þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Incorporated under
the Laws of Ohio Phone: (513) 271-3700 |
3471 River Hills Drive
Cincinnati, Ohio 45244 |
IRS Employer ID
No. 31-0888197 |
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BIODESIGN
Antibodies, antigens and assay development reagents
Viral Antigens
Custom infectious disease antigens
OEM Concepts
Custom antibody development and manufacturing, in vivo or in vitro
Meridian Biologics
Development and manufacturing of cGMP clinical grade biologicals
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EQUITY AND RELATED STOCKHOLDER MATTERS
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CONDITION AND RESULTS OF OPERATIONS
2007
2006
2005
61
%
60
%
59
%
32
%
35
%
37
%
28
%
25
%
22
%
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2007
2006
Change
$
26,721
$
18,333
46
%
(2,425
)
(100
)%
$
24,296
$
18,333
33
%
2007
2006
Change
$
0.67
$
0.47
43
%
(0.06
)
(100
)%
$
0.61
$
0.47
30
%
2007
2006
Change
$
0.66
$
0.46
43
%
(0.06
)
(100
)%
$
0.60
$
0.46
30
%
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Less than
More than
Total
1 Year
1-3 Years
4-5 Years
5 Years
$
1,516
$
599
$
822
$
95
$
9,690
9,305
385
1,971
152
1,819
$
13,177
$
10,056
$
3,026
$
95
$
(1)
Meridian and its subsidiaries are lessees of (i) office and warehouse buildings in
Florida, Belgium, and France; (ii) automobiles for use by the diagnostic direct sales
forces in the US and Europe; and (iii) certain office equipment such as facsimile machines
and copier machines across all business units, under operating lease agreements that expire
at various dates.
(2)
Meridians purchase obligations are primarily outstanding purchase orders for inventory
and service items. These contractual commitments are not in excess of expected production
requirements over the next twelve months.
(3)
OEM Concepts earnout obligation is contingent upon future calendar-year sales and gross
profit of OEM Concepts products through December 31, 2008.
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38
39
41
42
43
45
46
79
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William J. Motto
Chairman of the Board and
Chief Executive Officer
November 30, 2007
Melissa Lueke
Vice President and
Chief Financial Officer
November 30, 2007
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Meridian Bioscience, Inc.
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Cincinnati, Ohio
November 30, 2007
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For the Year Ended September 30,
2007
2006
2005
$
122,963
$
108,413
$
92,965
48,023
43,729
38,075
74,940
64,684
54,890
6,085
4,799
3,866
17,124
16,698
15,208
16,701
16,293
15,491
39,910
37,790
34,565
35,030
26,894
20,325
1,642
1,123
43
(38
)
(128
)
(770
)
48
177
107
1,652
1,172
(620
)
36,682
28,066
19,705
9,961
9,733
7,067
$
26,721
$
18,333
$
12,638
$
0.67
$
0.47
$
0.36
0.66
0.46
0.35
39,584
39,132
35,211
1,154
1,032
945
40,738
40,164
36,156
$
0.40
$
0.28
$
0.21
32
2
279
380
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For the Year Ended September 30,
2007
2006
2005
$
26,721
$
18,333
$
12,638
2,764
2,717
2,597
1,635
2,572
1,655
800
47
(243
)
2,632
1,082
279
(2,425
)
5
38
(7
)
(3,011
)
(3,146
)
(1,100
)
(2,145
)
920
2,455
(374
)
(408
)
(87
)
26,602
22,155
18,187
(971
)
(1,494
)
(678
)
(3,211
)
(3,120
)
(2,590
)
4
47
14
(6,383
)
(6,000
)
4,000
2,000
(265
)
(122
)
(10
)
(443
)
(8,689
)
(9,647
)
(29
)
(790
)
(3,061
)
(15,836
)
(11,095
)
(7,200
)
2,574
1,660
3,302
29,925
(345
)
(3
)
(13,291
)
(10,225
)
22,618
184
22
(56
)
13,052
3,263
31,102
36,348
33,085
1,983
$
49,400
$
36,348
$
33,085
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As of September 30,
2007
2006
$
49,400
$
36,348
4,000
22,651
19,645
18,171
16,989
2,147
2,109
1,376
1,651
93,745
80,742
890
701
16,907
15,963
24,619
22,902
1,290
870
43,706
40,436
25,395
22,629
18,311
17,807
106
9,964
9,864
9,457
10,816
1,000
1,000
221
193
20,642
21,979
$
132,698
$
120,528
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As of September 30,
2007
2006
$
4,704
$
3,671
7,541
7,896
152
937
4,008
3,955
662
4,158
17,067
20,617
1,803
2,683
3,758
82,209
74,950
30,375
19,490
364
(90
)
112,948
94,350
$
132,698
$
120,528
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Additional
Accumulated Other
Common
Shares Held
Treasury
Paid-in
Retained
Comprehensive
Comprehensive
Shares Issued
in Treasury
Stock
Capital
Earnings
Income (Loss)
Income (Loss)
Total
33,685
(18
)
(32
)
25,936
6,814
(294
)
32,424
(7,200
)
(7,200
)
863
3,956
3,956
279
279
1,662
11,817
11,817
2,700
29,580
29,580
12,638
$
12,638
12,638
(161
)
(161
)
(161
)
$
12,477
38,910
(18
)
(32
)
71,568
12,252
(455
)
83,333
(11,095
)
(11,095
)
245
1,722
1,722
1,082
1,082
99
610
610
(18
)
18
32
(32
)
18,333
$
18,333
18,333
13
13
13
50
50
50
302
302
302
$
18,698
39,236
74,950
19,490
(90
)
94,350
(15,836
)
(15,836
)
336
2,950
2,950
2,632
2,632
275
1,677
1,677
26,721
$
26,721
26,721
(283
)
(283
)
(283
)
(244
)
(244
)
(244
)
981
981
981
$
27,175
39,847
$
$
82,209
$
30,375
$
364
$
112,948
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(a)
Nature of Business
Meridian is a fully-integrated life science company whose principal
businesses are (i) the development, manufacture and distribution of diagnostic test kits
primarily for certain respiratory, gastrointestinal, viral and parasitic infectious diseases,
(ii) the manufacture and distribution of bulk antigens, antibodies, and reagents used by
researchers and other diagnostic manufacturers and (iii) the contract development and
manufacture of proteins and other biologicals for use by biopharmaceutical and biotechnology
companies engaged in research for new drugs and vaccines.
(b)
Principles of Consolidation
The consolidated financial statements include the accounts of
Meridian Bioscience, Inc. and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated. Unless the context requires otherwise, references to
Meridian, we, us, our, or our company refer to Meridian Bioscience, Inc. and its
subsidiaries.
(c)
Use of Estimates
- The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
Significant estimates are discussed in Notes 1(g), 1(h), 1(i), 1(j), 1(l), 1(m), 7 and 8(b).
