SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 OR ( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-14902 ------- MERIDIAN BIOSCIENCE, INC. - -------------------------------------------------------------------------------- Incorporated under the laws of Ohio 31-0888197 - -------------------------------------------------------------------------------- (I.R.S. Employer Identification No.) 3471 River Hills Drive Cincinnati, Ohio 45244 (513) 271-3700 Indicate by check whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No --- --- Indicate by check whether the Registrant is an accelerated filer (as defined in Rule 12-b2 of the Exchange Act). Yes |X| No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding July 31, 2003 - ---------------------------------- ------------------------------------------- Common Stock, no par value 14,708,928 ------------------------------------------- Page 1 of 30 MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q PAGE(S) ------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statements of Operations Three Months Ended June 30, 2003 and 2002 Nine Months Ended June 30, 2003 and 2002 3 Consolidated Statements of Cash Flows Nine Months Ended June 30, 2003 and 2002 4 Consolidated Balance Sheets June 30, 2003 and September 30, 2002 5-6 Consolidated Statement of Changes in Shareholders' Equity Nine Months Ended June 30, 2003 7 Notes to Consolidated Financial Statements 8-12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-21 Item 3. Quantitative and Qualitative Disclosures About Market Risk 22 Item 4. Controls and Procedures 22 PART II. OTHER INFORMATION Item 5. Other Information 23 Item 6. Exhibits and Reports on Form 8-K 23 Signature 24 The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward looking statements accompanied by meaningful cautionary statements. Except for historical information, this report contains forward-looking statements which may be identified by words such as "estimates", "anticipates", "projects", "plans", "expects", "intends", "believes", "should" and similar expressions and which also may be identified by their context. Such statements are based upon current expectations of the Company and speak only as of the date made. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ, including, without limitation, the following: Meridian's continued growth depends, in part, on its ability to introduce into the marketplace enhancements of existing products or new products that incorporate technological advances, meet customer requirements and respond to products developed by Meridian's competition. While Meridian has introduced a number of internally-developed products, there can be no assurance that it will be successful in the future in introducing such products on a timely basis. Ongoing consolidations of reference laboratories and formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Costs and difficulties in complying with laws and regulations administered by the United States Food and Drug Administration can result in unanticipated expenses and delays and interruptions to the sale of new and existing products. Changes in the relative strength or weakness of the U.S. dollar can change expected results. One of Meridian's main growth strategies is the acquisition of companies and product lines. There can be no assurance that additional acquisitions will be consummated or that, if consummated, will be successful and the acquired businesses successfully integrated into Meridian's operations. Page 2 of 30 MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) - ----------------------------------------------------------------------------------------------------------------------------- THREE MONTHS NINE MONTHS ENDED JUNE 30, ENDED JUNE 30, 2003 2002 2003 2002 - ----------------------------------------------------------------------------------------------------------------------------- NET SALES $ 15,693 $ 14,898 $ 48,709 $ 43,545 COST OF SALES 6,563 6,326 20,356 18,303 - ----------------------------------------------------------------------------------------------------------------------------- Gross profit 9,130 8,572 28,353 25,242 - ----------------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES: Research and development 985 653 2,960 2,147 Sales and marketing 2,654 2,477 8,110 7,227 General and administrative 2,423 2,501 7,669 7,787 - ----------------------------------------------------------------------------------------------------------------------------- Total operating expenses 6,062 5,631 18,739 17,161 - ----------------------------------------------------------------------------------------------------------------------------- Operating income 3,068 2,941 9,614 8,081 OTHER INCOME (EXPENSE): Interest income 11 5 32 26 Interest expense (425) (495) (1,308) (1,538) Other, net 195 30 155 189 - ----------------------------------------------------------------------------------------------------------------------------- Total other income (expense) (219) (460) (1,121) (1,323) - ----------------------------------------------------------------------------------------------------------------------------- Earnings before income taxes 2,849 2,481 8,493 6,758 INCOME TAX PROVISION 1,027 925 3,324 2,590 ============================================================================================================================= NET EARNINGS $ 1,822 $ 1,556 $ 5,169 $ 4,168 ============================================================================================================================= BASIC EARNINGS PER COMMON SHARE $ 0.12 $ 0.11 $ 0.35 $ 0.29 DILUTED EARNINGS PER COMMON SHARE $ 0.12 $ 0.11 $ 0.35 $ 0.28 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 14,664 14,631 14,650 14,615 DILUTIVE COMMON STOCK OPTIONS 348 187 232 149 - ----------------------------------------------------------------------------------------------------------------------------- AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 15,012 14,818 14,882 14,764 ============================================================================================================================= ANTI-DILUTIVE SECURITIES: Common stock options 201 558 374 746 Shares from convertible debentures 1,243 1,243 1,243 1,243 - ----------------------------------------------------------------------------------------------------------------------------- DIVIDENDS DECLARED PER COMMON SHARE $ 0.09 $ 0.07 $ 0.25 $ 0.21 ============================================================================================================================- The accompanying notes are an integral part of these consolidated financial statements. Page 3 of 30 MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS) - ------------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED JUNE 30, 2003 2002 - ------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 5,169 $ 4,168 Non cash items: Depreciation of property, plant and equipment 1,765 1,680 Amortization of intangible assets 1,047 1,062 Stock based compensation 14 48 Deferred income taxes 731 981 Loss on disposition