##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)



|[X] |  |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|--- |  |  | ---------------------------------------------------------------------------------

For the quarterly period ended October 31, 2001



|[  ] |  |  | 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: 0-5958

MERIDIAN MEDICAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 52-0898764                       
|                                                               |  |                                  
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer
Identification No.)
|                                                              
|10240 Old Columbia Road, Columbia, Maryland                    |  | 21046                            
|                                                               |  |                                  
|(Address of principal executive offices)                       |  | (Zip Code)                       
|                                                              
|Registrants telephone number, including area code:            |  | 410-309-6830                     
|                                                               |  |                                  

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES [X]          NO [  ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

|                             |  |                                    
|---------------------------- |  | -----------------------------------
|Class                        |  | Outstanding as of November 30, 2001
|                             |  |                                    
|Common Stock, $.10 par value |  | 3,637,133 Shares                   





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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

|                                                                                               |  |         
|---------------------------------------------------------------------------------------------- |  | --------
|                                                                                               |  | Page No.
|                                                                                               |  |         
|PART I. FINANCIAL INFORMATION                                                                  |  |         
|                                                                                              
|ITEM 1.  Consolidated Financial Statements                                                     |  |         
|                                                                                              
|Consolidated Balance Sheets as of
October 31, 2001 and July 31, 2001                           |  | 4       
|                                                                                              
|Consolidated Statements of Income for
the Three Months Ended October 31, 2001 and 2000         |  | 5       
|                                                                                              
|Consolidated Statements of Cash Flows for
the Three Months Ended October 31, 2001 and 2000     |  | 6       
|                                                                                              
|Notes to Consolidated Financial Statements                                                     |  | 7       
|                                                                                              
|ITEM 2.  Managements Discussion and Analysis of Financial
Condition and Results of Operations |  | 9       
|                                                                                              
|ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk                            |  | 12      
|                                                                                              
|PART II. OTHER INFORMATION                                                                     |  |         
|                                                                                              
|ITEM 2.  Changes in Securities and Use of Proceeds                                             |  | 13      
|                                                                                              
|ITEM 6.  Exhibits and Reports on Form 8-K                                                      |  | 13      
|                                                                                              
|SIGNATURES                                                                                     |  | 14      

2



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

INTRODUCTION

Meridian Medical Technologies, Inc. (hereinafter referred to as Meridian or
MMT or the Company), a publicly-traded company (NASDAQ: MTEC), operates
its business in two segments: Pharmaceutical Systems and Cardiopulmonary
Systems. The Company is a leading producer of auto-injector drug delivery
devices, which are used for the self-administration of injectable drugs.
Meridian has developed, and upon receipt of FDA approval, expects to market in
the U.S., a proprietary electrocardiac mapping system technology, the PRIME
ECG.

Meridians auto-injector business is part of its core Pharmaceutical Systems
business. The Pharmaceutical Systems business generated $55.3 million in
revenue in its fiscal year ended July 31, 2001, accounting for 95% of
Meridians total revenues. Meridian sells its auto-injector products to both
commercial and government markets. The principal source of revenues in the
commercial market comes from its EpiPen family of auto-injectors, which are
prescribed primarily for severe allergic reactions. Government revenues are
principally generated from nerve agent antidotes and other emergency medicine
auto-injector products and services marketed to the U.S. Department of Defense
(DoD) and other federal, state and local agencies, particularly those
involved in homeland security, as well as foreign governments.

The Cardiopulmonary Systems segment, which accounted for 5% of Meridians
revenues in its fiscal year ended July 31, 2001, includes the PRIME ECG and its
telemedicine business. The telemedicine business is currently the principal
source of revenues in the Cardiopulmonary Systems segment. The Companys new
PRIME ECG product targets a $6 billion annual market and, if successfully
introduced, could generate significant revenues and profits over time. The
Companys goal is to establish PRIME ECG as the standard of care in the
diagnosis, treatment and monitoring of heart disease. Based upon results from
its multi-center clinical trial completed in May 2001, Meridian filed a 510(k)
application with the United States Food and Drug Administration (FDA) in July
2001 for clearance to market PRIME ECG in the U.S. FDA clearance is
anticipated to be received early in calendar 2002, with marketing to commence
immediately afterwards. The Company introduced PRIME ECG in certain countries
outside the United States in 2000, having received CE mark approval in Europe.

