☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of each class
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Trading Symbol
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Name of each exchange of which registered
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Common Shares, No Par Value
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VIVO
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The NASDAQ Stock Market LLC
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(NASDAQ Global Select Market)
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging
G
rowth
C
ompany
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☐
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Page
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Item 1
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4
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Item 1A
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11
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Item 1B
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20
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Item 2
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21
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Item 3
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21
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Item 4
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22
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Item 5
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22
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Item 6
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24
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Item 7
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24
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Item 7A
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33
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Item 8
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34
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Item 9
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68
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Item 9A
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68
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Item 9B
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68
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Item 10
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69
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Item 11
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69
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Item 12
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69
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Item 13
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69
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Item 14
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69
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Item 15
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70
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Item 16
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72
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Type of Segment Information
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Location within Annual Report on Form
10-K
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Physical locations and activities
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Item 2. “Properties”
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Revenue by geographic region
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Item 7. “Management’s Discussion and Analysis of Financial Condition & Results of Operations” (hereafter “MD&A”)
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Financial information
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Note 9 of Consolidated Financial Statements
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• |
Real-time PCR Amplification (Revogene brand)
1-8
tests per run in about one hour. Current menu includes four
FDA-cleared
assays. Simple sample prep, footprint and test turnaround time make the Revogene platform suitable for Integrated Delivery Networks (“IDNs”) and hospital systems using a decentralized testing approach.
|
• |
Isothermal DNA Amplification (Alethia brand)
C. difficile,
Streptococcus
Streptococcus
|
• |
Lateral Flow Immunoassay (Curian brand)
time-to-result
analyzer readout in 20 minutes. The 510(k) application for the Curian instrument and its first assay, a stool antigen test for
H. pylori
|
• |
Rapid Immunoassay (Immuno
Card
Card
single-use
immunoassays that have fast turnaround times (generally under 20 minutes); and can reduce expensive send-outs for hospitals and outpatient clinics.
|
• |
Enzyme-linked Immunoassay (PREMIER brand)
|
• |
Anodic Stripping Voltammetry (LeadCare and PediaStat brands)
|
Income Statement Information (Amounts in thousands, except per share data)
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||||||||||||||||||||
For the Year Ended September 30,
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||
Net revenues
|
$ |
201,014
|
$ |
213,571
|
$ |
200,771
|
$ |
196,082
|
$ |
194,830
|
||||||||||
Gross profit
|
118,325
|
130,697
|
124,292
|
127,212
|
121,882
|
|||||||||||||||
Operating income
|
32,699
|
31,584
|
37,382
|
51,378
|
56,060
|
|||||||||||||||
Net earnings
|
24,382
|
23,849
|
21,557
|
32,229
|
35,540
|
|||||||||||||||
Basic earnings per share
|
$ |
0.57
|
$ |
0.56
|
$ |
0.51
|
$ |
0.77
|
$ |
0.85
|
||||||||||
Diluted earnings per share
|
$ |
0.57
|
$ |
0.56
|
$ |
0.51
|
$ |
0.76
|
$ |
0.85
|
||||||||||
Cash dividends declared per share
|
$ |
0.250
|
$ |
0.500
|
$ |
0.575
|
$ |
0.800
|
$ |
0.800
|
||||||||||
Book value per share
|
$ |
4.47
|
$ |
4.14
|
$ |
4.02
|
$ |
3.95
|
$ |
3.96
|
||||||||||
Balance Sheet Information
|
||||||||||||||||||||
As of September 30,
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||
Current assets
|
$ |
144,761
|
$ |
139,053
|
$ |
133,875
|
$ |
126,791
|
$ |
119,422
|
||||||||||
Current liabilities
|
20,914
|
24,173
|
22,887
|
22,571
|
15,251
|
|||||||||||||||
Total assets
|
325,478
|
251,377
|
249,777
|
252,028
|
183,282
|
|||||||||||||||
Long-term debt obligations
|
75,824
|
50,180
|
54,647
|
58,360
|
—
|
|||||||||||||||
Shareholders’ equity
|
190,967
|
175,418
|
169,585
|
166,472
|
165,873
|
|
2019
|
2018
|
2017
|
2019 vs.
2018
Inc (Dec)
|
2018 vs.
2017
Inc (Dec)
|
|||||||||||||||
Gross Profit
|
$ |
118,325
|
$ |
130,697
|
$ |
124,292
|
(9
|
%) |
5
|
% | ||||||||||
Gross Profit Margin
|
59
|
% |
61
|
% |
62
|
% |
-2 points
|
-1 point
|
|
Research &
Development |
|
Selling &
Marketing |
|
General &
Administrative |
|
Other
|
|
Total Operating
Expenses |
|
||||||||||
Fiscal 2017:
|
|
|
|
|
|
|||||||||||||||
Diagnostics
|
$ |
13,433
|
$ |
22,942
|
$ |
13,268
|
$ |
6,628
|
$ |
56,271
|
||||||||||
Life Science
|
2,603
|
9,446
|
7,493
|
—
|
19,542
|
|||||||||||||||
Corporate
|
—
|
—
|
10,335
|
762
|
11,097
|
|||||||||||||||
Total 2017 Expenses
|
$
|
16,036
|
|
$
|
32,388
|
|
$
|
31,096
|
|
$
|
7,390
|
|
$
|
86,910
|
|
|||||
Fiscal 2018:
|
|
|
|
|
|
|||||||||||||||
Diagnostics
|
$ |
13,742
|
$ |
25,002
|
$ |
19,397
|
$ |
4,032
|
$ |
62,173
|
||||||||||
Life Science
|
3,047
|
9,466
|
8,111
|
1,240
|
21,864
|
|||||||||||||||
Corporate
|
—
|
—
|
7,297
|
7,779
|
15,076
|
|||||||||||||||
Total 2018 Expenses
|
$
|
16,789
|
|
$
|
34,468
|
|
$
|
34,805
|
|
$
|
13,051
|
|
$
|
99,113
|
|
|||||
Fiscal 2019:
|
|
|
|
|
|
|||||||||||||||
Diagnostics
|
$ |
14,711
|
$ |
23,058
|
$ |
19,191
|
$ |
3,446
|
$ |
60,406
|
||||||||||
Life Science
|
3,237
|
5,388
|
6,034
|
188
|
14,847
|
|||||||||||||||
Corporate
|
—
|
—
|
7,777
|
2,596
|
10,373
|
|||||||||||||||
Total 2019 Expenses
|
$
|
17,948
|
|
$
|
28,446
|
|
$
|
33,002
|
|
$
|
6,230
|
|
$
|
85,626
|
|
|||||
|
Research &
Development
|
|
Selling &
Marketing
|
|
General &
Administrative
|
|
Other
|
|
Total Operating
Expenses
|
|
||||||||||
2017 Expenses
|
$
|
16,036
|
|
$
|
32,388
|
|
$
|
31,096
|
|
$
|
7,390
|
|
$
|
86,910
|
|
|||||
% of Revenues
|
8
|
% |
16
|
% |
15
|
% |
4
|
% |
43
|
% | ||||||||||
Fiscal 2018 Increases (Decreases):
|
|
|
|
|
|
|||||||||||||||
Diagnostics
|
309
|
2,060
|
6,129
|
(2,596
|
) |
5,902
|
||||||||||||||
Life Science
|
444
|
20
|
618
|
1,240
|
2,322
|
|||||||||||||||
Corporate
|
—
|
—
|
(3,038
|
) |
7,017
|
3,979
|
||||||||||||||
2018 Expenses
|
$
|
16,789
|
|
$
|
34,468
|
|
$
|
34,805
|
|
$
|
13,051
|
|
$
|
99,113
|
|
|||||
% of Revenues
|
8
|
% |
16
|
% |
16
|
% |
6
|
% |
46
|
% | ||||||||||
% Increase
|
5
|
% |
6
|
% |
12
|
% |
77
|
% |
14
|
% | ||||||||||
Fiscal 2019 Increases (Decreases):
|
|
|
|
|
|
|||||||||||||||
Diagnostics
|
969
|
(1,944
|
) |
(206
|
) |
(586
|
) |
(1,767
|
) | |||||||||||
Life Science
|
190
|
(4,078
|
) |
(2,077
|
) |
(1,052
|
) |
(7,017
|
) | |||||||||||
Corporate
|
—
|
—
|
480
|
(5,183
|
) |
(4,703
|
) | |||||||||||||
2019 Expenses
|
$
|
17,948
|
|
$
|
28,446
|
|
$
|
33,002
|
|
$
|
6,230
|
|
$
|
85,626
|
|
|||||
% of Revenues
|
9
|
% |
14
|
% |
16
|
% |
3
|
% |
43
|
% | ||||||||||
% Increase (Decrease)
|
7
|
% |
(17
|
%) |
(5
|
%) |
(52
|
%) |
(14
|
%) |
• | Increased Research & Development costs, reflecting the addition of the GenePOC business expenses for the development of the GI and RI panel assays since the June 3, 2019 date of acquisition being more than offset by the decreased expenditures resulting from the timing of product development projects and the clinical trials for our cCMV test in fiscal 2018; |
• | Decreased Selling & Marketing costs due to: (i) the effects of the fiscal 2018 organization streamlining initiatives; and (ii) lower sales commissions resulting from the decrease in sales levels; |
• | Decreased General & Administrative costs, reflecting the effects of the fiscal 2018 organization streamlining initiatives and lower Quality System remediation costs related to our blood-lead manufacturing facility, partially offset by the addition of the GenePOC business expenses, including purchase accounting amortization; and |
• | Decreased restructuring & selected legal costs, along with the effects of the fiscal 2019 acquisition-related costs (reflected within “Other” in the above tables). |
• | Increased Selling & Marketing costs, reflecting increased commission and bonus payments made in connection with the increased revenue levels, along with costs associated with the new branding strategy; |
• | Increased General & Administrative costs due in large part to the cash incentive compensation resulting from the revenue and net earnings results achieved, along with increased Quality System remediation costs related to Magellan; |
• | Increased restructuring costs, reflecting: (i) compensation and benefits for our previous Executive Chairman and CEO throughout fiscal 2018, the period during which we also have the compensation and benefits of a new CEO; and (ii) the costs of terminations and related expenses incurred in connection with realigning our business structure; and |
• | Increased legal costs related to the matters discussed in Item 3. “Legal Proceedings”. |
• | Draws on the revolving credit facility used to fund acquisition of the business of GenePOC and pay off the term loan used to fund the March 2016 acquisition of Magellan (May 2019 – September 2019), bearing interest at a fluctuating rate tied to, at the Company’s option, either the federal funds rate or LIBOR. |
• | Term loan used to fund the acquisition of Magellan (March 2016 – May 2017), bearing interest at an effective rate of 2.76%. |
|
Total
|
Less than 1
Year |
1-3
Years
|
4-5
Years
|
More than
5 Years
|
|||||||||||||||
Operating leases
(1)
|
$ |
6,567
|
$ |
1,528
|
$ |
3,711
|
$ |
1,145
|
$ |
183
|
||||||||||
Purchase obligations
(2)
|
14,995
|
14,203
|
737
|
55
|
—
|
|||||||||||||||
Acquisition price holdback and contingent consideration
(3)
|
75,000
|
—
|
75,000
|
—
|
—
|
|||||||||||||||
Uncertain income tax positions liability and interest
(4)
|
511
|
511
|
—
|
—
|
—
|
|||||||||||||||
Total
|
$ |
97,073
|
$ |
16,242
|
$ |
79,448
|
$ |
1,200
|
$ |
183
|
||||||||||
(1) | Meridian and its subsidiaries are parties to a number of operating lease agreements around the world, the majority of which relate to office and warehouse building leases expiring at various dates. |
(2) | Purchase obligations relate primarily to outstanding purchase orders for inventory, including instruments, service items, and research and development activities. These contractual commitments are not in excess of expected production requirements over the next twelve months. |
(3) |
Pursuant to the purchase agreement related to the June 3, 2019 acquisition of the business of GenePOC, Meridian’s maximum remaining consideration to be paid totals $75,000. As noted below and detailed in Note 2,
“Acquisition of Business of GenePOC”
|
(4) | Due to inherent uncertainties in the timing of settlement of tax positions, we are unable to estimate the timing of the effective settlement of these obligations. |
Accounting Policy
|
Location
Within Consolidated
Financial Statements |
Examples of Key Estimate Assumptions
|
||
Inventories
|
Note 1(f)
|
Slow-moving, excess & obsolete inventories
|
||
Intangible Assets
|
Note 1(h)
|
Triggering events and impairment conditions
|
||
Revenue Recognition
|
Note 1(i)
|
Distributor price adjustments and fee accruals
