☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange
on which registered
|
||
Common Stock, no par value
|
VIVO
|
NASDAQ Global Select Market
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
|||
Non-accelerated
filer
|
☐
|
Smaller reporting company
|
☐
|
|||
Emerging growth company
|
☐
|
|
|
Class
|
Outstanding January 31, 2020
|
|
Common Stock, no par value
|
42,829,480
|
|
|
Page(s)
|
|
|||
PART I.
|
|
|
|
|||
Item 1.
|
|
|||||
|
1
|
|||||
|
2
|
|||||
|
3
|
|||||
|
4-
5
|
|||||
|
6
|
|||||
|
7-
18
|
|||||
Item 2.
|
19-
24
|
|||||
Item 3.
|
24
|
|||||
Item 4.
|
24
|
|||||
PART II.
|
|
|
|
|||
Item 1.
|
24
|
|||||
Item 1A.
|
24
|
|||||
Item 6.
|
26
|
|||||
|
26
|
|
Three Months Ended
|
|||||||
|
December 31,
|
|||||||
|
2019
|
2018
|
|
|||||
NET REVENUES
|
$
|
47,421
|
$ |
|
||||
COST OF SALES
|
19,981
|
19,908
|
||||||
GROSS PROFIT
|
27,440
|
31,572
|
||||||
OPERATING EXPENSES
|
|
|
||||||
Research and development
|
4,824
|
3,967
|
||||||
Selling and marketing
|
6,684
|
7,563
|
||||||
General and administrative
|
8,756
|
8,902
|
||||||
Change in fair value of contingent consideration obligation
|
|
|
1,187
|
|
|
—
|
|
|
Restructuring costs
|
275
|
—
|
||||||
Selected legal costs
|
320
|
589
|
||||||
Total operating expenses
|
22,046
|
21,021
|
||||||
OPERATING INCOME
|
5,394
|
10,551
|
||||||
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
||||||
Interest income
|
111
|
149
|
||||||
Interest expense
|
(767
|
) |
(363
|
) | ||||
Other, net
|
(712
|
) |
139
|
|||||
Total other expense
|
(1,368
|
) |
(75
|
) | ||||
EARNINGS BEFORE INCOME TAXES
|
4,026
|
10,476
|
||||||
INCOME TAX PROVISION
|
1,199
|
2,370
|
||||||
NET EARNINGS
|
$ |
2,827
|
$ |
8,106
|
||||
BASIC EARNINGS PER COMMON SHARE
|
$ |
0.07
|
$ |
0.19
|
||||
DILUTED EARNINGS PER COMMON SHARE
|
$ |
0.07
|
$ |
0.19
|
||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC
|
42,789
|
42,446
|
||||||
EFFECT OF DILUTIVE STOCK OPTIONS AND RESTRICTED SHARE UNITS
|
149
|
459
|
||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED
|
42,938
|
42,905
|
||||||
ANTI-DILUTIVE SECURITIES:
|
|
|
||||||
Common share options and restricted share units
|
1,407
|
684
|
||||||
DIVIDENDS DECLARED PER COMMON SHARE
|
$ |
—
|
$ |
0.125
|
|
Three Months Ended
|
|||||||
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
||||
NET EARNINGS
|
$ |
2,827
|
$ |
8,106
|
||||
Other comprehensive income (loss):
|
|
|
||||||
Foreign currency translation adjustment
|
2,768
|
(716
|
) | |||||
Unrealized loss on cash flow hedge
|
—
|
(577
|
) | |||||
Reclassification of gain on cash flow hedge
|
(77
|
) |
—
|
|||||
Income taxes related to items of other comprehensive income
|
19
|
145
|
||||||
Other comprehensive income (loss), net of tax
|
2,710
|
(1,148
|
) | |||||
COMPREHENSIVE INCOME
|
$ |
5,537
|
$ |
6,958
|
||||
Three Months Ended December 31,
|
2019
|
|
2018
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
||||||
Net earnings
|
$ |
2,827
|
$ |
8,106
|
||||
Non-cash
items included in net earnings:
|
|
|
||||||
Depreciation of property, plant and equipment
|
1,218
|
1,253
|
||||||