FORWARD LOOKING STATEMENTS

This report and other written and oral statements made by the Company may
contain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act with respect to financial performance and other financial
and business matters. Forward-looking statements are typically identified by
future or conditional verbs or similar expressions regarding events that have
yet to occur. These forward-looking statements are based on the Companys
current expectations and are subject to numerous assumptions, risks and
uncertainties. The following factors, among others, could cause actual results
to differ materially from forward-looking statements or historical performance:
political, economic and competitive conditions; capital availability or costs;
fluctuations in demand for the Companys products; government procurement
timing and policies; technological challenges associated with the development
and manufacture of the Companys products; commercial acceptance of the
Companys products; delays, costs and uncertainties associated with clinical
testing and government approvals required to market new drugs and medical
devices; availability and quality of raw materials; success and timing of
efficiency, cost reduction and quality enhancement programs; regulatory and
contract compliance; relationships with significant customers; adequacy of
product liability insurance; ability to obtain, timing and success of marketing
representatives and strategic alliances; and adequacy of intellectual property
protection. Meridian assumes no duty to update forward-looking statements.

3



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements

MERIDIAN MEDICAL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |          |         |        |        | 
|------------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | -------------------------- | ------- | ----------- | ------ | -------- | ------- | ------ | ------ | 
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         | October 31, |        | July 31,
|Assets                               |                                                                                               | 2001                                                                                                                               |                                   | 2001                      
|                                     |                                                                                               |                                                                                                                                    |                                   |                           
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         | (unaudited) |        |          |         |       
|Current assets:                      |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     | Cash and cash equivalents                                                                     |                                                                                                                                    | $                                 | 3,633                      |         |             | $      | 2,167    |        
|                                     | Restricted cash                                                                               |                                                                                                                                    |                                   | 291                        |         |             |        | 291      |        
|                                     | Receivables, less allowances of $77 and $68, respectively                                     |                                                                                                                                    |                                   | 7,239                      |         |             |        | 6,834    |        
|                                     | Inventories                                                                                   |                                                                                                                                    |                                   | 8,409                      |         |             |        | 6,787    |        
|                                     | Deferred income taxes                                                                         |                                                                                                                                    |                                   | 1,829                      |         |             |        | 1,829    |        
|                                     | Other current assets                                                                          |                                                                                                                                    |                                   | 641                        |         |             |        | 705      |        
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               |                                                                                                                                    | Total current assets              |                            |         | 22,042      |        |          |         | 18,613 |       
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     | Property, plant and equipment                                                                 |                                                                                                                                    |                                   | 26,795                     |         |             |        | 26,091   |        
|                                     |                                                                                               |                                                                                                                                    | Less  Accumulated depreciation   |                            |         | (10,328     | )      |          |         | (9,627 | )     
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               |                                                                                                                                    | Net property, plant and equipment |                            |         | 16,467      |        |          |         | 16,464 |       
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     | Deferred financing fees                                                                       |                                                                                                                                    |                                   | 457                        |         |             |        | 490      |        
|                                     | Capitalized software costs, net                                                               |                                                                                                                                    |                                   | 1,256                      |         |             |        | 1,331    |        
|                                     | Excess of cost over net assets acquired, less
amortization of $6,096 and $6,096, respectively |                                                                                                                                    |                                   | 5,266                      |         |             |        | 5,266    |        
|                                     | Other intangible assets, less amortization of $1,975 and
$1,911, respectively                 |                                                                                                                                    |                                   | 1,270                      |         |             |        | 1,334    |        
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               |                                                                                                                                    | Total assets                      |                            | $       | 46,758      |        |          | $       | 43,498 |       
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|Liabilities and Shareholders Equity |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|Current assets:                      |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               | Accounts payable and other accrued liabilities                                                                                     |                                   | $                          | 7,615   |             |        | $        | 5,518   |       
|                                     |                                                                                               | Note payable to bank                                                                                                               |                                   |                            | 76      |             |        |          | 71      |       
|                                     |                                                                                               | Customer deposits                                                                                                                  |                                   |                            | 50      |             |        |          | 75      |       
|                                     |                                                                                               | Current portion of long-term debt                                                                                                  |                                   |                            | 1,500   |             |        |          | 1,250   |       
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               |                                                                                                                                    |                                   | Total current liabilities  |         |             | 9,241  |          |         |        | 6,914  | 
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               | Long-term debt  notes payable, net of discount                                                                                    |                                   |                            | 15,374  |             |        |          | 15,813  |       
|                                     |                                                                                               | Deferred income taxes                                                                                                              |                                   |                            | 1,775   |             |        |          | 1,775   |       
|                                     |                                                                                               | Other non-current liabilities                                                                                                      |                                   |                            | 1,261   |             |        |          | 1,250   |       
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               |                                                                                                                                    |                                   | Total liabilities          |         |             | 27,651 |          |         |        | 25,752 | 
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|Shareholders equity:                |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               | Common stock (voting and non-voting)
Par value $.10 per share; 18,000,000 shares
authorized; 3,374,439 and 3,197,088 shares issued |                                   |                            | 337     |             |        |          | 320     |       
|                                     |                                                                                               | Additional capital                                                                                                                 |                                   |                            | 33,296  |             |        |          | 33,156  |       
|                                     |                                                                                               | Accumulated other comprehensive loss  cumulative
translation adjustment                                                           |                                   |                            | (181    | )           |        |          | (227    | )     
|                                     |                                                                                               | Accumulated deficit                                                                                                                |                                   |                            | (14,132 | )           |        |          | (15,290 | )     
|                                     |                                                                                               | Treasury stock, 30,176 shares at cost                                                                                              |                                   |                            | (213    | )           |        |          | (213    | )     
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               |                                                                                                                                    |                                   | Total shareholders equity |         |             | 19,107 |          |         |        | 17,746 | 
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         
|                                     |                                                                                               | Total liabilities and shareholders equity                                                                                         |                                   | $                          | 46,758  |             |        | $        | 43,498  |       
|                                     |                                                                                               |                                                                                                                                    |                                   |                            |         |             |        |         

