SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~June 30,~~December 31, 2011

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

For the transition period from to

Commission file number0-14902

MERIDIAN BIOSCIENCE, INC.

Incorporated under the laws of Ohio

31-0888197

(I.R.S. Employer Identification No.)

3471 River Hills Drive

Cincinnati, Ohio 45244

(513) 271-3700

Indicate by a 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.

Yesþx Noo¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yesþx Noo¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso¨ Noþx

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


Class		Outstanding ~~July~~January 31, ~~2011~~2012

Common Stock, no par value		~~41,051,356~~41,253,959

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q


	~~Page(s)~~
~~PART I. FINANCIAL INFORMATION~~

~~Item 1. Financial Statements (Unaudited)~~		Page(s)

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited) Condensed Consolidated Statements of Operations Three ~~and Nine~~ Months Ended ~~June 30,~~December 31, 2011 and 2010		1


Condensed Consolidated Statements of Cash Flows ~~Nine~~ Three Months Ended ~~June 30,~~December 31, 2011 and 2010		2


Condensed Consolidated Balance Sheets ~~June 30,~~ December 31, 2011 and September 30, ~~2010~~2011		3-4


Condensed Consolidated Statement of Changes in Shareholders’ Equity ~~Nine~~ Three Months Ended ~~June 30,~~December 31, 2011		5


Notes to Condensed Consolidated Financial Statements		~~6-12~~6-10

Item 2.
~~Item 2.~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~13-21~~10-16

Item 3.
~~Item 3.~~ Quantitative and Qualitative Disclosures About Market Risk		2116

Item 4.	Controls and Procedures		16

PART II.	OTHER INFORMATION

Item ~~4. Controls and Procedures~~1A.	Risk Factors		2117

Item 6.	Exhibits		17

~~PART II. OTHER INFORMATION~~Signature			18

~~Item 1A. Risk Factors~~		22

~~Item 6. Exhibits~~		22

~~Signature~~		23

~~EX-10.4EX-31.1EX-31.2EX-32EX-101 INSTANCE DOCUMENTEX-101 SCHEMA DOCUMENTEX-101 CALCULATION LINKBASE DOCUMENTEX-101 LABELS LINKBASE DOCUMENTEX-101 PRESENTATION LINKBASE DOCUMENTEX-101 DEFINITION LINKBASE DOCUMENT~~

The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements accompanied by meaningful cautionary statements. Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, which may be identified by words such as “estimates”, “anticipates”, “projects”, “plans”, “seeks”, “may”, “will”, “expects”, “intends”, “believes”, “should” and similar expressions or the negative versions thereof and which also may be identified by their context. Such statements, whether expressed or implied, are based upon current expectations of the Company and speak only as of the date made. The Company assumes no obligation to publicly update or revise any forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially, including, without limitation, the following: Meridian’s continued growth depends, in part, on its ability to introduce into the marketplace enhancements of existing products or new products that incorporate technological advances, meet customer requirements and respond to products developed by Meridian’s competition. While Meridian has introduced a number of internally developed products, there can be no assurance that it will be successful in the future in introducing such products on a timely basis. Meridian relies on proprietary, patented and licensed technologies, and the Company’s ability to protect its intellectual property rights, as well as the potential for intellectual property litigation, would impact its results. Ongoing consolidations of reference laboratories and formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Recessionary pressures on the economy and the markets in which our customers operate, as well as adverse trends in buying patterns from customers can change expected results. Costs and difficulties in complying with laws and regulations, including those administered by the United States Food and Drug Administration, can result in unanticipated expenses and delays and interruptions to the sale of new and existing products. ~~Changes~~The international scope of Meridian’s operations, including changes in the relative strength or weakness of the U.S. dollar and general economic conditions in foreign countries, can ~~also change expected results.~~impact results and make them difficult to predict. One of Meridian’s main growth strategies is the acquisition of companies and product lines. There can be no assurance that additional acquisitions will be consummated or that, if consummated, will be successful and the acquired businesses will be successfully integrated into Meridian’s operations. There may be risks that acquisitions may disrupt operations and may pose potential difficulties in employee retention and there may be additional risks with respect to Meridian’s ability to recognize the benefits of acquisitions, including potential synergies and cost savings or the failure of acquisitions to achieve their plans and objectives. The Company cannot predict the possible impact of recently-enacted United States healthcare legislation and any similar initiatives in other countries on its results of operations. In addition to the factors described in this paragraph, Part I, Item 1A Risk Factors of our Form 10-K contains a list and description of uncertainties, risks and other matters that may affect the Company.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

Three Months Ended Nine Months Ended
June 30, June 30,
2011 2010 2011 2010
NET SALES $ 40,052 $ 33,857 $ 118,374 $ 107,461

COST OF SALES 14,626 12,121 43,046 40,073

GROSS PROFIT 25,426 21,736 75,328 67,388

OPERATING EXPENSES
Research and development 2,710 2,128 7,383 6,521
Selling and marketing 6,143 4,287 17,847 13,495
General and administrative 6,442 4,872 18,675 14,042
European and global sales & marketing leadership reorganization — — 1,240 —
Bioline Group transaction costs — 673 — 673

Total operating expenses 15,295 11,960 45,145 34,731

OPERATING INCOME 10,131 9,776 30,183 32,657

OTHER INCOME (EXPENSE)
Interest income 26 29 70 90
Other, net 36 (9 ) 357 (17 )

Total other income (expense) 62 20 427 73

EARNINGS BEFORE INCOME TAXES 10,193 9,796 30,610 32,730

INCOME TAX PROVISION 3,357 3,372 10,489 11,405

NET EARNINGS $ 6,836 $ 6,424 $ 20,121 $ 21,325

BASIC EARNINGS PER COMMON SHARE $ 0.17 $ 0.16 $ 0.49 $ 0.53

DILUTED EARNINGS PER COMMON SHARE $ 0.17 $ 0.16 $ 0.49 $ 0.52

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC 40,737 40,535 40,680 40,510

EFFECT OF DILUTIVE STOCK OPTIONS 657 616 673 656

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED 41,394 41,151 41,353 41,166

ANTI-DILUTIVE SECURITIES:
Common share options 160 234 177 207

DIVIDENDS DECLARED PER COMMON SHARE $ 0.19 $ 0.19 $ 0.57 $ 0.55

September 30, September 30,
Three Months Ended December 31,
     2011      2010
NET SALES
     $ 40,266      $ 37,263
COST OF SALES
     15,533      13,761




GROSS PROFIT
     24,733      23,502




OPERATING EXPENSES

Research and development
     2,273      2,309
Selling and marketing
     5,568      5,475
General and administrative
     6,643      6,628
Plant consolidation costs
     444      —




Total operating expenses
     14,928      14,412




OPERATING INCOME
     9,805      9,090
OTHER INCOME

Interest income
     5      17
Other, net
     316      203




Total other income
     321      220




EARNINGS BEFORE INCOME TAXES
     10,126      9,310
INCOME TAX PROVISION
     3,548      3,285




NET EARNINGS
     $ 6,578      $ 6,025




BASIC EARNINGS PER COMMON SHARE
     $ 0.16      $ 0.15
DILUTED EARNINGS PER COMMON SHARE
     $ 0.16      $ 0.15
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC
     41,067      40,615
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARES AND UNITS
     420      679
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED
     41,487      41,294




ANTI-DILUTIVE SECURITIES:

Common share options and restricted shares and units
     343      160




DIVIDENDS DECLARED PER COMMON SHARE
     $ 0.19      $ 0.19




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

~~Page~~ 1

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)

Nine Months Ended June 30, 2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 20,121 $ 21,325
Non-cash items:
Depreciation of property, plant and equipment 2,525 2,307
Amortization of intangible assets 1,796 1,079
Amortization of deferred illumigene contract costs 81 —
Stock-based compensation 1,981 1,255
Deferred income taxes (1,622 ) (108 )
Loss on disposition of fixed assets 7 15
Unrealized loss on auction-rate securities and rights, net — 10
Change in current assets (10,176 ) 2,151
Change in current liabilities 2,451 (4,327 )
Other, net (546 ) (6 )

Net cash provided by operating activities 16,618 23,701

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (7,666 ) (3,681 )
Purchases of intangibles and other assets (12 ) —
Purchases of short-term investments — (1,000 )
Proceeds from sales and calls of short-term investments — 8,275

Net cash (used for) provided by investing activities (7,678 ) 3,594

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (23,192 ) (22,282 )
Proceeds and tax benefits from exercises of stock options 1,481 559

Net cash used for financing activities (21,711 ) (21,723 )

Effect of Exchange Rate Changes on Cash and Equivalents 455 (1,383 )

Net (Decrease) Increase in Cash and Equivalents (12,316 ) 4,189

Cash and Equivalents at Beginning of Period 37,879 54,030

Cash and Equivalents at End of Period $ 25,563 $ 58,219

September 30, September 30,
Three Months Ended December 31,
     2011    2010
CASH FLOWS FROM OPERATING ACTIVITIES

Net earnings
     $ 6,578    $ 6,025
Non-cash items included in net earnings:

Depreciation of property, plant and equipment
     903    845
Amortization of intangible assets
     520    595
Amortization of deferred illumigene contract costs
     149    —
Stock-based compensation
     979    967
Deferred income taxes
     (679 )    (955 )
(Gain) loss on disposition of fixed assets and other assets
     (23 )    4
Change in current assets
     2,718    2,276
Change in current liabilities
     1,452    3,177
Other, net
     (100 )    665




Net cash provided by operating activities
     12,497    13,599




CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment
     (1,052 )    (2,559 )
Proceeds from sale of assets
     400    —
Purchases of intangibles and other assets
     (1,290 )    (12 )




Net cash used for investing activities
     (1,942 )    (2,571 )




CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid
     (7,803 )    (7,720 )
Proceeds and tax benefits from exercises of stock options
     269    739




Net cash used for financing activities
     (7,534 )    (6,981 )




Effect of Exchange Rate Changes on Cash and Equivalents
     (442 )    (447 )




Net Increase in Cash and Equivalents
     2,579    3,600
Cash and Equivalents at Beginning of Period
     23,626    37,879




Cash and Equivalents at End of Period
     $ 26,205    $ 41,479




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

~~Page~~ 2

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets ~~(Unaudited)~~

(dollars in thousands)

ASSETS

June 30, September 30,
2011 2010
CURRENT ASSETS
Cash and equivalents $ 25,563 $ 37,879
Accounts receivable, less allowances of $125 and $241 23,987 22,064
Inventories 34,066 28,420
Prepaid expenses and other current assets 6,571 5,071
Deferred income taxes 2,335 1,871

Total current assets 92,522 95,305

PROPERTY, PLANT AND EQUIPMENT, at Cost
Land 1,194 991
Buildings and improvements 21,406 20,670
Machinery, equipment and furniture 31,382 31,945
Construction in progress 5,946 1,320

Subtotal 59,928 54,926
Less: accumulated depreciation and amortization 33,472 33,689

Net property, plant and equipment 26,456 21,237

OTHER ASSETS
Goodwill 23,443 23,302
Other intangible assets, net 11,632 13,327
Restricted cash 1,000 1,000
Deferred illumigene contract costs 2,643 231
Other assets 255 239

Total other assets 38,973 38,099

��
TOTAL ASSETS $ 157,951 $ 154,641

September 30, September 30,
     December 31,
2011
(Unaudited)      September 30,
2011
CURRENT ASSETS

Cash and equivalents
     $ 26,205      $ 23,626
Accounts receivable, less allowances of $453 and $310
     24,023      24,844
Inventories
     33,656      32,689
Prepaid expenses and other current assets
     2,424      6,343
Deferred income taxes
     3,098      2,852




Total current assets
     89,406      90,354




PROPERTY, PLANT AND EQUIPMENT, at Cost

Land
     1,176      1,184
Buildings and improvements
     26,188      23,033
Machinery, equipment and furniture
     34,121      32,408
Construction in progress
     784      3,887




Subtotal
     62,269      60,512
Less: accumulated depreciation and amortization
     35,641      33,973




Net property, plant and equipment
     26,628      26,539




OTHER ASSETS

Goodwill
     22,699      23,124
Other intangible assets, net
     11,648      10,947
Restricted cash
     1,000      1,000
Deferred illumigene contract costs, net
     3,577      3,304
Other assets
     237      225




Total other assets
     39,161      38,600




TOTAL ASSETS
     $ 155,195      $ 155,493




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

~~Page~~ 3

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets ~~(Unaudited)~~
(dollars in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY

June 30, September 30,
2011 2010
CURRENT LIABILITIES
Accounts payable $ 6,093 $ 4,466
Accrued employee compensation costs 4,100 3,451
Other accrued expenses 5,457 5,521
Income taxes payable 1,532 1,086

Total current liabilities 17,182 14,524

DEFERRED INCOME TAXES 2,649 2,756

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY
Preferred stock, no par value, 1,000,000 shares authorized, none issued — —
Common shares, no par value, 71,000,000 shares authorized, 41,048,269 and 40,654,286 shares issued, respectively — —
Additional paid-in capital 97,577 94,529
Retained earnings 39,106 42,177
Accumulated other comprehensive income 1,437 655

Total shareholders’ equity 138,120 137,361

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 157,951 $ 154,641

September 30, September 30,
     December 31,
2011
(Unaudited)    September 30,
2011
CURRENT LIABILITIES

Accounts payable
     $ 6,207    $ 5,548
Accrued employee compensation costs
     4,035    4,235
Other accrued expenses
     5,252    4,692
Income taxes payable
     1,065    789




Total current liabilities
     16,559    15,264




DEFERRED INCOME TAXES
     933    1,705
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY

Preferred stock, no par value, 1,000,000 shares authorized, none issued
     —         —
Common shares, no par value, 71,000,000 shares authorized, 41,247,545 and 41,237,120 shares issued, respectively
     —         —
Additional paid-in capital
     101,095    100,010
Retained earnings
     36,840    38,065
Accumulated other comprehensive income
     (232 )    449




Total shareholders’ equity
     137,703    138,524




TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
     $ 155,195    $ 155,493




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

~~Page~~ 4

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

(dollars and shares in thousands)

Accumulated
Common Additional Other Total
Shares Paid-In Retained Comprehensive Comprehensive Shareholders’
Issued Capital Earnings Income (Loss) Income (Loss) Equity

Balance at September 30, 2010
40,654 $ 94,529 $ 42,177 $ 655 — $ 137,361
Cash dividends paid — — (23,192 ) — (23,192 )
Exercise of stock options 212 1,067 — — 1,067
Issuance of restricted shares 182 — — — —
Stock compensation expense — 1,981 — — 1,981
Comprehensive income:
Net earnings — — 20,121 — $ 20,121 20,121
Foreign currency translation adjustment — — — 1,203 1,203 1,203
Other comprehensive income taxes — — — (421 ) (421 ) (421 )

Comprehensive income $ 20,903

Balance at June 30, 2011
41,048 $ 97,577 $ 39,106 $ 1,437 $ 138,120

00000000 00000000 00000000 00000000 00000000 00000000
Common
Shares
Issued Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Comprehensive
Income (Loss) Total
Shareholders’
Equity
Balance at September 30, 2011
41,237 $ 100,010 $ 38,065 $ 449 $ 138,524
Cash dividends paid
—      —      (7,803 ) —      (7,803 )
Exercise of stock options
10 106 —      —      106
Issuance of restricted shares, net of forfeitures
(1 ) —      —      —      —
Conversion of restricted stock units
1 —      —      —      —
Stock compensation expense
—      979 —      —      979
Comprehensive income:

Net earnings
—      —      6,578 —      $ 6,578 6,578
Other comprehensive income taxes
—      —      —      363 363 363
Foreign currency translation adjustment
—      —      —      (1,044 ) (1,044 ) (1,044 )

Comprehensive income
$ 5,897

Balance at December 31, 2011
41,247 $ 101,095 $ 36,840 $ (232 ) $ 137,703

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

~~Page~~ 5

MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Dollars in Thousands, Except Per Share Amounts
(Unaudited)

1.	1. Basis of Presentation

The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of Management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of ~~June 30,~~December 31, 2011, the results of its operations for the three ~~and nine~~ month periods ended ~~June 30,~~December 31, 2011 and 2010, and its cash flows for the ~~nine~~three month periods ended ~~June 30,~~December 31, 2011 and 2010. These statements should be read in conjunction with the financial statements and footnotes thereto included in the Company’s fiscal ~~2010~~2011 Annual Report on Form 10-K. Financial information as of September 30, ~~2010~~2011 has been derived from the Company’s audited consolidated financial statements.

The results of operations for interim periods are not necessarily indicative of the results to be expected for the year.

2.	2. Significant Accounting Policies

(a)

Revenue Recognition and Accounts Receivable —–


		Revenue is generally recognized from sales when product is shipped and title has passed to the buyer. Revenue for the U.S. Diagnostics operating segment is reduced at the date of sale for estimated rebates that will be claimed by customers. Management estimates accruals for rebate agreements based on data provided by these customers, estimates of inventories of our products held by these customers, historical statistics, current trends, and other factors. Changes to the accruals are recorded in the period that they become known. Our rebate accruals were $4,272 at June 30, 2011 and $5,273 at September 30, 2010.

		~~Revenue for our Diagnostics operating segments includes bundled product revenue for our~~*~~illumi~~*~~gene~~^{^®}~~molecular test system. The bundled product includes a reader instrument, instrument accessories, and test kits. In many instances, amounts invoiced for the~~*~~illumi~~*~~gene~~^{^®}test kits cover the reader instrument, accessories, and test kits. Revenue is recognized based on kit sales. Costs for the reader instruments are recognized in earnings over the period that we have a pricing agreement in effect with the customer, generally three years.

		Life Science revenue for contract services may come from research and development services or manufacturing services, including process development work, or a combination of both. Revenue is recognized based on each of the deliverables in a given arrangement having distinct and separate customer pricing. Pricing is often subject to a competitive bidding process. Contract research and development services may be performed on a “time and materials” basis or “fixed fee” basis. For “time and materials” arrangements, revenue is recognized as services are performed and billed. For “fixed fee” arrangements, revenue is recognized upon completion and acceptance by the customer. For contract manufacturing services, revenue is generally recognized upon delivery of product and acceptance by the customer. In some cases, customers may request that we store on their behalf clinical grade biologicals that we produce under contract manufacturing agreements. These cases arise when customers do not have clinical grade storage facilities or do not want to risk contamination during transport. For such cases, revenue may be recognized on a bill-and-hold basis.

Revenue is generally recognized from sales when product is shipped and title has passed to the buyer. Revenue for the U.S. Diagnostics operating segment is reduced at the date of sale for estimated rebates that will be claimed by customers. Management estimates accruals for rebate agreements based on data provided by these customers, estimates of inventories of our products held by these customers, historical statistics, current trends, and other factors. Changes to the accruals are recorded in the period that they become known. Our rebate accruals were $4,311 at December 31, 2011 and $4,176 at September 30, 2011.

Revenue for our Diagnostics operating segments includes bundled product revenue for ourillumigene^®molecular test system. The bundled product includes an instrument, instrument accessories and test kits. If not sold outright, amounts invoiced for theillumigene^®test kits cover the instrument, accessories and test kits. Revenue is recognized based on kit sales. If not sold outright, costs for the instruments are recognized in cost of sales over the period that we have a pricing agreement in effect with the customer, generally three years.

Life Science revenue for contract services may come from research and development services or manufacturing services, including process development work, or a combination of both. Revenue is recognized based on each of the deliverables in a given arrangement having distinct and separate customer pricing. Pricing is often subject to a competitive bidding process. Contract research and development services may be performed on a “time and materials” basis or “fixed fee” basis. For “time and materials” arrangements, revenue is recognized as services are performed and billed. For “fixed fee” arrangements, revenue is recognized upon completion and acceptance by the customer. For contract manufacturing services, revenue is generally recognized upon delivery of product and acceptance by the customer. In some cases, customers may request that we store on their behalf, clinical grade biologicals that we produce under contract manufacturing agreements. These cases arise when customers do not have clinical grade storage facilities or do not want to risk contamination during transport. For such cases, revenue may be recognized on a bill-and-hold basis. No such bill-and-hold arrangements existed at December 31, 2011 or September 30, 2011.

~~Page~~ 6

Trade accounts receivable are recorded in the accompanying Condensed Consolidated Balance Sheets at invoiced amounts less provisions for rebates and doubtful accounts. The allowance for doubtful accounts represents our estimate of probable credit losses and is based on historical write-off experience. The allowance for doubtful accounts and related metrics, such as days’ sales outstanding, are reviewed monthly. Accounts with past due balances over 90 days are reviewed individually for collectibility. Customer invoices are charged off against the allowance when we believe it is probable that the invoices will not be paid.


~~(b)~~		*~~Comprehensive Income (Loss) —~~*


		~~Our comprehensive income or loss is comprised of net earnings, foreign currency translation and the related income tax effects.~~

		Assets and liabilities of foreign operations are translated using period-end exchange rates with gains or losses resulting from translation included as a separate component of comprehensive income or loss. Revenues and expenses are translated using exchange rates prevailing during the period. We also recognize foreign currency transaction gains and losses on certain assets and liabilities that are denominated in the Australian dollar, British pound and Euro currencies. These gains and losses are included in other income and expense in the accompanying Condensed Consolidated Statements of Operations.

		~~Comprehensive income for the interim periods was as follows:~~

Three Months Nine Months
Ended June 30, Ended June 30,
2011 2010 2011 2010

Net earnings $ 6,836 $ 6,424 $ 20,121 $ 21,325
Foreign currency translation adjustment 335 (1,287 ) 1,203 (2,429 )
Income taxes (117 ) 451 (421 ) 850

Comprehensive income $ 7,054 $ 5,588 $ 20,903 $ 19,746

~~(c)~~		*~~Income Taxes —~~*

		The provision for income taxes includes federal, foreign, state and local income taxes currently payable and those deferred because of temporary differences between income for financial reporting and income for tax purposes. We prepare estimates of permanent and temporary differences between income for financial reporting purposes and income for tax purposes. These differences are adjusted to actual upon filing of our tax returns, typically occurring in the third and fourth quarters of the current fiscal year for the preceding fiscal year’s estimates.

		We account for uncertain tax positions using a benefit recognition model with a two-step approach: (i) a more-likely-than-not recognition criterion; and (ii) a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit is recorded. We recognize accrued interest and penalties related to unrecognized tax benefits as a portion of our income tax provision in the Condensed Consolidated Statements of Operations.


~~(d)~~		*~~Stock-based Compensation —~~*


		We recognize compensation expense for all stock-based awards made to employees, based upon the fair value of the stock-based award on the date of the grant. Shares are expensed over their requisite service period.

~~Page 7~~

~~(e)~~		*~~Cash, Cash Equivalents and Investments —~~*

		~~Our investment portfolio includes the following components:~~

June 30, 2011 September 30, 2010
Cash and Cash and
Equivalents Other Equivalents Other
Taxable investments -
Overnight repurchase agreements $ 11,332 $ — $ 14,862 $ —
Money market funds — — 10,249 —
Cash on hand -
Restricted — 1,000 — 1,000
Unrestricted 14,231 — 12,768 —

Total $ 25,563 $ 1,000 $ 37,879 $ 1,000

~~(f)~~

~~Recent Accounting Pronouncements —~~


		~~In May 2011, FASB issued Accounting Standards Update (ASU) No. 2011-04,~~~~Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.~~ FASB ASU No. 2011-04 amends and clarifies the measurement and disclosure requirements of FASB ASC 820, resulting in common requirements for measuring fair value and for disclosing information about fair value measurements, clarification of how to apply existing fair value measurement and disclosure requirements, and changes to certain principles and requirements for measuring fair value and disclosing information about fair value measurements. The new requirements are effective for fiscal years beginning after December 15, 2011. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s consolidated results of operations, cash flows or financial position.

		~~In June 2011, FASB issued ASU No. 2011-05,~~~~Presentation of Comprehensive Income~~, which amends the disclosure and presentation requirements of Comprehensive Income. Specifically, FASB ASU No. 2011-05 requires that all nonowner changes in shareholders’ equity be presented either in 1) a single continuous statement of comprehensive income or 2) two separate but consecutive statements, in which the first statement presents total net income and its components, and the second statement presents total other comprehensive income and its components. These new presentation requirements are effective for the Company beginning October 1, 2012, with early adoption permitted. The Company will proceed with evaluating the presentation alternatives provided within FASB ASU No. 2011-05, as well as the permitted dates of adoption, and determine the most appropriate changes to be made to the current presentation of comprehensive income within its Statement of Changes in Shareholders’ Equity and when to make such changes.