Amortization of intangible assets
|
1,722
|
829
|
||||||
Stock-based compensation
|
788
|
1,670
|
||||||
Deferred income taxes
|
419
|
96
|
||||||
Change in accrued contingent consideration
|
|
|
1,187
|
|
|
|
—
|
|
Change in the following:
|
|
|
||||||
Accounts receivable
|
550
|
317
|
||||||
Inventories
|
(3,526
|
) |
(37
|
) | ||||
Prepaid expenses and other current assets
|
1,434
|
539
|
||||||
Accounts payable and accrued expenses
|
(664
|
) |
(4,081
|
) | ||||
Income taxes payable
|
(464
|
) |
991
|
|||||
Other, net
|
(203
|
) |
(197
|
) | ||||
Net cash provided by operating activities
|
5,288
|
9,486
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
||||||
Purchase of property, plant and equipment
|
(340
|
) |
(1,109
|
) | ||||
Net cash used for investing activities
|
(340
|
) |
(1,109
|
) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
||||||
Dividends paid
|
—
|
(5,301
|
) | |||||
Payments on term loan
|
—
|
(1,125
|
) | |||||
Proceeds from exercise of stock options
|
—
|
66
|
||||||
Net cash used for financing activities
|
—
|
(6,360
|
) | |||||
Effect of Exchange Rate Changes on Cash and Equivalents and Restricted Cash
|
1,212
|
(257
|
) | |||||
Net Increase in Cash and Equivalents and Restricted Cash
|
6,160
|
1,760
|
||||||
Cash and Equivalents and Restricted Cash at Beginning of Period
|
62,397
|
60,763
|
||||||
Cash and Equivalents and Restricted Cash at End of Period
|
$ |
68,557
|
$ |
62,523
|
||||
Cash and Equivalents
|
$ |
68,557
|
$ |
61,523
|
||||
Restricted Cash
|
—
|
1,000
|
||||||
Cash and Equivalents and Restricted Cash at End of Period
|
$ |
68,557
|
$ |
62,523
|
||||
|
December 31,
2019 (Unaudited) |
|
September 30,
2019 |
|
||||
CURRENT ASSETS
|
|
|
||||||
Cash and equivalents
|
$ |
68,557
|
$ |
62,397
|
||||
Accounts receivable, less allowances of $527 and $537
,
respectively
|
35,318
|
35,608
|
||||||
Inventories
|
42,827
|
39,617
|
||||||
Prepaid expenses and other current assets
|
5,730
|
7,139
|
||||||
Total current assets
|
152,432
|
144,761
|
||||||
PROPERTY, PLANT AND EQUIPMENT, at Cost
|
|
|
||||||
Land
|
985
|
982
|
||||||
Buildings and improvements
|
31,928
|
31,904
|
||||||
Machinery, equipment and furniture
|
65,320
|
64,155
|
||||||
Construction in progress
|
943
|
522
|
||||||
Subtotal
|
99,176
|
97,563
|
||||||
Less: accumulated depreciation and amortization
|
68,681
|
66,996
|
||||||
Net property, plant and equipment
|
30,495
|
30,567
|
||||||
OTHER ASSETS
|
|
|
||||||
Goodwill
|
89,958
|
89,241
|
||||||
Other intangible assets, net
|
58,586
|
60,243
|
||||||
Right-of-use assets
|
|
|
6,041
|
|
|
|
—
|
|
Deferred income taxes
|
132
|
156
|
||||||
Other assets
|
484
|
510
|
||||||
Total other assets
|
155,201
|
150,150
|
||||||
TOTAL ASSETS
|
$ |
|
$ |
325,478
|
||||
|
Common
Shares Issued |
Additional
Paid-In
Capital |
Retained
Earnings |
Accumulated Other
Comprehensive Income (Loss) |
Total
Shareholders’ Equity |
|||||||||||||||
Balance at September 30, 2019
|
42,712
|
$ |
132,834
|
$ |
63,108
|
$ |
(4,975
|
) | $ |
190,967
|
||||||||||
Conversion of restricted share units and
|
116
|
—
|
—
|
—
|
—
|