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

4



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

MERIDIAN MEDICAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)

|                                              |                  |         |        |                    |       |      |        |     |       | 
|--------------------------------------------- | ---------------- | ------- | ------ | ------------------ | ----- | ---- | ------ | --- | ----- | 
|                                              |                  |         |        | Three Months Ended
|                                              |                  |         |        | October 31,       
|                                              |                  |         |        |                   
|                                              |                  |         |        | 2001               |       | 2000
|                                              |                  |         |        |                    |       |     
|Net sales                                     |                  | $       | 14,777 |                    |       | $    | 12,986 |    
|Cost of sales                                 |                  |         | 8,081  |                    |       |      | 7,848  |    
|                                              |                  |         |        |                    |       |      |        |    
|Gross profit                                  |                  |         | 6,696  |                    |       |      | 5,138  |    
|                                             
|Selling, general, and
administrative expenses |                  |         | 2,240  |                    |       |      | 1,967  |    
|Research and development expenses             |                  |         | 990    |                    |       |      | 783    |    
|Depreciation and amortization                 |                  |         | 754    |                    |       |      | 871    |    
|                                              |                  |         |        |                    |       |      |        |    
|                                              |                  |         | 3,984  |                    |       |      | 3,621  |    
|                                              |                  |         |        |                    |       |      |        |    
|                                             
|Operating income                              |                  |         | 2,712  |                    |       |      | 1,517  |    
|                                             
|Other expense:                                |                  |         |        |                    |       |      |        |    
|                                              | Interest expense |         |        | 611                |       |      |        | 701 |      
|                                              | Other expense    |         |        | 66                 |       |      |        | 1   |      
|                                              |                  |         |        |                    |       |      |        |    
|                                              |                  |         | 677    |                    |       |      | 702    |    
|                                              |                  |         |        |                    |       |      |        |    
|                                             
|Income before income taxes                    |                  |         | 2,035  |                    |       |      | 815    |    
|                                             
|Provision for income taxes                    |                  |         | 877    |                    |       |      | 390    |    
|                                              |                  |         |        |                    |       |      |        |    
|                                             
|Net income                                    |                  | $       | 1,158  |                    |       | $    | 425    |    
|                                              |                  |         |        |                    |       |      |        |    
|Net income per share:                         |                  |         |        |                    |       |      |        |    
|                                              |                  | Basic   |        | $                  | .36   |      |        | $   | .14   | 
|                                              |                  |         |        |                    |       |      |        |    
|                                              |                  | Diluted |        | $                  | .32   |      |        | $   | .12   | 
|                                              |                  |         |        |                    |       |      |        |    
|Weighted average shares:                      |                  |         |        |                    |       |      |        |    
|                                              |                  | Basic   |        |                    | 3,205 |      |        |     | 3,010 | 
|                                              |                  | Diluted |        |                    | 3,665 |      |        |     | 3,616 | 