(d)
Foreign Currency Translation
- Assets and liabilities of foreign operations are translated
using year-end exchange rates with gains or losses resulting from translation included in a
separate component of accumulated other comprehensive income (loss). Revenues and expenses
are translated using exchange rates prevailing during the year. We also recognize foreign
currency transaction gains and losses on certain assets and liabilities that are denominated
in the Euro currency. These gains and losses are included in other income and expense in the
accompanying consolidated statements of operations.
(e)
Cash Equivalents
We consider short-term investments with original maturities of 90 days or
less to be cash equivalents, including overnight repurchase agreements, investments in
municipal variable rate demand notes that have a seven-day put feature and institutional money
market funds.
(f)
Short-term Investments
Auction-rate securities are separately classified as short-term
investments in the consolidated financial statements and are accounted for as
available-for-sale securities under SFAS No. 115,
Accounting for Certain Investments in Debt
and Equity Securities
. As such, unrealized holding gains and losses are reported as a
component of other comprehensive income until realized. The carrying value of
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these securities was equal to their fair value as of September 30, 2006. We did not hold any
auction-rate securities at September 30, 2007. There were no realized gains or losses from the
sales of these securities during fiscal 2007.
(g)
Inventories
- Inventories are stated at the lower of cost or market. Cost is determined on a
first-in, first-out basis (FIFO).
We establish reserves against cost for excess and obsolete materials, finished goods whose shelf
life may expire before sale to customers, and other identified exposures. Such reserves were
$1,162,000 and $1,158,000 at September 30, 2007 and 2006, respectively. Management estimates
these reserves based on assumptions about future demand and market conditions. If actual demand
and market conditions were to be less favorable than such estimates, additional inventory
write-downs would be required and recorded in the period known. Such adjustments would
negatively affect gross profit margin and overall results of operations.
Prior to July 1, 2007, the cost of certain inventories within the Life Science operating segment
was determined by the last-in, first-out (LIFO) method. Effective July 1, 2007, we changed
our method of accounting for this inventory from the LIFO method to the FIFO method, and now
substantially all of our inventories are reflected at the lower of cost or market with cost
determined by the FIFO method. We changed to the FIFO method for these inventories because: it
conforms substantially all of our worldwide inventories to a consistent basis of accounting; and
it provides better comparability to our industry peers, many of whom use the FIFO method of
accounting for inventories. In accordance with Statement of Financial Accounting Standards
(SFAS) No. 154,
Accounting Changes and Error Corrections
, the change in accounting has been
retrospectively applied to all prior periods presented herein. The effects of the change as it
relates to our consolidated financial statements for the periods presented are as follows:
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Effect of
LIFO Method
FIFO Method
Change
$
90,577
$
90,577
$
34,871
34,826
(45
)
55,706
55,751
45
29,356
29,356
26,350
26,395
45
1,169
1,169
27,519
27,564
45
7,270
7,287
17
$
20,249
$
20,277
$
28
$
0.51
$
0.51
$
$
0.50
$
0.50
$
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Effect of
LIFO Method
FIFO Method
Change
$
108,413
$
108,413
$
43,742
43,729
(13
)
64,671
64,684
13
37,790
37,790
26,881
26,894
13
1,172
1,172
28,053
28,066
13
9,728
9,733
5
$
18,325
$
18,333
$
8
$
0.47
$
0.47
$
$
0.46
$
0.46
$
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Effect of
LIFO Method
FIFO Method
Change
$
92,965
$
92,965
$
38,184
38,075
(109
)
54,781
54,890
109
34,565
34,565
20,216
20,325
109
(620
)
(620
)
19,596
19,705
109
7,031
7,067
36
$
12,565
$
12,638
$
73
$
0.36
$
0.36
$
$
0.35
$
0.35
$
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Effect of
LIFO Method
FIFO Method
Change
$
18,825
$
18,179
$
(646
)
1,141
1,358
217
66,821
66,821
86,787
86,358
(429
)
38,881
38,881
$
125,668
$
125,239
$
(429
)
$
16,855
$
16,855
$
28,705
28,276
(429
)
80,108
80,108
108,813
108,384
(429
)
$
125,668
$
125,239
$
(429
)
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Effect of
LIFO Method
FIFO Method
Change
$
17,680
$
16,989
$
(691
)
1,387
1,651
264
62,102
62,102
81,169
80,742
(427
)
39,786
39,786
$
120,955
$
120,528
$
(427
)
$
26,178
$
26,178
$
19,917
19,490
(427
)
74,860
74,860
94,777
94,350
(427
)
$
120,955
$
120,528
$
(427
)
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Effect of
LIFO Method
FIFO Method
Change
$
16,785
$
16,081
$
(704
)
1,258
1,527
269
52,117
52,117
70,160
69,725
(435
)
40,409
40,409
$
110,569
$
110,134
$
(435
)
$
26,801
$
26,801
$
12,687
12,252
(435
)
71,081
71,081
83,768
83,333
(435
)
$
110,569
$
110,134
$
(435
)
(h)
Property, Plant and Equipment
- Property, plant and equipment are stated at cost. Upon
retirement or other disposition of property, plant and equipment, the cost and related
accumulated depreciation and amortization are removed from the accounts and the resulting gain
or loss is reflected in earnings. Maintenance and repairs are expensed as incurred.
Depreciation and amortization are computed on the straight-line method in amounts sufficient
to write-off the cost over the estimated useful lives as follows:
(i)
Intangible Assets and Application of SFAS Nos. 142 and 144
SFAS No. 142,
Goodwill and Other
Intangible Assets,
addresses accounting and reporting for acquired goodwill and other
intangible assets. SFAS No. 142 provides that goodwill and other intangible assets with
indefinite lives are subject to an annual impairment review (or more frequently if impairment
indicators arise) by applying a fair-value based test. We perform our annual impairment
review as of June 30, the end of our
third fiscal quarter. We have no intangible assets with indefinite lives other than goodwill.
There have been no impairments from the analyses prepared pursuant to SFAS No. 142. During
fiscal 2007, the change in goodwill was an increase of $100,000. This change consisted of an
increase related to the OEM Concepts earnout obligations for calendar 2006 and the first nine
months of calendar 2007 in the amount of $186,000 (Life Science operating segment), offset by a
decrease of $86,000 related to recognition of acquired tax benefits (US Diagnostics operating
segment). During fiscal 2006, the change in goodwill was an increase of $1,085,000. This
change
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Wtd Avg
2007
2006
Amort
Gross
2007
Gross
2006
Period
Carrying
Accumulated
Carrying
Accumulated
As of September 30,
(Yrs)
Value
Amortization
Value
Amortization
15
$
4,698
$
2,313
$
4,698
$
2,023
15
5,907
4,089
5,907
3,743
12
2,270
1,694
2,005
1,545
13
10,641
5,963
10,633
5,116
$
23,516
$
14,059
$
23,243
$
12,427
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2007, the carrying value of this
contract was zero. There have been no events or circumstances indicating that the carrying
value of other such assets may not be recoverable.