of fixed assets 26 - Gain on sale of common stock received in demutualization - (254) Change in current assets excluding cash and deferred taxes (2,214) (702) Change in current liabilities, excluding debt obligations 3,078 968 Other 650 251 - ------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 10,266 8,202 - ------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (1,255) (2,627) Viral Antigens earnout payments (1,407) (905) Proceeds from sale of common stock received in demutualization - 254 - ------------------------------------------------------------------------------------------------------------------------- Net cash used for investing activities (2,662) (3,278) - ------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net activity on revolving credit facility (2,774) (384) Repayment of debt obligations (1,827) (1,933) Dividends paid (3,662) (2,997) Proceeds from exercise of stock options 153 135 - ------------------------------------------------------------------------------------------------------------------------- Net cash used for financing activities (8,110) (5,179) - ------------------------------------------------------------------------------------------------------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 370 191 - ------------------------------------------------------------------------------------------------------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (136) (64) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,060 4,673 ========================================================================================================================= CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,924 $ 4,609 ========================================================================================================================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Income taxes paid $ 391 $ 329 Interest 968 1,272 The accompanying notes are an integral part of these consolidated financial statements. Page 4 of 30 MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DOLLARS IN THOUSANDS) ASSETS - ----------------------------------------------------------------------------------------------------------------------------- CURRENT ASSETS: JUNE 30, SEPTEMBER 30, 2003 2002 - ----------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents $ 2,924 $ 3,060 Accounts receivable, less allowance of $667 and $987 for doubtful accounts 12,941 12,616 Inventories 14,105 12,735 Deferred income taxes 354 998 Other current assets 1,485 966 - ----------------------------------------------------------------------------------------------------------------------------- Total current assets 31,809 30,375 - ----------------------------------------------------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT: Land 686 666 Buildings and improvements 15,165 13,986 Machinery, equipment and furniture 17,878 15,317 Construction in progress 443 2,780 - ----------------------------------------------------------------------------------------------------------------------------- Total property, plant and equipment 34,172 32,749 Less-accumulated depreciation and amortization 16,568 14,744 - ----------------------------------------------------------------------------------------------------------------------------- Net property, plant and equipment 17,604 18,005 - ----------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS: Deferred debenture offering costs, net 416 517 Goodwill 4,528 4,542 Other intangible assets, net 10,483 11,415 Other assets 233 241 - ----------------------------------------------------------------------------------------------------------------------------- Total other assets 15,660 16,715 - ----------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 65,073 $ 65,095 ============================================================================================================================= The accompanying notes are an integral part of these consolidated balance sheets. Page 5 of 30 MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DOLLARS IN THOUSANDS) LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------------------ CURRENT LIABILITIES: JUNE 30, SEPTEMBER 30, 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ Current portion of long-term obligations $ 891 $ 943 Borrowings under bank lines of credit 171 2,945 Accounts payable 2,060 1,914 Accrued payroll costs 3,298 2,428 Purchase business combination liability - 1,407 Abandoned acquisition costs - 980 Other accrued expenses 3,589 2,817 Income taxes payable 4,085 1,815 - ------------------------------------------------------------------------------------------------------------------------ Total current liabilities 14,094 15,249 - ------------------------------------------------------------------------------------------------------------------------ LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS: Bank debt and capital lease obligations 2,436 3,626 Convertible subordinated debentures 20,000 20,000 DEFERRED TAX LIABILITIES 1,925 1,839 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, no par value, 1,000,000 shares authorized; none issued - - Common stock, no par value, 50,000,000 shares authorized; 14,669,540 and 14,633,215 shares issued and outstanding, respectively, stated at 2,535 2,535 Treasury stock, 8,300 shares (32) (32) Additional paid-in capital 21,358 21,191 Retained earnings 3,408 1,901 Accumulated other comprehensive loss (651) (1,214) - ------------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 26,618 24,381 - ------------------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 65,073 $ 65,095 ======================================================================================================================== The accompanying notes are an integral part of these consolidated balance sheets. Page 6 of 30 MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (DOLLARS AND SHARES IN THOUSANDS) - -------------------------------------------------------------------------------------------------------------- Accumulated Common Shares Additional Other Shares Held in Common Treasury Paid-in Retained Comprehensive Issued Treasury Stock Stock Capital Earnings Income (Loss) -------------------------------------------------------------------------------------------------------------- BALANCE AT SEPTEMBER 30, 2002 14,633 (8) $2,535 $(32) $21,191 $1,901 $(1,214) Dividends paid - - - - - (3,662) - Exercise of stock options 35 - - - 153 - - Stock based compensation 2 - - - 14 - - Comprehensive income: Net income - - - - - 5,169 - Foreign currency translation - - - - - - 563 Comprehensive income ============================================================================================================== BALANCE AT JUNE 30, 2003 14,670 (8) $2,535 $(32) $21,358 3,408 $(651) ============================================================================================================== - --------------------------------------------------------------- Total Comprehensive Shareholders' Income (Loss) Equity - --------------------------------------------------------------- BALANCE AT SEPTEMBER 30, 2002 $24,381 Dividends paid (3,662) Exercise of stock options 153 Stock based compensation 14 Comprehensive income: Net income $ 5,169 5,169 Foreign currency translation 563 563 ---------- Comprehensive income $ 5,732 ========== =============================================================== BALANCE AT JUNE 30, 2003 $26,618 =============================================================== The accompanying notes are an integral part of these consolidated financial statements. Page 7 of 30 MERIDIAN BIOSCIENCE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION: The consolidated financial statements included herein have not been audited by independent public accountants, but include all adjustments (consisting of normal recurring entries) which are, in the opinion of management, necessary for a fair presentation of the results for such periods. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the requirements of the Securities and Exchange Commission, although Meridian believes that the disclosures included in these financial statements are adequate to make the information not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in Meridian's Annual Report on Form 10-K for the Year Ended September 30, 2002. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year. 2. SIGNIFICANT ACCOUNTING POLICIES: (a) Translation of Foreign Currency - Assets and liabilities of foreign operations are translated using period-end exchange rates with gains or losses resulting from translation included in a separate component of accumulated other comprehensive income (loss). Revenues and expenses are translated using exchange rates prevailing during the period. Meridian also recognizes foreign currency transaction gains and losses on certain assets and liabilities that are denominated in the Euro currency. These gains and losses are included in other income and expense in the accompanying consolidated statements of operations. (b) Stock-based Compensation - Meridian accounts for its stock-based compensation plans pursuant to the intrinsic value method provided in APB Opinion No. 25. Had compensation cost for these plans been determined using the fair value method provided in SFAS No. 123, Meridian's net income and earnings per share would have been reduced to the following pro forma amounts (amounts in thousands, except per share data): Page 8 of 30 ================================================================================================================= THREE MONTHS NINE MONTHS ENDED JUNE 30, ENDED JUNE 30 2003 2002 2003 2002 - ----------------------------------------------------------------------------------------------------------------- Net income as reported $ 1,822 $ 1,556 $ 5,169 $ 4,168 Stock-based compensation included in net income as reported, after tax 5 5 9 30 Pro forma fair value of stock options, after tax (134) (92) (443) (331) - ----------------------------------------------------------------------------------------------------------------- Pro forma net income $ 1,693 $ 1,469 $ 4,735 $ 3,867 - ----------------------------------------------------------------------------------------------------------------- Basic EPS as reported $0.12 $0.11 $0.35 $0.29 Stock-based compensation included in net income as reported, after tax - - - - Pro forma fair value of stock options, after tax - (0.01) (0.03) (0.03) - ----------------------------------------------------------------------------------------------------------------- Pro forma basic EPS $0.12 $0.10 $0.32 $0.26 - ----------------------------------------------------------------------------------------------------------------- Diluted EPS as reported $0.12 $0.11 $0.35 $0.28 Stock-based compensation included in net income as reported, after tax - - - - Pro forma fair value of stock options, after tax (0.01) (0.01) (0.03) (0.02) - ----------------------------------------------------------------------------------------------------------------- Pro forma diluted EPS $0.11 $0.10 $0.32 $0.26 ================================================================================================================= (c) New Accounting Pronouncements - During December 2002, the Financial Accounting Standards Board issued Statement No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an Amendment of FASB Statement No. 123. Statement No. 148 provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based compensation. Statement No. 148 provides three alternatives for an entity that adopts the fair value based method of accounting: Prospective Method, Modified Prospective Method and Retroactive Restatement Method. Under the Prospective Method, fair value based accounting would be applied to all employee awards granted after the beginning of the fiscal year in which the provisions are first applied. Under the Modified Prospective Method, fair value based accounting would be applied as of the beginning of the fiscal year of adoption for all employee awards granted in fiscal years beginning after December 15, 1994. Under the Retroactive Restatement Method, all periods presented are restated to reflect fair value based accounting for all employee awards granted in fiscal years beginning after December 15, 1994. If an entity elects fair value based accounting in a fiscal year beginning after December 15, 2003, either the Modified Prospective Method or the Retroactive Restatement method must be used. Meridian accounts for its stock-based compensation plans under Accounting Principles Board Opinion No. 25, in which compensation expense is determined based on intrinsic value. Meridian continually evaluates its accounting policies, including those governing stock-based compensation, and at this time believes it is appropriate to continue accounting for employee stock-based compensation under APB No. 25, consistent with historical practice. During November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Page 9 of 30 Disclosure Requirements for Guarantees, Including Direct Guarantees of Indebtedness of Others. Interpretation No. 45 clarifies the requirements of FASB Statement No. 5 relating to a guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. Meridian's adoption of Interpretation No. 45 has had no impact on results of operations or financial condition. 