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

5



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

MERIDIAN MEDICAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                    |        |      |      |     |        |  
|---------------------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------------- | ------------------------------------------------------------------ | -------------------------------------- | ---- | ------------------ | ------ | ---- | ---- | --- | ------ | -
|                                                     |                                                                                              |                                        |                                                                    |                                        |      | Three Months Ended
|                                                     |                                                                                              |                                        |                                                                    |                                        |      | October 31,       
|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                   
|                                                     |                                                                                              |                                        |                                                                    |                                        |      | 2001               |        | 2000
|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|OPERATING ACTIVITIES:                                |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|                                                     | Net income                                                                                   |                                        | $                                                                  | 1,158                                  |      |                    | $      | 425  |     
|                                                     | Adjustments to reconcile net income to net cash
provided by (used for) operating activities: |                                        |                                                                    |                                        |      |                    |        |      |     
|                                                     |                                                                                              |                                        | Depreciation and amortization                                      |                                        |      | 754                |        |      |      | 871 |       
|                                                     |                                                                                              |                                        | Amortization of capitalized software costs                         |                                        |      | 80                 |        |      |      | 79  |       
|                                                     |                                                                                              |                                        | Amortization of notes payable discount and
deferred financing fees |                                        |      | 94                 |        |      |      | 102 |       
|                                                     | Changes in assets and liabilities                                                            |                                        |                                                                    |                                        |      |                    |        |      |     
|                                                     |                                                                                              |                                        |                                                                    | Receivables                            |      |                    | (405   | )    |      |     | 1,190  |  
|                                                     |                                                                                              |                                        |                                                                    | Inventories                            |      |                    | (1,622 | )    |      |     | (1,213 | )
|                                                     |                                                                                              |                                        |                                                                    | Other current assets                   |      |                    | 64     |      |      |     | 445    |  
|                                                     |                                                                                              |                                        |                                                                    | Accounts payable and other liabilities |      |                    | 2,072  |      |      |     | (2,367 | )
|                                                     | Other                                                                                        |                                        |                                                                    | 63                                     |      |                    |        | (31  | )   
|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|Net cash provided by (used for) operating activities |                                                                                              |                                        | 2,258                                                              |                                        |      |                    | (499   | )   
|                                                    
|INVESTING ACTIVITIES                                 |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|                                                     |                                                                                              | Purchase of fixed assets               |                                                                    |                                        | (704 | )                  |        |      | (275 | )  
|                                                     |                                                                                              | Increase in restricted cash            |                                                                    |                                        |     |                    |        |      | (1   | )  
|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|Net cash used for investing activities               |                                                                                              |                                        | (704                                                               | )                                      |      |                    | (276   | )   
|                                                    
|FINANCING ACTIVITIES                                 |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|                                                     |                                                                                              | Net proceeds on lines of credit        |                                                                    |                                        | 5    |                    |        |      | 756  |    
|                                                     |                                                                                              | Payment on long-term debt              |                                                                    |                                        | (250 | )                  |        |      | (276 | )  
|                                                     |                                                                                              | Proceeds from issuance of common stock |                                                                    |                                        | 157  |                    |        |      | 252  |    
|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|Net cash (used for) provided by financing activities |                                                                                              |                                        | (88                                                                | )                                      |      |                    | 732    |     
|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|Net increase (decrease) in cash                      |                                                                                              |                                        | 1,466                                                              |                                        |      |                    | (43    | )   
|Cash and cash equivalents at beginning of period     |                                                                                              |                                        | 2,167                                                              |                                        |      |                    | 79     |     
|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     
|Cash and cash equivalents at end of period           |                                                                                              | $                                      | 3,633                                                              |                                        |      | $                  | 36     |     
|                                                     |                                                                                              |                                        |                                                                    |                                        |      |                    |        |     

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

6



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



| | 1. |  | The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
standards (GAAP) for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by GAAP
for complete financial statements. In the opinion of management, the
accompanying unaudited consolidated financial statements contain all
adjustments (consisting of normal recurring accruals) necessary to present
fairly the Companys financial position as of October 31, 2001 and July
31, 2001, the results of its operations for the three-month periods ended
October 31, 2001 and 2000, and its cash flows for the three-month periods
ended October 31, 2001 and 2000. The results of operations for the
three-month period ended October 31, 2001 are not necessarily indicative
of the results that may be expected for the fiscal year ending July 31,
2002. Certain prior period amounts have been reclassified to conform to
current period presentation. The information included in this Form 10-Q
should be read in conjunction with Managements Discussion and Analysis
and financial statements and notes thereto included in the Meridian
Medical Technologies, Inc. 2001 Form 10-K filed with the Securities and
Exchange Commission.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | The Company considers all investments with a maturity of three months or
less on their acquisition date to be cash equivalents. Restricted cash
consists of cash pledged as collateral on an outstanding letter of credit
supporting the working capital line of credit at the Companys Belfast
subsidiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | 3. |  | Inventories as of October 31, 2001 and July 31, 2001 consisted of the
following (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                    |  |                  |       |               |  |   |       |  
|----------------------------------- |  | ---------------- | ----- | ------------- |  | - | ----- | -
|                                    |  | October 31, 2001 |       | July 31, 2001
|                                    |  |                  |       |              
|Components and subassemblies        |  | $                | 5,157 |               |  | $ | 4,750 |  
|Work in process                     |  |                  | 3,699 |               |  |   | 2,378 |  
|Finished goods                      |  |                  | 533   |               |  |   | 497   |  
|                                    |  |                  |       |               |  |   |       |  
|                                    |  |                  | 9,389 |               |  |   | 7,625 |  
|Less: inventory valuation allowance |  |                  | (980  | )             |  |   | (838  | )
|                                    |  |                  |       |               |  |   |       |  
|                                    |  | $                | 8,409 |               |  | $ | 6,787 |  
|                                    |  |                  |       |               |  |   |       |  



| | 4. |  | A reconciliation of net income to comprehensive income is as follows (in
thousands):
| | -- |  | ------------------------------------------------------------------------------------

|                                        |  |                    |       |      |  |   |     |  
|--------------------------------------- |  | ------------------ | ----- | ---- |  | - | --- | -
|                                        |  | Three Months Ended
|                                        |  | October 31,       
|                                        |  |                   
|                                        |  | 2001               |       | 2000
|                                        |  |                    |       |     
|Net income                              |  | $                  | 1,158 |      |  | $ | 425 |  
|Foreign exchange translation adjustment |  |                    | 46    |      |  |   | (38 | )
|                                        |  |                    |       |      |  |   |     |  
|Comprehensive income                    |  | $                  | 1,204 |      |  | $ | 387 |  
|                                        |  |                    |       |      |  |   |     |  