Meridians ability to recover its intangible assets, both identifiable intangibles and
goodwill, is dependent upon the future cash flows of the related acquired businesses and
assets. The application of SFAS Nos. 142 and 144 requires management to make judgments and
assumptions regarding future cash flows, including sales levels, gross profit margins,
operating expense levels, working capital levels, and capital expenditures. With respect to
identifiable intangibles and fixed assets, management also makes judgments and assumptions
regarding useful lives.
Management considers the following factors in evaluating events and circumstances for possible
impairment: (i) significant under-performance relative to historical or projected operating
results, (ii) negative industry trends, (iii) sales levels of specific groups of products
(related to specific identifiable intangibles), (iv) changes in overall business strategies and
(v) other factors.
If actual cash flows are less favorable than projections, this could trigger impairment of
intangible assets and other long-lived assets. If impairment were to occur, this would
negatively affect overall results of operations.
(j)
Revenue Recognition
Revenue is generally recognized from sales when product is shipped and
title has passed to the buyer. Revenue for the US Diagnostics operating segment is reduced at
the date of sale for estimated rebates that will be claimed by
customers. Management estimates accruals for rebate agreements based on historical statistics,
current trends, and other factors. Changes to the accruals are recorded in the period that
they become known. Our rebate accruals were $2,415,000 at September 30, 2007 and $2,181,000 at
September 30, 2006.
Life Science revenue for contract services may come from standalone arrangements for process
development and/or optimization work (contract research and development services) or custom
manufacturing, or multiple-deliverable arrangements that include process development work
followed by larger-scale manufacturing (both contract research and development services and
contract manufacturing services). Revenue is recognized based on the nature of the
arrangements, using the principles in EITF 00-21,
Revenue Arrangements with Multiple
Deliverables
. The framework in EITF 00-21 is based on each of the multiple deliverables in a
given arrangement having distinct and separate fair values. Fair values are determined via
consistent pricing between standalone arrangements and multiple deliverable arrangements, as
well as a competitive bidding process. Contract research and development services may be
performed on a time and materials basis or fixed fee basis. For time and materials
arrangements, revenue is recognized as services are performed and billed. For fixed fee
arrangements, revenue is recognized upon completion and acceptance by the customer. For
contract manufacturing services, revenue is recognized upon delivery of product and acceptance
by the customer.
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Trade accounts receivable are recorded in the accompanying consolidated balance sheet at
invoiced amounts less provisions for rebates and doubtful accounts. The allowance for doubtful
accounts represents our estimate of probable credit losses and is based on historical write-off
experience. The allowance for doubtful accounts and related metrics, such as days sales
outstanding, are reviewed monthly. Accounts with past due balances over 90 days are reviewed
individually for collectibility. Customer invoices are charged off against the allowance when
we believe it is probable the invoices will not be paid.
(k)
Research and Development Costs
- Research and development costs are charged to expense as
incurred. Research and development costs include, among other things, salaries and wages for
research scientists, materials and supplies used in the development of new products, and costs
for facilities and equipment.
(l)
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 years estimates. See Note 7.
(m)
Stock-based Compensation
We account for stock-based compensation pursuant to SFAS No. 123R,
Share-Based Payment
, which was adopted as of July 1, 2005. SFAS No. 123R requires recognition
of compensation expense for all share-based awards made to employees, based upon the fair
value of the share-based award on the date of the grant. Meridian elected to adopt the
provisions of SFAS No. 123R, utilizing the modified prospective method, which required
compensation expense be measured and recognized based on grant-date fair value for stock
option awards granted after July 1, 2005 and the non-vested portions of stock options awards
granted prior to July 1, 2005. See Note 8(b).
(n)
Derivative Financial Instruments
We account for our derivative financial instruments in
accordance with SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities
, as
amended. These instruments are designated as cash flow hedges, and therefore, the effective
portion of the net gain or loss on the derivative instrument is reported as a component of
accumulated other comprehensive income (loss) and reclassified into earnings in the same
period or periods during which the hedged transaction affects earnings. For the ineffective
portion of the hedge, gains or losses are charged to earnings in the current period. All
derivative instruments are recognized as either assets or liabilities at fair value in the
consolidated balance sheets. Cash flows from our hedging instruments are classified in
Operating Activities, consistent with cash flows from the related items being hedged. See
Note 6.
(o)
Comprehensive Income (Loss)
Comprehensive income represents the net change in shareholders
equity during a period from sources other than transactions with shareholders. Meridians
comprehensive income
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is comprised of net earnings, foreign currency translation, and changes
in the fair value of forward exchange contracts accounted for as cash flow hedges.
Components of beginning and ending accumulated other comprehensive income (loss), and related
activity, are shown in the following table (in thousands):
Accumulated
Currency
Other
Translation
Cash Flow
Tax
Comprehensive
Adjustment
Hedges
Benefits
Income (Loss)
$
(153
)
$
13
$
50
$
(90
)
981
981
94
94
(377
)
(377
)
(244
)
(244
)
$
828
$
(270
)
$
(194
)
$
364
(p)
Supplemental Cash flow Information
Supplemental cash flow information is as follows for
fiscal 2007 , 2006 and 2005 (dollars in thousands):
Year Ended September 30,
2007
2006
2005
$
12,412
$
6,734
$
7,067
37
106
493
1,775
648
11,737
(q)
Recent Accounting Pronouncements
During July 2006, the Financial Accounting Standards Board
issued Interpretation 48,
Accounting for Uncertainty in Income Taxes: An Interpretation of
FASB Statement No. 109
. Interpretation 48 establishes criteria that an individual tax
position would have to meet for some or all of the benefit of that position to be recognized
in an entitys financial statements. Interpretation 48 also establishes disclosure criteria
for tax contingency reserves. We will be required to adopt Interpretation 48 during the first
quarter of fiscal 2008. At this time, we are unable to determine the impact that adoption of
this pronouncement will have on our financial condition.
During September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
. SFAS 157 defines
fair value and provides a framework for measuring fair value,
including a hierarchy that prioritizes the inputs to valuation techniques into three broad
levels. This fair value hierarchy gives the highest priority to quoted prices in active
markets for identical assets and liabilities and the lowest priority to unobservable inputs.
We are required to adopt SFAS 157 in fiscal 2009. We are currently in the process of
evaluating the impact of SFAS 157 on our financial statements.