3. INVENTORIES: Inventories are comprised of the following (amounts in thousands): ========================================================================= June 30, September 30, 2003 2002 - ------------------------------------------------------------------------- Raw materials $ 3,955 $ 3,578 Work-in-process 5,313 4,745 Finished goods 4,837 4,412 - ------------------------------------------------------------------------- $ 14,105 $ 12,735 ========================================================================= 4. SEGMENT INFORMATION: As a result of changes that occurred in February 2003 in the organization and management of Meridian's businesses, effective with the quarter beginning January 1, 2003, Meridian changed its reportable operating segments to US Diagnostics (formerly referred to as Meridian Bioscience, Inc.), European Diagnostics (formerly referred to as Meridian Bioscience Europe) and Life Science. The US Diagnostics operating segment consists of manufacturing operations in Cincinnati, Ohio, and the sale and distribution of diagnostic test kits in the US and countries outside of Europe, Africa and the Middle East. The European Diagnostics operating segment consists of the sale and distribution of diagnostic test kits in Europe, Africa and the Middle East. The Life Science operating segment consists of manufacturing operations in Memphis, Tennessee and Saco, Maine, and the sale and distribution of bulk antigens, antibodies and bioresearch reagents domestically and abroad. The Life Science operating segment consists of the Viral Antigens and BIODESIGN subsidiaries (formerly part of the Meridian Bioscience, Inc. operating segment), including the protein production laboratory. As required by Financial Accounting Standards Board Statement No. 131, Disclosures About Segments of an Enterprise and Related Information, prior year operating information in the following table has been restated to conform with the current year presentation. Segment information for the three months and nine months ended June 30, 2003 and 2002 is as follows (in thousands): Page 10 of 30 ===================================================================================================================== US European Life Diagnostics Diagnostics Science ELIM(1) Total - --------------------------------------------------------------------------------------------------------------------- THREE MONTHS - 2003 Net sales - Third-party $ 8,793 $ 3,627 $ 3,273 $ - $15,693 Inter-segment 1,281 - 210 (1,491) - Operating income 1,695 669 811 (107) 3,068 Total assets 62,712 11,936 21,745 (31,320) 65,073 THREE MONTHS - 2002 Net sales - Third-party $ 8,127 $ 3,129 $3,642 $ - $14,898 Inter-segment 1,554 - 176 (1,730) - Operating income 1,548 294 1,233 (134) 2,941 Total assets 66,528 11,551 19,447 (32,160) 65,366 NINE MONTHS - 2003 Net sales - Third-party $29,198 $10,500 $ 9,011 $ - $48,709 Inter-segment 4,149 - 730 (4,879) - Operating income 6,185 2,021 1,490 (82) 9,614 Total assets 62,712 11,936 21,745 (31,320) 65,073 NINE MONTHS - 2002 Net sales - Third-party $25,292 $ 8,963 $ 9,290 $ - $43,545 Inter-segment 4,033 - 489 (4,522) - Operating income 5,035 1,142 1,896 8 8,081 Total assets 66,528 11,551 19,447 (32,160) 65,366 ====================================================================================================================== (1) Eliminations consist of intersegment transactions. Transactions between geographic segments are accounted for as intercompany sales at established intercompany prices for internal and management purposes with all intercompany amounts eliminated in consolidation. Total assets for US Diagnostics and Life Science include goodwill and other intangible assets of $9,779,000 and $5,232,000, respectively at June 30, 2003, and $10,855,000 and $4,051,000, respectively at June 30, 2002. 5. FDA MATTERS: During January 2001, the FDA completed an inspection of Meridian's compliance with the Quality Systems Regulations that govern the manufacturing of in vitro diagnostics. In response to this inspection, in January 2001, Meridian submitted a comprehensive plan to the FDA outlining specific steps it committed to undertake to improve its quality systems. In June 2001, Meridian received a Warning Letter from the FDA which summarized and reiterated certain of the observations made by the FDA during their inspection completed in January 2001. Page 11 of 30 In accordance with the FDA's directive in the Warning Letter, Meridian is required to undergo three annual independent audits to evaluate Meridian's progress implementing its comprehensive plan. The first audit was completed in November 2001. Based on an extensive review of documents and an on-site visit during this audit, the auditors substantiated Meridian's progress in addressing the issues raised in the FDA inspection and Warning Letter. In August 2002, the FDA completed an on-site follow-up inspection. The FDA issued several observations, primarily aimed at fine-tuning established quality control systems and procedures. Meridian submitted written corrective action plans to address these refinements and continues its periodic communications with the FDA on the progress of its comprehensive plan submitted to the FDA in January 2001 and the observations from the August 2002 inspection. In January 2003, the second of three annual independent audits commenced. This audit was completed on May 1, 2003. The audit report substantiated Meridian's progress in addressing issues raised in the prior FDA and independent audits. Meridian has responded to the latest observations and recommendations with corrective actions designed to further improve its established quality control systems and procedures. At present, it is uncertain whether Meridian's actions will be sufficient so that no further remedial action or enforcement action by the FDA will occur. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE-MONTH PERIOD ENDED JUNE 30, 2003 COMPARED TO THREE-MONTH PERIOD ENDED JUNE 30, 2002 Overview Net earnings for the third quarter of fiscal 2003 were $1,822,000, an increase of $266,000, or 17%, compared to the third quarter of fiscal 2002. On a diluted per share basis, net earnings were $0.12 for the third quarter of fiscal 2003, an increase of $0.01, or 9%, compared to the third quarter of fiscal 2002. Operating Segments As a result of changes that occurred in February 2003 in the organization and management of Meridian's businesses, effective with the quarter beginning January 1, 2003 (Meridian's second quarter), Meridian changed its reportable operating segments to US Diagnostics (formerly referred to as Meridian Bioscience, Inc.), European Diagnostics (formerly referred to as Meridian Bioscience Europe) and Life Science. The US Diagnostics operating segment consists of manufacturing operations in Cincinnati, Ohio, and the sale and distribution of diagnostic test kits in the US and countries outside of Europe, Africa and the Middle East. The European Diagnostics Page 12 of 30 operating segment consists of the sale and distribution of diagnostic test kits in Europe, Africa and the Middle East. The Life Science operating segment consists of manufacturing operations in Memphis, Tennessee and Saco, Maine, and the sale and distribution of bulk antigens, antibodies and bioresearch reagents domestically and abroad. The Life Science operating segment consists of the Viral Antigens and BIODESIGN subsidiaries (formerly part of the Meridian Bioscience, Inc. operating segment), including the protein production laboratory. Net Sales Overall, net sales increased $795,000, or 5%, to $15,693,000 for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002. Net sales for the US Diagnostics operating segment increased $666,000, or 8%, for the European Diagnostics operating segment increased $498,000, or 16%, and for the Life Science