7



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q



| | 5. |  | In accordance with Statement of Financial Accounting Standards No. 86,
the Company began amortizing the $1,588,000 of software costs incurred
during fiscal 1999 and 1998 relating to its PRIME ECG product during the
third quarter of fiscal 2000, as it was available for sale. Amortization,
which is being provided on a 5 year, straight-line basis, totaled $80,000
for the three months ended October 31, 2001 and is included in cost of
sales. The Company capitalized $219,000 of additional software costs
relating to enhancements made to its PRIME ECG during the fourth quarter
of fiscal 2001. Amortization of these costs will begin when the
enhancements are available for sale.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 6. |  | Segment information is as follows (in thousands, except percentage
information):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                           |                         |                          |   |                    |        |      |   |        |        |  
|-------------------------- | ----------------------- | ------------------------ | - | ------------------ | ------ | ---- | - | ------ | ------ | -
|                           |                         |                          |   | Three Months Ended
|                           |                         |                          |   | October 31,       
|                           |                         |                          |   |                   
|                           |                         |                          |   | 2001               |        | 2000
|                           |                         |                          |   |                    |        |     
|Revenues:                  |                         |                          |   |                    |        |      |   |       
|                           | Pharmaceutical systems  |                          | $ | 14,088             |        |      | $ | 12,526 |       
|                           | Cardiopulmonary systems |                          |   | 689                |        |      |   | 460    |       
|                           |                         |                          |   |                    |        |      |   |       
|                           |                         | Total revenues           |   | $                  | 14,777 |      |   | $      | 12,986 |  
|                           |                         |                          |   |                    |        |      |   |       
|Operating income (loss):   |                         |                          |   |                    |        |      |   |       
|                           | Pharmaceutical systems  |                          | $ | 3,450              |        |      | $ | 2,376  |       
|                           | Cardiopulmonary systems |                          |   | (738               | )      |      |   | (859   | )     
|                           |                         |                          |   |                    |        |      |   |       
|                           |                         | Total operating income   |   | $                  | 2,712  |      |   | $      | 1,517  |  
|                           |                         |                          |   |                    |        |      |   |       
|Operating income (loss) %: |                         |                          |   |                    |        |      |   |       
|                           | Pharmaceutical systems  |                          |   | 24.5               | %      |      |   | 19.0   | %     
|                           | Cardiopulmonary systems |                          |   | (107.1             | %)     |      |   | (186.7 | %)    
|                           |                         |                          |   |                    |        |      |   |       
|                           |                         | Total operating income % |   |                    | 18.4   | %    |   |        | 11.7   | %
|                           |                         |                          |   |                    |        |      |   |       



| | 7. |  | Effective August 1, 2001, the Company early adopted Statement of
Financial Accounting Standards No. 142, Goodwill and Intangible Assets
(SFAS No. 142) which resulted in discontinuing the amortization of
goodwill. Under the Statement, goodwill will be carried at its book value
as of August 1, 2001 and any future impairment of goodwill will be
recognized as either a change in accounting principle (with respect to the
transitional impairment test conducted within six months of adoption) or
as an operating expense in the period of impairment. However, under the
terms of the Statement, identifiable intangibles with identifiable lives
will continue to be amortized. Amortization expense for the three months
ended October 31, 2001 was $64,000, which represented the amortization
relating to the identified intangible assets still required to be
amortized under SFAS No. 142. For each of the next five years, intangible
amortization expense relating to these identified intangibles will be
approximately $256,000.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The Company is required to complete its transitional impairment test of
its goodwill (excess of cost over net assets) balance by January 31, 2002.
As of the date hereof, the Company does not expect any impairment loss as
a result of such test. The Company will be required to test the value of
its goodwill at least annually.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