|
||
Fair Value Measurements
|
Note 1(j)
|
Valuation of contingent consideration
|
||
Income Taxes
|
Note 1(l) and Note 6
|
Uncertain tax positions and state apportionment factors
|
35
|
||||
36
|
||||
41
|
||||
42
|
||||
43
|
||||
44
|
||||
46
|
||||
47
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74
|
/s/ Jack Kenny
|
|
/s/ Bryan T. Baldasare
|
||
Jack Kenny
|
|
Bryan T. Baldasare
|
||
Chief Executive Officer
|
|
Executive Vice President and
|
||
November 26, 2019
|
|
Chief Financial Officer
|
||
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|
November 26, 2019
|
• | We tested the design and operating effectiveness of controls relating to management’s calculation and review of the reserve which included verifying the completeness of the input data, mathematical accuracy of the calculation and evaluating the reasonableness of key assumptions used in the calculation. |
• | We tested the reserve calculation prepared by management by performing specific procedures on the key inputs and assumptions such as the monthly sales volume, validity of distributor agreements and applied reserve percentage. The procedures performed are as follows: |
• | We tested the completeness and accuracy of the historical sales (including average selling price) and volume report used in the calculation of the reserve by agreeing total sales to accounting records and tracing a sample of individual sales to supporting audit evidence, such as purchase orders, shipping documents and invoices. |
• | We evaluated the existence and validity of distributor agreements by obtaining a sample of issued credit memos and executed distributor agreements to test compliance with the stated terms in the corresponding agreements. |
• | We analyzed year over year trends in the reserve in comparison with revenue trends to further evaluate reasonableness of the estimate and consistency with expectations. |
• | We tested the design and operating effectiveness of controls relating to the valuation report and allocation of purchase price which included management’s review of the valuation report for the completeness and mathematical accuracy of the data, and evaluating the reasonableness of assumptions used in the calculation such as economic life and discount rate. |
• | We utilized a valuation specialist to assist in evaluating the appropriateness of the Company’s valuation models developed for acquired assets and evaluating the reasonableness of significant assumptions used including the assumed sales growth rate, margin percentages, economic life and discount rate as compared to industry/market data. |
• | We evaluated whether the assumptions used were reasonable by considering past performance of similar technological assets, industry data, current market forecasts, and whether such assumptions were consistent with evidence obtained in other areas of the audit. |
For the Year Ended September 30,
|
2019
|
|
2018
|
2017
|
||||||||
Net Revenues
|
$
|
201,014
|
|
$
|
213,571
|
$
|
200,771
|
|||||
Cost of Sales
|
|
82,689
|
|
82,874
|
76,479
|
|||||||
Gross Profit
|
|
118,325
|
|
130,697
|
124,292
|
|||||||
Operating Expenses:
|
|
|
|
|
|
|||||||
Research and development
|
|
17,948
|
|
16,789
|
16,036
|
|||||||
Selling and marketing
|
|
28,446
|
|
34,468
|
32,388
|
|||||||
General and administrative
|
|
33,002
|
|
34,805
|
31,096
|
|||||||
Acquisition-related costs
|
|
1,808
|
|
—
|
—
|
|||||||
Restructuring costs
|
|
2,839
|
|
8,706
|
134
|
|||||||
Selected legal
costs
|
|
1,583
|
|
4,345
|
628
|
|||||||
Goodwill impairment charge
|
|
—
|
|
—
|
6,628
|
|||||||
Total operating expenses
|
|
85,626
|
|
99,113
|
86,910
|
|||||||
Operating Income
|
|
32,699
|
|
31,584
|
37,382
|
|||||||
Other Income (Expense):
|
|
|
|
|
|
|||||||
Interest income
|
|
681
|
|
418
|
171
|
|||||||
Interest expense
|
|
(1,945
|
)
|
(1,520
|
) |
(1,642
|
) | |||||
Other, net
|
|
122
|
|
(102
|
) |
518
|
||||||
Total other expense
|
|
(1,142
|
)
|
(1,204
|
) |
(953
|
) | |||||
Earnings Before Income Taxes
|
|
31,557
|
|
30,380
|
36,429
|
|||||||
Income Tax Provision
|
|
7,175
|
|
6,531
|
14,872
|
|||||||
Net Earnings
|
$
|
24,382
|
|
$
|
23,849
|
$
|
21,557
|
|||||
Earnings Per Share Data:
|
|
|
|
|
|
|||||||
Basic earnings per common share
|
$
|
0.57
|
|
$
|
0.56
|
$
|
0.51
|
|||||
Diluted earnings per common share
|
$
|
0.57
|
|
$
|
0.56
|
$
|
0.51
|
|||||
Common shares used for basic earnings per common share
|
|
42,571
|
|
42,325
|
42,188
|
|||||||
Effect of dilutive stock options and restricted share units
|
|
328
|
|
429
|
383
|
|||||||
Common shares used for diluted earnings per common share
|
|
42,899
|
|
42,754
|
42,571
|
|||||||
Dividends declared per common share
|
$
|
0.250
|
|
$
|
0.500
|
$
|
0.575
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive Securities:
|
|
|
|
|
|
|||||||
Common share options and restricted share units
|
|
1,129
|
|
1,007
|
873
|
For the Year Ended September 30,
|
2019
|
|
2018
|
2017
|
||||||||
Net Earnings
|
$
|
24,382
|
$
|
23,849
|
$
|
21,557
|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|||||||
Foreign currency translation adjustment
|
|
(802
|
)
|
(1,075
|
) |
1,616
|
||||||
Unrealized gain (loss) on cash flow hedge
|
|
(1,159
|
)
|
907
|
1,544
|
|||||||
Amortization of gain on cash flow hedge
|
|
|
(102
|
)
|
|
|
—
|
|
|
|
—
|
|
Income taxes related to items of other comprehensive income
|
|
465
|
|
(263
|
) |
(590
|
) | |||||
Other comprehensive income (loss), net of tax
|
|
(1,598
|
)
|
(431
|
) |
2,570
|
||||||
Comprehensive Income
|
$
|
22,784
|
$
|
23,418
|
$
|
24,127
|
||||||
For the Year Ended September 30,
|
2019
|
|
2018
|
|
2017
|
|||||||
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
|
|||
Net earnings
|
$
|
24,382
|
|
$ |
23,849
|
$ |
21,557
|
|||||
Non-cash
items included in net earnings:
|
|
|
|
|
|
|||||||
Depreciation of property, plant and equipment
|
|
5,433
|
|
4,491
|
4,342
|
|||||||
Amortization of intangible assets
|
|
4,531
|
|
3,433
|
3,776
|
|||||||
Amortization of deferred instrument costs
|
|
—
|
|
764
|
972
|
|||||||
Stock-based compensation
|
|
3,251
|
|
3,402
|
3,381
|
|||||||
Goodwill impairment charge
|
|
—
|
|
—
|
6,628
|
|||||||
Deferred income taxes
|
|
(817
|
)
|
(300
|
) |
1,474
|
||||||
Losses on
dispositions of
long-lived assets
|
|
632
|
|
—
|
—
|
|||||||
Change in the following, net of acquisition:
|
|
|
|
|
|
|||||||
Accounts receivable
|
|
(2,314
|
)
|
(4,447
|
) |
(1,211
|
) | |||||
Inventories
|
|
3,841
|
|
(1,142
|
) |
3,467
|
||||||
Prepaid expenses and other current assets
|
|
(2,044
|
)
|
323
|
1,225
|
|||||||
Accounts payable and accrued expenses
|
|
(2,315
|
)
|
4,124
|
(3,151
|
) | ||||||
Income taxes payable
|
|
1,793
|
|
(524
|
) |
(384
|
) | |||||
Other, net
|
|
(542
|
)
|
810
|
(721
|
) | ||||||
Net cash provided by operating activities
|
|
35,831
|
|
34,783
|
41,355
|
|||||||
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
|||
Purchase of property, plant and equipment
|
|
(3,797
|
)
|
(4,201
|
) |
(4,467
|
) | |||||
Disposal
s
of property, plant and equipment
|
|
669
|
|
—
|
—
|
|||||||
Acquisition of GenePOC business
|
|
(45,324
|
)
|
—
|
—
|
|||||||
Net cash used for investing activities
|
|
(48,452
|
)
|
(4,201
|
) |
(4,467
|
) | |||||
Cash Flows From Financing Activities
|
||||||||||||
Dividends paid
|
|
(10,612
|
)
|
(21,170
|
) |
(24,266
|
) | |||||
Proceeds from revolving credit facility
|
|
75,824
|
|
—
|
—
|
|||||||
Payment of debt issuance costs
|
|
(489
|
)
|
—
|
—
|
|||||||
Payments on term loan
|
|
(50,250
|
)
|
(4,500
|
) |
(3,750
|
) | |||||
Proceeds and tax benefits from exercises of stock options
|
|
787
|
|
187
|
303
|
|||||||
Payment of acquisition consideration
|
—
|
(2,110
|
) |
—
|
||||||||
Net cash provided by (used for) financing activities
|
|
15,260
|
|
(27,593
|
) |
(27,713
|
) | |||||
Effect of Exchange Rate Changes on Cash and Equivalents and Restricted Cash
|
|
(1,005
|
)
|
(298
|
) |
671
|
||||||
Net Increase in Cash and Equivalents and Restricted Cash
|
|
1,634
|
|
2,691
|
9,846
|
|||||||
Cash and Equivalents and Restricted Cash at Beginning of Period
|
|
60,763
|
|
58,072
|
48,226
|
|||||||
Cash and Equivalents and Restricted Cash at End of Period
|
$
|
62,397
|
|
$ |
60,763
|
$ |
58,072
|
|||||
Cash and Equivalents
|
$
|
62,397
|
|
$ |
59,763
|
$ |
57,072
|
|||||
Restricted Cash
|
|
—
|
|
1,000
|
1,000
|
|||||||
Cash and Equivalents and Restricted Cash at End of Period
|
$
|
62,397
|
|
$ |
60,763
|
$ |
58,072
|
|||||
As of September 30,
|
2019
|
|
2018
|
|||||
Assets
|
|
|
|
|
|
|
||
Current Assets:
|
|
|
|
|
|
|
||
Cash and equivalents
|
$
|
62,397
|
|
$
|
59,763
|
|||
Accounts receivable, less allowances of $537 and $310, respectively
|
|
35,608
|
|
32,336
|
||||
Inventories
|
|
39,617
|
|
41,993
|
||||
Prepaid expenses and other current assets
|
|
7,139
|
|
4,961
|
||||
Total current assets
|
|
144,761
|
|
139,053
|
||||
Property, Plant and Equipment, at Cost:
|
|
|
|
|
|
|
||
Land
|
|
982
|
|
1,160
|
||||
Buildings and improvements
|
|
31,904
|
|
32,444
|
||||
Machinery, equipment and furniture
|
|
64,155
|
|
50,606
|
||||
Construction in progress
|
|
522
|
|
1,631
|
||||
Subtotal
|
|
97,563
|
|
85,841
|
||||
Less: accumulated depreciation and amortization
|
|
66,996
|
|
55,846
|
||||
Net property, plant and equipment
|
|
30,567
|
|
29,995
|
||||
Other Assets:
|
|
|
|
|
|
|
||
Goodwill
|
|
89,241
|
|
54,637
|
||||
Other intangible assets, net
|
|
60,243
|
|
23,113
|
||||
Restricted cash
|
|
—
|
|
1,000
|
||||
Deferred instrument costs, net
|
|
—
|
|
1,239
|
||||
Fair value of interest rate swap
|
|
—
|
|
1,722
|
||||
Deferred income taxes
|
|
156
|
|
130
|
||||
Other assets
|
|
510
|
|
488
|
||||
Total other assets
|
|
150,150
|
|
82,329
|
||||
Total assets
|
$
|
325,478
|
|
$
|
251,377
|
|||
As of September 30,
|
2019
|
|
2018
|
|||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
$
|
7,238
|
|
$
|
6,260
|
|||
Accrued employee compensation costs
|
|
7,938
|
|
9,195
|
||||
Other accrued expenses
|
|
3,758
|
|
3,133
|
||||
Current portion of long-term debt
|
|
—
|
|
5,250
|
||||
Income taxes payable
|
|
1,980
|
|
335
|
||||
Total current liabilities
|
|
20,914
|
|
24,173
|
||||
Non-Current Liabilities:
|
|
|
||||||
Acquisition consideration
|
|
32,202
|
|
—
|
||||
Post-employment benefits
|
|
2,500
|
|
2,646
|
||||
Long-term debt
|
|
75,824
|
|
44,930
|
||||
Long-term income taxes payable
|
|
549
|
|
441
|
||||
Deferred income taxes
|
|
2,522
|
|
3,769
|
||||
Total
non-current
liabilities
|
|
113,597
|
|
51,786
|
||||
Commitments and Contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
|
|
|
||
Preferred stock, no par value; 1,000,000 shares authorized; none issued
|
|
—
|
|
—
|
||||
Common shares, no par value; 71,000,000 shares authorized, 42,712,296 and 42,399,962 issued, respectively
|
|
—
|
|
—
|
||||
Additional
paid-in
capital
|
|
132,834
|
|
129,193
|
||||
Retained earnings
|
|
63,108
|
|
49,602
|
||||
Accumulated other comprehensive loss
|
|
(4,975
|
)
|
(3,377
|
) | |||
Total shareholders’ equity
|
|
190,967
|
|
175,418
|
||||
Total liabilities and shareholders’ equity
|
|
$
|
325,478
|
|
|
$
|
251,377
|
|
|
Common
Shares Issued |
Additional
Paid-in
Capital |
Retained
Earnings |
Accum
Comp Income (Loss) |
Total
|
|||||||||||||||
B
alance at September 30, 2016
|
42,107
|
$
|
122,356
|
$
|
49,632
|
$
|
(5,516
|
) |
$
|
166,472
|
||||||||||
Cash dividends paid - $0.575 per share
|
—
|
—
|
(24,266
|
) |
—
|
(24,266
|
) | |||||||||||||
Conversion of restricted share units
and exercise of stock options
|
100
|
(129
|
)
|
—
|
—
|
(129
|
)
|
|||||||||||||
Stock compensation expense
|
—
|
3,381
|
—
|
—
|
3,381
|
|||||||||||||||
Net earnings
|
—
|
—
|
21,557
|
—
|
21,557
|
|||||||||||||||
Foreign currency translation adjustment
|
—
|
—
|
—
|
1,616
|
1,616
|
|||||||||||||||
Hedging activity, net of tax
|
—
|
—
|
—
|
954
|
954
|
|||||||||||||||
Balance at September 30, 2017
|
42,207
|
125,608
|
46,923
|
(2,946
|
) |
169,585
|
||||||||||||||
Cash dividends paid - $0.500 per share
|
—
|
—
|
(21,170
|
) |
—
|
(21,170
|
) | |||||||||||||
Conversion of restricted share units
and ex
ercise of stock options
|
193
|
183
|
—
|
—
|
183
|
|||||||||||||||
Stock compensation expense
|
—
|
3,402
|
—
|
—
|
3,402
|
|||||||||||||||
Net earnings
|
—
|
—
|
23,849
|
—
|
23,849
|
|||||||||||||||
Foreign currency translation adjustment
|
—
|
—
|
—
|
(1,075
|
) |
(1,075
|
) | |||||||||||||
Hedging activity, net of tax
|
—
|
—
|
—
|
644
|
644
|
|||||||||||||||
Balance at September 30, 2018
|
42,400
|
129,193
|
49,602
|
(3,377
|
)
|
175,418
|
||||||||||||||
Cash dividends paid - $0.250 per share
|
—
|
—
|
(10,612
|
) |
—
|
(10,612
|
) | |||||||||||||
Conversion of restricted share units and exercise of stock options
|
312
|
390
|
—
|
—
|
390
|
|||||||||||||||
Stock compensation expense
|
—
|
3,251
|
—
|
—
|
3,251
|
|||||||||||||||
Net earnings
|
—
|
—
|
24,382
|
—
|
24,382
|
|||||||||||||||
Foreign currency translation adjustment
|
—
|
—
|
—
|
(802
|
) |
(802
|
) | |||||||||||||
Hedging activity, net of tax
|
—
|
—
|
—
|
(944
|
) |
(944
|
) | |||||||||||||
Adoption of ASU
2014-09
|
—
|
—
|
(116
|
) |
—
|
(116
|
) | |||||||||||||
Adoption of ASU
2018-02
|
—
|
—
|
(148
|
) |
148
|
—
|
||||||||||||||
Balance at September 30, 2019
|
42,712
|
$
|
132,834
|
$ |
63,108
|
$ |
(4,975
|
) |
$
|
190,967
|
||||||||||
(1)
|
Summary of Significant Accounting Policies
|
(a)
|
Nature of Business
-
.