operating segment decreased $369,000, or 10%. For the US Diagnostics operating segment, the increase in sales for the third quarter of fiscal 2003 was primarily due to volume growth in both existing and new products. For existing products, volume growth was strong in Rotavirus and Mycoplasma. A substantial portion of this growth occurred in export markets, including Japan. Certain of the sales into Japan related to the SARS outbreak. Meridian's products were used to exclude the diagnosis of certain respiratory ailments having similar symptoms, such as Mycoplasma, during the diagnosis of patients potentially infected with SARS. For new products, Meridian began distributing new diagnostic tests for the detection of Flu and RSV during the first quarter of fiscal 2003. Sales of these products continued during the third quarter, although at a lower level than the first six months due to the seasonal nature of Flu and RSV. For the European Diagnostics operating segment, the increase in sales for the third quarter of fiscal 2003 includes currency translation gains of $568,000. Sales for the European Diagnostics operating segment, excluding the effects of currency, decreased 4% for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002. For the Life Science operating segment, the decrease in sales for the third quarter of fiscal 2003 was primarily due to timing of orders for make-to-order bulk antigen products. For such products, bulk quantities are manufactured pursuant to customer purchase orders. Sales are recorded upon shipment. Although there is currently one project underway in the protein production laboratory, no revenues have been recognized to date. Revenue for the protein production laboratory is recognized either upon shipment of product or final lot acceptance depending on contract terms. For all operating segments combined, international sales were $5,795,000, or 37% of total sales, for the third quarter of fiscal 2003, compared to $4,260,000, or 29% of total sales, for the third quarter of fiscal 2002. Domestic exports for the US Diagnostics and Life Science operating segments were $2,168,000 for the third quarter of fiscal 2003, compared to $1,131,000 for the third quarter of fiscal 2002. The remaining international sales were generated by the European Diagnostics operating segment. Increases in domestic exports for the third quarter of fiscal 2003 occurred both in the US Diagnostics and Life Science operating segments. For the US Diagnostics operating segment, a large portion of its increase was attributable to Japan. For the Page 13 of 30 Life Science operating segment, its increase resulted from customer mix for make-to-order bulk products. Gross Profit Gross profit increased $558,000, or 7%, to $9,130,000 for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002. Gross profit margins were 58% for both the third quarter of fiscal 2003 and the third quarter of fiscal 2002. Meridian's overall operations consist of the sale of diagnostic test kits for various disease states and in alternative test formats, as well as bioresearch reagents, antigens and proficiency tests. On a quarterly basis, product sales mix shifts, in the normal course of business, can cause the consolidated gross profit margin to fluctuate by several points. Operating Expenses Operating expenses increased $431,000, or 8%, to $6,062,000 for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002. The reasons for this increase are discussed below. Research and development expenses increased $332,000, or 51%, to $985,000 for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002, and as a percentage of sales, increased from 4% for the third quarter of fiscal 2002 to 6% for the third quarter of fiscal 2003. Of this increase, $271,000 related to the US Diagnostics operating segment and $61,000 related to the Life Science operating segment. The increase for the US Diagnostics operating segment is primarily attributable to additional product development staff and material costs for new product development activities. Sales and marketing expenses increased $177,000, or 7%, to $2,654,000 for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002, and as a percentage of sales, was 17% for both the third quarter of fiscal 2003 and 2002. Of this increase, $130,000 related to the US Diagnostics operating segment, $25,000 related to the European Diagnostics operating segment and $22,000 related to the Life Science operating segment. The increase for the US Diagnostics operating segment is primarily attributable to costs related to sales person incentive compensation. General and administrative expenses decreased $78,000, or 3%, to $2,423,000 for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002, and as a percentage of sales, declined from 17% for the third quarter of fiscal 2002 to 15% for the third quarter of fiscal 2003. The US Diagnostics operating segment increased $40,000 and the European Diagnostics operating segment increased $37,000. The Life Science operating segment decreased $155,000. For the US Diagnostics operating segment, costs to support growth in the business and costs for incentive compensation were somewhat offset by an insurance reimbursement for legal fees ($168,000) related to trade secrets litigation. The decrease for the Life Science operating segment is primarily attributable to a change in the classification of benefits costs for production employees to cost of sales ($90,000). Page 14 of 30 Operating Income Operating income increased $127,000, or 4%, to $3,068,000 for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002. This increase is attributable to the factors discussed above. Other Income and Expense Interest expense declined $70,000, or 14%, to $425,000 for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2002. This decline is attributable to the favorable effects of a lower interest rate environment and lower overall debt levels outstanding. Borrowings outstanding on Meridian's revolving credit facility were $171,000 at June 30, 2003 compared to $5,501,000 at June 30, 2002. Other, net for the third quarter of fiscal 2003 includes a gain on the sale of certain distributor relationships for the European Diagnostics operating segment in the amount of $226,000. These distributor relationships related to blood-grouping products that no longer fit into Meridian's long-range product plans. Annual sales of these products were approximately 400,000 Euro. Income Taxes The effective rate for income taxes was 36% for the third quarter of fiscal 2003 compared to 37% for the third quarter of fiscal 2002. The decrease in the effective tax rate during the third quarter of fiscal 2003 is primarily due to a decline in the effective tax rate in Italy and favorable adjustments related to non-US sales activities. NINE-MONTH PERIOD ENDED JUNE 30, 2003 COMPARED TO NINE-MONTH PERIOD ENDED JUNE 30, 2002 Overview Net earnings for the first nine months of fiscal 2003 were $5,169,000, an increase of $1,001,000, or 24% compared to the first nine months of fiscal 2002. On a diluted per share basis, net