~~(g)~~		*~~Reclassifications —~~*


		Certain reclassifications have been made to the prior period financial statements to conform to the current fiscal period presentation. Such reclassifications had no impact on net earnings or shareholders’ equity.

~~3. Acquisition of Bioline Group~~

On July 20, 2010, we acquired all of the outstanding common stock of the Bioline group of companies (collectively the “Bioline Group”). We paid $23,849 from cash and equivalents on hand to acquire the Bioline Group. Headquartered in London, England, the Bioline Group is a leading manufacturer and distributor of molecular biology reagents with additional operations in Germany, Australia and the United States. The highly specialized molecular biology reagents it supplies to the life science research, biotech, pharmaceutical and commercial diagnostics markets are the critical components used in PCR testing for DNA, RNA and other genomic testing.

~~Page 8~~

As a result of the consideration paid exceeding the fair value of the net assets being acquired, goodwill in the amount of $12,992 was recorded in connection with this acquisition, none of which will be deductible for tax purposes. This goodwill results largely from the addition of key global operations and direct sales capabilities, management talent and a research-oriented customer base, to complement our existing Life Science operations. In addition to the Bioline Group’s results of operations, which are included in our Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2011 and reported as part of the Life Science operating segment, the consolidated results for the three and nine months ended June 30, 2011 also include:

	i)		$0 and $587 of Cost of Sales for the three and nine months, respectively, related to the roll-out of fair value inventory adjustments for sales of products that were in the Bioline Group’s inventory on the date of acquisition and, therefore, were valued at fair value, rather than manufactured cost, in the opening balance sheet; and

	~~ii)~~		$260 and $767 of General and Administrative Expenses for the three and nine months, respectively, related to the amortization of specific identifiable intangible assets recorded on the opening balance sheet, including customer relationships, license agreements, non-compete agreements, manufacturing processes and trade names.

The results of the Bioline Group included in the consolidated results of the Company for the three and nine months ended June 30, 2011 are as follows, reflecting the items noted above and adjustments to the Group’s income tax provision during the three months ended June 30, 2011:

Three Nine
Months Months
Ended Ended
June 30, 2011 June 30, 2011
Net Sales $ 3,905 $ 10,966
Operating Income (Loss) $ 83 $ (91 )
Net (Loss) Earnings $ (31 ) $ 28

~~The recognized amounts of identifiable assets acquired and liabilities assumed in the acquisition of the Bioline Group are as follows:~~

July 20,
2010 Measurement July 20,
(as initially Period 2010
reported) Adjustments (as adjusted)
Fair value of assets acquired -
Cash and equivalents $ 3,445 $ 3,445
Accounts receivable 1,897 1,897
Inventories 2,807 2,807
Other current assets 371 $ (21 ) 350
Property, plant and equipment, net 816 816
Goodwill 13,166 (174 ) 12,992
Other intangible assets (estimated useful life):
Customer relationships (10 years) 3,898 3,898
Manufacturing processes (6 years) 1,467 1,467
License agreements (approx. 8 year wtd. avg.) 718 718
Non-compete agreements (1 year) 122 122
Trade names (10 years) 995 995

29,702 (195 ) 29,507
Fair value of liabilities assumed -
Accounts payable and accrued expenses 2,817 364 3,181
Deferred income tax liabilities 3,036 (559 ) 2,477

Total consideration paid $ 23,849 $ — $ 23,849

~~Page 9~~

As of June 30, 2011, the purchase price allocation related to the acquisition of the Bioline Group has been finalized and is reflected in the above fair values of the assets acquired and liabilities assumed. These fair values are based on the information that was available as of the acquisition date and the subsequent filing of this Form 10-Q and are reflected in the accompanying Condensed Consolidated Balance Sheets ~~including retrospective adjustment~~at invoiced amounts less provisions for rebates and doubtful accounts. The allowance for doubtful accounts represents our estimate of probable credit losses and is based on current trends and historical write-off experience. The allowance for doubtful accounts and related metrics, such as days’ sales outstanding, are reviewed monthly. Accounts with past due balances over 90 days are reviewed individually for collectibility. Customer invoices are charged off against the allowance when we believe it is probable that the invoices will not be paid. Approximately $4,900 of our accounts receivable at December 31, 2011 is due from Italian hospital customers whose funding ultimately comes from the Italian government. The magnitude of the ~~September 30, 2010~~sovereign debt crisis in Europe, and Italy in particular, is significant. We have experienced a deterioration in the aging of our Italian accounts receivable and continue to monitor the situation closely.
(b)
Comprehensive Income (Loss) –
Our comprehensive income or loss is comprised of net earnings, foreign currency translation and the related income tax effects.
Assets and liabilities of foreign operations are translated using period-end exchange rates with gains or losses resulting from translation included as a separate component of comprehensive income or loss. Revenues and expenses are translated using exchange rates prevailing during the period. We also recognize foreign currency transaction gains and losses on certain assets and liabilities that are denominated in the Australian dollar, British pound and Euro currencies. These gains and losses are included in other income and expense in the accompanying Condensed Consolidated ~~Balance Sheet.~~

Statements of Operations.
Comprehensive income for the interim periods was as follows:
September 30, September 30,
     Three Months
     Ended December 31,
     2011    2010
Net earnings
     $ 6,578    $ 6,025
Foreign currency translation adjustment
     (1,044 )    (936 )
Income taxes
     363    325




Comprehensive income
     $ 5,897    $ 5,414




(c)
Income Taxes –
The ~~consolidated pro forma results~~provision for income taxes includes federal, foreign, state and local income taxes currently payable and those deferred because of temporary differences between income for financial reporting and income for tax purposes. We prepare estimates of permanent and temporary differences between income for financial reporting purposes and income for tax purposes. These differences are adjusted to actual upon filing of our tax returns, typically occurring in the third and fourth quarters of the ~~combined entities of Meridian and the Bioline Group, had the acquisition date been October 1, 2009, are as follows~~current fiscal year for the ~~periods indicated:~~

Three Months Nine Months
Ended June 30, Ended June 30,
2011 2010 2011 2010

Net Sales $ 40,052 $ 37,361 $ 118,374 $ 117,208
Net Earnings $ 6,857 $ 7,201 $ 20,565 $ 20,757
Diluted Earnings Per Common Share $ 0.17 $ 0.17 $ 0.50 $ 0.50

~~These pro forma amounts have been calculated after adjusting~~preceding fiscal year’s estimates.
We account for uncertain tax positions using a benefit recognition model with a two-step approach: (i) a more-likely-than-not recognition criterion; and (ii) a measurement attribute that measures the ~~results~~position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more likely than not that the ~~Bioline Group to reflect the transaction costs incurred by the Company~~benefit will be sustained on its technical merits, no benefit is recorded. We recognize accrued interest and the additional amortization that would have been charged assuming the previously-discussed fair value adjustments to inventory and identifiable intangible assets had been applied on October 1, 2009, together with the consequential tax effects. Fiscal 2011 pro forma earnings exclude $21 and $444 for the three and nine month periods, respectively,penalties related to ~~amortization~~unrecognized tax benefits as a portion of our income tax provision in the Condensed Consolidated Statements of Operations.
(d)
Stock-based Compensation –
We recognize compensation expense for all share-based awards made to employees, based upon the fair value ~~adjustments to inventory~~of the share-based award on the date of the grant. Shares are expensed over their requisite service period.
7
(e)
Cash and Cash Equivalents –
Cash and ~~identifiable intangible assets and~~cash equivalents include the ~~related tax effects, as these amounts~~following components:
September 30, September 30, September 30, September 30,
     December 31, 2011      September 30, 2011
     Cash and
Equivalents      Other      Cash and
Equivalents      Other
Overnight repurchase agreements
     $ 14,927      $ —           $ 11,784      $ —
Cash on hand—

Restricted
     —           1,000      —           1,000
Unrestricted
     11,278      —           11,842      —








Total
     $ 26,205      $ 1,000      $ 23,626      $ 1,000








(f)
Reclassifications –
Certain reclassifications have been ~~included in~~made to the prior period financial statements to conform to the current fiscal ~~2010 pro forma earnings.~~

period presentation. Such reclassifications had no impact on net earnings or shareholders’ equity.
3.
4. Inventories

Inventories are comprised of the following:

June 30, September 30,
2011 2010
Raw materials $ 6,821 $ 6,221
Work-in-process 7,655 6,784
Finished goods — illumigene instruments 3,556 455
Finished goods — kits and other 17,443 16,090

Gross inventory 35,475 29,550
Less: Reserves (1,409 ) (1,130 )

Net inventory $ 34,066 $ 28,420

September 30, September 30,
     December 31,
2011      September 30,
2011
Raw materials
     $ 7,940      $ 7,272
Work-in-process
     7,593      7,016
Finished goods - illumigene instruments
     3,599      4,179
Finished goods - kits and other
     14,524      14,222




Total
     $ 33,656      $ 32,689




4.
5. Major Customers and Segment Information

Meridian was formed in 1976 and functions as a fully-integrated research, development, manufacturing, marketing and sales organization with primary emphasis in the ~~field~~fields of in vitro diagnostics and life science. Our principal businesses are (i) the development, manufacture and distribution of diagnostic test kits primarily for gastrointestinal, viral, respiratory and parasitic infectious diseases; (ii) the manufacture and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells and bioresearch reagents used by researchers and other diagnostic manufacturers; and (iii) the contract development and manufacture of proteins and other biologicals for use by biopharmaceutical and biotechnology companies engaged in research for new drugs and vaccines.

Our reportable operating segments are U.S. Diagnostics, European Diagnostics and Life Science. Initial segmentation between Diagnostics and Life Science has been determined based upon products and customers, with further segmentation of Diagnostics between U.S. and European being based upon geographic regions served and management responsibility. The U.S. Diagnostics operating segment consists of manufacturing operations in Cincinnati, Ohio, and the sale and distribution of diagnostic test kits in the U.S. and countries outside of Australia, Europe, Africa and the Middle East. The European Diagnostics operating segment consists of the sale and distribution of diagnostic test kits in Australia, Europe, Africa and the Middle East. The Life Science operating segment consists of manufacturing operations in Memphis, Tennessee; Saco, Maine; Boca Raton, Florida; London, England; Luckenwalde, Germany; and Sydney, Australia, and the sale and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells and bioresearch reagents domestically and abroad. During the fourth quarter of fiscal 2011, plans were announced to consolidate the Saco, Maine operations into the Memphis, Tennessee facility, with such consolidation commencing early in the fiscal 2012 first quarter and expected to be completed in the third quarter of fiscal 2012. During the

first quarter of fiscal 2012, the Company incurred $444 of costs associated with the facility consolidation, primarily related to employee retention, resulting in $1,501 of total costs incurred since announcement of the consolidation in the fourth quarter of fiscal 2011 ($509 in Cost of Sales and $992 in Operating Expenses). Additional costs related to the consolidation totaling approximately $500 are expected to be incurred during the remainder of fiscal 2012, with the majority of such costs to be incurred in connection with retention bonus and other employee-related costs. The Life Science operating segment also includes the contract development and manufacture of cGMP clinical grade proteins and other biologicals for use by biopharmaceutical and biotechnology companies engaged in research for new drugs and vaccines.

