
    Six Months Ended March 31Inc
    
    
    
    
    
    
    
    
    
    Inc2008
    
    2007
    
    (Dec)
    
    2008
    
    2007
    
    (Dec)US Diagnostics
    
    $
    23,253,000
    
    
    $
    19,866,000
    
    
    
    17
    %
    
    $
    45,472,000
    
    
    $
    38,820,000
    
    
    
    17
    %European Diagnostics
    
    
    7,594,000
    
    
    
    6,274,000
    
    
    
    21
    %
    
    
    13,693,000
    
    
    
    11,529,000
    
    
    
    19
    %Life Science
    
    
    5,402,000
    
    
    
    5,954,000
    
    
    
    (9
    )%
    
    
    10,931,000
    
    
    
    10,465,000
    
    
    
    4
    %Consolidated
    
    $
    36,249,000
    
    
    $
    32,094,000
    
    
    
    13
    %
    
    $
    70,096,000
    
    
    $
    60,814,000
    
    
    
    15
    %International -
US Export
    
    $
    3,867,000
    
    
    $
    3,413,000
    
    
    
    13
    %
    
    $
    7,249,000
    
    
    $
    6,692,000
    
    
    
    8
    %European Diagnostics
    
    
    7,594,000
    
    
    
    6,274,000
    
    
    
    21
    %
    
    
    13,693,000
    
    
    
    11,529,000
    
    
    
    19
    %Total
    
    $
    11,461,000
    
    
    $
    9,687,000
    
    
    
    18
    %
    
    $
    20,942,000
    
    
    $
    18,221,000
    
    
    
    15
    %% of total sales
    
    
    32
    %
    
    
    30
    %
    
    
    
    
    
    
    30
    %
    
    
    30
    %
 Page 18 of 26




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H. pylori C. difficile Card ® H. pylori C. difficile Card ®
 C.
difficile Card ®
  Page 19 of 26




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Gross Profit
 Three Months Ended March 31
    
    Six Months Ended March 31Inc
    
    
    
    
    
    
    
    
    
    Inc2008
    
    2007
    
    (Dec)
    
    2008
    
    2007
    
    (Dec)Gross Profit
    
    $
    21,115,000
    
    
    $
    18,838,000
    
    
    
    12
    %
    
    $
    42,867,000
    
    
    $
    36,450,000
    
    
    
    18
    %Gross Profit Margin
    
    
    58
    %
    
    
    59
    %
    
    
    (1
    )%
    
    
    61
    %
    
    
    60
    %
    
    
    1
    %
   Operating Expenses
 Three Months Ended March 31
    
    Six Months Ended March 31Research &
    
    Sales &
    
    General &
    
    Research &
    
    Sales &
    
    General &Development
    
    Marketing
    
    Administrative
    
    Development
    
    Marketing
    
    Administrative2007 Expenses
    
    $
    1,718,000
    
    
    $
    4,064,000
    
    
    $
    4,207,000
    
    
    $
    3,033,000
    
    
    $
    8,259,000
    
    
    $
    8,251,000% of Sales
    
    
    5
    %
    
    
    13
    %
    
    
    13
    %
    
    
    5
    %
    
    
    14
    %
    
    
    14
    %Fiscal 2008 Increases
(Decreases):US Diagnostics
    
    
    (258,000
    )
    
    
    398,000
    
    
    
    234,000
    
    
    
    106,000
    
    
    
    937,000
    
    
    
    298,000European Diagnostics
    
    
    
    
    
    
    76,000
    
    
    
    20,000
    
    
    
    
    
    
    
    117,000
    
    
    
    92,000Life Science
    
    
    54,000
    
    
    
    10,000
    
    
    
    (146,000
    )
    
    
    (89,000
    )
    
    
    (75,000
    )
    
    
    7,0002008 Expenses
    
    $
    1,514,000
    
    
    $
    4,548,000
    
    
    $
    4,315,000
    
    
    $
    3,050,000
    
    
    $
    9,238,000
    
    
    $
    8,648,000% of Sales
    
    
    4
    %
    
    
    13
    %
    
    
    12
    %
    
    
    4
    %
    
    
    13
    %
    
    
    12
    %% Increase
(Decrease)
    
    
    (12
    )%
    
    
    12
    %
    
    
    3
    %
    
    
    1
    %
    
    
    12
    %
    
    
    5
    %
  ®
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Operating Income
  Other Income and Expense
  Income Taxes
  Accounting for Uncertainty in
Income Taxes
 Liquidity and Capital Resources :
 Comparative Cash Flow Analysis
  Page 21 of 26




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Capital Resources
     Student Loan Auction-Rate Securities
 Page 22 of 26




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PART II. OTHER INFORMATION
 
   
   (1)
    
    Election of the following six directors:James A. Buzard, 36,810,856 votes for and 1,118,396 votes withheld.
John A. Kraeutler, 26,446,681 votes for and 11,482,571 votes withheld.
Gary P. Kreider, 22,472,607 votes for and 15,456,645 votes withheld.
William J. Motto, 27,562,008 votes for and 10,367,244 votes withheld.
David C. Phillips, 36,525,078 votes for and 1,404,174 votes withheld.
Robert J. Ready, 33,925,773 votes for and 4,003,479 votes withheld.
 (2)
    
    Ratification of the appointment of Grant Thornton LLP as Meridians independent registered
public accounting firm for fiscal 2008: 37,325,887 votes for, 67,880 votes against, and 98,783
abstentions.
 (3)
    
    Amendment of the Companys Amended Code of Regulations to allow the Board of Directors to
amend such regulations without shareholder approval in certain circumstances: 30,415,188 votes
for, 875,435 votes against, and 150,184 abstentions.
 (4)
    
    Amendment of Meridians 2004 Equity Compensation Plan, amended and restated through January
19, 2006, to provide 1,537,500 additional common shares available for issuance: 18,808,322
votes for, 12,957,108 votes against, and 112,079 abstentions.
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MERIDIAN BIOSCIENCE, INC.Date:  May 12, 2008
    /s/ Melissa LuekeMelissa LuekeVice President and Chief Financial Officer Page 26 of 26