|||||||||||||||
Stock compensation expense
|
—
|
788
|
—
|
—
|
788
|
|||||||||||||||
Net earnings
|
—
|
—
|
2,827
|
—
|
2,827
|
|||||||||||||||
Foreign currency translation adjustment
|
—
|
—
|
—
|
2,768
|
2,768
|
|||||||||||||||
Hedging activity, net of tax
|
—
|
—
|
—
|
(58
|
) |
(58
|
) | |||||||||||||
Balance at December 31, 2019
|
42,828
|
$ |
133,622
|
$ |
65,935
|
$ |
(2,265
|
) | $ |
197,292
|
||||||||||
Balance at September 30, 2018
|
42,400
|
$ |
129,193
|
$ |
49,602
|
$ |
(3,377
|
) | $ |
175,418
|
||||||||||
Cash dividends paid - $0.125 per share
|
—
|
—
|
(5,301
|
) |
—
|
(5,301
|
) | |||||||||||||
Conversion of restricted share units and
|
89
|
13
|
—
|
—
|
13
|
|||||||||||||||
Stock compensation expense
|
—
|
1,670
|
—
|
—
|
1,670
|
|||||||||||||||
Net earnings
|
—
|
—
|
8,106
|
—
|
8,106
|
|||||||||||||||
Foreign currency translation adjustment
|
—
|
—
|
—
|
(716
|
) |
(716
|
) | |||||||||||||
Hedging activity, net of tax
|
—
|
—
|
—
|
(432
|
) |
(432
|
) | |||||||||||||
Adoption of ASU
2014-09
|
—
|
—
|
(116
|
) |
—
|
(116
|
) | |||||||||||||
Balance at December 31, 2018
|
42,489
|
$ |
130,876
|
$ |
52,291
|
$ |
(4,525
|
) | $ |
178,642
|
1.
|
Basis of Presentation
|
2.
|
Significant Accounting Policies
|
|
Three Months Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
Inc (Dec)
|
|
||||||
Diagnostics-
|
|
|
|
|||||||||
Americas
|
$ |
|
$ |
|
(9
|
)% | ||||||
EMEA
|
6,500
|
5,802
|
12
|
% | ||||||||
ROW
|
556
|
440
|
26
|
% | ||||||||
Total Diagnostics
|
34,791
|
36,665
|
(5
|
)% | ||||||||
Life Science-
|
|
|
|
|||||||||
Americas
|
4,019
|
4,521
|
(11
|
)% | ||||||||
EMEA
|
4,966
|
7,363
|
(33
|
)% | ||||||||
ROW
|
3,645
|
2,931
|
24
|
% | ||||||||
Total Life Science
|
12,630
|
14,815
|
(15
|
)
%
|
||||||||
Consolidated
|
$ |
47,421
|
$ |
51,480
|
(8
|
)% | ||||||
|
Three Months Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
Inc (Dec)
|
|
||||||
Diagnostics-
|
|
|
|
|||||||||
Molecular assays
|
$ |
6,887
|
$ |
7,231
|
(5
|
)% | ||||||
Immunoassays & blood chemistry assays
|
27,904
|
29,434
|
(5
|
)% | ||||||||
Total Diagnostics
|
$ |
34,791
|
$ |
36,665
|
(5
|
)% | ||||||
Life Science-
|
|
|
|
|||||||||
Molecular reagents
|
$ |
5,357
|
$ |
6,615
|
(19
|
)% | ||||||
Immunological reagents
|
7,273
|
8,200
|
(11
|
)% | ||||||||
Total Life Science
|
$ |
12,630
|
$ |
14,815
|
(15
|
)
%
|
||||||
|
Three Months Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
Inc (Dec)
|
|
||||||
Diagnostics-
|
|
|
|
|||||||||
Gastrointestinal assays
|
$ |
|
$ |
|
(14
|
)% | ||||||
Respiratory illness assays
|
7,749
|
7,981
|
(3
|
)% | ||||||||
Blood chemistry assays
|
5,150
|
4,430
|
16
|
% | ||||||||
Other
|
5,846
|
5,639
|
4
|
% | ||||||||
Total Diagnostics
|
$ |
34,791
|
$ |
36,665
|
(5
|
)% | ||||||
|
|
|
Fair Value Measurements Using
Inputs Considered as
|
|
||||||||||||
|
Carrying
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|||||
Contingent consideration -
|
||||||||||||||||
As of December 31, 2019
|
$ |
28,389
|
$ |
—
|
$ |
—
|
$ |
28,389
|
||||||||
As of September 30, 2019
|
$ |
27,202
|
$ |
—
|
$ |
—
|
$ |
27,202
|
3.