~~Page 10~~

Two distributor customers accounted for ~~47%~~50% and 52% of the U.S. Diagnostics operating segment third-party sales during the three months ended ~~June 30, 2011 and 2010, respectively, and 50% and 58% during the nine months ended June 30,~~December 31, 2011 and 2010, respectively. ~~This lower percentage of sales reflects the fact that the majority of our~~~~illumi~~~~gene~~^{^®} ~~product sales are direct, as well as the comparative decline in the distributors’ inventory stocking of influenza and other products. Three~~Two customers accounted for ~~17%~~27% and ~~29%~~16% of the Life Science operating segment third-party sales during the three months ended ~~June 30,~~December 31, 2011 and 2010, ~~respectively, and 18% and 33% during the nine months ended June 30, 2011 and 2010, respectively, primarily reflecting the addition of the Bioline Group.~~

respectively.
Segment information for the interim periods is as follows:

U.S. European Life
Diagnostics Diagnostics Science Eliminations(1) Total
Three Months Ended June 30, 2011

Net sales -
Third-party $ 23,829 $ 6,612 $ 9,611 $ — $ 40,052
Inter-segment 2,875 9 141 (3,025 ) —
Operating income 8,399 978 797 (43 ) 10,131
Goodwill (June 30, 2011) 1,381 — 22,062 — 23,443
Other intangible assets, net (June 30, 2011) 1,741 — 9,891 — 11,632
Total assets (June 30, 2011) 71,831 20,680 94,164 (28,724 ) 157,951

Three Months Ended June 30, 2010

Net sales -
Third-party $ 21,121 $ 6,218 $ 6,518 $ — $ 33,857
Inter-segment 2,723 8 177 (2,908 ) —
Operating income 8,104 726 752 194 9,776
Goodwill (September 30, 2010) 1,381 — 21,921 — 23,302
Other intangible assets, net (September 30, 2010) 2,283 9 11,035 — 13,327
Total assets (September 30, 2010) 72,030 18,044 90,388 (25,821 ) 154,641

Nine Months Ended June 30, 2011

Net sales -
Third-party $ 72,007 $ 18,926 $ 27,441 $ — $ 118,374
Inter-segment 7,938 16 459 (8,413 ) —
Operating income 26,780 1,781 1,499 123 30,183

Nine Months Ended June 30, 2010

Net sales -
Third-party $ 70,018 $ 19,103 $ 18,340 $ — $ 107,461
Inter-segment 8,200 12 438 (8,650 ) —
Operating income 26,805 2,789 2,976 87 32,657

September 30, September 30, September 30, September 30, September 30,
     U.S.
Diagnostics      European
Diagnostics      Life Science    Eliminations(1)    Total
Three Months Ended December 31, 2011

Net sales—

Third-party
     $ 25,200      $ 5,505      $ 9,561    $ —         $ 40,266
Inter-segment
     2,228      —           336    (2,564 )    —
Operating income (2)
     8,165      951      698    (9 )    9,805
Goodwill (December 31, 2011)
     1,381      —           21,318    —         22,699
Other intangible assets, net (December 31, 2011)
     2,746      —           8,902    —         11,648
Total assets (December 31, 2011)
     80,452      15,124      93,409    (33,790 )    155,195
Three Months Ended December 31, 2010

Net sales—

Third-party
     $ 22,650      $ 5,929      $ 8,684    $ —         $ 37,263
Inter-segment
     2,608      4      213    (2,825 )    —
Operating income
     8,574      753      (221 )    (16 )    9,090
Goodwill (September 30, 2011)
     1,381      —           21,743    —         23,124
Other intangible assets, net (September 30, 2011)
     1,604      —           9,343    —         10,947
Total assets (September 30, 2011)
     73,850      19,390      92,467    (30,214 )    155,493
(1)
Eliminations consist of inter-segment transactions.

(2)	Life Science includes $444 of costs related to consolidation of the Maine operations into the Tennessee facility.

Transactions between operating segments are accounted for at established intercompany prices for internal and management purposes, with all intercompany amounts eliminated in consolidation.

~~Page 11~~

9
5.
6. Intangible Assets
A summary of our acquired intangible assets subject to amortization, as of ~~June 30,~~December 31, 2011 and September 30, ~~2010~~2011 is as follows:

June 30, 2011 September 30, 2010
Gross Gross
Carrying Accumulated Carrying Accumulated
Value Amortization Value Amortization

Manufacturing technologies, core products and cell lines $ 11,664 $ 8,360 $ 11,644 $ 7,693
Trademarks, licenses and patents 3,654 1,329 3,547 997
Customer lists and supply agreements 12,322 6,330 12,537 5,816
Non-compete agreements 128 117 126 21

$ 27,768 $ 16,136 $ 27,854 $ 14,527

September 30, September 30, September 30, September 30,
     December 31, 2011      September 30, 2011
     Gross
Carrying
Value      Accumulated
Amortization      Gross
Carrying
Value      Accumulated
Amortization
Manufacturing technologies, core products and cell lines
     $ 11,610      $ 8,732      $ 11,626      $ 8,545
Trademarks, licenses and patents
     4,809      1,429      3,538      1,337
Customer lists and supply agreements
     12,178      6,788      12,222      6,557








     $ 28,597      $ 16,949      $ 27,386      $ 16,439








The actual aggregate amortization expense for these intangible assets was ~~$570~~$520 and ~~$345~~$595 for the three months ended ~~June 30, 2011 and 2010, respectively, and $1,796 and $1,079 for the nine months ended June 30,~~December 31, 2011 and 2010, respectively. The estimated aggregate amortization expense for these intangible assets for each of the fiscal years through fiscal ~~2015~~2016 is as follows: fiscal ~~2011 — $2,336, fiscal~~ 2012 ~~— $2,079,~~– $2,154, fiscal 2013 ~~— $2,078,~~– $2,175, fiscal 2014 ~~— $1,641~~– $1,739, fiscal 2015 – $1,492 and fiscal ~~2015 — $1,392.~~
~~7. Fair Value Measurements~~
We use fair value measurements to value our financial assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value into three broad levels, which are described below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date for assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly. These include quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3: Unobservable inputs, developed using our estimates and assumptions, which reflect those that the market participants would use. Such inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
Determining where an asset or liability falls within the hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and we consider counterparty credit risk in the assessment of fair value.
We had no financial assets or liabilities carried at fair value at June 30, 2011 to be classified as Level 1, 2 or 3. As of September 30, 2010, financial assets and liabilities to be so classified were comprised solely of money market funds totaling $10,249 classified as Level 1, with no financial assets or liabilities classified as Level 2 or Level 3.
2016 – $1,150.

~~Page 12~~
~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Refer to “Forward Looking Statements” following the Index in front of this Form 10-Q. In the discussion that follows, all amounts are in thousands (both tables and text), except per share data and percentages.
Following is a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of Meridian’s financial condition, changes in financial condition and results of operations. This discussion should be read in conjunction with the financial statements and notes thereto beginning on page 1.
Results of Operations
~~Three Months Ended June 30, 2011~~
Net earnings for the ~~third~~first quarter of fiscal ~~2011~~2012 increased 6%9% to ~~$6,836,~~$6,578, or ~~$0.17~~$0.16 per diluted share, from net earnings for the ~~third~~first quarter of fiscal ~~2010~~2011 of ~~$6,424,~~$6,025, or ~~$0.16~~$0.15 per diluted share. This increase reflects the combined effects of both increased sales and slightly increased operating ~~expenses, resulting primarily from~~expenses.Additionally, fiscal 2012 includes $444 of costs associated with the ~~inclusion~~consolidation of the ~~Bioline Group, which was acquired in July 2010.~~Saco, Maine operations into the Memphis, Tennessee facility (impact on earnings $289, or $0.01 per diluted share). Consolidated sales increased ~~18%~~8% to ~~$40,052~~$40,266 for the ~~third~~first quarter of fiscal ~~2011~~2012 compared to the same period of the prior year, reflecting ~~the impact of Bioline Group sales and~~ increases in sales across all ~~four~~ of our diagnostic focus product families:C. difficile, Foodborne andH. pylori, and ~~Upper Respiratory.~~
our Life Science businesses.
Sales for the U.S. Diagnostics operating segment for the ~~third~~first quarter of fiscal 2012 increased 11% compared to the first quarter of fiscal 2011, ~~increased 13% compared to the third quarter of fiscal 2010,~~ reflecting growth across all ~~four~~ of our focus product families ~~— ranging from 8%~~– 6% growth in ourH. pyloriproducts, ~~to 26%~~25% growth in our foodborne products and 37% growth in ourC. difficileproducts. ~~Third~~First quarter ~~2011~~2012 sales for our European Diagnostics operating segment ~~increased 6%~~decreased 7% compared to the third quarter of fiscal 2010 due primarily to a positive currency effect. As a result of the Bioline Group acquisition, our Life Science segment experienced a 47% increase in sales during this period. Excluding the effect of the Bioline Group, sales of our core Life Science operating segment decreased by 12% during the third quarter of fiscal 2011 compared to the third quarter of fiscal 2010, as this business continues to experience both pricing pressure and reduced order volumes in bulk antigens, antibodies and reagents. We expect core Life Science revenues to be flat to down single digits for fiscal 2012 as our large diagnostic manufacturing customers exert pricing pressures throughout their supply chains and certain segments of the diagnostics industry migrate to molecular technologies.
~~Nine Months Ended June 30, 2011~~
For the nine month period ended June 30, 2011, net earnings decreased 6% to $20,121, or $0.49 per diluted share, from net earnings for the comparable fiscal 2010 period of $21,325, or $0.52 per diluted share. This decrease reflects the impact of the increase in total sales being more than offset by the increase in operating expenses that resulted primarily from the inclusion of expenses from the Bioline Group, acquired in July 2010, as well as costs related to the reorganization of our European and global sales and marketing leadership during the secondfirst quarter of fiscal 2011. Consolidated sales increased 10% to $118,374 for the first nine months of fiscal 2011 compared to the same period of the prior fiscal year. This increase primarily results from the impact of Bioline Group sales and strong growth in foodborne and~~H. pyloriproduct sales being partially offset by a 32% decrease in respiratory product sales and a decline in sales of our core Life Science operating segment.~~
~~For the nine month period ended June 30, 2011, the Bioline Group has contributed nearly $11,000 in sales, with a slight operating loss from~~On an organic basis, which excludes the effects of ~~selling through acquisition date inventory. The Bioline Group has contributed positive operating income for each of the past two fiscal quarters.~~
~~During the first nine months of fiscal 2011,~~currency translation, sales ~~for the U.S. Diagnostics operating segment increased 3% from the comparable fiscal 2010 period. This modest increase reflects sales growth in our~~~~C. difficile,~~~~foodborne and~~~~H. pylori~~product families being significantly offset by the decrease in respiratory product sales, which resulted from the dramatic impact on the fiscal 2010 first quarter of the novel A (H1N1) influenza outbreak and the abrupt halt of the outbreak in December 2009. Sales of our European Diagnostics operating segment ~~for~~decreased 6% during the first ~~nine months~~quarter. The decrease in this operating segment reflects the general economic conditions in the European market, including the sovereign debt crisis, and the resulting reduction in medical-related funding in certain locations, compounded by the ongoing effects of ~~fiscal 2011 decreased 1% compared to the first nine months of fiscal 2010 largely due to decreased sales~~significant competitive pressures in theC. difficileand ~~respiratory~~H. pylori product families. ~~As a result of the Bioline Group acquisition, our Life Science segment experienced a 50% increase~~Reflecting growth in ~~sales during this period. Excluding the effect of the Bioline Group,~~both its viral antigen and molecular reagent businesses, sales of our ~~core~~ Life Science operating segment ~~decreased~~increased by 10% during the first ~~nine months~~quarter of fiscal ~~2011~~2012 compared to the first ~~nine months~~quarter of fiscal ~~2010, as this business continues to experience both pricing pressure and reduced order volumes in several key product lines.~~
2011.

~~Page 13~~
10
Non-GAAP Information
The tables below provide information on net earnings, basic earnings per share and diluted earnings per share, excluding the effect of costs associated with ~~reorganizing~~consolidation of our ~~European and Global Sales & Marketing Leadership, each of~~Saco, Maine operations into our Memphis, Tennessee facility, which is a non-GAAP financial measure, as well as reconciliations to amounts reported under U.S. Generally Accepted Accounting Principles. We believe that this information is useful to those who read our financial statements and evaluate our operating results because:
1.
These measures help to appropriately evaluate and compare the results of operations from period to period by removing the impact of non-routine costs related to ~~reorganizing our European~~consolidating the Maine operations; and ~~Global Sales and Marketing Leadership; and~~
2.
These measures are used by our management for various purposes, including evaluating performance against incentive bonus achievement targets, comparing performance from period to period in presentations to our Board of Directors, and as a basis for strategic planning and forecasting.