|
(b)
|
Principles of Consolidation -
|
(c)
|
Use of Estimates
-
|
(
d
)
|
Foreign Currency Translation
- Assets and liabilities of foreign operations are translated using
year-end
|
(e)
|
Cash, Cash Equivalents and Investments
-
A-2,
P-2
and
F-2,
and long-term ratings of at least A, Baa1 and A, by Standard & Poor’s, Moody’s and Fitch, respectively, at the time of purchase. We consider short-term investments with original maturities of 90 days or less to be cash equivalents, including institutional money market funds. At times our investments of cash and equivalents with various high credit quality financial institutions may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit.
|
|
September 30, 2019
|
September 30, 2018
|
||||||||||||||
|
Cash and
Equivalents |
|
Other
|
|
Cash and
Equivalents |
Other
|
||||||||||
Institutional money market funds
|
$
|
20,913
|
|
$
|
—
|
|
$ |
20,421
|
$ |
—
|
||||||
Cash on hand –
|
|
|
|
|
|
|
||||||||||
Restricted
|
|
—
|
|
—
|
—
|
1,000
|
||||||||||
Unrestricted
|
|
41,484
|
|
—
|
39,342
|
—
|
||||||||||
Total
|
$
|
62,397
|
|
$
|
—
|
|
$ |
59,763
|
$
|
1,000
|
||||||
(f)
|
Inventories
first-in,
first-out
(FIFO) basis. Testing instruments are carried in inventory until they are sold outright or placed with a customer under the customer reagent rental program, at which time they are transferred to property, plant and equipment.
|
(g)
|
Property, Plant and Equipment
write-off
the cost over the estimated useful lives, generally as follows:
|
(h)
|
Intangible Assets -
separately-run
businesses into two integrated global business units (see Note 3), at September 30, 2019 and September 30, 2018, we had two reporting units (Diagnostics and Life Science), both of which contained goodwill. We review our reporting unit structure annually, or more frequently if facts and circumstances warrant. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. We have no intangible assets with indefinite lives other than goodwill.
|
|
2019
|
2018
|
||||||||||||||
As of September 30,
|
Gross
Carrying Value |
|
Accum.
Amort. |
|
Gross
Carrying Value |
Accum.
Amort. |
||||||||||
Manufacturing technologies, core products and cell lines
|
$
|
56,193
|
|
$
|
15,096
|
|
$ |
22,297
|
$ |
13,974
|
||||||
Tradenames, licenses and patents
|
|
14,494
|
|
|
6,094
|
|
8,647
|
5,267
|
||||||||
Customer lists, customer relationships and supply agreements
|
|
24,274
|
|
|
14,110
|
|
24,461
|
13,051
|
||||||||
Government grants
|
|
814
|
|
|
232
|
|
—
|
—
|
||||||||
|
$
|
95,775
|
|
$
|
35,532
|
|
$ |
55,405
|
$ |
32,292
|
||||||
(i)
|
Revenue Recognition and Accounts Receivable
|
|
|
|
|
2019 vs.
2018 |
2018 vs.
2017 |
|||||||||||||||
|
2019
|
2018
|
2017
|
Inc (Dec)
|
Inc (Dec)
|
|||||||||||||||
Diagnostics-
|
|
|
|
|
|
|||||||||||||||
Americas
|
$
|
110,135
|
$
|
123,916
|
$
|
117,161
|
(11
|
)% |
6
|
% | ||||||||||
EMEA
|
23,865
|
23,922
|
22,594
|
—
|
% |
6
|
% | |||||||||||||
ROW
|
2,682
|
2,616
|
3,766
|
3
|
% |
(31
|
)% | |||||||||||||
Total Diagnostics
|
136,682
|
150,454
|
143,521
|
(9
|
)% |
5
|
% | |||||||||||||
Life Science-
|
|
|
|
|
|
|||||||||||||||
Americas
|
19,443
|
21,080
|
20,265
|
(8
|
)% |
4
|
% | |||||||||||||
EMEA
|
29,157
|
24,715
|
22,365
|
18
|
% |
11
|
% | |||||||||||||
ROW
|
15,732
|
17,322
|
14,620
|
(9
|
)% |
18
|
% | |||||||||||||
Total Life Science
|
64,332
|
63,117
|
57,250
|
2
|
% |
10
|
% | |||||||||||||
Consolidated
|
$ |
201,014
|
$ |
213,571
|
$ |
200,771
|
(6
|
)% |
6
|
% | ||||||||||
|
|
|
|
2019 vs.
2018 |
2018 vs.
2017 |
|||||||||||||||
|
2019
|
2018
|
2017
|
Inc (Dec)
|
Inc (Dec)
|
|||||||||||||||
Diagnostics-
|
|
|
|
|
|
|||||||||||||||
Molecular assays
|
$ |
26,231
|
$ |
33,709
|
$ |
33,712
|
(22
|
)% |
—
|
%
|
||||||||||
Immunoassays & blood chemistry assays
|
110,451
|
116,745
|
109,809
|
(5
|
)% |
6
|
% | |||||||||||||
Total Diagnostics
|
|
$
|
136,682
|
|
|
$
|
150,454
|
|
|
$
|
143,521
|
|
|
|
(9
|
)%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Science-
|
|
|
|
|
|
|||||||||||||||
Molecular reagents
|
$ |
23,261
|
$ |
24,533
|
$ |
21,966
|
(5
|
)% |
12
|
% | ||||||||||
Immunological reagents
|
41,071
|
38,584
|
35,284
|
6
|
% |
9
|
% | |||||||||||||
Total Life Science
|
$ |
64,332
|
$ |
63,117
|
$ |
57,250
|
2
|
% |
10
|
% | ||||||||||
|
|
|
|
2019 vs.
2018 |
2018 vs.
2017 |
|||||||||||||||
|
2019
|
2018
|
2017
|
Inc (Dec)
|
Inc (Dec)
|
|||||||||||||||
Diagnostics-
|
|
|
|
|
|
|||||||||||||||
Gastrointestinal assays
|
$ |
68,977
|
$ |
78,803
|
$ |
79,022
|
(12
|
)% |
—
|
% | ||||||||||
Respiratory illness assays
|
26,622
|
28,911
|
23,881
|
(8
|
)% |
21
|
% | |||||||||||||
Blood chemistry assays
|
19,082
|
19,109
|
18,212
|
—
|
% |
5
|
% | |||||||||||||
Other
|
22,001
|
23,631
|
22,406
|
(7
|
)% |
5
|
% | |||||||||||||
Total Diagnostics
|
$ |
136,682
|
$ |
150,454
|
$ |
143,521
|
(9
|
)% |
5
|
% | ||||||||||
(j)
|
Fair Value Measurements –
820-10,
Fair Value Measurements and Disclosures
820-10
defines fair value as the price that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC
820-10
requires a three level hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy level assigned to each asset and liability is based on the assessment of the transparency and reliability of the inputs used in the valuation of such items at the measurement date based on the lowest level of input that is significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).
|
|
|
|
|
|
Fair Value Measurements Using
Inputs Considered as
|
|
||||||||||
As of September 31, 2019
|
|
Carrying
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Contingent consideration
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
27,200
|
|
(k)
|
Research and Development Costs
.
|
(l)
|
Income Taxes
|
(m)
|
Stock-Based Compensation
|
(n)
|
Comprehensive Income (Loss)
|
(o)
|
Shipping and Handling Costs
|
(p)
|
Non-Income Government-Assessed Taxes
|
(q)
|
Recent Accounting Pronouncements
|
(r)
|
Reclassifications
- Certain reclassifications have been made to the prior fiscal year financial statements to conform to the current year presentation. Such reclassifications had no impact on net earnings or shareholders’ equity.