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During February 2007, the FASB issued SFAS 159,
The Fair Value Option for Financial Assets and
Financial Liabilities Including an Amendment of FASB Statement No. 115
. SFAS 159 permits an
entity to choose to measure certain financial instruments and other items at fair value where
such financial instruments and other items are not currently required to be measured at fair
value. For financial instruments and other items where the fair value option is elected,
unrealized gains and losses are reported in earnings. We are required to adopt SFAS 159 in
fiscal 2009. We are currently in the process of evaluating the impact of SFAS 157 on our
financial statements.
(r)
Shipping and Handling costs
Shipping and handling costs invoiced to customers are included
in net sales. Costs to distribute products to customers, including inbound freight costs,
warehousing costs, and other shipping and handling activities are included in cost of goods
sold.
(s)
Non-income Government-Assessed Taxes
We classify all non-income government-assessed taxes
(sales, use, and value-added) collected from customers and remitted by us to appropriate
revenue authorities, on a net basis (excluded from net sales) in the accompanying consolidated
statements of operations.
(t)
Reclassifications
Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation.
(2)
OEM Concepts Acquisition
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$
7,056
$
207
505
643
47
145
5,527
2,709
9
9,792
233
2,062
441
2,736
$
7,056
As of September 30,
2007
2006
$
4,816
$
4,024
5,141
4,578
8,214
8,387
$
18,171
$
16,989
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Notional
Contract
Estimated Fair
Average
Amount
Value
Value
Exchange Rate
Maturity
4,200
$
5,756
$
6,003
1.3703
FY 2008
300
$
421
$
429
1.4021
FY 2009
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Year Ended September 30,
2007
2006
2005
$
33,324
$
25,365
$
17,640
3,358
2,701
2,065
$
36,682
$
28,066
$
19,705
$
11,179
$
8,902
$
6,550
(105
)
(65
)
(57
)
(249
)
(588
)
(227
)
238
(88
)
(467
)
(678
)
(339
)
(65
)
(258
)
2
(163
)
(2,425
)
7,702
7,824
5,571
1,250
814
600
1,009
1,095
896
$
9,961
$
9,733
$
7,067
Year Ended September 30,
2007
2006
2005
$
12,839
35.0
%
$
9,824
35.0
%
$
6,895
35.0
%
835
2.3
685
2.4
500
2.5
(213
)
(0.6
)
(88
)
(0.3
)
(166
)
(0.8
)
117
0.6
170
0.5
145
0.5
19
0.1
(309
)
(0.8
)
(56
)
(0.2
)
(275
)
(1.0
)
(306
)
(1.6
)
(290
)
(0.8
)
(236
)
(0.8
)
(418
)
(1.1
)
(281
)
(1.0
)
(2,425
)
(6.6
)
(172
)
(0.5
)
(41
)
(0.1
)
8
0.1
$
9,961
27.2
%
$
9,733
34.7
%
$
7,067
35.9
%
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As of September 30,
2007
2006
$
922
$
1,465
1,237
503
920
890
472
176
90
225
3,641
3,259
(569
)
(888
)
3,072
2,371
(711
)
(830
)
(2,918
)
(3,190
)
(750
)
(458
)
(4,379
)
(4,478
)
$
(1,307
)
$
(2,107
)
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(a)
Savings and Investment Plan
- We have a profit sharing and retirement savings plan covering
substantially all full-time US employees. Profit sharing contributions to the plan, which are
discretionary, are approved by the Board of Directors. The plan permits participants to
contribute to the plan through salary reduction. Under terms of the plan, we match 50% of an
employees contributions, up to maximum match of 3% of compensation. Our discretionary and
matching contributions to the plan amounted to approximately $1,132,000, $1,066,000, and
$1,006,000, during fiscal 2007, 2006 and 2005, respectively.
(b)
Stock-Based Compensation Plans
We have one active stock based compensation plan, the 2004
Equity Compensation plan, which became effective December 7, 2004, as amended (the 2004
Plan) and an Employee Stock Purchase Plan (The ESP Plan), which became effective October 1,
1997. Effective October 1, 1997, we began selling shares of stock to our full-time and
part-time employees under the ESP Plan up to the number of shares equivalent to a 1% to 15%
payroll deduction from an employees base salary plus an additional 5% dollar match of this
deduction by Meridian.
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We may grant new shares for options for up to 1,462,500 shares under the 2004 Plan, of which we
have granted 976,000 through September 30, 2007. Options may be granted at exercise prices not
less than 100%
of the closing market value of the underlying common shares on the date of grant and have
maximum terms up to ten years. Vesting schedules are established at the time of grant and may
be set based on future service periods, achievement of performance targets, or a combination
thereof. All options contain provisions restricting their transferability and limiting their
exercise in the event of termination of employment or the disability or death of the optionee.
We have granted options for 5,407,000 shares under similar plans that have expired.
We adopted SFAS No. 123(R),
Share-Based Payment
, as of July 1, 2005. SFAS No. 123(R) requires
recognition of compensation expense for all share-based payments made to employees, based upon
the fair value of the share-based payment on the date of the grant. We elected to adopt the
provisions of SFAS No. 123(R), pursuant to the modified prospective method, which requires
compensation expense be measured and recognized based on grant-date fair value for stock option
awards granted after July 1, 2005 and the non-vested portions of stock option awards granted
prior to July 1, 2005.
Prior to July 1, 2005, we accounted for our stock based compensation plans pursuant to the
intrinsic value method in APB No. 25. Had compensation cost for these plans been determined
using the fair value method provided in SFAS No. 123(R), our net earnings for fiscal 2005 would
have been $12,376,000, compared to a reported amount of $12,638,000. Basic earnings per share
for fiscal 2005 would have been $0.35, compared to a reported amount of $0.36. Diluted earnings
per share for fiscal 2005 would have been $0.34, compared to a reported amount of $0.35.
The amount of stock-based compensation expense reported was $2,632,000, $1,082,000 and $279,000
in fiscal 2007, fiscal 2006, and fiscal 2005, respectively. The total income tax benefit
recognized in the income statement for these stock-based compensation arrangements was $668,000,
$339,000, and $65,000, for fiscal 2007, fiscal 2006, and fiscal 2005, respectively. We expect
stock compensation expense for unvested options as of September 30, 2007 to be $1,565,000, which
will be recognized during fiscal years 2008 through 2011.
SFAS No. 123(R) requires that we recognize compensation expense only for the portion of shares
that we expect to vest. As such, we apply estimated forfeiture rates to our compensation
expense calculations. These rates have been derived using historical forfeiture data,
stratified by several employee groups. During fiscal 2007, we recorded $210,000 in stock
compensation expense to adjust estimated forfeiture rates to actual.
We have elected to use the Black-Scholes option pricing model to determine grant-date fair
value, with the following assumptions for fiscal 2007 and 2006: (i) expected share price
volatility based on implied volatility calculations using options for Meridian and a peer-group
of companies; (ii) expected life of
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options based on contractual lives, employees historical
exercise behavior and employees historical post-vesting employment termination behavior; (iii)
risk-free interest rates based on treasury rates that
correspond to the expected lives of the options; and (iv) dividend yield based on the expected
yield on underlying Meridian common stock.