Nine Months
Ended June 30,
2011
Net Earnings -
U.S. GAAP basis $ 20,121
European and Global Sales & Marketing Leadership Reorganization costs, inclusive of the income tax effect (1) 872

Adjusted earnings $ 20,993

Net Earnings per Basic Common Share -
U.S. GAAP basis $ 0.49
European and Global Sales & Marketing Leadership Reorganization costs, inclusive of the income tax effect (1) 0.02

Adjusted Basic EPS (2) $ 0.52

Net Earnings per Diluted Common Share -
U.S. GAAP basis $ 0.49
European and Global Sales & Marketing Leadership Reorganization costs, inclusive of the income tax effect (1) 0.02

Adjusted Diluted EPS $ 0.51

September 30,
     Three Months
Ended
December 31,
2011
Net Earnings -

U.S. GAAP basis
     $ 6,578
Facility consolidation costs (1)
     289


Adjusted earnings
     $ 6,867


Net Earnings per Basic Common Share -

U.S. GAAP basis
     $ 0.16
Facility consolidation costs (1)
     0.01


Adjusted Basic EPS
     $ 0.17


Net Earnings per Diluted Common Share -

U.S. GAAP basis
     $ 0.16
Facility consolidation costs (1)
     0.01


Adjusted Diluted EPS
     $ 0.17


(1)
The income tax effects of the ~~Leadership Reorganization~~facility consolidation costs totaled ~~$368~~$155 and were calculated using the effective tax rates of the jurisdictions in which the costs were incurred.
~~(2)~~ ~~Net Earnings per Basic Common Share for the nine months ended June 30, 2011 does not sum to the total due to rounding.~~
~~Page 14~~
Revenue Overview
Our Diagnostics operating segments provide the largest share of our consolidated revenues, 76% and ~~81%~~77% for the ~~third~~first quarters of fiscal 2012 and 2011, ~~and 2010, respectively, and 77% and 83% for the first nine months of fiscal 2011 and 2010,~~ respectively. The percentage declines in both the quarterly and fiscal year-to-date periods result primarily from the addition of the Bioline Group to our Life Science operating segment and, in the case of year-to-date comparisons, the impact of the novel A (H1N1) influenza outbreak in 2010. Sales from our ~~four~~ focus families (C. difficile, Foodborne andH. pylori) comprised 62% and ~~Upper Respiratory) comprised 71% and 69%~~56% of our Diagnostics operating segments’ revenues during the ~~third~~first quarters of fiscal 2012 and 2011, ~~and 2010, respectively, and 71% and 73% for the nine month periods ended June 30, 2011 and 2010,~~ respectively.
Overall revenue ~~change~~ for the fiscal ~~2011 third~~2012 first quarter for both of our Diagnostics operating segments combined ~~was an increase of 11%~~increased 7%, reflecting growth across all ~~four~~ of our focus product ~~families. The levels of~~families – 2% growth ~~in the focus products ranged from 7%~~ in ourH. pyloriproducts, ~~to 28%~~24% growth in our foodborne ~~products.~~products and 27% growth in ourC. difficile products, which have experienced steady quarter-over-quarter increases since declining 3% in the first quarter of 2011. Respiratory product sales, including influenza respiratory products, decreased 2%. On an organic basis, which excludes the effects of currency translation, sales for our European Diagnostics operating segment decreased by 6% during the ~~third~~first quarter, reflecting ~~the combined effects of~~ decreases in ourC. difficile,upper respiratory andH. pyloriproduct families, partially offset by growth in our foodborne product sales.
~~For~~ The overall decrease in the ~~first nine months~~sales of ~~fiscal 2011, revenue for both~~this operating segment reflects the general economic conditions in the European market, including the sovereign debt crisis, and the resulting reduction in medical-related funding in certain locations, compounded by the ongoing effects of ~~our Diagnostics operating segments combined increased 2% from~~significant competitive pressures in the ~~comparable fiscal 2010 period. This slight increase primarily results from sales growth in our~~C. difficile andH. pylori product families.
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C. difficile ~~H. pylori~~Products
Ourillumigene^® molecularC. difficile product has now been available in markets around the world for over 15 months. Sales of this product were approximately $4,500 and ~~foodborne product families being significantly offset by the effects on our respiratory product sales of a relatively mild worldwide flu season~~$775 in the first quarter of fiscal 2012 and 2011, compared to the fiscal 2010 first quarter, including the dramatic effects on the prior year of the world-wide outbreak of novel A (H1N1) influenza. Excluding the effects of currency translation, our European Diagnostics operating segment’s sales during the nine months ended June 30, 2011 decreased 2% relative to the comparable fiscal 2010 period, reflecting the combined effects of decreases in our~~C. difficile,upper respiratory and~~~~H. pylori~~~~product families, partially offset by growth in our foodborne product sales.~~
~~C. difficile Products~~
~~During the third quarter of fiscal 2010, we launched our~~~~illumi~~~~gene~~^{^®} ~~molecular~~~~C. difficile~~~~product in non-U.S. markets, with launch of the product into U.S. markets following in the fourth quarter of fiscal 2010, upon receiving FDA clearance. As a result, we~~respectively. We have nearly ~~500~~750 placements ofillumigene^{^®} units worldwide to date, with approximately ~~90%~~85% of these installed in the U.S. ~~Of the total units placed worldwide, we estimate that more than 450 will be used for reporting of clinical results, with the balance being used for evaluations and third party studies.~~ At the present time, it generally takes a customer 90 days ~~on average,~~ from purchase order placement to ~~begin routine test usage. We~~become revenue producing – a timeframe we are continually working to ~~reduce that time frame. We expect~~reduce. Ourillumigene^® molecularC. difficile product has restored theC. difficile product family to positive sales ~~of the product, which totaled approximately $2,800 and $5,600~~growth, 27% in the ~~three and nine months ended June 30, 2011, respectively, to continue to grow significantly throughout the balance~~first quarter of fiscal ~~2011~~2012, and ~~during fiscal 2012, although no assurances can be made~~has allowed us to begin to recover lost test volume from our Toxin products.
Our major competitors in this ~~regard.~~
~~As a result of competitive pressures in this disease~~product family ~~over the last several years from new competitive products, including molecular assays, in recent previous periods~~are Cepheid and Becton Dickinson. We believe that we have ~~experienced extremely slow growth in~~two principal advantages versus our competition. First, our instrumentation package has a smaller footprint and significantly lower cost than either Cepheid or Becton Dickinson. We believe that this advantage allows our product to fit into virtually any size hospital or reference laboratory. We believe that our second principal advantage is the ~~sales~~breadth of ourC. difficile~~products. However, due to the introduction of our~~~~illumi~~~~gene~~^{^®} ~~molecular~~~~C. difficile~~product ~~and its growing market acceptance, we have begun to see a marked improvement over the recent periods. Sales of our~~~~C. difficile~~~~product grew 13% for all of our Diagnostics operating segments during the third quarter of fiscal 2011 and 5% for the first nine months of fiscal 2011.~~
offerings. With the launch of our molecular product and ~~recent~~ FDA clearance ~~and submission activities related to~~of our common antigenC. difficileproducts —– PremierC. difficileGDH received FDA clearance in May 2011, and ~~Immuo~~ImmunoCard C. difficileGDH ~~was submitted to the~~received FDA clearance in ~~mid-July — we believe~~December 2011 – unlike our primary competitors, we are in a ~~unique~~ position to offer a full line of testing solutions to our clinical laboratory customers around the world to counter the competitive pressures surrounding this market. Additionally, we hold the only FDA-approved claim forC. difficiletesting in the pediatric population. During ~~July,~~December 2011, we ~~submitted to the~~received FDA clearance for our second molecular test for theillumigene^{^®} molecular platform,illumigene^{^®} Group BStreptococcus(GBS), and over the next 12 months, we expect ~~two~~the following additional tests for the platform ~~— tests for~~– Group AStreptococcus~~and~~,Mycoplasma pneumoniae— andBordetella pertussis/parapertussis– to clear formal clinical trials and be submitted to the FDA for marketing clearance.
~~Page 15~~
Foodborne Products
Increased demand for our foodborne illness testing products ~~throughout the first nine months of fiscal 2011~~has resulted in our U.S. Diagnostics operating segment experiencing sales increases for these products totaling ~~26% and 40%~~25% for the ~~three and nine month periods ended June 30, 2011, respectively.~~first quarter of fiscal 2012. During ~~these~~this same ~~periods,~~period, our European Diagnostics operating segment experienced a 9% increase in sales ~~increases~~ of ~~approximately 60% and 43%, respectively,~~these products on an organic ~~basis, reflecting the effects of the~~~~Enterohemorrhagic E. coli~~~~(EHEC) infection outbreak in Europe during the quarter.~~
basis.
H. pylori Products
During the ~~third~~first quarter of fiscal ~~2011,~~2012, sales of ourH. pyloriproducts grew 8%6% for our U.S. Diagnostics operating ~~segment; 14% during~~segment. We have seen healthy customer orders in January, confirming our growth in the ~~nine month fiscal year-to-date period. This~~first quarter was impacted by order patterns from one regional reference laboratory. The increase in our U.S. Diagnostics operating segment continues to reflect the benefits of our partnerships with managed care companies in promoting the health and economic benefits of a test and treat strategy, and the ongoing effects of such strategy moving physician behavior away from serology-based testing toward direct antigen testing. Due to significant competitive pressures related to these products on the international front, sales ofH. pyloriproducts for our European Diagnostics operating segment declined 7%6% on an organic basis for the fiscal ~~2011 third~~2012 first quarter, compared to the ~~third~~first quarter of fiscal ~~2010, and declined 2% during the year-over-year nine month periods ended June 30.~~
2011.
~~Upper~~ Respiratory Products
During the ~~three and nine month periods ended June 30, 2011, upper~~first quarter of fiscal 2012, respiratory product sales, including influenza related products, for our Diagnostics operating segments ~~increased 8%~~decreased 2%. This decline reflects a 1% decline domestically and ~~decreased 32%, respectively, relative to the comparable fiscal 2010 periods. The sales decrease in the comparable year-to-date periods is~~ a direct result of influenza test kit sales; in particular the abrupt halt, in December 2009, of the outbreak of the novel A (H1N1) influenza virus that began to spread across the northern hemisphere during the second half of fiscal 2009. The outbreak also created an increased interest in influenza testing in European markets where rapid testing has not been traditionally performed and resulted in significant sales activity for these products during the fiscal 2010 first quarter. However, similar to U.S. markets, these sales levels were not repeated in fiscal 2011, as evidenced by the approximate 13%12% decline in ~~this~~our European Diagnostic operating ~~segment’s upper respiratory product sales~~segment on an organic ~~basis (excluding effects of currency translation) compared to the first nine months of fiscal 2010.~~
basis.
Group Purchasing Organizations and Integrated Delivery Networks
In our U.S. Diagnostics operating segment, consolidation of the U.S. healthcare industry over the last several years has led to the creation of group purchasing organizations (GPOs) and integrated delivery networks (IDNs) that aggregate buying power for hospital groups and put pressure on our selling prices. We have multi-year supply agreements with several ~~GPOs. During the third quarter~~GPOs and ~~first nine months of fiscal 2011, we have experienced approximately $200 and $1,000, respectively,~~IDNs. These agreements, which resulted in an approximate $115 unfavorable price variance ~~as a result~~during the first quarter of ~~these agreements. However, these agreements~~fiscal 2012, help secure our products with these customers and ~~have led~~lead to new business. ~~While in the near term this has negatively impacted gross profit, further increases in volumes are expected from these contracts.~~
~~Foreign Currency~~
Sales for our European Diagnostics operating segment included the effect of more favorable currency rates, which led to currency translation gains in the amount of approximately $650 for the third quarter of fiscal 2011, compared to $350 of currency translation losses in the fiscal 2010 third quarter. During the first nine months of fiscal 2011, translation gains of approximately $165 were experienced, compared to $550 of currency translation gains during the comparable prior year period.
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Life Science Operating Segment
Sales for our Life Science operating segment increased ~~47%~~10% for the ~~third~~first quarter of fiscal ~~2011~~2012, reflecting increases in both our viral antigen and ~~50%~~molecular reagent businesses of 8% and 13%, respectively. The increase in the viral antigen business largely results from increased orders for Rubella and Hepatitis A proteins, while the ~~nine month fiscal year-to-date period, due primarily to the revenue contribution of the~~molecular reagent business, operated through our Bioline Group, ~~acquired in July 2010. Excluding~~has benefitted from its new product launches and advancements during recent months – most notably its new SensiFAST™ and MyTaq™ PCR components.
Foreign Currency
During the first quarter of fiscal 2012, currency exchange rates had an approximate $50 unfavorable impact ofon revenue; $35 within the ~~Bioline Group, sales for the~~European Diagnostic operating segment ~~declined 12%~~ and ~~10% during~~$15 in the three and nine month periods, respectively, as this business continues to experience both pricing pressure and reduced order volumes in several key product lines. For fiscal 2011, we expect revenues for our core Life Science ~~business~~operating segment. This compares to ~~decline 6%-8%, while~~currency exchange having an approximate $435 unfavorable impact on revenue in the ~~Bioline Group is expected to contribute approximately $15,000.~~
first quarter of fiscal 2011.
~~Page 16~~
Significant Customers
Two national distributors in our U.S. Diagnostics operating segment accounted for ~~47%~~50% and 52% of total sales for this operating segment for the ~~third~~first quarters of fiscal 2012 and 2011, ~~and 2010, respectively, and 50% and 58% during the nine months ended June 30, 2011 and 2010,~~ respectively. ~~The lower percentage of sales reflects the fact that the majority of our~~~~illumi~~~~gene~~^{^®} ~~product sales are direct, as well as the comparative decline in these distributors’ inventory stocking of influenza and other products.~~
~~Three~~
Two diagnostic manufacturing customers in our Life Science operating segment accounted for ~~17%~~27% and ~~29%~~16% of total sales for this operating segment for the ~~third~~first quarters of fiscal ~~2011~~2012 and ~~2010, respectively, and 18% and 33% during the nine months ended June 30,~~ 2011, ~~and 2010,~~ respectively. The ~~lower~~higher percentage of sales ~~during both periods~~ results primarily from the ~~addition~~buying pattern of one of the ~~Bioline Group.~~
customers.
Operating Segment Revenues
Our reportable operating segments are U.S. Diagnostics, European Diagnostics and Life Science. Initial segmentation between Diagnostics and Life Science has been determined based upon products and customers, with further segmentation of Diagnostics between U.S. and European being based upon geographic regions served and management responsibility. The U.S. Diagnostics operating segment consists of manufacturing operations in Cincinnati, Ohio, and the sale and distribution of diagnostic test kits in the U.S. and countries outside of Australia, Europe, Africa and the Middle East. The European Diagnostics operating segment consists of the sale and distribution of diagnostic test kits in Australia, Europe, Africa and the Middle East. The Life Science operating segment consists of manufacturing operations in Memphis, Tennessee; Saco, Maine; Boca Raton, Florida; London, England; Luckenwalde, Germany; and Sydney, Australia, and the sale and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells and bioresearch reagents domestically and abroad. During the fourth quarter of fiscal 2011, plans were announced to consolidate the Saco, Maine operations into the Memphis, Tennessee facility, with such consolidation commencing early in the fiscal 2012 first quarter and expected to be completed in the third quarter of fiscal 2012. The Life Science operating segment also includes the contract development and manufacture of cGMP clinical grade proteins and other biologicals for use by biopharmaceutical and biotechnology companies engaged in research for new drugs and vaccines.
Revenues for the Diagnostics operating segments, in the normal course of business, may be affected from quarter to quarter by buying patterns of major distributors, seasonality and strength of certain diseases, and foreign currency exchange rates. Revenues for the Life Science operating segment, in the normal course of business, may be affected from quarter to quarter by the timing and nature of arrangements for contract services work, which may have longer production cycles than bioresearch reagents and bulk antigens and antibodies, as well as buying patterns of major ~~customers.~~customers, and foreign currency exchange rates. We believe that the overall breadth of our product lines serves to reduce the variability in consolidated revenues.
The Company has experienced no material adverse impact on revenue as a result of the disaster in Japan earlier this year, nor is any material adverse impact anticipated at this time, although no assurances can be given with regard to material adverse impacts that may arise in the future despite being unanticipated as of the date of this report. In addition, the Company’s supply of product and product components has not been and is not expected to be adversely impacted by the disaster.
13
Revenues for each of our operating segments are shown below.