8



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q



| |  |  | As required by SFAS No. 142 the results for the prior years quarter have
not been restated. A reconciliation of previously reported net income and
earnings per share to the amounts adjusted for the exclusion of goodwill
amortization net of the related income tax effect follows (in thousands,
except per share data):
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           |                                   |                                     |  |  |  |   |       |                    |       |      |     |      |      | 
|------------------------------------------ | --------------------------------- | ----------------------------------- |  |  |  | - | ----- | ------------------ | ----- | ---- | --- | ---- | ---- | 
|                                           |                                   |                                     |  |  |  |   |       | Three Months Ended
|                                           |                                   |                                     |  |  |  |   |       | October 31,       
|                                           |                                   |                                     |  |  |  |   |       |                   
|                                           |                                   |                                     |  |  |  |   |       | 2001               |       | 2000
|                                           |                                   |                                     |  |  |  |   |       |                    |       |     
|Reported net income                        |                                   |                                     |  |  |  | $ | 1,158 |                    |       | $    | 425 |     
|Add back goodwill amortization, net of tax |                                   |                                     |  |  |  |   |      |                    |       |      | 284 |     
|                                           |                                   |                                     |  |  |  |   |       |                    |       |      |     |      |      | 
|                                           |                                   | Adjusted net income                 |  |  |  |   |       | $                  | 1,158 |      |     | $    | 709  | 
|                                           |                                   |                                     |  |  |  |   |       |                    |       |      |     |      |      | 
|Basic earnings per share:                  |                                   |                                     |  |  |  |   |       |                    |       |      |     |     
|                                           | As reported                       |                                     |  |  |  |   | $     | 0.36               |       |      | $   | 0.14 |     
|                                           | Goodwill amortization, net of tax |                                     |  |  |  |   |       |                   |       |      |     | 0.09 |     
|                                           |                                   |                                     |  |  |  |   |       |                    |       |      |     |      |      | 
|                                           |                                   | Adjusted basic earnings per share   |  |  |  |   |       | $                  | 0.36  |      |     | $    | 0.23 | 
|                                           |                                   |                                     |  |  |  |   |       |                    |       |      |     |      |      | 
|Diluted earnings per share:                |                                   |                                     |  |  |  |   |       |                    |       |      |     |     
|                                           | As reported                       |                                     |  |  |  |   | $     | 0.32               |       |      | $   | 0.12 |     
|                                           | Goodwill amortization, net of tax |                                     |  |  |  |   |       |                   |       |      |     | 0.08 |     
|                                           |                                   |                                     |  |  |  |   |       |                    |       |      |     |      |      | 
|                                           |                                   | Adjusted diluted earnings per share |  |  |  |   |       | $                  | 0.32  |      |     | $    | 0.20 | 
|                                           |                                   |                                     |  |  |  |   |       |                    |       |      |     |      |      | 

ITEM 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations

The Quarter in Review

MMTs net income increased 63.3% for the quarter ended October 31, 2001 from
the adjusted first quarter of the prior year on revenues of $14.8 million. Net
income was $1,158,000 ($0.36 basic and $0.32 diluted earnings per share) as
compared to reported net income of $425,000 ($0.14 basic and $0.12 diluted
earnings per share) for the first quarter last year. For comparative purposes,
an adjustment was calculated to last years reported net income for the
adoption of SFAS No. 142. The Company adopted SFAS No. 142, Goodwill and
Other Intangible Assets effective August 1, 2001. This allowed the Company to
stop amortizing its excess of cost over net assets acquired. The adoption of
this standard in the first quarter of fiscal 2002 had the impact of reducing
amortization expense by approximately $284,000 (or approximately $0.08 per
diluted share). Net income increased more than earnings per share, on a
percentage basis, due to higher weighted average diluted shares outstanding at
October 31, 2001.

9



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

Revenues of MMTs two business segments and total gross profit for the
three-month periods ended October 31, 2001 and 2000 are as follows:

|                             |                    |      |                    |       |  |   |        |       | 
|---------------------------- | ------------------ | ---- | ------------------ | ----- |  | - | ------ | ----- | 
|                             |                    |      | Three Months Ended
|                             |                    |      | October 31,       
|                             |                    |     
|($ in thousands)             |                    | 2001 |                    | 2000 
|                             |                    |      |                    |      
|Pharmaceutical Systems:      |                    |      |                    |       |  |   |        |      
|                             | Commercial Systems |      | $                  | 9,003 |  |   | $      | 7,850 | 
|                             | Government Systems |      |                    | 5,085 |  |   |        | 4,676 | 
|                             |                    |      |                    |       |  |   |        |      
|Total Pharmaceutical Systems |                    |      | 14,088             |       |  |   | 12,526 |      
|Cardiopulmonary Systems      |                    |      | 689                |       |  |   | 460    |      
|                             |                    |      |                    |       |  |   |        |      
|                            
|Total Revenues               |                    |      | 14,777             |       |  |   | 12,986 |      
|                             |                    |      |                    |       |  |   |        |      
|                            
|Gross Profit                 |                    | $    | 6,696              |       |  | $ | 5,138  |      
|                             |                    |      |                    |       |  |   |        |      
|                            
|Gross Profit %               |                    |      | 45.3               | %     |  |   | 39.6   | %    
|                            
|EBITDA (1)                   |                    | $    | 3,480              |       |  | $ | 2,466  |      
|                             |                    |      |                    |       |  |   |        |      