Year Ended September 30,
2007
2006
2005
4.64
%
4.3%-4.4
%
3.8%-4.3
%
1.96
%
1.55
%
2.3%-5.4
%
5.80-7.50 yrs.
5.70-7.50 yrs.
6.25-7.00 yrs.
44
%
46
%
52%-54
%
0%-20
%
0%-20
%
5%-38
%
A summary of the status of our stock option plans at September 30, 2007 and changes during the
year is presented in the table and narrative below:
Wtd Avg
Wtd Avg
Exercise
Remaining
Aggregate
Shares
Price
Life (Yrs)
Intrinsic Value
1,919,696
$
5.48
358,925
16.65
(336,433
)
3.91
(9,256
)
13.14
(1,048
)
6.11
1,931,884
$
7.79
5.9
$
43,524,000
647,520
$
4.80
4.1
$
16,524,000
Weighted-
Average Grant
Date Fair
Shares
Value
1,151,595
$
2.93
358,925
7.10
(216,900
)
3.34
(9,256
)
5.74
1,284,364
$
4.03
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The weighted average grant-date fair value of options granted was $7.10, $6.54, and $3.21 for
fiscal 2007, 2006, and 2005, respectively. The total intrinsic value of options exercised was
$5,526,000, $2,648,000 and
$3,659,000, for fiscal 2007, fiscal 2006, and 2005, respectively. The total grant-date fair
value of options that vested during fiscal 2007, 2006, and 2005 was $721,000, $296,000 and
$235,000, respectively.
Cash received from options exercised was $1,315,000, $990,000, and $3,302,000 for fiscal 2007,
2006, and 2005, respectively. Tax benefits realized and recorded to additional paid-in capital
from option exercises totaled $1,632,000, $732,000, and $654,000 for fiscal 2007, 2006, and 2005
respectively.
Year Ended September 30,
2007
2006
2005
$
24,678
(20
%)
$
20,014
(18
%)
$
15,512
(17
%)
$
13,340
(11
%)
$
10,989
(10
%)
$
8,244
(9
%)
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Year Ended September 30,
2007
2006
2005
$
7,838
$
6,840
$
6,221
3,070
2,387
2,365
1,987
1,571
1,454
1,610
1,372
1,125
1,558
1,504
1,303
7,500
6,154
5,350
$
23,563
$
19,828
$
17,818
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US
European
Life
Diagnostics
Diagnostics
Science
Elim (1)
Total
$
74,845
$
23,563
$
24,555
$
$
122,963
8,872
532
(9,404
)
26,825
4,559
3,795
(149
)
35,030
2,641
110
1,648
4,399
1,645
52
1,514
3,211
115,297
13,600
45,410
(41,609
)
132,698
$
65,721
$
19,828
$
22,864
$
$
108,413
7,171
712
(7,883
)
20,169
3,540
3,144
41
26,894
2,586
129
2,574
5,289
2,040
37
1,043
3,120
109,678
12,716
41,751
(43,617
)
120,528
$
53,485
$
17,818
$
21,662
$
$
92,965
6,553
15
804
(7,372
)
13,655
2,315
4,251
104
20,325
2,667
147
1,438
4,252
1,477
89
1,024
2,590
99,878
11,552
38,947
(40,243
)
110,134
(1)
Eliminations consist of intersegment transactions.
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Year Ended September 30,
2007
2006
2005
$
35,030
$
26,894
$
20,325
1,642
1,123
43
(38
)
(128
)
(770
)
48
177
107
$
36,682
$
28,066
$
19,705
(a)
Royalty Commitments
We have entered into various license agreements that require payment of
royalties based on a specified percentage of the sales of licensed products (1% to 8%). These
royalty expenses are recognized on an as-earned basis and recorded in the year earned as a
component of cost of sales. Annual royalty expenses associated with these agreements were
approximately $739,000, $866,000, and $743,000, respectively, for the fiscal years ended
September 30, 2007, 2006 and 2005.
During October 2006, we entered into a license agreement with Eiken Chemical Co., Ltd., that
provides rights to Eikens loop-mediated isothermal amplification technology for infectious
disease testing in the United States and 18 other geographic markets. The agreement calls for
payments of up to 200,000,000 Japanese Yen (approximately $1,740,000) based on the achievement
of certain milestones and on-going royalties once products are available for commercial sale.
Payments made during product development are expected to occur over a five-year period and began
in fiscal 2007 with a payment equal to 20,000,000 Japanese Yen or $169,000.
During the fourth quarter of fiscal 2007, we began seeking recovery of approximately $1,400,000
of past royalties paid and interest under a license agreement around certain rapid diagnostic
testing technology. This license agreement covered patent rights that were narrowed in scope
via other litigation with the licensor that did not involve Meridian. We strongly believe that
the licensed patent, as reissued, does not cover any of our products. We also ceased further
royalty payments under this license agreement. The licensor to this agreement disputes our
position that the patent, as reissued, does not cover our products.
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Although we believe that
our position is very strong, we are unable to predict the outcome of this matter.
No provision has been made in the accompanying financial statements for on-going royalties, if
any, nor has any accrual or income been recorded for recovery of past royalties paid.
(b)
Purchase Commitments
We have purchase commitments primarily for inventory and service items
as part of the normal course of business. Commitments made under these obligations are
$9,305,000 and $385,000 for fiscal 2008 and fiscal 2009, respectively. No commitments have
been made for fiscal 2010, 2011, or 2012.
(c)
Operating Lease Commitments
- Meridian and its subsidiaries are lessees of (i) office and
warehouse buildings in Florida, Belgium, and France; (ii) automobiles for use by the direct
sales forces in the US and Europe; and (iii) certain office equipment such as facsimile
machines and copier machines across all business units, under operating lease agreements that
expire at various dates. Amounts charged to expense under operating leases were $696,000,
$686,000 and $621,000 for fiscal 2007, 2006 and 2005, respectively. Operating lease
commitments for each of the five succeeding fiscal years are as follows: fiscal 2008 -
$599,000, fiscal 2009 $464,000, fiscal 2010 $260,000, fiscal 2011 $98,000, and fiscal
2012 $95,000.
(d)
Litigation
We are a party to litigation that we believe is in the normal course of
business. The ultimate resolution of these matters is not expected to have a material adverse
effect on our financial position, results of operations or cash flows. No provision has been
made in the accompanying consolidated financial statements for these matters.
(e)
Indemnifications
In conjunction with certain contracts and agreements, we may provide
routine indemnifications whose terms range in duration and in some circumstances are not
explicitly defined. The maximum obligation under some such indemnifications is not explicitly
stated and, as a result, cannot be reasonably estimated. We have not made any payments for
these indemnifications and no liability is recorded at September 30, 2007 and September 30,
2006. We believe that if we were to incur a loss on any of these matters, the loss would not
have a material effect on our financial condition.