Three Months Ended June 30, Nine Months Ended June 30,
2011 2010 Inc (Dec) 2011 2010 Inc (Dec)
U.S. Diagnostics $ 23,829 $ 21,121 13 % $ 72,007 $ 70,018 3 %
European Diagnostics 6,612 6,218 6 % 18,926 19,103 (1 )%
Life Science 9,611 6,518 47 % 27,441 18,340 50 %

Consolidated $ 40,052 $ 33,857 18 % $ 118,374 $ 107,461 10 %

International -
U.S. Diagnostics $ 1,845 $ 1,401 32 % $ 5,058 $ 4,378 16 %
European Diagnostics 6,612 6,218 6 % 18,926 19,103 (1 )%
Life Science 5,365 3,085 74 % 15,238 8,337 83 %

Total $ 13,822 $ 10,704 29 % $ 39,222 $ 31,818 23 %

% of total sales 35 % 32 % 33 % 30 %

September 30, September 30, September 30,
     Three Months Ended December 31,
     2011 2010 Inc (Dec)
U.S. Diagnostics
     $ 25,200 $ 22,650 11 %
European Diagnostics
     5,505 5,929 (7 )%
Life Science
     9,561 8,684 10 %


Consolidated
     $ 40,266 $ 37,263 8 %


International -

U.S. Diagnostics
     $ 1,485 $ 1,596 (7 )%
European Diagnostics
     5,505 5,929 (7 )%
Life Science
     5,720 4,589 25 %


Total
     $ 12,710 $ 12,114 5 %


% of total sales
     32 % 33 %


~~Page 17~~
Gross Profit

Three Months Ended June 30, Nine Months Ended June 30,
2011 2010 Change 2011 2010 Change
Gross Profit $ 25,426 $ 21,736 17 % $ 75,328 $ 67,388 12 %

Gross Profit Margin 63 % 64 % -1 point 64 % 63 % +1 point

~~Gross~~
September 30, September 30, September 30,
     Three Months Ended December 31,
     2011 2010 Change
Gross Profit
     $ 24,733 $ 23,502 5 %
Gross Profit Margin
     61 % 63 % -2 points


The overall gross profit margin ~~improvement~~decline for the first ~~nine~~three months of fiscal ~~2011~~2012 results primarily from the combined effects of 1) the ~~margin contribution~~mix of ~~Bioline Group~~ products ~~in fiscal 2011; 2) continued operating efficiencies in our Cincinnati, Ohio diagnostic test manufacturing facility; and 3)~~sold, as well as the ~~year-over-year decline in upper respiratory product sales. Our upper respiratory product family generally has a lower gross profit margin than our other focus product families (~~~~C. difficile~~,~~H. pylori~~~~and foodborne). Sales~~mix of ~~upper respiratory products during the first nine months of fiscal 2011 were approximately 11% of our consolidated~~ sales ~~compared to 18% of consolidated sales for the comparable fiscal 2010 period. Specifically, sales of~~from the Company’s ~~influenza products represented approximately 2% of consolidated sales during the nine months ended June 30, 2011, compared to approximately 8% in the first nine months of fiscal 2010.~~
operating segments.
Our overall operations consist of the sale of diagnostic test kits for various disease states and in alternative test formats, as well as bioresearch reagents, bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells, proficiency panels, contract research and development, and contract manufacturing services. Product sales mix shifts, in the normal course of business, can cause the consolidated gross profit margin to fluctuate by several points.

Operating Expenses

Three Months Ended June 30, 2011
Research & Selling & General & Total Operating
Development Marketing Administrative Other (1) Expenses
2010 Expenses
$ 2,128 $ 4,287 $ 4,872 $ 673 $ 11,960

% of Sales 6 % 13 % 14 % 2 % 35 %

Fiscal 2011 Increases (Decreases):
U.S. Diagnostics 521 754 (15 ) — 1,260
European Diagnostics — 87 (27 ) — 60
Life Science
- Bioline Group 173 1,037 1,817 — 3,027
- Core (112 ) (22 ) (205 ) — (339 )
- Transaction Costs — — — (673 ) (673 )

2011 Expenses
$ 2,710 $ 6,143 $ 6,442 $ — $ 15,295

% of Sales 7 % 15 % 16 % — % 38 %
% Increase (Decrease) 27 % 43 % 32 % (100 )% 28 %

September 30, September 30, September 30, September 30, September 30,
     Research &
Development Selling &
Marketing General &
Administrative Plant
Consolidation Total Operating
Expenses
Q1 2011 Expenses
     $ 2,309 $ 5,475 $ 6,628 $ —      $ 14,412


% of Sales
     6 % 15 % 18 % —   % 39 %
Fiscal 2012 Increases (Decreases):

U.S. Diagnostics
     109 (144 ) 119 —      84
European Diagnostics
     —      (31 ) 204 —      173
Life Science
     (145 ) 268 (308 ) 444 259


Q1 2012 Expenses
     $ 2,273 $ 5,568 $ 6,643 $ 444 $ 14,928


% of Sales
     6 % 14 % 16 % 1 % 37 %
% Increase (Decrease)
     (2 )% 2 % —   % NMF    4 %

~~Page 18~~
14
~~Operating Expenses~~

Nine Months Ended June 30, 2011
Research & Selling & General & Total Operating
Development Marketing Administrative Other (1) Expenses
2010 Expenses
$ 6,521 $ 13,495 $ 14,042 $ 673 $ 34,731

% of Sales 6 % 13 % 13 % 1 % 32 %

Fiscal 2011 Increases (Decreases):
U.S. Diagnostics 343 1,612 326 365 2,646
European Diagnostics — 20 (115 ) 875 780
Life Science
- Bioline Group 527 2,772 4,484 — 7,783
- Core (8 ) (52 ) (62 ) — (122 )
- Transaction Costs — — — (673 ) (673 )