|
(2)
|
Acquisition of Business of GenePOC
|
(i) |
a $50,000 cash payment on June 3, 2019, subject to a working capital adjustment and a holdback of $5,000 to secure selling party’s performance of certain post-closing obligations;
|
|
|
|
(ii) | two $10,000 installments contingent upon the achievement of certain product development milestones if achieved by September 30, 2020 and March 31, 2021, respectively; and |
(iii) | up to $50,000 of contingent consideration payable if certain financial performance targets are achieved during the twelve-month period ending September 30, 2022. |
|
PRELIMINARY
|
|||||||||||
|
June 3,
2019 (as initially reported) |
|
Measurement
Period Adjustments |
|
June 3,
2019 (as adjusted) |
|
||||||
Fair value of assets acquired -
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
58
|
|
|
$
|
(1
|
)
|
|
$
|
57
|
|
Inventories
|
1,617
|
(106
|
) |
1,511
|
||||||||
Other current assets
|
77
|
7
|
84
|
|||||||||
Property, plant and equipment
|
1,520
|
(96
|
) |
1,424
|
||||||||
Goodwill
|
34,482
|
100
|
34,582
|
|||||||||
Other intangible assets (estimated useful life):
|
|
|
|
|||||||||
License agreement (10 years)
|
5,990
|
—
|
5,990
|
|||||||||
Technology (15 years)
|
34,040
|
96
|
34,136
|
|||||||||
Government grant (1.33 years)
|
800
|
—
|
800
|
|||||||||
|
78,584
|
—
|
78,584
|
|||||||||
Fair value of liabilities assumed -
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
1,082
|
(24
|
) |
1,058
|
||||||||
Total consideration paid (including contingent consideration currently estimated at $27,200)
|
$ |
77,502
|
$ |
24
|
$ |
77,526
|
||||||
Year Ended September 30,
|
2019
|
|
2018
|
|||||
Net Revenues
|
$
|
201,222
|
|
$ |
213,753
|
|||
Net Earnings
|
$
|
16,093
|
|
$ |
9,407
|
Year Ended September 30,
|
2019
|
|
2018
|
|||||
Adjustments to Net Revenues
|
|
|
||||||
GenePOC
pre-acquisition
revenues
|
$
|
208
|
|
$ |
182
|
|||
Adjustments to Net Earnings
|
|
|
||||||
GenePOC
pre-acquisition
net loss
|
$
|
(9,578
|
)
|
$ |
(12,775
|
) | ||
Pro forma adjustments:
|
|
|
|
|
||||
Meridian acquisition-related costs
|
|
1,808
|
|
—
|
||||
|
|
1,245
|
|
—
|
||||
non-continuing
personnel, locations
or activities
|
|
1,576
|
|
2,552
|
||||
|
(2,344
|
)
|
(3,499
|
) | ||||
|
(743
|
)
|
(977
|
) | ||||
|
(253
|
)
|
257
|
|||||
Total Adjustments to Net Earnings
|
$
|
(8,289
|
)
|
$ |
(14,442
|
) | ||
(3)
|
Restructuring
|
|
2019
|
|
2018
|
|||||
Severance, other termination benefits and related costs
|
$
|
2,046
|
|
$ |
5,012
|
|||
Lease and other contract termination fees
|
|
54
|
|
353
|
||||
Loss on fixed asset disposals and inventory scrap
|
|
528
|
|
225
|
||||
Other
|
|
211
|
|
742
|
||||
Total
|
$
|
2,839
|
|
$ |
6,332
|
|||
As of September 30,
|
2019
|
|
2018
|
|||||
Severance, other termination benefits and related costs
|
$
|
1,010
|
|
$ |
987
|
|||
Lease and other contract termination fees
|
|
12
|
|
33
|
||||
Other
|
|
114
|
|
6
|
||||
Total
|
$
|
1,136
|
|
$ |
1,026
|
|||
(4)
|
Inventories
|
As of September 30,
|
2019
|
|
2018
|
|||||
Raw materials
|
$
|
7,455
|
|
$ |
6,689
|
|||
Work-in-process
|
|
11,504
|
|
12,098
|
||||
Finished goods - instruments
|
|
935
|
|
1,191
|
||||
Finished goods - kits and reagents
|
|
19,723
|
|
22,015
|
||||
Total
|
$
|
39,617
|
|
$ |
41,993
|
|||
(5)
|
Bank Credit Arrangements
|
(6)
|
Income Taxes
|
(a) | Earnings before income taxes, and the related provision for income taxes for the years ended September 30, 2019, 2018 and 2017 were as follows: |
Year Ended September 30,
|
2019
|
|
2018
|
2017
|
||||||||
Domestic
|
$
|
23,954
|
|
$ |
27,787
|
$ |
31,885
|
|||||
Foreign
|
|
7,603
|
|
2,593
|
4,544
|
|||||||
Total earnings before income taxes
|
$
|
31,557
|
|
$ |
30,380
|
$ |
36,429
|
|||||
Provision (credit) for income taxes -
|
|
|
|
|
|
|||||||
Federal -
|
|
|
|
|
|
|||||||
Current
|
$
|
5,001
|
|
$ |
6,030
|
$ |
11,262
|
|||||
Temporary differences
|
|
|
|
|
|
|||||||
Fixed asset basis differences and depreciation
|
|
288
|
|
410
|
(181
|
) | ||||||
Intangible asset basis differences and amortization
|
|
(797
|
)
|
(4,052
|
) |
(1,158
|
) | |||||
Currently
non-deductible
expenses and reserves
|
|
241
|
|
1,206
|
884
|
|||||||
Stock-based compensation
|
|
(109
|
)
|
1,379
|
(635
|
) | ||||||
Net operating loss carryforwards utilized
|
|
69
|
|
61
|
1,831
|
|||||||
Tax credit carryforwards utilized
|
|
—
|
|
181
|
67
|
|||||||
Other, net
|
|
(169
|
)
|
(148
|
) |
99
|
||||||
Subtotal
|
|
4,524
|
|
5,067
|
12,169
|
|||||||
State and local
|
|
834
|
|
1,066
|
1,900
|
|||||||
Foreign
|
|
1,817
|
|
398
|
803
|
|||||||
Total income tax provision
|
$
|
7,175
|
|
$ |
6,531
|
$ |
14,872
|
|||||
(b) | The following is a reconciliation between the statutory U.S. income tax rate and the effective rate derived by dividing the provision for income taxes by earnings before income taxes: |
Year Ended September 30,
|
2019
|
2018
|
2017
|
||||||||||||||||||||||
Computed income taxes at statutory rate
|
|
$
|
6,627
|
|
|
21.0
|
%
|
$
|
7,443
|
24.5
|
% |
|
$
|
12,750
|
35.0
|
% | |||||||||
Increase (decrease) in taxes resulting from -
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
State and local income taxes
|
|
577
|
|
|
|
1.8
|
|
982
|
3.2
|
1,093
|
3.0
|
||||||||||||||
U.S. tax law change
|
|
|
—
|
|
|
|
—
|
|
(2,655
|
) |
(8.7
|
) |
—
|
—
|
|||||||||||
One-time
repatriation tax
|
|
|
—
|
|
|
|
—
|
|
876
|
2.9
|
—
|
—
|
|||||||||||||
Foreign-Derived Intangible Income tax
|
|
|
|
(294
|
)
|
|
|
(0.9
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Global Intangible Low Taxed Income tax
|
|
|
|
1,119
|
|
|
|
3.6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Foreign tax credit
|
|
|
|
(990
|
)
|
|
|
(3.1
|
)
|
|
|
(15
|
)
|
|
|
—
|
|
|
|
(57
|
)
|
|
|
(0.2
|
)
|
Foreign tax rate differences
|
|
|
46
|
|
|
|
0.1
|
|
(104
|
) |
(0.3
|
) |
(281
|
) |
(0.8
|
) | |||||||||
Qualified domestic production incentives
|
|
|
—
|
|
|
|
—
|
|
(550
|
) |
(1.8
|
) |
(1,012
|
) |
(2.8
|
) | |||||||||
Uncertain tax position activity
|
|
|
126
|
|
|
|
0.4
|
|
(62
|
) |
(0.2
|
) |
134
|
0.4
|
|||||||||||
Goodwill impairment charge
|
|
|
—
|
|
|
|
—
|
|
—
|
—
|
2,320
|
6.4
|
|||||||||||||
Valuation allowance
|
|
|
|
106
|
|
|
|
0.3
|
|
|
|
(40
|
)
|
|
|
(0.1
|
)
|
|
|
—
|
|
|
|
—
|
|
Stock-based compensation
|
|
|
(33
|
)
|
|
|
(0.1
|
)
|
447
|
1.4
|
—
|
—
|
|||||||||||||
Other, net
|
|
|
(109
|
)
|
|
|
(0.4
|
)
|
209
|
0.6
|
(75
|
) |
(0.2
|
) | |||||||||||
|
|||||||||||||||||||||||||
|
|
$
|
7,175
|
|
|
22.7
|
%
|
$
|
6,531
|
21.5
|
% |
$
|
14,872
|
40.8
|
% | ||||||||||
|
(c)
|
The components of net deferred tax liabilities were as follows:
|
As of September 30,
|
2019
|
|
2018
|
|||||
Deferred tax assets -
|
|
|
|
|||||
Valuation reserves and
non-deductible
expenses
|
$
|
1,253
|
|
$
|
1,473
|
|||
Stock compensation expense not deductible
|
|
2,158
|
|
2,033
|
||||
Net operating loss and tax credit carryforwards
|
|
494
|
|
433
|
||||
Basis difference in equity-method investee
|
|
302
|
|
302
|
||||
Inventory basis differences
|
|
289
|
|
383
|
||||
Other
|
|
125
|
|
(530
|
) | |||
Subtotal
|
|
4,621
|
|
4,094
|
||||
Less valuation allowance
|
|
(408
|
)
|
(302
|
) | |||
Deferred tax assets
|
|
4,213
|
|
3,792
|
||||
Deferred tax liabilities -
|
|
|
|
|
||||
Fixed asset basis differences and depreciation
|
|
(2,205
|
)
|
(1,913
|
) | |||
Intangible asset basis differences and amortization
|
|
(4,374
|
)
|
(5,518
|
) | |||
Deferred tax liabilities
|
|
(6,579
|
)
|
(7,431
|
) | |||
Net deferred tax liabilities
|
$
|
(2,366
|
)
|
$
|
(3,639
|
) | ||
|
2019
|
|
2018
|
|||||
Unrecognized income tax benefits
at
beginning of year
|
$
|
262
|
|
$
|
517
|
|||
Additions for tax positions of prior years
|
|
83
|
|
—
|
||||
Reductions for tax positions of prior years
|
|
(100
|
)
|
—
|
||||
Additions for tax positions of current year
|
|
138
|
|
—
|
||||
Tax examination and other settlements
|
|
—
|
|
(161
|
) | |||
Expiration of statute of limitations
|
|
—
|
|
(94
|
) | |||
Unrecognized income tax benefits at end of year
|
$
|
383
|
|
$
|
262
|
|||
(7)
|
Employee Benefits
|
(a)
|
Savings and Investment Plan
|
(b)
|
Stock-Based Compensation Plans
|
Year ended September 30,
|
2019
|
|
2018
|
2017
|
||||||||
Risk-free interest rates
|
|
2.99
|
%
|
2.10
|
% |
1.34
|
% | |||||
Dividend yield
|
|
3.3
|
%
|
3.3
|
% |
4.1
|
% | |||||
Life of option
|
|
6.51 yrs.
|
|
6.47 yrs.
|
6.44 yrs.
|
|||||||
Share price volatility
|
|
29
|
%
|
30
|
% |
27
|
% | |||||
Forfeitures (by employee group)
|
|
0%-16
|
%
|
0%-16
|
%
|
0%-19
|
%
|
|
Options
|
Wtd Avg
Exercise Price |
Wtd Avg
Remaining Life (Yrs) |
Aggregate
Intrinsic Value |
||||||||||||
Outstanding beginning of period
|
1,095
|
$ |
17.56
|
|
|
|||||||||||
Grants
|
77
|
16.07
|
|
|
||||||||||||
Exercises
|
(30
|
) |
15.13
|
|
|
|||||||||||
Forfeitures
|
(52
|
) |
15.03
|
|
|
|||||||||||
Cancellations
|
(100
|
) |
20.48
|
|
|
|||||||||||
Outstanding end of period
|
990
|
$ |
17.36
|
6.37
|
$ |
1
|
||||||||||
Exercisable end of period
|
782
|
$ |
17.99
|
5.86
|
$ |
—
|
||||||||||
|
Options
|
Weighted-
Average Grant Date Fair Value |
||||||
Nonvested beginning of period
|
389
|
$ |
3.24
|
|||||
Granted
|
77
|
3.61
|
||||||
Vested
|
(205
|
) |
3.39
|
|||||
Forfeitures
|
(52
|
) |
3.25
|
|||||
Nonvested end of period
|
209
|
$ |
3.24
|
|||||
(8)
|
Non-Current Liabilities
|
(9)
|
Reportable Segments and Major Concentration Data
|
Year Ended September 30,
|
2019
|
2018
|
2017
|
|||||||||||||||||||||
Customer A
|
$
|
18,096
|
|
|
|
(9
|
)%
|
$ |
21,162
|
(10
|
)% |
|
$ |
22,397
|
(11
|
)% | ||||||||
Customer B
|
$
|
17,350
|
|
|
|
(9
|
)%
|
$ |
22,490
|
(11
|
)% | $ |
17,825
|
(9
|
)% |
Year Ended September 30,
|
2019
|
|
2018
|
2017
|
||||||||
United States
|
$
|
105,648
|
|
$
|
120,555
|
$
|
114,494
|
|||||
Italy
|
|
10,898
|
|
10,398
|
9,004
|
|||||||
France
|
|
2,442
|
|
2,353
|
1,845
|
|||||||
United Kingdom
|
|
2,397
|
|
2,340
|
1,778
|
|||||||
Puerto Rico
|
|
2,276
|
|
1,054
|
730
|
|||||||
Japan
|
|
1,571
|
|
1,307
|
2,421
|
|||||||
Belgium
|
|
1,465
|
|
1,711
|
1,507
|
|||||||
Holland
|
|
1,411
|
|
1,454
|
1,290
|
|||||||
Other countries
|
|
8,574
|
|
9,282
|
10,452
|
|||||||
Total Diagnostics
|
$
|
136,682
|
|
$
|
150,454
|
$
|
143,521
|
|||||
Year Ended September 30,
|
2019
|
|
2018
|
2017
|
||||||||
United States
|
$
|
18,936
|
|
|
20,468
|
|
$
|
19,595
|
||||
Germany
|
|
12,664
|
|
8,108
|
7,406
|
|||||||
China
|
|
8,460
|
|
8,347
|
5,898
|
|||||||
United Kingdom
|
|
4,714
|
|
5,201
|
5,579
|
|||||||
Spain
|
|
4,415
|
|
4,187
|
3,209
|
|||||||
Australia
|
|
3,461
|
|
3,631
|
4,002
|
|||||||
France
|
|
2,200
|
|
2,040
|
1,792
|
|||||||
Japan
|
|
1,624
|
|
1,932
|
1,375
|
|||||||
Italy
|
|
1,357
|
|
971
|
700
|
|||||||
South Korea
|
|
1,134
|
|
2,044
|
2,308
|
|||||||
Other countries
|
|
5,367
|
|
6,188
|
5,386
|
|||||||
Total Life Science
|
$
|
64,332
|
|
$
|
63,117
|
$
|
57,250
|
|||||
|
|
Diagnostics
|
|
|
Life Science
|
|
|
Corporate
(1) |
|
|
Eliminations
(2) |
|
|
Total
|
|
|||||
Fiscal 2019
|
||||||||||||||||||||
Net revenues -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Third-party
|
$ |
136,682
|
$ |
64,332
|
$ |
—
|
$
|
—
|
$ |
201,014
|
|
|||||||||
Inter-segment
|
462
|
361
|
—
|
(823
|
) |
—
|
|
|||||||||||||
Operating income
|
22,399
|
20,572
|
(10,373
|
) |
101
|
32,699
|
|
|||||||||||||
Depreciation and amortization
|
7,676
|
2,288
|
—
|
—
|
9,964
|
|
||||||||||||||
Capital expenditures
|
2,049
|
1,748
|
—
|
—
|
3,797
|
|
||||||||||||||
Goodwill
|
70,395
|
18,846
|
—
|
—
|
89,241
|
|
||||||||||||||
Other intangible assets, net
|
59,807
|
436
|
—
|
—
|
60,243
|
|
||||||||||||||
Total assets
|
255,169
|
70,392
|
—
|
(83
|
) |
325,478
|
|
|||||||||||||
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net revenues -
|
|
|
|
|
|
|||||||||||||||
Third-party
|
$ |
150,454
|
$ |
63,117
|
$ |
—
|
$ |
—
|
$ |
213,571
|
||||||||||
Inter-segment
|
392
|
397
|
—
|
(789
|
) |
—
|
||||||||||||||
Operating income
|
32,569
|
13,799
|
(15,076
|
) |
292
|
31,584
|
||||||||||||||
Depreciation and amortization
|
6,557
|
2,131
|
—
|
—
|
8,688
|
|||||||||||||||
Capital expenditures
|
2,477
|
1,724
|
—
|
—
|
4,201
|
|||||||||||||||
Goodwill
|
35,213
|
19,424
|
—
|
—
|
54,637
|
|||||||||||||||
Other intangible assets, net
|
22,068
|
1,045
|
—
|
—
|
23,113
|
|||||||||||||||
Total assets
|
180,978
|
70,341
|
—
|
58
|
251,377
|
|||||||||||||||
Fiscal 2017
|
||||||||||||||||||||
Net revenues -
|
|
|
|
|
|
|||||||||||||||
Third-party
|
$ |
143,521
|
$ |
57,250
|
$ |
—
|
$ |
—
|
$ |
200,771
|
||||||||||
Inter-segment
|
389
|
537
|
—
|
(926
|
) |
—
|
||||||||||||||
Operating income
|
34,124
|
14,086
|
(11,097
|
)
|
269
|
37,382
|
||||||||||||||
Depreciation and amortization
|
7,037
|
2,053
|
—
|
—
|
9,090
|
|||||||||||||||
Capital expenditures
|
2,554
|
1,913
|
—
|
—
|
4,467
|
|||||||||||||||
Goodwill
|
35,213
|
19,713
|
—
|
—
|
54,926
|
|||||||||||||||
Other intangible assets, net
|
24,973
|
1,731
|
—
|
—
|
26,704
|
|||||||||||||||
Total assets
|
180,226
|
69,938
|
—
|
(387
|
) |
249,777
|
(1)
|
Includes Restructuring and Selected Legal
Costs of $2,596, $7,779 and $762 in fiscal years 2019, 2018 and 2017, respectively.