|(1)     EBITDA represents operating income plus or minus other income (expense)
and plus depreciation and amortization. EBITDA is not a measure of performance
or financial condition under generally accepted accounting principles, but is
presented to provide additional information related to operating results.
EBITDA should not be considered in isolation or as a substitute for other
measures of financial performance or liquidity under generally accepted
accounting principles. While EBITDA is frequently used as a measure of
operations and the ability to meet debt service requirements, it is not
necessarily comparable to other similarly titled captions of other
companies due to potential inconsistencies in the method of
calculation.                                                                                                                                                                                                                                                                                                                                                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Commercial Systems revenue for the quarter ended October 31, 2001 was $9.0
million, $1.2 million higher than in the comparable prior year period. The
14.7% increase in revenue resulted from 7.9% higher sales of EpiPens in the
current quarter compared to the same quarter in the prior year, and an 86.0%
increase in R&D revenue, which exceeded $1.3 million this quarter. Higher R&D
revenue was driven by significant projects with certain key customers. R&D
revenue is subject to fluctuations in the number and timing of projects,
reflecting its variable nature from period to period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Government Systems revenues were $5.1 million in the quarter ended October 31,
2001 compared to $4.7 million in the first quarter of fiscal 2001. Homeland
Security sales were $475,000 for the three months ended October 31, 2001 versus
$99,000 for the three month period ended October 31, 2000. This increase
reflects shipments towards recently received orders of nerve agent antidotes by
state and local first responders under the Metropolitan Medical Response
System, and other non-military agencies. These orders were placed under an
effort to enhance civilian defense against potential chemical agent terrorist
attacks. Military revenues were $4.6 million for the quarter ended October 31,
2001, comparable to the same period last year. DoD revenues were lower, while
foreign government revenues increased on a year over year basis for the quarter
reflecting the timing of procurements by the military. Overall the Company
expects military based revenues will increase this year as compared to fiscal
2001, based on heightened global military preparedness, and as a result of the
Companys foreign marketing efforts.

10



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

Cardiopulmonary Systems revenues were $689,000 for the three months ended
October 31, 2001 compared to $460,000 for the three months ended October 31,
2000. This increase was primarily due to stronger telemedicine sales during
the quarter. MMTs distributor of telemedicine products, SHL Telemedicine
Ltd., is party to a joint venture with Philips Medical Systems to market
cardiology telemedicine products and services in targeted markets in Europe.
The increased telemedicine revenues include orders placed as a result of this
initial market expansion. The Company continued to invest in the development
of its PRIME ECG sales and marketing infrastructure in Europe during the
quarter. A 510(k) application was submitted to the U.S. FDA in fiscal 2001 for
clearance to market PRIME in the United States. The FDA review is on-going,
and the Company expects to receive clearance in early calendar 2002.

Gross profits increased to 45.3% of revenues during the first quarter of 2002
totaling $6.7 million, compared to 39.6% for the same period of the prior year.
The increased gross profit percentage is a result of product mix, with
increased revenues from higher margin sales involving Homeland Security, R&D
Services, and Foreign, as well as the Companys successful efforts to control
overhead production costs.

Operating costs were $4.0 million for the three months ended October 31, 2001
compared to $3.6 million incurred in the same period of last year. Adjusting
the first quarter of last year for the adoption of SFAS No. 142, this
represents a $647,000, or 19.4% increase. Selling, general and administrative
expenses (SG&A) were 13.9% higher than the same quarter last year, due to the
Companys investment in the marketing infrastructure for PRIME ECG, and
expenses relating to the building of a sales and marketing infrastructure for
specialty pharmaceuticals. The Company also had increases in R&D expense and
depreciation, reflecting new product development efforts and fixed asset
additions, respectively.

Interest expense was $611,000 in the first quarter of fiscal 2002 compared to
$701,000 for the same quarter last year. This represents a 12.8% decrease due
to lower average debt balances and lower interest rates.

The provision for income taxes was $877,000 for the three months ended October
31, 2001, reflecting an estimated effective tax rate of 43.1% for the year.
The Company takes no consolidated tax benefit from the foreign losses, which
for the first quarter approximated $565,000. U.S. pre-tax income, taxed at the
statutory rate, is higher than the consolidated pre-tax income, which inflates
the effective rate. The effective rate has decreased as compared to fiscal
2001s effective rate of 52.0% primarily due to the adoption of SFAS No. 142,
which resulted in discontinuing the amortization of goodwill, thereby
eliminating a permanent book-to-tax difference, and bringing the effective rate
closer to the statutory rate.