2011 Expenses
$ 7,383 $ 17,847 $ 18,675 $ 1,240 $ 45,145

% of Sales 6 % 15 % 16 % 1 % 38 %
% Increase 13 % 32 % 33 % 84 % 30 %

~~(1)~~ ~~Comprised of transaction costs for our acquisition of the Bioline Group (2010) and costs related to reorganizing our European and Global Sales & Marketing Leadership (2011).~~
~~We continue to closely control spending for each of our operating segments.~~
~~The quarterly and year-to-date increases~~Overall, the relatively modest increase in ~~all three ongoing~~total operating expense ~~categories (i.e., Research & Development, Selling & Marketing, and General & Administrative)~~during the first quarter of ~~approximately $4,000 and $9,800, respectively, result~~fiscal 2012 results in large part from the ~~addition of the Bioline Group’s operating expenses. Additionally, operating expenses for the U.S. Diagnostics operating segment reflect the~~combined effects of our (i) ongoing efforts to control spending in each of our operating segments while investing the ~~following:~~
~~Research & Development~~
Increased personnel-related costs of approximately $200 and $300 for the quarterly and nine month year-to-date periods, respectively, in line with the overall increase in spending on new product development.
~~Selling & Marketing~~
1)
~~Increased sales bonus and commissions expense of approximately $300 and $600 for the quarterly and nine month year-to-date periods, respectively, due to the~~~~illumi~~~~gene~~^{^®} ~~launch and sales growth;~~
2) ~~Increased samples and promotional expense of approximately $300 for the nine month year-to-date period, resulting in large part~~necessary resources in our strategic areas of growth; (ii) beginning to realize cost savings from ~~efforts during the second quarter to move flu inventory manufactured by third parties prior to its expiration; and~~
3)
~~Increased travel and trade show expenses during the quarterly and nine month year-to-date periods of approximately $345 and $640, respectively, due in large part to the~~~~illumi~~~~gene~~^{^®} ~~launch costs.~~
~~General & Administrative~~
The positive effects of overall cost containment and reduction efforts being dramatically impacted by approximately $850 of stock-based compensation expense during the nine month year-to-date period — approximately $400 of which related to restricted stock grants during the fiscal 2011 first quarter, and an approximate $450 impact on the fiscal 2011 third quarter related to retirement eligible employees.
~~Page 19~~
~~During~~ the ~~second quarter~~consolidation of ~~fiscal 2011, the Company incurred~~our Core Life Science operations into one facility; and (iii) incurring approximately ~~$1,240~~$444 of costs in connection with the ~~reorganization~~consolidation of our ~~European and Global Sales and Marketing Leadership. Approximately 75% of these~~Saco, Maine operations into our Memphis, Tennessee location. The facility consolidation costs ~~related~~incurred during the quarter relate primarily to ~~severance benefits~~retention bonus costs for ~~the former President and Managing Director of our European diagnostics business, with no further such costs anticipated~~personnel scheduled to terminate at ~~this time.~~
varying times during fiscal 2012.
Operating Income
Operating income increased 4%8% to ~~$10,131~~$9,805 for the ~~third~~first quarter of fiscal ~~2011, and decreased 8% to $30,183 for the first nine months of fiscal 2011,~~2012, as a result of the factors discussed above.
Other Income and Expense
The increase in other income, net, during the ~~nine month year-to-date period~~first three months of fiscal 2012 can primarily be attributed to the ~~addition~~net effects of ~~the Bioline Group, as it contributed to~~ an improvement in net currency exchange gains/losses of approximately ~~$100~~$250 and a decrease in grant income from a foreign governmental agency of approximately ~~$200.~~
$80.
Income Taxes
The effective rate for income taxes was ~~33% for the third quarter and 34%~~35% for the first ~~nine months~~quarters of both fiscal 2011, each of which is one percentage point lower than the corresponding periods of fiscal 2010. This decrease in rates primarily results from the fiscal 2011 third quarter release of reserves for certain uncertain tax positions due to the passage of the relevant statute of limitations.2012 and 2011. For the fiscal year ending September 30, ~~2011,~~2012, we expect the effective tax rate to also approximate 35%.
Liquidity and Capital Resources
Comparative Cash Flow Analysis
Our cash flow and financing requirements are determined by analyses of operating and capital spending budgets, consideration of acquisition plans, and consideration of common share dividends. We have historically maintained a credit facility to augment working capital requirements and to respond quickly to acquisition opportunities. Our investment portfolio presently contains overnight repurchase agreements. ~~We used $23,849 from our investment portfolio to complete the acquisition of the Bioline Group during July 2010.~~
We have an investment policy that guides the holdings of our investment portfolio. Our objectives in managing the investment portfolio are to (i) preserve capital; (ii) provide sufficient liquidity to meet working capital requirements and fund strategic objectives such as acquisitions; and (iii) capture a market rate of return commensurate with market conditions and our policy’s investment eligibility criteria. As we look forward, we will continue to manage the holdings of our investment portfolio with preservation of capital being the primary objective.
~~Except as otherwise described herein,~~
At the present time, we do not expect current conditions in the financial markets, or overall economic conditions to have a significant impact on our liquidity needs, financial condition, or results of ~~operations.~~operations, although no assurances can be made in this regard. We intend to continue to fund our working capital requirements and dividends from current cash flows from operating activities and cash on hand. We also have an additional source of liquidity through our $30,000 bank credit facility, if needed.
To date, except for the Italian matter discussed below, we have not experienced any significant deterioration in the aging of our customer accounts receivable nor in our vendors’ ability to supply raw materials and services and extend normal credit terms. Approximately $4,900 of our accounts receivable at December 31, 2011 is due from Italian hospital customers whose funding ultimately comes from the Italian government. The magnitude of the sovereign debt crisis in Europe, and Italy in particular, is significant. We have experienced a deterioration in the aging of our Italian accounts receivable and continue to monitor the situation closely. Our liquidity needs may change if overall economic conditions worsen and/or liquidity and credit within the financial markets remains tight for an extended period of time, and such conditions impact the collectibility of our customer accounts receivable or credit terms with our vendors, or disrupt the supply of raw materials and services.
Net cash provided by operating activities decreased ~~30%~~8% for the first ~~nine months~~quarter of fiscal ~~2011~~2012 to ~~$16,618,~~$12,497, reflecting the ~~6% decrease~~9% increase in net earnings and the effects of net working capital changes related to our investments inillumigene^{^®} inventory ~~including readers, fluctuations in sales levels,~~ and the timing of payments with suppliers. Net cash flows from operating activities and cash on hand are anticipated to be adequate to fund working capital requirements and dividends during the next 12 months. During the last ~~six~~eight fiscal quarters, the per share amount of our cash dividend has exceeded the per share amount of our diluted earnings. ~~As we enter~~During the second half of fiscal 2012, management expects that this relationship will change; ~~meaning~~
15
we believe that the per share amount of our diluted earnings will exceed the per share amount of our current cash dividend, although no assurances can be made in this regard.
During the first quarter of fiscal 2012, cash generated from the Company’s operating activities exceeded the quarterly dividend.
~~Page 20~~
Capital Resources
We have a $30,000 credit facility with a commercial bank which expires on September 15, 2012. As of ~~July~~January 31, ~~2011,~~2012, there were no borrowings outstanding on this facility and we had 100% borrowing capacity available to us. We have had no borrowings outstanding under this facility during the first ~~nine~~three months of fiscal ~~2011,~~2012, or during the full year of fiscal ~~2010.~~
2011.
Our capital expenditures ~~for the balance of fiscal 2011~~ are estimated to berange between approximately ~~$1,700.~~$3,000 to $5,000 for fiscal 2012, with the actual amount depending upon actual operating results and the phasing of certain projects. Such expenditures may be funded with cash and ~~cash~~ equivalents on hand, operating cash flows, and/or availability under the $30,000 credit facility discussed above. Capital expenditures relate to manufacturing and other equipment of a normal and recurring nature, as well as costs associated with production line automation in Cincinnati, facilities expansions in Cincinnati and Memphis, and computer system and software purchases for the Bioline Group. We also expect to have approximately $1,700 in expenditures for readers to support the ongoing~~illumi~~~~gene~~^{^®} ~~product launch.~~
We do not utilize any special-purpose financing vehicles or have any undisclosed off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company’s exposure to market risk since September 30, ~~2010.~~
2011.
ITEM 4. CONTROLS AND PROCEDURES
As of ~~June 30,~~December 31, 2011, an evaluation was completed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) promulgated under the Securities Exchange Act of 1934, as amended. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of ~~June 30,~~December 31, 2011. There have been no changes in our internal control over financial reporting identified in connection with the evaluation of internal control that occurred during the ~~third~~first fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, or in other factors that could materially affect internal control subsequent to ~~June 30,~~December 31, 2011.

~~Page 21~~
16
PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
There have been no material changes from risk factors as previously disclosed in the Registrant’s Form 10-K in response to Item 1A to Part I of Form 10-K.
ITEM 6. EXHIBITS
The following exhibits are being filed or furnished as a part of this Quarterly Report on Form 10-Q.
10.6*    2004 Equity Compensation Plan, Amended and Restated through January 25, 2012
10.4*10.16*    ~~Salary Continuation Agreement between Meridian Bioscience, Inc. and John A. Kraeutler, as amended April 24, 2001, December 29, 2008 and August 3, 2011 (Filed herewith)~~2012 Stock Incentive Plan
31.1    Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) ~~(Filed herewith)~~
31.2    Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) ~~(Filed herewith)~~
32    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(Filed herewith)~~
*101    The following financial information from Meridian Bioscience, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2011 filed with the SEC on February 9, 2012, formatted in XBRL includes: (i) Condensed Consolidated Statements of Operations for the three months ended December 31, 2011 and 2010, (ii) Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2011 and 2010, (iii) Condensed Consolidated Balance Sheets as of December 31, 2011 and September 30, 2011, (iv) Condensed Consolidated Statement of Changes in Shareholders’ Equity for the three months ended December 31, 2011, and (v) the Notes to Condensed Consolidated Financial Statements
*
Management Compensatory Arrangement

~~Page 22~~
17
SIGNATURE
~~SIGNATURE~~
Pursuant to the requirements 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 BIOSCIENCE, INC.
Date:February 9, 2012

~~Date: August 9, 2011~~ /s/ Melissa A. Lueke

Melissa A. Lueke
Executive Vice President and
Chief Financial Officer

~~Page 23~~18


	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
NET SALES	$	40,052	$	33,857		$	118,374	$	107,461

COST OF SALES		14,626		12,121			43,046		40,073


GROSS PROFIT		25,426		21,736			75,328		67,388


OPERATING EXPENSES
Research and development		2,710		2,128			7,383		6,521
Selling and marketing		6,143		4,287			17,847		13,495
General and administrative		6,442		4,872			18,675		14,042
European and global sales & marketing leadership reorganization		—		—			1,240		—
Bioline Group transaction costs		—		673			—		673

Total operating expenses		15,295		11,960			45,145		34,731


OPERATING INCOME		10,131		9,776			30,183		32,657

OTHER INCOME (EXPENSE)
Interest income		26		29			70		90
Other, net		36		(9	)		357		(17	)

Total other income (expense)		62		20			427		73


EARNINGS BEFORE INCOME TAXES		10,193		9,796			30,610		32,730

INCOME TAX PROVISION		3,357		3,372			10,489		11,405


NET EARNINGS	$	6,836	$	6,424		$	20,121	$	21,325


BASIC EARNINGS PER COMMON SHARE	$	0.17	$	0.16		$	0.49	$	0.53

DILUTED EARNINGS PER COMMON SHARE	$	0.17	$	0.16		$	0.49	$	0.52

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC		40,737		40,535			40,680		40,510

EFFECT OF DILUTIVE STOCK OPTIONS		657		616			673		656

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED		41,394		41,151			41,353		41,166


ANTI-DILUTIVE SECURITIES:
Common share options		160		234			177		207


DIVIDENDS DECLARED PER COMMON SHARE	$	0.19	$	0.19		$	0.57	$	0.55

		September 30,		September 30,
Three Months Ended December 31,	2011		2010
NET SALES	$	40,266	$	37,263

COST OF SALES		15,533		13,761


GROSS PROFIT		24,733		23,502


OPERATING EXPENSES
Research and development		2,273		2,309
Selling and marketing		5,568		5,475
General and administrative		6,643		6,628
Plant consolidation costs		444		—

Total operating expenses		14,928		14,412


OPERATING INCOME		9,805		9,090

OTHER INCOME
Interest income		5		17
Other, net		316		203

Total other income		321		220


EARNINGS BEFORE INCOME TAXES		10,126		9,310

INCOME TAX PROVISION		3,548		3,285


NET EARNINGS	$	6,578	$	6,025


BASIC EARNINGS PER COMMON SHARE	$	0.16	$	0.15

DILUTED EARNINGS PER COMMON SHARE	$	0.16	$	0.15

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		41,067		40,615

EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARES AND UNITS		420		679

AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		41,487		41,294


ANTI-DILUTIVE SECURITIES:
Common share options and restricted shares and units		343		160


DIVIDENDS DECLARED PER COMMON SHARE	$	0.19	$	0.19


Nine Months Ended June 30,	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	20,121		$	21,325
Non-cash items:
Depreciation of property, plant and equipment		2,525			2,307
Amortization of intangible assets		1,796			1,079
Amortization of deferred illumigene contract costs		81			—
Stock-based compensation		1,981			1,255
Deferred income taxes		(1,622	)		(108	)
Loss on disposition of fixed assets		7			15
Unrealized loss on auction-rate securities and rights, net		—			10
Change in current assets		(10,176	)		2,151
Change in current liabilities		2,451			(4,327	)
Other, net		(546	)		(6	)

Net cash provided by operating activities		16,618			23,701


CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(7,666	)		(3,681	)
Purchases of intangibles and other assets		(12	)		—
Purchases of short-term investments		—			(1,000	)
Proceeds from sales and calls of short-term investments		—			8,275

Net cash (used for) provided by investing activities		(7,678	)		3,594


CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid		(23,192	)		(22,282	)
Proceeds and tax benefits from exercises of stock options		1,481			559

Net cash used for financing activities		(21,711	)		(21,723	)


Effect of Exchange Rate Changes on Cash and Equivalents		455			(1,383	)


Net (Decrease) Increase in Cash and Equivalents		(12,316	)		4,189

Cash and Equivalents at Beginning of Period		37,879			54,030


Cash and Equivalents at End of Period	$	25,563		$	58,219

		September 30,		September 30,
	December 31, 2011 (Unaudited)		September 30, 2011
CURRENT ASSETS

Cash and equivalents	$	26,205	$	23,626
Accounts receivable, less allowances of $453 and $310		24,023		24,844
Inventories		33,656		32,689
Prepaid expenses and other current assets		2,424		6,343
Deferred income taxes		3,098		2,852


Total current assets		89,406		90,354


PROPERTY, PLANT AND EQUIPMENT, at Cost
Land		1,176		1,184
Buildings and improvements		26,188		23,033
Machinery, equipment and furniture		34,121		32,408
Construction in progress		784		3,887

Subtotal		62,269		60,512
Less: accumulated depreciation and amortization		35,641		33,973


Net property, plant and equipment		26,628		26,539


OTHER ASSETS
Goodwill		22,699		23,124
Other intangible assets, net		11,648		10,947
Restricted cash		1,000		1,000
Deferred illumigene contract costs, net		3,577		3,304
Other assets		237		225


Total other assets		39,161		38,600


TOTAL ASSETS	$	155,195	$	155,493


								Accumulated
	Common		Additional					Other						Total
	Shares		Paid-In		Retained			Comprehensive			Comprehensive			Shareholders’
	Issued		Capital		Earnings			Income (Loss)			Income (Loss)			Equity