(f)
Viral Antigens Earnout
The purchase agreement for the Viral Antigens purchase acquisition provided for additional
consideration, contingent upon Viral Antigens earnings through September 30, 2006. Final
earnout consideration in the amount of $853,000 for fiscal 2006 was paid during the second
quarter of fiscal 2007. This amount is included in goodwill in the accompanying consolidated
balance sheets.
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(g)
OEM Concepts Earnout
The purchase agreement for the OEM Concepts acquisition provides for additional consideration,
up to a maximum remaining amount of $1,819,000 at September 30, 2007, contingent upon future
calendar year sales and gross profit of OEM Concepts products through December 31, 2008.
Earnout consideration in the amount of $118,000 related to calendar 2006 was paid during fiscal
2007. Earnout consideration in the amount of $152,000 related to the nine-month period ended
September 30, 2007 has been accrued in the accompanying consolidated balance sheet. Future
earnout consideration, if any, will be allocated to goodwill, and will be recorded in the period
in which it is earned and payable.
All quarters of fiscal 2007 and fiscal 2006 have been adjusted to reflect the change in
accounting for certain inventories within the Life Science operating segment from the LIFO
method to the FIFO method. See further detail regarding this change in Note 1(g).
Amounts are in thousands except per share data. The sum of the earnings per common share and
cash dividends per share may not equal the corresponding annual amounts due to interim quarter
rounding.
For the Quarter Ended in Fiscal
September
2007
December 31
March 31
June 30
30
As
As
As
Previously
As
Previously
As
Previously
As
Reported
Adjusted
Reported
Adjusted
Reported
Adjusted
$
28,720
$
28,720
$
32,094
$
32,094
$
29,763
$
29,763
$
32,386
17,597
17,612
18,823
18,838
19,286
19,301
19,189
5,564
5,573
5,881
5,890
8,804
8,814
6,444
0.14
0.14
0.15
0.15
0.22
0.22
0.16
0.14
0.14
0.15
0.15
0.22
0.22
0.16
0.08
0.08
0.11
0.11
0.11
0.11
0.11
For the Quarter Ended in Fiscal
2006
December 31
March 31
June 30
September 30
As
As
As
As
Previously
As
Previously
As
Previously
As
Previously
As
Reported
Adjusted
Reported
Adjusted
Reported
Adjusted
Reported
Adjusted
$
24,908
$
24,908
$
28,272
$
28,272
$
26,583
$
26,583
$
28,650
$
28,650
15,150
15,150
16,580
16,640
16,355
16,385
16,586
16,509
3,962
3,962
4,723
4,760
4,862
4,881
4,778
4,730
0.10
0.10
0.12
0.12
0.12
0.12
0.12
0.12
0.10
0.10
0.12
0.12
0.12
0.12
0.12
0.12
0.05
0.05
0.08
0.08
0.08
0.08
0.08
0.08
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On September 21, 2005, we issued 2,700,000 common shares at an offering price of $11.67 per
share. The number of shares issued and the offering price per share have been adjusted to
reflect the May 2007 stock split discussed below. The net proceeds from the offering, after
underwriting discounts and offering costs totaling $1,920,000, were approximately $29,580,000.
Underwriting discounts and offering costs incurred in connection with this offering are
reflected as a reduction of shareholders equity.
On August 15, 2005, we announced a three-for-two stock split, with fractional shares paid in
cash. This split was effective on September 2, 2005 to shareholders of record as of August 29,
2005. On April 19, 2007, we announced a three-for-two stock split, with fractional shares paid
in cash. This split was effective on May 11, 2007, for shareholders of record on May 4, 2007.
All references in this Annual Report on Form 10-K to number of shares and per share amounts
reflect these stock splits.
ON ACCOUNTING AND FINANCIAL DISCLOSURE
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Table of Contents
Exhibit Number
Description of Exhibit
Filing Status
Articles of Incorporation, including amendments
not related to Company name change
A
Code of Regulations
B
Sublicense Agreement dated June 17, 1993 among
Johnson & Johnson, the Scripps Research Institute
and Meridian Concerning certain Patent Rights
E
Assignment dated June 17, 1993 from Ortho
Diagnostic Systems Inc. to Meridian concerning
certain Patent Rights
E
Agreement dated January 24, 1994 between Meridian
Diagnostics, Inc. and Immulok, Inc.
F
Asset Purchase Agreement dated June 24, 1996
between Cambridge Biotech Corporation and Meridian
Diagnostics, Inc.
G
Merger Agreement among Gull Laboratories, Inc.,
Meridian Diagnostics, Inc. Fresenius AG and
Meridian Acquisition Co. dated as of September 15,
1998
H
Savings and Investment Plan Prototype Adoption
Agreement
S
1994 Directors Stock Option Plan
J
1996 Stock Option Plan
K
Salary Continuation Agreement for John A. Kraeutler
L
First Amendment to Merger Agreement Among Gull
Laboratories, Inc., Meridian Diagnostics, Inc.
Fresenius AG and Meridian Acquisition Co.
M
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Exhibit Number
Description of Exhibit
Filing Status
1999 Directors Stock Option Plan
N
Dividend Reinvestment Plan
P
Merger Agreement dated September 13, 2000 among
Meridian and the Shareholders of Viral Antigens, Inc.
O
Employment Agreement Dated February 15, 2001 between
Meridian and John A. Kraeutler, including the Addendum
to Employment Agreement dated April 24, 2001 between
Meridian and John A. Kraeutler
R
Sample Option Agreement Dated October 1, 2001
R
1996 Stock Option Plan as Amended and Restated
Effective January 23, 2001
Q
Sample Option Agreement Dated November 19, 2002
S
Agreement Concerning Disability and Death dated
September 10, 2003, between Meridian and William J.
Motto
S
Professional Services Agreement dated October 1, 2002
between Meridian and Antonio Interno
S
Stock Purchase Agreement of OEM Concepts, Inc. by
Meridian Bioscience, Inc. dated January 31, 2005
W
Sample Option Agreement dated November 10, 2005
W
2004 Equity Compensation Plan, Amended and Restated
through January 19, 2006
V
Fiscal 2006 Officers Compensation Plan, Amended and
Restated through January 19, 2006
V
Sample Option Agreement dated November 14, 2007
Filed herewith
Fiscal 2007 Officers Performance Compensation Plan
X
Amended and Restated Revolving Note with Fifth Third
Bank dated August 1, 2007
Filed herewith
2008 Annual Report to Shareholders
(1
)
Code of Ethics
S
Grant Thornton Preferability Letter
Filed herewith
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Exhibit Number
Description of Exhibit
Filing Status
Subsidiaries of the Registrant
Filed herewith
Consent of Independent Registered Public Accounting Firm
Filed herewith
Certification of Principal Executive Officer required
by Rule 13a-14(a)
Filed herewith
Certification of Principal Financial Officer required
by Rule 13a-14(a)
Filed herewith
Section 1350 Certification of Chief Executive Officer
and Chief Financial Officer
Filed herewith
(1)
Only portions of the 2007 Annual Report to Shareholders specifically are incorporated by
reference in this Form 10-K as filed herewith. A supplemental paper copy of the 2007 Annual Report
to Shareholders has been provided to the Securities and Exchange Commission for informational
purposes only.