11



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

Liquidity and Capital Resources

Total cash as of October 31, 2001 was $3.6 million, an increase of $1.5 million
from July 31, 2001. The Company generated $2.3 million in cash from operations
in the first three months of fiscal 2002 attributable mostly to net income,
non-cash depreciation and amortization, and higher accounts payable and other
liabilities, offset by higher accounts receivable and inventories. Investing
activities in the first three months of fiscal 2001 used $0.7 million of cash
for capital additions. Financing activities used $0.1 million, primarily from
net payments on existing debt facilities, offset by the sale of stock through
stock option and warrant exercises. The Company presently has a domestic
working capital line of credit for $6.5 million, which was fully paid down and
available at October 31, 2001. The Company is currently exploring capital
opportunities in the area of debt refinancing and equity transactions.

During the quarter ended October 31, 2001, the Company issued 19,432 shares of
common stock upon the exercise of certain stock options and warrants,
generating proceeds to the Company of $157,132, and 157,999 shares of common
stock pursuant to a net issue exercise (cashless exercise) provision upon the
exercise of warrants. Subsequent to quarter end, the Company issued 262,694
shares of common stock upon the exercise of warrants, generating proceeds to
the Company of $2,889,634. The proceeds from these transactions have been
retained for general corporate purposes.

Working capital at October 31, 2001 was $12.8 million, up from $11.7 million at
July 31, 2001. The increase was primarily attributable to higher cash ($1.5
million), higher accounts receivable ($0.4 million), and higher inventory ($1.6
million), offset by higher accounts payable and other accrued liabilities ($2.1
million). At October 31, 2001, accounts receivable were $7.2 million,
representing 39 days-sales-outstanding, and inventories were $8.4 million
representing a turn-over rate of 4.3 times per year.

ITEM 3.     Quantitative and Qualitative Disclosure About Market Risk

The Companys earnings are affected by fluctuations in the value of the U.S.
dollar, as compared to foreign currencies, as a result of transactions in
foreign markets. At October 31, 2001, the result of a uniform 10%
strengthening or weakening in the value of the dollar relative to the
currencies in which the Companys transactions are denominated would have
resulted in a $57,000 increase or decrease, respectively, in operating income
for the three months ended October 31, 2001. This calculation assumes that
each exchange rate would change in the same direction relative to the U.S.
dollar. In addition to the direct effects of changes in exchange rates, which
change the dollar value of the resulting sales, changes in exchange rates also
affect the volume of sales or the foreign currency sales price as competitors
services become more or less attractive. The Companys sensitivity analysis of
the effects of changes in foreign currency exchange rates does not factor in a
potential change in sales levels or local currency prices.

The Company is exposed to changes in interest rates as a result of its
outstanding debt. Total short-term and long-term debt outstanding at April 30,
2001 was $17.0 million, consisting of $2.4 million in variable rate borrowing
and $14.5 million in fixed rate borrowing. At this level of variable rate
borrowing, a hypothetical 10% increase in interest rates would have decreased
pre-tax earnings by approximately $3,000 for the three months ended October 31,
2001. At October 31, 2001, the fair value of the Companys fixed rate debt
outstanding was estimated at $15.0 million. A hypothetical 10% change in
interest rates would not result in a material change in the fair value of the
Companys fixed rate debt. The Company does not currently utilize any
derivative financial instruments related to its interest rate exposure.

12



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

PART II  OTHER INFORMATION

ITEM 2.     Changes in Securities and Use of Proceeds

During the period beginning May 1, 2001 and ending November 20, 2001, the
Company issued an aggregate of 508,757 shares of its common stock upon the
exercise of warrants. 267,822 of the shares were issued at an exercise price
of $11.00, for which the Company received aggregate proceeds of $2,946,042.
82,936 and 157,999 shares were issued to ING (U.S.) Investment Corporation
(ING) and Nomura Holding America Inc. (Nomura), respectively, pursuant to a
net issue exercise (cashless exercise) provision included in warrants held by
ING and Nomura. These shares were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933.

ITEM 6.     Exhibits and Reports on Form 8-K:

|                                                        |                                                                                   |                                                                                                                                                                                                  
|------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)                                                     | Exhibits                                                                         
|                                                       
|                                                        | 10.36                                                                             | Form of Change of Control Agreement between the Company and
Dr. Gerald L. Wannarka, Mr. Peter A Garbis, Mr. Dennis P. OBrien,
and Mr. Robert J. Kilgore dated October 9, 2001.  Filed herewith.*
|                                                       
|* Management contract, compensatory plan or arrangement
|                                                       
|(b)                                                     | Reports on Form 8-K                                                              
|                                                       
|                                                        | No reports on Form 8-K were filed during the three months ended October 31, 2001.

13



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##### 



MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                      |                                     |                                                                                                                                              
|--------------------- | ----------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------
|                      | MERIDIAN MEDICAL TECHNOLOGIES, INC.
|                      | Registrant                         
|                     
|November 30, 2001Date |                                     | By:    /S/ JAMES H. MILLERJames H. Miller
President and
Chief Executive Officer
(Principal Executive Officer)                                
|                     
|November 30, 2001Date |                                     | By:    /S/ DENNIS P. OBRIENDennis P. OBrien
Vice President-Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)

14