|
(2)
|
Eliminations consist of inter-segment transactions. |
Year Ended September 30,
|
2019
|
|
2018
|
2017
|
||||||||
Segment operating income
|
$
|
43,072
|
|
$ |
46,660
|
$ |
48,479
|
|||||
Corporate expenses
|
|
|
(10,373
|
)
|
|
|
(15,076
|
)
|
|
|
(11,097
|
)
|
Interest income
|
|
681
|
|
418
|
171
|
|||||||
Interest expense
|
|
(1,945
|
)
|
(1,520
|
) |
(1,642
|
) | |||||
Other, net
|
|
122
|
|
(102
|
) |
518
|
||||||
Consolidated earnings before income taxes
|
$
|
31,557
|
|
$ |
30,380
|
$ |
36,429
|
|||||
(10)
|
Commitments and Contingencies
|
(a)
|
Royalty Commitments -
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 $2,107, $2,579 and $2,600 for the fiscal years ended September 30, 2019, 2018 and 2017, respectively.
|
(b)
|
Purchase Commitments
-
3
. No purchase commitments have been made beyond fiscal 202
3
.
|
(c)
|
Operating Lease Commitments
-
|
(d)
|
Acquisition Price Holdback and Contingent Consideration -
|
(e)
|
Litigation -
|
(f)
|
Indemnifications -
|
(11)
|
Quarterly Financial Data (Unaudited)
|
For the Quarter Ended in Fiscal 2019
|
|
December 31
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
||||
Net revenues
|
$
|
51,480
|
|
$
|
50,248
|
|
$
|
48,440
|
|
$
|
50,846
|
|
||||
Gross profit
|
|
31,572
|
|
|
29,338
|
|
|
28,259
|
|
|
29,156
|
|
||||
Net earnings
|
|
8,106
|
|
|
7,094
|
|
|
5,079
|
|
|
4,103
|
|
||||
Basic earnings per common share
|
|
0.19
|
|
|
0.17
|
|
|
0.12
|
|
|
0.10
|
|
||||
Diluted earnings per common share
|
|
0.19
|
|
|
0.17
|
|
|
0.12
|
|
|
0.10
|
|
||||
Cash dividends per common share
|
|
0.125
|
|
|
0.125
|
|
|
—
|
|
|
—
|
|
||||
For the Quarter Ended in Fiscal 2018
|
|
December 31
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
||||
Net revenues
|
$ |
52,283
|
$ |
56,451
|
$ |
51,737
|
$ |
53,100
|
||||||||
Gross profit
|
32,010
|
34,569
|
31,962
|
32,156
|
||||||||||||
Net earnings
|
6,302
|
5,288
|
6,825
|
5,434
|
||||||||||||
Basic earnings per common share
|
0.15
|
0.12
|
0.16
|
0.13
|
||||||||||||
Diluted earnings per common share
|
0.15
|
0.12
|
0.16
|
0.13
|
||||||||||||
Cash dividends per common share
|
0.125
|
0.125
|
0.125
|
0.125
|
||||||||||||
(a) | (1) and (2) FINANCIAL STATEMENTS AND SCHEDULES. |
(b) | (3) EXHIBITS. |
Exhibit
Number
|
Description of Exhibit
|
|||
3.1
|
||||
3.2
|
||||
4.1
|
||||
10.1*
|
||||
10.2*
|
||||
10.3*
|
||||
10.4*
|
||||
10.5*
|
||||
10.6*
|
||||
10.7*
|
||||
10.8*
|
||||
10.9**
|
10.10**
|
||||
10.11**
|
||||
10.12*
|
||||
10.13*
|
||||
10.14*
|
||||
10.15*
|
||||
14
|
||||
21
|
||||
23
|
||||
31.1
|
||||
31.2
|
||||
32***
|
||||
101.INS
|
Inline XBRL Instance Document
|
|||
101.SCH
|
Inline XBRL Taxonomy Extension Schema
|
|||
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
|||
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
|||
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase
|
|||
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
|||
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
* | Management Compensatory Contracts |
** |
Schedules to and certain portions of these exhibits have been omitted pursuant to Item 601(b)(2) of Regulation
S-K.
The omitted information is not material and would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant hereby agrees to furnish a copy of any omitted schedule or other portion to the SEC upon request.
|
*** | Furnished, not filed. |
MERIDIAN BIOSCIENCE, INC.
|
||
|
|
|
By:
|
|
/s/ Jack Kenny
|
Date: November 26, 2019
|
||
Jack Kenny
|
||
Chief Executive Officer
|
Signature
|
|
Capacity
|
|
Date
|
|
|
|
|
|
/s/ Jack Kenny
|
|
Chief Executive Officer and Director
|
|
November 26, 2019
|
Jack Kenny
|
|
|
|
|
|
|
|
|
|
/s/ Bryan T. Baldasare
|
|
Executive Vice President, Chief
|
|
November 26, 2019
|
Bryan T. Baldasare
|
|
Financial Officer and Secretary
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ David C. Phillips
|
|
Chairman of the Board
|
|
November 26, 2019
|
David C. Phillips
|
|
|
|
|
|
|
|
|
|
/s/ James M. Anderson
|
|
Director
|
|
November 26, 2019
|
James M. Anderson
|
|
|
|
|
|
|
|
|
|
/s/ Dwight E. Ellingwood
|
|
Director
|
|
November 26, 2019
|
Dwight E. Ellingwood
|
|
|
|
|
|
|
|
|
|
/s/ John C. McIlwraith
|
|
Director
|
|
November 26, 2019
|
John C. McIlwraith
|
|
|
|
|
|
|
|
|
|
/s/ John M. Rice, Jr.
|
|
Director
|
|
November 26, 2019
|
John M. Rice, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Catherine A. Sazdanoff
|
|
Director
|
|
November 26, 2019
|
Catherine A. Sazdanoff
|
|
|
|
|
|
|
|
|
|
/s/ Felicia Williams
|
|
Director
|
|
November 26, 2019
|
Felicia Williams
|
|
|
|
|
Description
|
Balance at
Beginning of Period |
Charged to
Costs and Expenses |
Deductions
|
Other (a)
|
Balance at
End of Period |
|||||||||||||||
Year Ended September 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
$ |
310
|
$ |
347
|
$ |
(100
|
) | $ |
(20
|
) | $ |
537
|
||||||||
Inventory realizability reserves
|
1,971
|
774
|
(448
|
) |
(12
|
) |
2,285
|
|||||||||||||
Valuation allowances – deferred taxes
|
302
|
106
|
—
|
—
|
408
|
|||||||||||||||
Year Ended September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
$ |
307
|
$ |
39
|
$ |
(32
|
) | $ |
(4
|
) | $ |
310
|
||||||||
Inventory realizability reserves
|
2,059
|
321
|
(405
|
) |
(4
|
) |
1,971
|
|||||||||||||
Valuation allowances – deferred taxes
|
342
|
—
|
(40
|
) |
—
|
302
|
||||||||||||||
Year Ended September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
$ |
334
|
$ |
90
|
$ |
(134
|
) | $ |
17
|
$ |
307
|
|||||||||
Inventory realizability reserves
|
2,680
|
35
|
(661
|
) |
5
|
2,059
|
||||||||||||||
Valuation allowances – deferred taxes
|
342
|
—
|
—
|
—
|
342
|
(a) |
Balances reflect the effects of currency translation.
|
Exhibit 3.1
AMENDED ARTICLES OF INCORPORATION
OF
MERIDIAN BIOSCIENCE, INC.
MERIDIAN BIOSCIENCE, INC. hereby adopts the following Amended Articles of Incorporation to supercede and take the place of the existing Amended Articles of Incorporation and all Amendments thereto:
FIRST. The name of the Corporation is Meridian Bioscience, Inc.
SECOND. The place in Ohio where its principal office is to be located is 3467 Riverhills Drive, Cincinnati, Hamilton County, Ohio 45244.
THIRD. The purpose for which the Corporation is organized shall be:
To develop, manufacture and sell medical diagnostic products and to do any other lawful act or acts for which corporations may be formed under Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH. The maximum number of shares which the Corporation is authorized to have outstanding is:
A. 50,000,000 shares of Common Stock, without par value and
B. 1,000,000 shares of Preferred Stock, without par value.
The holders of the Preferred Stock shall be entitled to receive dividends out of any funds of the Corporation at the time legally available for dividends when and as declared by the Board of Directors at such rate as shall be fixed by the Board of Directors before any sum shall be set apart or applied to the redemption or purchase of or any dividends shall be declared or paid upon or set apart for any class or series of Common Stock. In the event of any liquidation, dissolution or winding up of the Corporation, the holders of Preferred Stock shall be entitled to receive out of the assets of the Corporation payment of an amount per share as determined by the Board of Directors as a liquidation price (including accrued dividends, if any) before any distribution of assets shall be made to the holders of any class or series of Common Stock.
The Board of Directors shall have the express authority from time-to-time to adopt amendments to these Articles of Incorporation with respect to any unissued or treasury shares of Preferred Stock and thereby to fix or change the division of such shares into series and the designation and authorized number of shares of each series and to provide for each such series: voting powers, full or limited or no voting powers; dividend rates; dates of payment of dividends; dates from which dividends are cumulative; liquidation prices; redemption rights and prices; sinking fund requirements; conversion rights; restrictions on the issuance of shares of other series of Preferred Stock; and such other designations, preferences and relative participating options or other special rights and qualifications, powers, limitations or restrictions thereon as may be determined by the Board of Directors.
FIFTH. No holder of any shares of this Corporation shall have any pre-emptive rights to subscribe for or to purchase any shares of this Corporation of any class whether such shares or such class be now or hereafter authorized or to purchase or subscribe for securities convertible into or exhangeable for shares of any class or to which shall be attached or appertained any warrants or rights entitling the holder thereof to purchase or subscribe for shares of any class.
SIXTH. This Corporation, through its Board of Directors, shall have the right and power to purchase any of its outstanding shares at such price and upon such terms as may be agreed upon between the Corporation and any selling shareholder.