*
Management Compensatory Contracts
A.
Registration Statement No. 333-02613 on Form S-3 filed with the Securities and Exchange
Commission on April 18, 1996.
B.
Registration Statement No. 33-6052 filed under the Securities Act of 1933.
C.
Registration Statement No. 333-11077 on Form S-3 filed with the Securities and Exchange
Commission on August 29, 1996.
D.
Meridians Schedule T-O filed with the Securities and Exchange Commission on October 24, 2003.
E.
Meridians Form 8-K filed with the Securities and Exchange Commission on June 17, 1993.
F.
Meridians Forms 8-K filed with the Securities and Exchange Commission on February 8, 1994
and April 6, 1994.
G.
Meridians Form 8-K filed with the Securities and Exchange Commission on July 2, 1996.
H.
Meridians Form 8-K filed with the Securities and Exchange Commission on September 17, 1998.
I.
Not used.
J.
Registration Statement No. 33-78868 on Form S-8 filed with the Securities and Exchange
Commission on May 12, 1994.
K.
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 1996.
L.
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 1995.
M.
Companys Report on Form 8-K filed with the Securities and Exchange Commission filed on
November 13, 1998.
N.
Meridians Proxy Statement filed with the Securities and Exchange Commission on December 21,
1998.
O.
Meridians Current Report on Form 8-K dated September 29, 2000.
Table of Contents
P.
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 1999.
Q.
Registration Statement No. 333-75312 on Form S-8 filed with the Securities and Exchange
Commission on December 17, 2001
R.
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2001.
S.
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2003.
T.
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2004.
U.
Meridians Proxy Statement filed with the Securities and Exchange Commission on December 23,
2004.
V.
Meridians Form 8-K dated January 19, 2006.
W.
Meridians Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2005.
X.
Meridians Form 8-K filed November 21, 2006
MERIDIAN BIOSCIENCE, INC.
By:
/s/ William J. Motto
Date: November 30, 2007
William J. Motto
Chairman of the Board
and Chief Executive Officer
Table of Contents
Signature
Capacity
Date
Chairman of the Board of
Directors and Chief Executive
Officer (Principal Executive
Officer)
November 30, 2007
President and Chief Operating
Officer, Director
November 30, 2007
Vice President and Chief
Financial Officer
November 30, 2007
Director
November 30, 2007
Director
November 30, 2007
Director
November 30, 2007
Director
November 30, 2007
Table of Contents
Meridian Bioscience, Inc.
and Subsidiaries
(Dollars in thousands)
Charged
Balance at
to Costs
Balance
Beginning
and
at End of
Description
of Period
Expenses
Deductions
Other
(a)
Period
$
408
19
(200
)
31
$
258
1,158
259
(258
)
3
1,162
888
(390
)
71
569
$
360
$
132
$
(102
)
$
18
$
408
556
822
(221
)
1
1,158
927
(32
)
(7
)
888
$
479
$
(37
)
$
(88
)
$
6
$
360
271
494
(369
)
160
556
1,177
(223
)
(27
)
927
(a)
Balances reflect the effects of currency translation (fiscal years 2005-2007) and the
acquisition of OEM Concepts January 31, 2005 (fiscal year 2005).
Optionee:
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<<Optionee Name>> | |||
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Number of Shares Covered by Option:
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**<<Number of Shares>>** | |||
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Option Price Per Share:
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**$<<Share Price>** | |||
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||||
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Date of Grant:
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<<Option Date>> | |||
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Expiration Date:
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<<Expiration Date>> | |||
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BY: | |||
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Name: | Melissa Lueke | ||
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Its: | Vice President, Chief Financial Officer |
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Date Accepted
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<<Optionee Name>> |
2
3
4
5
6
7
8
9
10
11
12
13
Level I Status Funded | Level II Status Funded | Level III Status Funded | ||||||||||
Debt/EBITDA | Debt/EBITDA | Debt/EBITDA | ||||||||||
Applicable Margin | ≤1.00:1.00 | >1.00:1.00≤2.00:1.00 | >2.00:1.00<3.00:1.00 | |||||||||
Libor Rate/Euro
Libor Rate
Revolver
|
+0.65 | % | +0.75 | % | +1.25 | % |
Level I Status Funded | Level II Status Funded | Level III Status Funded | ||||
Debt/EBITDA | Debt/EBITDA | Debt/EBITDA | ||||
Applicable Margin | ≤1.00:1.00 | >1.00:1.00≤2.00:1.00 | >2.00:1.00<3.00:1.00 | |||
Unused Fee
|
10 basis points | 10 basis points | 10 basis points | |||
|
||||||
Libor Rate/Euro
Libor Rate Revolver
|
+0.50% | +0.60% | +1.10% |
14
15
(i) | Agent must give Bank written notices of its intention to use the Foreign Currency Option at least 3 days prior to the actual funding date. Such written notice shall specify the actual funding date, the principal amount of such funding and state that the Borrowers are not then in default under the terms of this Agreement. |
16
(ii) | Borrowers, right to elect a Foreign Currency Option for any portion of outstanding Loans is subject to the following limitations: (A) the total number of Foreign Currency Options outstanding at any one time under this Agreement shall not exceed five; (B) Borrowers may not elect a Foreign Currency Option at a time when an Event of Default has occurred and has not been waived; (C) no Foreign Currency Option shall end later than the maturity date of the Note evidencing the borrowing of the relevant principal amount; and (D) once a Foreign Currency Option has been selected for a portion of the Loans, no other Foreign Currency Option may apply to that same portion of the Loans until the expiration of the interest period applicable to such Foreign Currency Option (but nothing in this clause (D) shall be construed as prohibiting separate Foreign Currency Options on different portions of the Loans as contemplated by clause (A) of this paragraph). | ||
(iii) | Borrowers right to elect a Foreign Currency Option shall be suspended automatically if Bank, by telephonic or telegraphic or other written notice, notifies Borrowers that foreign currency contracts which have a maturity corresponding to the proposed interest period, in an amount equal to the amount requested to be subject to a Foreign Currency Option, are not readily available. Such suspension shall end automatically upon termination of the circumstances originally creating the suspension. |
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
|
To Borrowers: | Meridian Bioscience, Inc., as agent for itself and for | ||
|
Meridian Bioscience Corporation | |||