|
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. |
|
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 originally estimated at
$27,202)
|
$ |
77,502
|
$ |
24
|
$ |
77,526
|
||||||
Three Months Ended December 31,
|
2019
|
|
2018
|
|||||
Net Revenues
|
$ |
47,421
|
|
$ |
51,552
|
|||
Net Earnings
|
$ |
2,827
|
|
$ |
4,379
|
Three Months Ended December 31,
|
2019
|
|
2018
|
|||||
Adjustments to Net Revenues
|
|
|
||||||
GenePOC
pre-acquisition
revenues
|
$ |
—
|
|
$ |
72
|
|||
Adjustments to Net Earnings
|
|
|
|
|||||
GenePOC
pre-acquisition
net loss
|
$ |
—
|
$ |
(3,203
|
) | |||
Pro forma adjustments:
|
|
|
|
|||||
Expenses related to
non-continuing
personnel,
locations or activities
|
—
|
|
568
|
|||||
Incremental depreciation and amortization
|
—
|
(876
|
) | |||||
Incremental interest costs
|
—
|
(284
|
) | |||||
Tax effects of pro forma adjustments
|
—
|
68
|
||||||
Total Adjustments to Net Earnings
|
$ |
—
|
$ |
(3,727
|
) | |||
4.
|
Restructuring
|
|
|
Employee
Separation and Related Costs |
|
|
Lease and
Other Contract Termination Fees |
|
|
Other
|
|
|
Total
|
|
||||
Balance at September 30, 2019
|
|
$
|
1,010
|
|
|
$
|
12
|
|
|
|
114
|
|
|
$
|
1,136
|
|
Restructuring charges
|
|
|
236
|
|
|
|
80
|
|
|
|
—
|
|
|
|
316
|
|
Reversal of prior period accruals
|
|
|
(41
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(41
|
)
|
Payments
|
|
|
(1,020
|
)
|
|
|
(65
|
)
|
|
|
(114
|
)
|
|
|
(1,199
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
$
|
185
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
Cash and Equivalents
|
|
December 31,
2019 |
|
September 30,
2019 |
|
||||
Institutional money market funds
|
$ |
21,010
|
$ |
20,913
|
||||
Cash on hand, unrestricted
|
47,547
|
41,484
|
||||||
Total
|
$ |
68,557
|
$ |
62,397
|
||||
6.
|
Inventories
|
|
December 31,
2019 |
|
September 30,
2019 |
|
||||
Raw materials
|
$ |
8,549
|
$ |
7,455
|
||||
Work-in-process
|
12,209
|
11,504
|
||||||
Finished goods - instruments
|
688
|
935
|
||||||
Finished goods - kits and reagents
|
21,381
|
19,723
|
||||||
Total
|
$ |
42,827
|
$ |
39,617
|
||||
7.
|
Leasing Arrangements
|
Three Months Ended December 31,
|
|
2019
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
387
|
|
|
|
|
|
|
|
|
December 31,
2019 |
|
|
Remainder of 2020
|
|
$
|
1,132
|
|
2021
|
|
|
1,456
|
|
2022
|
|
|
1,310
|
|
2023
|
|
|
967
|
|
2024
|
|
|
712
|
|
Thereafter
|
|
|
616
|
|
|
|
|
|
|
Total lease payments
|
|
|
6,193
|
|
Less amount of lease payment representing interest
|
|
|
(380
|
)
|
|
|
|
|
|
Total present value of lease payments
|
|
$
|
5,813
|
|
|
|
|
|
|
|
|
September 30,
2019 |
|
|
2020
|
|
$
|
1,528
|
|
2021
|
|
|
1,451
|
|
2022
|
|
|
1,293
|
|
2023
|
|
|
967
|
|
2024
|
|
|
712
|
|
Thereafter
|
|
|
616
|
|
|
|
|
|
|
Total
|
|
$
|
6,567
|
|
8.