SEVENTH. The provisions of Ohio Revised Code Section 1701.831 relating to control share acquisitions shall not be applicable to this Corporation.
ATTACHMENT TO
CERTIFICATE OF AMENDMENT
MERIDIAN BIOSCIENCE, INC.
Article Fourth:
RESOLVED, that the Amended Articles of Incorporation, as amended, in Article Fourth be amended such that subparagraph A and B shall read as follows:
A. |
71,000,000 shares of Common Stock, without par value, and |
B. |
1,000,000 shares of Preferred Stock, without par value. |
Exhibit 3.2
AMENDED AND RESTATED
CODE OF REGULATIONS
OF
MERIDIAN BIOSCIENCE, INC.
The Amended Code of Regulations of Meridian Bioscience, Inc. is hereby amended and restated in its entirety by the Board of Directors pursuant to Ohio General Corporation Law Section 1701.11(A)(1)(d) to read as follows as of November 26, 2019.
ARTICLE I
FISCAL YEAR
Unless otherwise designated by resolution of the Board of Directors, the fiscal year of the Corporation shall commence on the first of day of October of each year.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meetings.
The Annual Meeting of the Shareholders of this Corporation, for the election of members of the Board of Directors, the consideration of financial statements and other reports, and the transaction of such other business as may properly be brought before such meeting, shall be held at 3:00 pm Eastern Standard Time, on the third Thursday in January of each year or at such other time and date as determined by the Board of Directors each year. Upon due notice, there may also be considered and acted upon at an Annual Meeting any matter which could properly be considered and acted upon at a Special Meeting in which case and for which purpose the Annual Meeting shall also be considered as, and shall be a Special Meeting. In the event the Annual Meeting is not held or if Directors are not elected thereat, a Special Meeting may be called and held for that purpose.
Section 2. Special Meetings.
Special meetings of the Shareholders may be held on any business day when called by the Chairman of the Board, the President, a majority of Directors or persons holding twenty-five percent or more of all shares outstanding and entitled to vote. Only such business shall be brought before the special meeting: (i) pursuant to the Notice of Meeting procedures provided for in Section 4(a) of this Article II; (ii) by or at the direction of the Board of Directors; or (iii) by any Shareholder of the Corporation who was a Shareholder of record both at the time of giving notice by the Shareholder as provided for in Section 5(a) of this Article II for any business other than
nominations for election to the Board of Directors and Section 2(a) of Article III of these Regulations for nominations for election to the Board of Directors and at the time of such meeting, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in Section 5(a) of this Article II for any business other than nominations for election to the Board of Directors and Section 2(a) of Article III of these Regulations for nominations for election to the Board of Directors.
Section 3. Place of Meetings.
Any meeting of Shareholders may be held at such place within or without the State of Ohio as may be designated in the Notice of said meeting. The Board of Directors may, in its sole discretion, determine that any meeting shall not be held at any place, but instead may be held solely by means of remote communication as authorized by Ohio law.
Section 4. Notice of Meeting and Waiver of Notice.
(a) Notice. Written notice of the time, place and purposes of any meeting of Shareholders shall be given to each Shareholder entitled thereto not less than seven days nor more than sixty days before the date fixed for the meeting and as prescribed by law. Such notice shall be provided by personal delivery, mail, or, to the extent permitted by law, electronically to each Shareholder entitled to notice of or to vote at such meeting. If such notice is mailed, it shall be directed, postage pre-paid, to the Shareholders at their respective addresses as they appear upon the records of the Corporation, and notice shall be deemed to have been given on the day so mailed. If any meeting is adjourned to another time or place, no notice as to such adjourned meeting need be given other than by announcement at the meeting at which such an adjournment is taken. No business shall be transacted at any such adjourned meeting except as might have been lawfully transacted at the meeting at which such adjournment was taken.
(b) Notice to Joint Owners. All notices with respect to any shares to which persons are entitled by joint or common ownership may be given to that one of such persons who is named first upon the books of this Corporation, and notice so given shall be sufficient notice to all the holders of such shares.
(c) Waiver. Notice of any meeting, whether required to be given by law or under these Regulations, however, may be waived in writing by any Shareholder either before or after any meeting of Shareholders, or by attendance at such meeting without protest to the commencement thereof.
Section 5. Advance Notice of Shareholder Proposals
(a) Shareholder Proposals Other Than Nominations for Election to the Board of Directors. The proposal of any business to be considered by the Shareholders other than nominations for election to the Board of Directors may be made at any Annual Meeting of Shareholders or any special meeting as provided for in Section 2 of this Article II: (i) pursuant to the Notice of Meeting procedures provided for in Section 4(a) of this Article II; (ii) by or at the direction of the Board of Directors; or (iii) by any Shareholder of the
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Corporation who was a Shareholder of record both at the time of giving notice by the Shareholder as provided for in this Section 5(a) and at the time of such meeting, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 5(a). For any business other than nominations for election to the Board of Directors to be properly brought before any meeting by a Shareholder pursuant to this Section 5(a), the Shareholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for action by the Shareholders. To be timely, a Shareholders notice shall set forth all information required by this Section 5 and shall be delivered to the Secretary at the principal executive office of the Corporation not earlier than the one-hundred fiftieth day nor later than 5:00 p.m., Eastern Time, on the ninetieth day prior to such meeting if such meeting is an annual meeting or not later than 5:00 p.m., Eastern Time, on the fifteenth day prior to such meeting if such meeting is a special meeting. In no event shall the public announcement of a postponement of such meeting or of an adjournment or postponement of any meeting to a later date or time commence a new time period for the giving of a Shareholders notice as described above.
A Shareholders notice to be proper must set forth (i) as to any business that the Shareholder proposes to bring before the meeting, other than nominations to election to the Board of Directors, a description of the business desired to be brought before the meeting, the reasons for proposing such business at the meeting and any material interest in such business of such Shareholder and any Shareholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the Shareholder or the Shareholder Associated Person therefrom; (ii) as to the Shareholder giving the notice and any Shareholder Associated Person (A) the class, series and number of all shares of stock of the Corporation which are owned by such Shareholder and by such Shareholder Associated Person, if any, (B) the nominee holder for, and the number of, shares owned beneficially but not of record by such Shareholder and by any such Shareholder Associated Person, and (C) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock) has been made, the effect or intent of which is to mitigate loss to or manage risk of stock price changes for, or to increase the voting power of, such Shareholder or any such Shareholder Associated Person with respect to any share of stock of the Corporation; (iii) as to any Shareholder giving notice and any Shareholder Associated Person covered by this Section 5(a), the name and address of such Shareholder, as they appear on the Corporations stock ledger and current name and address, if different, and of such Shareholder Associated Person; and (iv) to the extent known by the Shareholder giving the notice, the name and address of any other Shareholder supporting the notice.
(b) Shareholder Associated Person. For the purposes of this Section 5 and Section 2 of Article III of these Regulations Shareholder Associated Person of any Shareholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such Shareholder; (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such Shareholder; and (iii) any person controlling, controlled by or under common control with such Shareholder Associated Person.
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(c) Inaccurate Information. If information submitted pursuant to this Section 5 by any Shareholder proposing any business other than a nomination for election to the Board of Directors shall be inaccurate to a material extent, such information may be deemed not to have been provided in accordance with this Section 5. Upon written request by the Secretary or the Board of Directors, any Shareholder proposing any business other than a nomination for election to the Board of Directors shall provide, within five business days of delivery of such request (or other period as may be specified in such request), (i) written verification, satisfactory, in the discretion of the Board of Directors or any authorized Officer of the Corporation, to demonstrate the accuracy of any information submitted by the Shareholder pursuant to this Section 5; and (ii) a written update of any information previously submitted by the Shareholder pursuant to this Section 5 as of an earlier date. If the Shareholder fails to provide such written verification or a written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 5. Only such proposals made in accordance with the procedures set forth in this Section 5 shall be eligible to be brought before the meeting. The Chairman of the meeting shall have the power to determine whether a proposal was made in accordance with this Section 5, and, if any proposal is not in compliance with this Section 5, to declare that such proposal shall be disregarded.
(d) General. Notwithstanding the foregoing provisions of this Section 5, a Shareholder shall also comply with all applicable requirements of state law and the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 5. Nothing in this Section 5 shall be deemed to affect the right of a Shareholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporations proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Securities Exchange Act of 1934.
Section 6. Shareholders Entitled to Notice and to Vote.
If a record date shall not be fixed or the books of the Corporation shall not be closed against transfers of shares pursuant to statutory authority, the record date for the determination of Shareholders entitled to notice of or to vote at any meeting of Shareholders shall be the close of business on the twentieth day prior to the date of the meeting and only Shareholders of record at such record date shall be entitled to notice of and to vote at such meeting. Such record date shall continue to be the record date for all adjournments of such meeting unless a new record date shall be fixed and notice thereof and of the date of the adjourned meeting be given to all Shareholders entitled to notice in accordance with the new record date so fixed.
Section 7. Quorum.
At any meeting of Shareholders, the holders of shares entitling them to exercise a majority of the voting power of the Corporation, present in person or by proxy, shall constitute a quorum for such meeting; provided, however, that no action required by law, the Articles, or these Regulations to be authorized or taken by the holders of a designated proportion of the shares of the Corporation may be authorized or taken by a lesser proportion. The Shareholders present in
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person or by proxy, whether or not a quorum be present, may adjourn the meeting from time to time without notice other than by announcement at the meeting.
Section 8. Voting Power of Shareholders.
Every Shareholder of record of the Corporation shall be entitled at each meeting of Shareholders to one vote for each share of stock held by such Shareholder according to the books and records of the Corporation as of the date of such vote or, if a record date is set by the Board of Directors, as of such record date.
Section 9. Organization of Meetings.
(a) Presiding Officer. The Chairman of the Board, or in his absence, the President, or in the absence of both of them, a Vice President of the Corporation, shall call all meetings of the Shareholders to order and shall act as Chairman thereof; if all are absent, the Shareholders shall elect a Chairman.
(b) Minutes. The Secretary of the Corporation, or, in his absence, an Assistant Secretary, or, in the absence of both, a person appointed by the Chairman of the meeting, shall act as Secretary of the meeting and shall keep and make a record of the proceedings thereat.
Section 10. Order of Business.
The order of business at all meetings of the Shareholders, unless waived or otherwise determined by a vote of the holder or holders of the majority of the number of shares entitled to vote present in person or represented by proxy, shall be as follows:
1. |
Call meeting to order. |
2. |
Selection of Chairman and/or Secretary, if necessary. |
3. |
Proof of notice of meeting and presentment of affidavit thereof. |
4. |
Filing of proxies with Secretary. |
5. |
Upon appropriate demand, appointment of inspectors of election. |
6. |
Reading, correction and approval of previously unapproved minutes. |
7. |
Reports of officers and committees. |
8. |
If annual meeting, or meeting called for that purpose, election of Directors. |
9. |
Unfinished business, if adjourned meeting. |
10. |
Consideration in sequence of all other matters set forth in the call for and written notice of the meeting. |
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11. |
Any new business other than that set forth in the notice of the meeting which shall have been submitted to the Secretary of the corporation in writing in accordance with the terms and conditions of Section 5 of this Article II. The provisions of Article III shall govern the procedures for Shareholder nominations of directors. |
12. |
Adjournment |
Section 11. Voting.
Except as provided by statute or in the Articles, every Shareholder entitled to vote shall be entitled to cast one vote on each proposal submitted to the meeting for each share held of record by him on the record date for the determination of the Shareholders entitled to vote at the meeting. At any meeting at which a quorum is present, all questions and business which may come before the meeting shall be determined by a majority of votes cast, except when a greater proportion is required be law, the Articles, or these Regulations.
Section 12. Proxies.
A person who is entitled to attend a Shareholders meeting, to vote thereat, or to execute consents, waivers and releases, may be represented at such meeting or vote thereat, and execute consents, waivers, and releases and exercise any of his rights, by proxy or proxies appointed by a writing signed by such person, or by his duly authorized attorney, as provided by the laws of the State of Ohio.
Section 13. List of Shareholders.
At any meeting of Shareholders a list of Shareholders, alphabetically arranged, showing the number and classes of shares held by each on the record date applicable to such meeting shall be produced on the request of any Shareholder.
ARTICLE III
DIRECTORS
Section 1. General Powers.
The authority of this Corporation shall be exercised by or under the direction of the Board of Directors, except where the law, the Articles or these Regulations require action to be authorized or taken by the Shareholders.
Section 2. Election, Number and Qualification of Directors.
(a) Election. The Directors shall be elected at the Annual Meeting of the Shareholders, or if not so elected, at a special meeting of Shareholders called for that purpose provided that the Board of Directors has determined that Directors shall be elected at such special meeting. Nominations for election to the Board of Directors may be made at any such meeting described in the previous sentence (i) pursuant to the Notice of Meeting
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procedures provided for in Section 4(a) of Article II of these Regulations; (ii) by or at the direction of the Board of Directors; or (iii) by any Shareholder of the Corporation who was a Shareholder of record both at the time of giving notice by the Shareholder as provided for in this Section 2(a) and at the time of the meeting, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 2(a). For a nomination for election to the Board of Directors to be properly brought before any meeting by a Shareholder pursuant to this Section 2(a), the Shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a Shareholders notice shall set forth all information required by this Section 2 and shall be delivered to the Secretary at the principal executive office of the Corporation not earlier than the one-hundred fiftieth day nor later than 5:00 p.m., Eastern Time, on the ninetieth day prior to such meeting if such meeting is an annual meeting or not later than 5:00 p.m., Eastern Time, on the fifteenth day prior to such meeting if such meeting is a special meeting. In no event shall the public announcement of a postponement of such meeting or of an adjournment or postponement of meeting to a later date or time commence a new time period for the giving of a Shareholders notice as described above. Only persons nominated as provided for in this Section 2(a) shall be eligible for election.