earnings were $0.35 for the first nine months of fiscal 2003, an increase of $0.07, or 25% compared to the first nine months of fiscal 2002. Net Sales Overall, net sales increased $5,164,000, or 12% to $48,709,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. Net sales for the US Diagnostics operating segment increased $3,906,000, or 15%, for the European Diagnostics operating segment increased $1,537,000, or 17%, and for the Life Science operating segment decreased $279,000, or 3%. For the US Diagnostics operating segment, the increase in sales for the first nine months of fiscal 2003 was primarily due to volume growth in both existing and new products. For existing products, volume growth was strong in C. difficile diagnostic products, led by Meridian's internally developed Premier Toxins A&B, as well as tests to detect Cryptosporidium, Giardia, Rotavirus, Mycoplasma, H. pylori and E. coli. For new products, Meridian began distributing new diagnostic Page 15 of 30 tests for the detection of Flu and RSV during the first quarter of fiscal 2003. These new products are a result of Meridian's recent collaboration with Binax, Inc. For the European Diagnostics operating segment, the increase in sales for the first nine months of fiscal 2003 includes currency translation gains of $1,373,000. Sales for the European Diagnostics operating segment, excluding the effects of currency, increased 2% for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. For the Life Science operating segment, the decrease in sales for the first nine months of fiscal 2003 was primarily due to timing of orders for make-to-order bulk antigen products. For such products, bulk quantities are manufactured pursuant to customer purchase orders. Sales are recorded upon shipment. Although there is currently one project underway in the protein production laboratory, no revenues have been recognized to date. Revenue for the protein production laboratory is recognized either upon shipment of product or final lot acceptance depending on contract terms. For all operating segments combined, international sales were $16,857,000, or 35% of total sales, for the first nine months of fiscal 2003, compared to $13,385,000, or 31% of total sales, for the first nine months of fiscal 2002. Domestic exports for the US Diagnostics and Life Science operating segments were $6,357,000 for the first nine months of fiscal 2003, compared to $4,422,000 for the first nine months of fiscal 2002. The remaining international sales were generated by the European Diagnostics operating segment. Gross Profit Gross profit increased $3,111,000 or 12%, to $28,353,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. Gross profit margins were 58% for both the first nine months of fiscal 2003 and 2002. Meridian's overall operations consist of the sale of diagnostic test kits for various disease states and in alternative test formats, as well as bioresearch reagents, antigens and proficiency tests. On a quarterly basis, product sales mix shifts, in the normal course of business, can cause the consolidated gross profit margin to fluctuate by several points. Operating Expenses Operating expenses increased $1,578,000, or 9%, to $18,739,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. The reasons for this increase are discussed below. Research and development expenses increased $813,000, or 38% to $2,960,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002, and as a percentage of sales, increased from 5% for the first nine months of fiscal 2002 to 6% for the first nine months of fiscal 2003. Of this increase, $609,000 related to the US Diagnostics operating segment and $204,000 related to the Life Science operating segment. The increase for the US Diagnostics operating segment is primarily attributable to additional product development staff and material costs for new product development activities. The increase for the Life Science operating segment is primarily attributable to activities at the protein production laboratory prior to opening in March 2003. Page 16 of 30 Sales and marketing expenses increased $883,000, or 12%, to $8,110,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002, and as a percentage of sales, was 17% for both the first nine months of fiscal 2003 and 2002. Of this increase, $718,000 related to the US Diagnostics operating segment, $137,000 related to the European Diagnostics operating segment and $28,000 related to the Life Science operating segment. The increase for the US Diagnostics operating segment is primarily attributable to spending on strategic sales initiatives, including preparation and training of field sales personnel, costs related to the new Binax products, such as samples and brochures, and sales person incentive compensation. The increase for the European Diagnostics operating segment is, in part, due to currency. General and administrative expenses decreased $118,000, or 2%, to $7,669,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002, and as a percentage of sales, declined from 18% for the first nine months of fiscal 2002 to 16% for the first nine months of fiscal 2003. The US Diagnostics operating segment increased $14,000 and the Life Science operating segment increased $41,000. The European Diagnostics operating segment decreased $173,000. The increase for the US Diagnostics operating segment is primarily attributable to support costs for growth in the business, somewhat offset by a favorable adjustment to the reserve for bad debts based on better than anticipated write-off history and an insurance reimbursement for legal fees related to trade secrets litigation. The increase for the Life Science operating segment is primarily attributable to support costs for the protein production facility somewhat offset by a change in the classification of benefits costs for production employees. The decrease for the European Diagnostics operating segment is primarily attributable to a favorable adjustment related to a contract amendment that reduced certain minimum purchase commitments to align with current market expectations. Operating Income Operating income increased $1,533,000, or 19%, to $9,614,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. This increase is attributable to the factors discussed above. Other Income and Expense Other income and expense, net for the first nine months of fiscal 2003 includes a gain on the sale of certain distributor relationships for the European Diagnostics operating segment in the amount of $226,000. These distributor relationships related to blood-grouping products that no longer fit into Meridian's long-range product plans. Other income and expense, net for the first nine months of fiscal 2002 included a net gain of $254,000 related to the sale of shares of common stock received in the demutualization of two insurance companies during the third quarter of fiscal 2002. Interest expense declined $230,000, or 15%, to $1,308,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. This decline is attributable to the favorable effects of a lower interest rate environment