Balance at September 30, 2010		40,654	$	94,529	$	42,177		$	655			—		$	137,361
Cash dividends paid		—		—		(23,192	)		—						(23,192	)
Exercise of stock options		212		1,067		—			—						1,067
Issuance of restricted shares		182		—		—			—						—
Stock compensation expense		—		1,981		—			—						1,981
Comprehensive income:
Net earnings		—		—		20,121			—		$	20,121			20,121
Foreign currency translation adjustment		—		—		—			1,203			1,203			1,203
Other comprehensive income taxes		—		—		—			(421	)		(421	)		(421	)

Comprehensive income											$	20,903

Balance at June 30, 2011		41,048	$	97,577	$	39,106		$	1,437					$	138,120

		00000000			00000000		00000000			00000000			00000000			00000000
	Common Shares Issued			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)			Total Shareholders’ Equity

Balance at September 30, 2011		41,237		$	100,010	$	38,065		$	449					$	138,524
Cash dividends paid		—			—		(7,803	)		—						(7,803	)
Exercise of stock options		10			106		—			—						106
Issuance of restricted shares, net of forfeitures		(1	)		—		—			—						—
Conversion of restricted stock units		1			—		—			—						—
Stock compensation expense		—			979		—			—						979
Comprehensive income:
Net earnings		—			—		6,578			—		$	6,578			6,578
Other comprehensive income taxes		—			—		—			363			363			363
Foreign currency translation adjustment		—			—		—			(1,044	)		(1,044	)		(1,044	)

Comprehensive income												$	5,897


Balance at December 31, 2011		41,247		$	101,095	$	36,840		$	(232	)				$	137,703


	Three Months						Nine Months
	Ended June 30,						Ended June 30,
	2011			2010			2011			2010

Net earnings	$	6,836		$	6,424		$	20,121		$	21,325
Foreign currency translation adjustment		335			(1,287	)		1,203			(2,429	)
Income taxes		(117	)		451			(421	)		850

Comprehensive income	$	7,054		$	5,588		$	20,903		$	19,746


	June 30, 2011				September 30, 2010
	Cash and				Cash and
	Equivalents		Other		Equivalents		Other
Taxable investments -
Overnight repurchase agreements	$	11,332	$	—	$	14,862	$	—
Money market funds		—		—		10,249		—
Cash on hand -
Restricted		—		1,000		—		1,000
Unrestricted		14,231		—		12,768		—

Total	$	25,563	$	1,000	$	37,879	$	1,000


	Three			Nine
	Months			Months
	Ended			Ended
	June 30, 2011			June 30, 2011
Net Sales	$	3,905		$	10,966
Operating Income (Loss)	$	83		$	(91	)
Net (Loss) Earnings	$	(31	)	$	28


	July 20,
	2010		Measurement			July 20,
	(as initially		Period			2010
	reported)		Adjustments			(as adjusted)
Fair value of assets acquired -
Cash and equivalents	$	3,445				$	3,445
Accounts receivable		1,897					1,897
Inventories		2,807					2,807
Other current assets		371	$	(21	)		350
Property, plant and equipment, net		816					816
Goodwill		13,166		(174	)		12,992
Other intangible assets (estimated useful life):
Customer relationships (10 years)		3,898					3,898
Manufacturing processes (6 years)		1,467					1,467
License agreements (approx. 8 year wtd. avg.)		718					718
Non-compete agreements (1 year)		122					122
Trade names (10 years)		995					995

		29,702		(195	)		29,507
Fair value of liabilities assumed -
Accounts payable and accrued expenses		2,817		364			3,181
Deferred income tax liabilities		3,036		(559	)		2,477

Total consideration paid	$	23,849	$	—		$	23,849

		September 30,		September 30,
	December 31, 2011		September 30, 2011
Raw materials	$	7,940	$	7,272
Work-in-process		7,593		7,016
Finished goods - illumigene instruments		3,599		4,179
Finished goods - kits and other		14,524		14,222

Total	$	33,656	$	32,689


	U.S.		European		Life
	Diagnostics		Diagnostics		Science		Eliminations(1)			Total
Three Months Ended June 30, 2011
Net sales -
Third-party	$	23,829	$	6,612	$	9,611	$	—		$	40,052
Inter-segment		2,875		9		141		(3,025	)		—
Operating income		8,399		978		797		(43	)		10,131
Goodwill (June 30, 2011)		1,381		—		22,062		—			23,443
Other intangible assets, net (June 30, 2011)		1,741		—		9,891		—			11,632
Total assets (June 30, 2011)		71,831		20,680		94,164		(28,724	)		157,951


Three Months Ended June 30, 2010
Net sales -
Third-party	$	21,121	$	6,218	$	6,518	$	—		$	33,857
Inter-segment		2,723		8		177		(2,908	)		—
Operating income		8,104		726		752		194			9,776
Goodwill (September 30, 2010)		1,381		—		21,921		—			23,302
Other intangible assets, net (September 30, 2010)		2,283		9		11,035		—			13,327
Total assets (September 30, 2010)		72,030		18,044		90,388		(25,821	)		154,641


Nine Months Ended June 30, 2011
Net sales -
Third-party	$	72,007	$	18,926	$	27,441	$	—		$	118,374
Inter-segment		7,938		16		459		(8,413	)		—
Operating income		26,780		1,781		1,499		123			30,183


Nine Months Ended June 30, 2010
Net sales -
Third-party	$	70,018	$	19,103	$	18,340	$	—		$	107,461
Inter-segment		8,200		12		438		(8,650	)		—
Operating income		26,805		2,789		2,976		87			32,657


	June 30, 2011				September 30, 2010
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Value		Amortization		Value		Amortization

Manufacturing technologies, core products and cell lines	$	11,664	$	8,360	$	11,644	$	7,693
Trademarks, licenses and patents		3,654		1,329		3,547		997
Customer lists and supply agreements		12,322		6,330		12,537		5,816
Non-compete agreements		128		117		126		21

	$	27,768	$	16,136	$	27,854	$	14,527

	1.		These measures help to appropriately evaluate and compare the results of operations from period to period by removing the impact of non-routine costs related to ~~reorganizing our European~~consolidating the Maine operations; and ~~Global Sales and Marketing Leadership; and~~

		September 30,
	Three Months Ended December 31, 2011
Net Earnings -
U.S. GAAP basis	$	6,578
Facility consolidation costs (1)		289

Adjusted earnings	$	6,867


Net Earnings per Basic Common Share -
U.S. GAAP basis	$	0.16
Facility consolidation costs (1)		0.01

Adjusted Basic EPS	$	0.17


Net Earnings per Diluted Common Share -
U.S. GAAP basis	$	0.16
Facility consolidation costs (1)		0.01

Adjusted Diluted EPS	$	0.17


(1)		The income tax effects of the ~~Leadership Reorganization~~facility consolidation costs totaled ~~$368~~$155 and were calculated using the effective tax rates of the jurisdictions in which the costs were incurred.

~~(2)~~		~~Net Earnings per Basic Common Share for the nine months ended June 30, 2011 does not sum to the total due to rounding.~~


	Three Months Ended June 30,									Nine Months Ended June 30,
	2011			2010			Inc (Dec)			2011			2010			Inc (Dec)
U.S. Diagnostics	$	23,829		$	21,121			13	%	$	72,007		$	70,018			3	%
European Diagnostics		6,612			6,218			6	%		18,926			19,103			(1	)%
Life Science		9,611			6,518			47	%		27,441			18,340			50	%

Consolidated	$	40,052		$	33,857			18	%	$	118,374		$	107,461			10	%


International -
U.S. Diagnostics	$	1,845		$	1,401			32	%	$	5,058		$	4,378			16	%
European Diagnostics		6,612			6,218			6	%		18,926			19,103			(1	)%
Life Science		5,365			3,085			74	%		15,238			8,337			83	%

Total	$	13,822		$	10,704			29	%	$	39,222		$	31,818			23	%

% of total sales		35	%		32	%					33	%		30	%


	Three Months Ended June 30, 2011
	Research &			Selling &			General &						Total Operating
	Development			Marketing			Administrative			Other (1)			Expenses
2010 Expenses	$	2,128		$	4,287		$	4,872		$	673		$	11,960

% of Sales		6	%		13	%		14	%		2	%		35	%

Fiscal 2011 Increases (Decreases):
U.S. Diagnostics		521			754			(15	)		—			1,260
European Diagnostics		—			87			(27	)		—			60
Life Science
- Bioline Group		173			1,037			1,817			—			3,027
- Core		(112	)		(22	)		(205	)		—			(339	)
- Transaction Costs		—			—			—			(673	)		(673	)


2011 Expenses	$	2,710		$	6,143		$	6,442		$	—		$	15,295

% of Sales		7	%		15	%		16	%		—	%		38	%
% Increase (Decrease)		27	%		43	%		32	%		(100	)%		28	%


	Nine Months Ended June 30, 2011
	Research &			Selling &			General &						Total Operating
	Development			Marketing			Administrative			Other (1)			Expenses
2010 Expenses	$	6,521		$	13,495		$	14,042		$	673		$	34,731

% of Sales		6	%		13	%		13	%		1	%		32	%

Fiscal 2011 Increases (Decreases):
U.S. Diagnostics		343			1,612			326			365			2,646
European Diagnostics		—			20			(115	)		875			780
Life Science
- Bioline Group		527			2,772			4,484			—			7,783
- Core		(8	)		(52	)		(62	)		—			(122	)
- Transaction Costs		—			—			—			(673	)		(673	)


2011 Expenses	$	7,383		$	17,847		$	18,675		$	1,240		$	45,145

% of Sales		6	%		15	%		16	%		1	%		38	%
% Increase		13	%		32	%		33	%		84	%		30	%


~~(1)~~		~~Comprised of transaction costs for our acquisition of the Bioline Group (2010) and costs related to reorganizing our European and Global Sales & Marketing Leadership (2011).~~

			~~Research & Development~~

			Increased personnel-related costs of approximately $200 and $300 for the quarterly and nine month year-to-date periods, respectively, in line with the overall increase in spending on new product development.

			~~Selling & Marketing~~

	1)		~~Increased sales bonus and commissions expense of approximately $300 and $600 for the quarterly and nine month year-to-date periods, respectively, due to the~~*~~illumi~~*~~gene~~^{^®} ~~launch and sales growth;~~

	2)		~~Increased samples and promotional expense of approximately $300 for the nine month year-to-date period, resulting in large part~~necessary resources in our strategic areas of growth; (ii) beginning to realize cost savings from ~~efforts during the second quarter to move flu inventory manufactured by third parties prior to its expiration; and~~

	3)		~~Increased travel and trade show expenses during the quarterly and nine month year-to-date periods of approximately $345 and $640, respectively, due in large part to the~~*~~illumi~~*~~gene~~^{^®} ~~launch costs.~~

			~~General & Administrative~~

			The positive effects of overall cost containment and reduction efforts being dramatically impacted by approximately $850 of stock-based compensation expense during the nine month year-to-date period — approximately $400 of which related to restricted stock grants during the fiscal 2011 first quarter, and an approximate $450 impact on the fiscal 2011 third quarter related to retirement eligible employees.



10.6*		2004 Equity Compensation Plan, Amended and Restated through January 25, 2012

10.410.16		~~Salary Continuation Agreement between Meridian Bioscience, Inc. and John A. Kraeutler, as amended April 24, 2001, December 29, 2008 and August 3, 2011 (Filed herewith)~~2012 Stock Incentive Plan

31.1		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) ~~(Filed herewith)~~

31.2		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) ~~(Filed herewith)~~

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(Filed herewith)~~


*101		The following financial information from Meridian Bioscience, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2011 filed with the SEC on February 9, 2012, formatted in XBRL includes: (i) Condensed Consolidated Statements of Operations for the three months ended December 31, 2011 and 2010, (ii) Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2011 and 2010, (iii) Condensed Consolidated Balance Sheets as of December 31, 2011 and September 30, 2011, (iv) Condensed Consolidated Statement of Changes in Shareholders’ Equity for the three months ended December 31, 2011, and (v) the Notes to Condensed Consolidated Financial Statements



	MERIDIAN BIOSCIENCE, INC.
Date:February 9, 2012
~~Date: August 9, 2011~~		/s/ Melissa A. Lueke

		Melissa A. Lueke
	Executive Vice President and Chief Financial Officer

Large accelerated filer

Accelerated filer

~~Large accelerated~~
Non-accelerated filerþ

~~Accelerated filer~~o
¨

~~Non-accelerated filer~~o
Smaller reporting company

~~Smaller reporting company~~o
¨