A Shareholders nomination to be proper must set forth (i) as to each individual whom the Shareholder proposes to nominate for election or reelection as a Director (A) the name, age, business address and residence address of such individual, (B) the class, series, and number of any shares of stock of the Corporation that are beneficially owned or owned of record by such individual, (C) the date such shares were acquired and the investment intent of such acquisition and (D) all other information relating to such individual that is required to be disclosed in solicitations of proxies for election of Directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder (including such individuals written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); (ii) as to the Shareholder giving the notice and any Shareholder Associated Person (A) the class, series and number of all shares of stock of the Corporation which are owned by such Shareholder and by such Shareholder Associated Person, if any, (B) the nominee holder for, and the number of, shares owned beneficially but not of record by such Shareholder and by any such Shareholder Associated Person, and (C) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock) has been made, the effect or intent of which is to mitigate loss to or manage risk of stock price changes for, or to increase the voting power of, such Shareholder or any such Shareholder Associated Person with respect to any share of stock of the Corporation; (iii) as to any Shareholder giving notice and any Shareholder Associated Person covered by this Section 2(a), the name and address of such Shareholder, as they appear on the Corporations stock ledger and current name and address, if different, and of such Shareholder Associated Person; and (iv) to the extent known by the Shareholder giving the notice, the name and address of any other Shareholder supporting the nominee for election or reelection as a Director.
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(b) Number. The number of Directors, which shall not be less than three, may be fixed or changed at a meeting of the Shareholders called for the purpose of electing Directors at which a quorum is present, by the affirmative vote of the holders of a majority of the shares represented at the meeting and entitled to vote on such proposal. In addition, the number of Directors may be fixed or changed by action of the Directors at a meeting called for that purpose at which a quorum is present by a majority vote of the Directors present at the meeting. The Directors then in office may fill any Directors office that is created by an increase in the number of Directors. The number of Directors elected shall be deemed to be the number of Directors fixed unless otherwise fixed by resolution adopted at the meeting at which such Directors are elected.
(c) Shareholder Nominations. If information submitted pursuant to this Section 2 by any Shareholder proposing a nominee for election as a Director shall be inaccurate to a material extent, such information may be deemed not to have been provided in accordance with this Section 2. Upon written request by the Secretary or the Board of Directors, any Shareholder proposing a nominee for election as a Director shall provide, within five business days of delivery of such request (or other period as may be specified in such request), (i) written verification, satisfactory, in the discretion of the Board of Directors or any authorized Officer of the Corporation, to demonstrate the accuracy of any information submitted by the Shareholder pursuant to this Section 2 and (ii) a written update of any information previously submitted by the Shareholder pursuant to this Section 2 as of an earlier date. If the Shareholder fails to provide such written verification or a written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 2. Only such individuals who are nominated in accordance with the procedures set forth in this Section 2 shall be eligible for election by Shareholders as Directors. The Chairman of the meeting shall have the power to determine whether a nomination was made in accordance with this Section 2, and, if any proposed nomination is not in compliance with this Section 2, to declare that such nomination shall be disregarded.
(d) Qualifications. Directors need not be Shareholders of the Corporation.
Section 3. Term of Office of Directors.
(a) Term. Each Director shall hold office until the next annual meeting of the Shareholders and until his successor has been elected or until his earlier resignation, removal from office, or death. A majority of the whole Board may elect a Chairman of the Board on an annual basis or otherwise from time-to-time as may be deemed necessary. The Chairman of the Board, if any, shall hold office until the next annual meeting of Shareholders and until his successor, if any, has been elected or until his earlier resignation, removal from office, or death. Directors shall be subject to removal as provided by statute or by other lawful procedures and nothing herein shall be construed to prevent the removal of any or all Directors in accordance therewith.
(b) Resignation. A resignation from the Board of Directors shall be deemed to take effect immediately upon its being received by any incumbent corporate officer other
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than an officer who is also the resigning Director, unless some other time is specified therein.
(c) Vacancy. In the event of any vacancy in the Board of Directors for any cause, including, but not limited to, those caused by an increase in the number of Directors, the remaining Directors, though less than a majority of the whole Board, may fill any such vacancy for the unexpired term.
Section 4. Meetings of Directors.
(a) Regular Meetings. A regular meeting of the Board of Directors shall be held immediately following the adjournment of the annual meeting of the Shareholders or a special meeting of the Shareholders at which Directors are elected. The holding of such Shareholders meeting shall constitute notice of such Directors meeting and such meeting shall be held without further notice. Other regular meetings shall be held at such other times and places as may be fixed by the Directors.
(b) Special Meetings. Special Meetings of the Board of Directors may be held at any time upon call of the Chairman of the Board, the President, any Vice President, or any two Directors.
(c) Place of Meeting. Any meeting of Directors may be held at such place within or without the State of Ohio as may be designated in the Notice of said meeting.
(d) Notice of Meeting and Waiver of Notice. Notice of the time and place of any regular or special meeting of the Board of Directors (other than the regular meeting of Directors following the adjournment of the annual meeting of the Shareholders or following any special meeting of the Shareholders at which Directors are elected) shall be given to each Director by personal delivery, telephone, mail, or by electronic delivery at least forty-eight hours before the meeting, which notice need not specify the purpose of the meeting. Such notice, however, may be waived in writing by any Director either before or after any such meeting, or by attendance at such meeting without protest prior to the commencement thereof.
(e) Meetings by Communications Equipment. Members of the Board or any committee designated by the Board may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.
Section 5. Quorum and Voting.
At any meeting of Directors, not less than one-half of the whole authorized number of Directors is necessary to constitute a quorum for such meeting, except that a majority of the remaining Directors in office constitutes a quorum for filling a vacancy in the Board. At any meeting at which a quorum is present, all acts, questions, and business which may come before the meeting shall be determined by a majority of votes cast by the Directors present at such
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meeting, unless the vote of a greater number is required by the Articles, or these Regulations or By-Laws duly adopted by the Board of Directors.
Section 6. Committees.
(a) Appointment. The Board of Directors may from time to time appoint certain of its members (but in no event less than one) to act as a committee or committees in the intervals between meetings of the Board and may delegate to such committee or committees power to be exercised under the control and direction of the Board. Each such committee and each member thereof shall serve at the pleasure of the Board.
(b) Executive Committee. In particular, the Board of Directors may create from its membership and define the powers and duties of an Executive Committee. During the intervals between meetings of the Board of Directors, the Executive Committee shall possess and may exercise all of the powers of the Board of Directors in the management and control and the business of the Corporation to the extent permitted by law. All action taken by the Executive Committee shall be reported to the Board of Directors at its first meeting thereafter.
(c) Committee Action. Unless otherwise provided by the Board of Directors, a majority of the members of any committee appointed by the Board of Directors pursuant to this Section shall constitute a quorum at any meeting thereof and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of such committee. Action may be taken by any such committee without a meeting by a writing signed by all its members. Any such committee shall prescribe its own rules for calling and holding meetings and its method of procedure, subject to any rules prescribed by the Board of Directors, and shall keep a written record of all action taken by it.
Section 7. Action of Directors Without a Meeting.
Any action which may be taken at a meeting of Directors or any Committee thereof may be taken without a meeting, if authorized by a writing or writings signed by all the Directors, which writing or writings shall be filed or entered upon the records of the Corporation.
Section 8. Compensation of Directors.
The Board of Directors may allow compensation for attendance at meetings or for any special services, may allow compensation to the member of any committee, and may reimburse any Director for his expenses in connection with attending any Board or committee meeting.
Section 9. Relationship with Corporation.
Directors shall not be barred from providing professional or other services to the Corporation. No contract or transaction shall be void or voidable with respect to the Corporation for the reason that it is between the Corporation and one or more of its Directors, or between the Corporation and any other person in which one or more of its Directors are directors, trustees or
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officers or have a financial or personal interest, or for the reason that one or more interested Directors participate in or vote at the meeting of the Directors or committee thereof which authorizes such contract or transaction, if in any such case (a) the material facts as to the Directors relationship or interest and as to the contract or transaction are disclosed or are known to the Directors or the committee and the Directors or committee, in good faith, reasonably justified by such facts, authorized the contract or transaction by the affirmative vote of a majority of the disinterested Directors, even though the disinterested Directors constitute less than a quorum; or (b) the material facts as to the Directors relationship or interest and as to the contract or transaction are disclosed or are known to the Shareholders entitled to vote thereon and the contract or transaction is specifically approved at a meeting of the Shareholders held for such purpose by the affirmative vote of the holders of shares entitling them to exercise a majority of the voting power of the Corporation held by persons not interested in the contract or transaction; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized or approved by the Directors, a committee thereof or the Shareholders.
Section 10. Attendance at Meetings of Persons Who Are Not Directors.
Unless waived by a majority of Directors in attendance, not less than twenty-four hours before any regular or special meeting of the Board of Directors any Director who desires the presence at such meeting of not more than one person who is not a Director shall so notify all other Directors, request the presence of such person at the meeting, and state the reason in, writing. Such person will not be permitted to attend the Directors meeting unless a majority of the Directors in attendance vote to admit such person to the meeting. Such vote shall constitute the first order of business for any such meeting of the Board of Directors. Such right to attend, whether granted by waiver or vote, may be revoked at any time during any such meeting by the vote of a majority of the Directors in attendance.
ARTICLE IV
OFFICERS
Section 1. General Provisions.
The Board of Directors shall elect a Chief Executive Officer, a President, a Secretary and a Treasurer, and may elect a Chairman of the Board, one or more Vice Presidents, and such other officers and assistant officers as the Board may from time-to-time deem necessary. The Chairman of the Board, if any, shall be a Director but need not be an officer. The Chief Executive Officer shall be a Director, but no one of the other officers need be a Director. Any two or more offices may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required to be executed, acknowledged or verified by two or more officers.
Section 2. Powers and Duties.
All officers, as between themselves and the Corporation, shall respectively have such authority and perform such duties as are customarily incident to their respective offices, and as may be specified from time to time by the Board of Directors, regardless of whether such authority and duties are customarily incident to such office. In the absence of any officer of the
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Corporation, or for any other reason the Board of Directors may deem sufficient, powers or duties of such officer, or any of them may be delegated, to any other officer or to any Director. The Board of Directors may from time to time delegate to any officer authority to appoint and remove subordinate officers and to prescribe their authority and duties. Since the lawful purposes of this Corporation includes the acquisition and ownership of real property, personal property and property in the section of the Corporations property rights in its patents, copyrights and trademarks, each of the officers of this Corporation is empowered to execute any power of attorney necessary to protect, secure, or vest the Corporations interest in and to real property, personal property and its property protectable by patents, trademarks and copyright registrations and to secure such patents, copyrights and trademark registrations.
Section 3. Term of Office and Removal.
(a) Term. Each officer of the Corporation shall hold office at the pleasure of the Board of Directors, and unless sooner removed by the Board of Directors, until the meeting of the Board of Directors following the date of election of Directors and until his successor is elected and qualified.
(b) Removal. The Board of Directors may remove any officer at any time with or without cause by the affirmative vote of a majority of Directors then in office.
Section 4. Compensation of Officers.
Unless compensation is otherwise determined by a majority of the Directors at a regular or special meeting of the Board of Directors or unless such determination is delegated by the Board of Directors to another officer or officers, the President of the Corporation from time to time shall determine the compensation to be paid to all officers and other employees for services rendered to the Corporation.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right of Indemnification.
Each Director, officer and member of a committee of this Corporation, and any person who may have served at the request of this Corporation as a Director, trustee, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise, such persons heirs, executors and administrators, shall be indemnified and held harmless by the Corporation, to the furthest extent permitted by law as then in effect, against all costs and expenses reasonably incurred by such person concerning, or in connection with, the defense of any claim asserted or suit or proceeding brought against such person by reason of that persons conduct or actions in such capacity at the time of incurring such costs or expenses, except costs and expenses incurred in relation to matters as to which such person shall have been willfully derelict in the performance of that persons duty. Such costs and expenses shall include the cost of reasonable settlements (with or without suit), judgments, attorneys fees, costs of suit, fines and penalties and other liabilities (other than amounts paid by any such person to this Corporation or any subsidiary thereof). The right to indemnification conferred in this Section 1 shall be a contract right and shall include the
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right to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final dispositions (hereinafter an advancement of expenses). Any advancement of expenses shall be made only upon delivery to the Corporation of an undertaking by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section 1. To the extent any of the indemnification provisions set forth above prove to be ineffective for any reason in furnishing the indemnification provided, each of the persons named above shall be indemnified by the Corporation to the full extent authorized by the General Corporation Law of Ohio.
Section 2. Definition of Performance.