and lower overall debt levels outstanding. Borrowings outstanding on Meridian's revolving credit facility were $171,000 at June 30, 2003 compared to $5,501,000 at June 30, 2002. Page 17 of 30 Income Taxes The effective rate for income taxes is 39% for the first nine months of fiscal 2003 compared to 38% for the first nine months of fiscal 2002. The increase in the effective tax rate during the first nine months of fiscal 2003 is in part due to a higher percentage of income from foreign operations. This was somewhat offset by a decline in the effective tax rate in Italy and favorable adjustments related to non-US sales activities. Additionally, the effective rate for the first nine months of fiscal 2002 included the favorable effects of reversing valuation allowance provisions in Belgium as net operating loss carryforwards in this jurisdiction were utilized. LIQUIDITY AND CAPITAL RESOURCES: COMPARATIVE CASH FLOW ANALYSIS Meridian's operating cash flow and financing requirements are determined by analyses of operating and capital spending budgets and consideration of acquisition plans. Meridian has historically maintained line of credit availability to respond to acquisition opportunities quickly. Net cash provided by operating activities increased $2,064,000, or 25%, to $10,266,000 for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002. This increase is primarily attributable to higher earnings levels and relief from income tax payments in certain jurisdictions as tax operating loss carryforwards have been utilized. Net cash used for investing activities was $2,662,000 for the first nine months of fiscal 2003, compared to $3,278,000 for the first nine months of fiscal 2002, and primarily related to capital expenditures and Viral Antigens earnout payments during both periods. The level of capital expenditures during the first nine months of fiscal 2002 reflects the construction of the protein production laboratory. Net cash used for financing activities was $8,110,000 for the first nine months of fiscal 2003, compared to $5,179,000 for the first nine months of fiscal 2002. Activity of $2,774,000 on the revolving credit facility and accelerated payments of $763,000 on term borrowings during the first nine months of fiscal 2003 reflect planned efforts to pay down debt. Activity on the revolving credit facility during the first nine months of fiscal 2002 included approximately $1,000,000 related to payment of the mortgage loan for the Viral Antigens facilities that matured in January 2002. Net cash flows from operating activities are anticipated to fund working capital requirements, debt service and dividends during fiscal 2003. CAPITAL RESOURCES The following table presents Meridian's financing obligations as of June 30, 2003 (amounts in thousands): Page 18 of 30 Payments Due for 12-Month Periods Beginning July 1 ---------------------------------------------------------------------------- 2003 2004 2005 2006 2007 Total ---------------------------------------------------------------------------- Bank term debt $ 790 $ 853 $ 786 $ 785 $ - $3,214 Capital lease obligations 100 13 - - - 113 Subordinated debentures - - - 20,000 - 20,000 Meridian has a $25,000,000 credit facility with a commercial bank that includes $5,000,000 of term debt and capital lease capacity and a $20,000,000 line of credit that expires in September 2004. As of July 31, 2003, there were no borrowings outstanding on the line of credit portion of this facility, and the availability was $20,000,000. A substantial portion of the bank term debt, $3,143,000, is denominated in the Euro currency and bears interest at a variable rate tied to Euro LIBOR. This debt serves as a natural currency hedge against certain Euro denominated intercompany receivables. The subordinated convertible debentures in the amount of $20,000,000 bear interest at a fixed rate of 7% and have a conversion rate of $16.09. The Company expects that these debentures will be converted or refinanced at maturity. The Viral Antigens acquisition, completed in fiscal 2000, provides for additional purchase consideration up to a maximum remaining amount of $5,938,000, contingent upon Viral Antigens' future earnings through September 30, 2006. Earnout consideration is payable each year, following the period earned. Earnout payments, if any, may require financing under the line of credit or other bank credit facility. Earnout consideration in the amount of $1,407,000 related to fiscal 2002 was paid in January 2003, primarily from operating cash flows. Meridian's capital expenditures are estimated to be $2,000,000 for fiscal 2003, and may be funded with operating cash flows or availability under the $25,000,000 credit facility discussed above. Capital expenditures for the fiscal year to date of $1,225,000 have been funded primarily from operating cash flows. Capital expenditures primarily relate to manufacturing and other equipment of a normal and recurring nature. COMMITMENTS AND CONTINGENCIES: ROYALTIES Meridian has entered into various license agreements that require payment of royalties based on a specified percentage of sales of related products (1% to 8%). Meridian expects that payments under these agreements will amount to as much as $700,000 in fiscal 2003. For one of these license agreements, Meridian is engaged in a dispute with the licensor regarding the payment of royalties. The licensor has claimed additional royalties due from Meridian in the amount of approximately $700,000. Meridian believes that it has satisfactorily complied with all provisions of this license agreement and therefore, disputes this claim. In addition, Meridian believes it has valid claims against the licensor under this agreement. This matter is not expected to have a material effect on results of operations or financial condition. Page 19 of 30 UNCONDITIONAL PURCHASE COMMITMENTS Meridian has entered into agreements to distribute diagnostic test kits that are manufactured by other diagnostic manufacturing companies. Certain of these agreements require Meridian to purchase minimum quantities of diagnostic kits during 12-month measurement periods. Aggregate minimum purchase commitments under these agreements amount to $353,000 for fiscal 2003. For one of these agreements, Meridian did not meet the minimum purchase provisions contained therein due to the actual size of the market for this specific product being smaller than anticipated prior to execution of the agreement. Meridian and the other party to this agreement have subsequently adjusted the minimum purchase provisions to align with current market expectations. The amendment to this agreement did not result in any further financial obligation for Meridian. CONTRACT RESEARCH AND DEVELOPMENT During fiscal 2000, Meridian executed a Research and Development Agreement and an Exclusive Supply Agreement with OraSure Technologies, Inc. to commercialize the UpLink technology. These agreements, assuming certain milestones were met, would require Meridian to make future payments to OraSure to fund research and development activities for specific