|
Omega Technologies, Inc. | |||
|
Meridian Life Science, Inc. | |||
|
3471 River Hills Drive | |||
|
Cincinnati, Ohio 45244 | |||
|
Attention: Chief Financial Officer | |||
|
||||
|
With copy to: | James M. Jansing, Esq. | ||
|
Keating, Muething & Klekamp | |||
|
1400 Provident Tower | |||
|
One E. 4th Street | |||
|
Cincinnati, Ohio 45202 | |||
|
||||
|
To Bank: | Fifth Third Bank | ||
|
38 Fountain Square Plaza | |||
|
Cincinnati, Ohio 45263 | |||
|
Attention: Commercial Loan Department |
34
MERIDIAN BIOSCIENCE CORPORATION | MERIDIAN BIOSCIENCE, INC. | |||||||||
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By:
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By: | |||||||||
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Its:
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Its: | |||||||||
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OMEGA TECHNOLOGIES, INC. | MERIDIAN LIFE SCIENCE, INC. | |||||||||
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By:
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By: | |||||||||
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Its:
|
Its: | |||||||||
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FIFTH THIRD BANK | ||||||||||
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||||||||||
By:
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||||||||||
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||||||||
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||||||||||
Its:
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||||||||||
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35
$30,000,000 |
Cincinnati, Ohio
Dated: August 1, 2007 |
41
MERIDIAN BIOSCIENCE CORPORATION | MERIDIAN BIOSCIENCE, INC. | |||||||
|
||||||||
By:
|
By: | |||||||
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||||||||
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||||||||
Its:
|
Its: | |||||||
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OMEGA TECHNOLOGIES, INC. | MERIDIAN LIFE SCIENCE, INC. | |||||||
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By:
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By: | |||||||
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Its:
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Its: | |||||||
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42
FY 2007
FY 2006
FY 2005
FY 2004
FY 2003
Net sales
$122,963
$108,413
$92,965
$79,606
$65,864
74,940
64,684
54,890
45,955
38,383
35,030
26,894
20,325
14,956
12,884
26,721
18,333
12,638
9,366
7,077
$
0.67
$
0.47
$
0.36
$
0.28
$
0.21
$
0.66
$
0.46
$
0.35
$
0,27
$
0.21
$
0.40
$
0.28
$
0.20
$
0.17
$
0.15
$
2.83
$
2.40
$
2.14
$
0.96
$
0.81
30-Sep-07
30-Sep-06
30-Sep-05
30-Sep-04
30-Sep-03
$
93,745
$
80,742
$
69,725
$
35,603
$
31,872
17,067
20,617
19,791
16,650
15,330
132,698
120,528
110,134
68,814
65,731
1,803
2,684
17,093
21,505
112,948
94,350
83,333
32,424
26,795
The private securities Litigation Reform Act of 1995
provides a safe harbor from civil litigation for
forward-looking statements accompanied by meaningful cautionary
statements. Except for
historical information, this report contains forward-looking
statements which may be identified by
words such as estimates, anticipates, projects, plans, seeks,
may, will, expects, intends,
believes, should and similar expressions or the
negative versions thereof and which
also may be identified by their context. Such statements,
whether expressed or implied, are based
upon current expectations of the Company and speak only as of
the date made. The Company assumes no obligation to publicly update any
forward-looking statements. These statements
are subject to various risks, uncertainties and other factors that could
cause actual results to differ
materially, including, without limitation, the following:
Meridians 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 Meridians 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 result. One
of Meridians 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 Meridians operations. In addition to the factors described
in the paragraph, Part 1, Item 1A Risk Factors of our Form 10-K contains a list of uncertainties and risks that may affect the financial performance of the Company.
Corporate Data | Meridian Bioscience, Inc. and Subsidiaries | |
Corporate Headquarters
|
Annual Meeting | |
3471 River Hills Drive
|
The annual meeting of the shareholders will be held on | |
Cincinnati, Ohio 45244
|
Tuesday, January 22, 2008 at 3:00 p.m. Eastern Time at the | |
(513) 271-3700
|
Holiday Inn Eastgate, 4501 Eastgate Boulevard, Cincinnati, | |
|
OH 45245. | |
Legal Counsel
|
Directions to the Holiday Inn Eastgate can be found on our | |
Keating Muething & Klekamp PLL
|
website: www.meridianbioscience.com | |
Cincinnati, Ohio
|
||
|
||
Independent Public Accountants
|
||
Grant Thornton LLP
|
||
Cincinnati, Ohio
|
||
|
||
Transfer Agent, Registrar and Dividend
|
||
Reinvestment Administration
|
||
Shareholders requiring a change of name, address or ownership
of stock, as well as information about shareholder records, lost or
stolen certificates, dividend checks, dividend direct deposit, and
dividend reinvestment should contact: Computershare Investor
Services LLC, P. O. Box 43078, Providence, RI 02940-3078;
(888) 294-8217 or (312) 601-4332: e-mail web.queries@com-
putershare.com; or submit your inquiries online through www.computershare.com/contactus.
|
Years Ended September 30, | 2007 | 2006 | ||||||||||||||
Quarter ended: | High | Low | High | Low | ||||||||||||
December 31
|
17.160 | 13.840 | 15.340 | 11.840 | ||||||||||||
March 31
|
19.950 | 16.250 | 18.490 | 13.410 | ||||||||||||
June 30
|
22.470 | 18.390 | 18.670 | 14.310 | ||||||||||||
September 30
|
31.200 | 21.300 | 16.890 | 12.830 |
* | $100 invested on 9/30/02 in stock or index-including reinvestment of dividends. Fiscal year ending September 30. |
1. | Omega Technologies, Inc., an Ohio corporation | |
2. | Meridian Bioscience Corporation, an Ohio corporation | |
3. | Meridian Bioscience Europe, s.r.l., an Italian corporation | |
4. | Meridian Life Science, Inc., a Maine corporation | |
5. | Meridian Bioscience Europe S.A., a Belgian corporation | |
6. | Gull Europe S.A. Holding, a Belgian corporation | |
7. | Meridian Bioscience Europe B.V., a Dutch corporation |
1. | I have reviewed this annual report on Form 10-K of Meridian Bioscience, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ William J. Motto
|
||
|
||
Chairman of the Board and
|
||
Chief Executive Officer
|
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Melissa Lueke
|
||
|
||
Vice President and
|
||
Chief Financial Officer
|
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ William J. Motto
|
||
|
||
Chairman of the Board and
|
||
Chief Executive Officer
|
||
November 30, 2007
|
||
|
||
/s/ Melissa Lueke
|
||
|
||
Vice President and
|
||
Chief Financial Officer
|
||
November 30, 2007
|