For the purposes of this Article, a Director, officer or member of a committee shall conclusively be deemed not to have been willfully derelict in the performance of such persons duty as such Director, officer or member of committee:
(a) Determination by Suit. In a matter which shall have been the subject of a suit or proceeding in which such person was a party which is disposed of by adjudication on the merits, unless such person shall have been finally adjudged in such suit or proceeding to, have been willfully derelict in the performance of that persons duty as such Director, officer or member of a committee; or
(b) Determination by Committee. In a matter not falling within (a) above, a majority of disinterested members of the Board of Directors or a majority of a committee of disinterested Shareholders of the Corporation, selected as hereinafter provided, shall determine that such person was not willfully derelict. Such determination shall be made by the disinterested members of the Board of Directors except where such members shall determine that such matter should be referred to said committee of disinterested Shareholders.
Section 3. Selection of Committee.
The selection of a committee of Shareholders provided above may be made by the majority vote of the disinterested Directors or, if there be no disinterested Director or Directors, by the chief executive officer of the Corporation. A Director or Shareholder shall be deemed disinterested in a matter if such person has no interest therein other than as a Director or Shareholder of the Corporation as the case may be. The Corporation shall pay the fees and expenses of the Shareholders or Directors, as the case may be, incurred in connection with making a determination as above provided.
Section 4. Non-Committee Determination.
In the event that a Director, officer or member of a committee shall be found by some other method not to have been willfully derelict in the performance of such persons duty as such Director, officer or member of a committee, then such determination as to dereliction shall not be questioned on the ground that it was made otherwise than as provided above.
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Section 5. Indemnification by Law or Contract.
The foregoing rights of indemnification and payment of expenses shall not be exclusive of, and shall be in addition to any rights to which any such person may otherwise be entitled as a matter of law or by contract with the Corporation which is expressly permitted hereby.
Section 6. Insurance.
The Corporation may, to the full extent then permitted by law and authorized by the Board of Directors, purchase and maintain insurance or furnish similar protection, including but not limited to trust funds, letters of credit or self-insurance, on behalf of or for any persons described in this Article V, against any liability asserted against and incurred by any such person in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such liability. Insurance may be purchased from or maintained with a person in which the Corporation has a financial interest.
Section 7. Miscellaneous.
The right of indemnification conferred hereby shall be extended to any threatened action, suit or proceeding, and the failure to institute it shall be deemed its final determination. Advances may be made by the Corporation against costs, expenses and fees, as and upon the terms, determined by the Board of Directors.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
Section 1. Transfer of Securities Owned by the Corporation.
All endorsements, assignments, transfers, stock powers, share powers or other instruments of transfer of securities standing in the name of the Corporation shall be executed for and in the name of the Corporation by the President, by a Vice President, by the Secretary or by the Treasurer or by any other person or persons as may be thereunto authorized by the Board of Directors.
Section 2. Voting Securities Held by the Corporation.
The Chairman of the Board, President, and Vice President, Secretary or Treasurer, in person or by another person thereunto authorized by the Board of Directors, in person or by proxy or proxies appointed by him, shall have full power and authority on behalf of the Corporation to vote, act and consent with respect to any securities issued by other corporations which the Corporation may own.
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ARTICLE VII
SHARE CERTIFICATES
Section 1. Transfer and Registration of Certificates.
The Board of Directors shall have authority to make such rules and regulations, not inconsistent with law, the Articles or these Regulations, as it deems expedient concerning the issuance, transfer and registration of certificates for shares and the shares represented thereby and may appoint transfer agents and registrars thereof.
Section 2. Uncertificated Shares of Stock; Stock Certificates.
The Board of Directors may provided by resolution, to the extent permitted by applicable law and unless otherwise provided by the Articles or these Regulations, that some or all of any or all classes and series of shares of stock of the Corporation shall be issued in uncertificated form pursuant to customary arrangements for issuing shares in such uncertificated form, including by electronic or other means. Any such resolution shall not apply to shares then represented by a certificate until such certificate is surrendered to the Corporation, nor shall such a resolution apply to a certificated share issued in exchange for an uncertificated share. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send to the registered owner of the shares a written notice containing the information required to be set forth or stated on certificates pursuant to applicable law. Notwithstanding the foregoing, upon the written request of a holder of shares of the Corporation delivered to the Secretary, such holder is entitled to receive one or more certificates representing the shares of stock of the Corporation held by such holder. Any such certificate shall be signed by the Chairman of the Board, the President or a Vice President and the Secretary or Treasurer or an Assistant Secretary, and sealed with the seal of the Corporation. Such signatures and/or seal may be a facsimile, engraved or printed. In case any such officer who has signed any such certificate shall have ceased to be such officer before such certificate is delivered by the Corporation, it may nevertheless be issued and delivered by the Corporation with the same effect as if such officer had not ceased to be such at the date of its delivery. Any certificate representing the stock of the Corporation shall be in such form as shall be approved by the Board of Directors and shall conform to the requirements of the laws of the State of Ohio.
Section 3. Substituted Certificates.
Any person claiming that a certificate for shares has been lost, stolen or destroyed, shall make an affidavit or affirmation of that fact and, if required, shall give the Corporation (and its registrar or registrars and its transfer agent or agents, if any) a bond of indemnity, in such form and with one or more sureties satisfactory to the Board, and, if required by the Board of Directors, shall advertise the same in such manner as the Board of Directors may require, where upon a new certificate may be executed and delivered of the same tenor and for the same number of shares as the one alleged to have been lost, stolen or destroyed.
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ARTICLE VIII
CONSISTENCY WITH ARTICLES OF INCORPORATION
If any provisions of these Regulations shall be inconsistent with the Corporations Articles of Incorporation (and as they may be amended from time to time), the Articles of Incorporation (as so amended at the time) shall govern.
ARTICLE IX
SECTION HEADINGS
The headings contained in this Code of Regulations are for reference purposes only and shall not be construed to be part of and/or shall not affect in any way the meaning or interpretation of this Code of Regulations.
ARTICLE X
AMENDMENTS
This Code of Regulations of the Corporation (and as it may be amended from time-to-time) may be amended or added to by the affirmative vote or the written consent of the Shareholders of record entitled to exercise a majority of the voting power on such proposal or by the directors to the extent permitted by the Ohio General Corporation Law; provided, however, that if an amendment or addition is adopted by written consent without a meeting of the Shareholders or otherwise by the directors, it shall be the duty of the Secretary to enter the amendment or addition in the records of the Corporation, and to provide notice to Shareholders to the extent required by applicable law.
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Exhibit 4.1
Description of Registrants Securities
Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
As of November 26, 2019, Meridian Bioscience, Inc. (we, our) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, namely, common stock. We also are authorized to issue preferred stock. The description below does not include all of the terms of our common stock and preferred stock and should be read together with our Amended and Restated Articles of Incorporation and Amended and Restated Code of Regulations.
General
Under our Amended and Restated Articles of Incorporation, we are authorized to issue up to 72,000,000 shares of capital stock, including:
|
71,000,000 shares of common stock, without par value; and |
|
1,000,000 shares of preferred stock, without par value. |
Common Stock
Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of shareholders, and shareholders have cumulative voting rights, subject to compliance with applicable Ohio law. Our shares of common stock are traded on the Nasdaq Global Select Market.
Subject to the rights of holders of any outstanding shares of preferred stock, each record holder of common stock on the applicable record date is entitled to receive dividends on common stock to the extent authorized by our Board of Directors out of assets legally available for the payment of dividends. In addition, subject to the rights of holders of any outstanding preferred shares, holders of common stock are entitled to share ratably in our assets legally available for distribution to our shareholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all our known debts and liabilities.
Holders of common stock do not have any preemptive rights to subscribe for any of our securities. No conversion, redemption or sinking fund provisions apply to the common stock, and the holders of common stock are not liable to further calls or assessments by us.
Preferred Stock
Our Board of Directors is authorized, without shareholder approval, to issue up to 1,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions granted to or imposed upon the preferred shares, including voting rights, dividend rights, conversion rights, terms of redemption, liquidation preference, sinking fund terms and the number of shares constituting any series or the designation of a series. Our Board of Directors
can, without shareholder approval, issue preferred shares with voting and conversion rights that could adversely affect the voting power of the holders of common stock. Any preferred shares issued would also rank senior to our common stock as to rights up on liquidation, winding-up or dissolution. If we issue any preferred shares that are convertible into our common stock, such issuance shares could have the effect of delaying, deferring or preventing a change in control of our company. No preferred shares are outstanding.
Business Combinations
We are subject to Chapter 1704 of the Ohio General Corporation Law (OGCL), which prohibits certain business combinations and transactions between an issuing public corporation and an Ohio law interested shareholder for at least three years after the Ohio law interested shareholder attains 10% ownership, unless the Board of Directors of the issuing public corporation approves the transaction before the Ohio law interested shareholder attains 10% ownership. An issuing public corporation is an Ohio corporation with 50 or more shareholders that has its principal place of business, principal executive offices, or substantial assets within the State of Ohio, and as to which no close corporation agreement exists. An Ohio law interested shareholder is a beneficial owner of 10% or more of the shares of a corporation. Examples of transactions regulated by Chapter 1704 include the disposition of assets, mergers and consolidations, voluntary dissolutions and the transfer of shares.
Subsequent to the three-year period, a transaction subject to Chapter 1704 may take place provided that certain conditions are satisfied, including:
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prior to the interested shareholders share acquisition date, the board of directors approved the purchase of shares by the interested shareholder; |
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the transaction is approved by the holders of shares with at least 66 2/3% of the voting power of the corporation (or a different proportion set forth in the articles of incorporation), including at least a majority of the outstanding shares after excluding shares controlled by the Ohio law interested shareholder; or |
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the business combination results in shareholders, other than the Ohio law interested shareholder, receiving a fair price plus interest for their shares. |
Chapter 1704 is applicable to all corporations formed under Ohio law.
The OGCL also requires approval of mergers, dissolutions, dispositions of all or substantially all of a corporations assets and majority share acquisitions and combinations involving the issuance of shares representing one-sixth or more of the voting power of the company immediately after the consummation of the transaction (other than so-called parent-subsidiary mergers), by two-thirds of the voting power of the company, unless the articles of incorporation specify a different proportion (but not less than a majority). Our articles of incorporation do not specify a voting power proportion different than that specified by Ohio law in connection with the approval of these transactions.
Transfer Agent and Registrar
Computershare serves as the transfer agent and registrar for our common stock.
Exhibit 21
Subsidiaries of the Registrant
1. |
Meridian Bioscience Corporation, an Ohio corporation |
2. |
Meridian Life Science, Inc., a Maine corporation |
3. |
Meridian Bioscience Europe, s.r.l., an Italian corporation |
4. |
Meridian Bioscience Europe S.A., a Belgian corporation |
5. |
Meridian Bioscience Europe B.V., a Dutch corporation |
6. |
Meridian Bioscience Asia Pte. Ltd., a Singapore corporation |
7. |
Meridian Bioscience UK Ltd., a United Kingdom corporation |
8. |
Meridian Bioscience International Ltd., a United Kingdom corporation |
9. |
Meridian Bioscience Beijing, LLC, a Wholly Foreign Owned Enterprise located in Beijing, China |
10. |
Meridian Bioscience Canada, Inc., a Canadian corporation |
11. |
Bioline Ltd., a United Kingdom corporation |
12. |
Bioline Reagents Ltd., a United Kingdom corporation |
13. |
Bioline GmbH, a German corporation |
14. |
Bioline (Aust) Pty Ltd., an Australian corporation |
15. |
Magellan Biosciences, Inc., a Delaware corporation |
16. |
Magellan Diagnostics, Inc., a Delaware corporation |
Exhibit 23
Consent of Independent Registered Public Accounting Firm
We have issued our reports dated November 26, 2019, with respect to the consolidated financial statements, schedule, and internal control over financial reporting included in the Annual Report of Meridian Bioscience, Inc. on Form 10-K for the year ended September 30, 2019. We consent to the incorporation by reference of said reports in the Registration Statements of Meridian Bioscience, Inc. on Form S-3 (File No. 333-221794), and on Forms S-8 (File No. 333-179440, File No. 333-155703 and File No. 333-122554).
/s/ GRANT THORNTON LLP
Cincinnati, Ohio
November 26, 2019
Exhibit 31.1
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Jack Kenny, certify that:
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 control 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 most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) 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 the 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. |
Date: November 26, 2019 |
/s/ Jack Kenny |
Jack Kenny |
Chief Executive Officer |
Exhibit 31.2
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Bryan T. Baldasare, certify that:
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 control 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 most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) 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 the 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. |
Date: November 26, 2019 |
/s/ Bryan T. Baldasare |
Bryan T. Baldasare |
Executive Vice President and |
Chief Financial Officer |
Exhibit 32
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the filing with the Securities and Exchange Commission of the Annual Report of Meridian Bioscience, Inc. (the Company) on Form 10-K for the period ended September 30, 2019 (the Report), the undersigned officers of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:
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/ Jack Kenny |
Jack Kenny |
Chief Executive Officer |
November 26, 2019 |
/s/ Bryan T. Baldasare |
Bryan T. Baldasare |
Executive Vice President and |
Chief Financial Officer |
November 26, 2019 |