diagnostic products and to obtain an exclusive license to market and sell such products on a global basis. In February 2003, Meridian informed OraSure that it was terminating these agreements. Currently, Meridian and OraSure are working together to wind down activities related to these agreements. Costs to wind down these agreements are not expected to be material. FDA MATTERS During January 2001, the FDA completed an inspection of Meridian's compliance with the Quality Systems Regulations that govern the manufacturing of in vitro diagnostics. In response to this inspection, in January 2001, Meridian submitted a comprehensive plan to the FDA outlining specific steps it committed to undertake to improve its quality systems. In June 2001, Meridian received a Warning Letter from the FDA which summarized and reiterated certain of the observations made by the FDA during their inspection completed in January 2001. In accordance with the FDA's directive in the Warning Letter, Meridian is required to undergo three annual independent audits to evaluate Meridian's progress implementing its comprehensive plan. The first audit was completed in November 2001. Based on an extensive review of documents and an on-site visit during this audit, the auditors substantiated Meridian's progress in addressing the issues raised in the FDA inspection and Warning Letter. In August 2002, the FDA completed an on-site follow-up inspection. The FDA issued several observations, primarily aimed at fine-tuning established quality control systems and procedures. Meridian submitted written corrective action plans to address these refinements and continues its Page 20 of 30 periodic communications with the FDA on the progress of its comprehensive plan submitted to the FDA in January 2001 and the observations from the August 2002 inspection. In January 2003, the second of three annual independent audits commenced. This audit was completed on May 1, 2003. The audit report substantiated Meridian's progress in addressing issues raised in the prior FDA and independent audits. Meridian has responded to the latest observations and recommendations with corrective actions designed to further improve its established quality control systems and procedures. At present, it is uncertain whether Meridian's actions will be sufficient so that no further remedial action or enforcement action by the FDA will occur. NEW ACCOUNTING PRONOUNCEMENTS: During January 2003, the Financial Accounting Standards Board issued Statement No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an Amendment of FASB Statement No. 123. Statement No. 148 provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based compensation. Statement No. 148 provides three alternatives for an entity that adopts the fair value based method of accounting: Prospective Method, Modified Prospective Method and Retroactive Restatement Method. Under the Prospective Method, fair value based accounting would be applied to all employee awards granted after the beginning of the fiscal year in which the provisions are first applied. Under the Modified Prospective Method, fair value based accounting would be applied as of the beginning of the fiscal year of adoption for all employee awards granted in fiscal years beginning after December 15, 1994. Under the Retroactive Restatement Method, all periods presented are restated to reflect fair value based accounting for all employee awards granted in fiscal years beginning after December 15, 1994. If an entity elects fair value based accounting in a fiscal year beginning after December 15, 2003, either the Modified Prospective Method or the Retroactive Restatement method must be used. Meridian accounts for its stock-based compensation plans under Accounting Principles Board Opinion No. 25, in which compensation expense is determined based on intrinsic value. Meridian continually evaluates its accounting policies, including those governing stock-based compensation, and at this time believes it is appropriate to continue accounting for employee stock-based compensation under APB No. 25, consistent with historical practice. During November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Direct Guarantees of Indebtedness of Others. Interpretation No. 45 clarifies the requirements of FASB Statement No. 5 relating to a guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. Meridian's adoption of Interpretation No. 45 has had no impact on results of operations or financial condition. Page 21 of 30 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Meridian has market risk exposure related to interest rate sensitive debt and foreign currency transactions. Meridian has debt obligations, excluding the line of credit, in the aggregate amount of $23,327,000 outstanding at June 30, 2003, of which $3,147,000 bears interest at variable rates. Information concerning the maturities of interest rate sensitive debt is included in the discussion of Capital Resources above. To date, Meridian has not employed a hedging strategy with respect to interest rate risk. Meridian is exposed to foreign currency rate risk related to its European distribution operations, including foreign currency denominated intercompany receivables, as well as Euro denominated term debt. The Euro denominated term debt serves as a natural hedge against a portion of the Euro denominated intercompany receivables. ITEM 4. CONTROLS AND PROCEDURES As of June 30, 2003, an evaluation was completed under the supervision and with the participation of Meridian's management, including Meridian's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Meridian's disclosure controls and procedures. Based on that evaluation, Meridian's management, including the CEO and CFO, concluded that Meridian's disclosure controls and procedures were effective as of June 30, 2003. There have been no changes in Meridian's internal controls over financial reporting identified in connection with the evaluation of internal controls that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to affect, Meridian's internal controls over financial reporting, or in other factors that could significantly affect internal controls subsequent to June 30, 2003. Page 22 of 30 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 31.1 - Certification of Principal Executive Officer pursuant to ss.302 of the Sarbanes-Oxley Act of 2002 31.2 - Certification of Principal Financial Officer pursuant to ss.302 of the Sarbanes-Oxley Act of 2002 32.1 - Certification of Principal Executive Officer pursuant to ss.906 of the Sarbanes-Oxley Act of 2002 32.2 - Certification of Principal Financial Officer pursuant to ss.906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K: Form 8-K dated April 24, 2003 containing Press Release dated April 24, 2003 announcing results for the quarter ended March 31, 2003. Page 23 of 30 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. AND SUBSIDIARIES Date: August 14, 2003 /s/ Melissa Lueke ---------------------- ------------------ Melissa Lueke Vice President and Chief Financial Officer Page 24 of 30