|
Intangible Assets
|
|
December 31, 2019
|
September 30, 2019
|
||||||||||||||
|
Gross
Carrying Value |
|
Accumulated
Amortization |
|
Gross
Carrying Value |
|
Accumulated
Amortization |
|
||||||||
Manufacturing technologies, core products and cell lines
|
$ |
56,273
|
$ |
16,057
|
$ |
56,193
|
$ |
15,096
|
||||||||
Trade names, licenses and patents
|
14,596
|
6,566
|
14,494
|
6,094
|
||||||||||||
Customer lists, customer relationships and supply agreements
|
24,500
|
14,626
|
24,274
|
14,110
|
||||||||||||
Government grants
|
828
|
362
|
814
|
232
|
||||||||||||
Total
|
$ |
96,197
|
$ |
37,611
|
$ |
95,775
|
$ |
35,532
|
||||||||
9.
|
Bank Credit Arrangements
|
10
.
|
Reportable Segment and Major Customers Information
|
(1)
|
Includes Restructuring
Cost
and Selected Legal Costs of $370 and $589 in the quarters ended December 31, 2019 and 2018, respectively.
s
|
(2)
|
Eliminations consist of inter-segment transactions. |
Three Months Ended December 31,
|
|
2019
|
|
|
2018
|
|
||
Segment operating income
|
|
$
|
7,481
|
|
|
$
|
13,942
|
|
Corporate expenses
|
|
|
(2,087
|
)
|
|
|
(3,391
|
)
|
Interest income
|
|
|
111
|
|
|
|
149
|
|
Interest expense
|
|
|
(767
|
)
|
|
|
(363
|
)
|
Other, net
|
|
|
(712
|
)
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
Consolidated earnings before income taxes
|
|
$
|
4,026
|
|
|
$
|
10,476
|
|
|
|
|
|
|
|
|
|
|
1
1
.
|
Litigation Matters
|
- | By Reportable Segment & Geographic Region |
- | By Product Platform/Type |
|
Three Months Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
Change
|
|
||||||
Gross Profit
|
$ |
27,440
|
$ |
31,572
|
(13)
|
% | ||||||
Gross Profit Margin
|
58
|
% |
61
|
% |
-3 points
|
• | Increased Research & Development costs, primarily for the development of the Revogene system GI and RI panel assays for the Diagnostics operating segment; |
• | Decreased Selling & Marketing costs, primarily reflecting the effects of reorganization and streamlining initiatives; |
• | Decreased General & Administrative costs, primarily reflecting the effects of reorganization and streamlining initiatives, partially offset by the purchase accounting amortization from the acquisition of the GenePOC business; and |
• | Increased restructuring costs and a change in fair value of the contingent consideration obligation for the GenePOC business, partially offset by a decrease in selected legal costs (reflected within “Other” in the above tables). |
10.1*
|
||||
31.1
|
||||
31.2
|
||||
32
|
||||
101.INS
|
Inline XBRL Instance Document
|
|||
101.SCH
|
Inline XBRL Instance Extension Schema
|
|||
101.CAL
|
Inline XBRL Instance Extension Calculation Linkbase
|
|||
101.DEF
|
Inline XBRL Instance Extension Definition Linkbase
|
|||
101.LAB
|
Inline XBRL Instance Extension Label Linkbase
|
|||
101.PRE
|
Inline XBRL Instance Extension Presentation Linkbase
|
|||
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
* | Certain portions of this exhibit 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 portion to the SEC upon request. |
|
|
|
MERIDIAN BIOSCIENCE, INC.
|
|||
Date:
February 7, 2020
|
|
By:
|
/s/ Bryan T. Baldasare
|
|||
|
|
|
Bryan T. Baldasare
|
|||
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS
EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***]
Exhibit 10.1
CASH-BASED INCENTIVE COMPENSATION PLAN
FISCAL YEAR 2020
OFFICERS
LEVEL 8
I. |
PURPOSE |
The purpose of this cash-based incentive compensation plan (the Plan) is to define a mechanism for stimulating and rewarding the achievement of business goals by eligible employees, as proposed by the Compensation Committee of the Board of Directors of the Company (the Board) and agreed by the Board.
II. |
SCOPE |
This Plan includes certain executives as designated by the CEO (collectively Executives) of Meridian Bioscience, Inc. and its subsidiaries (the Company).
III. |
ELIGIBILITY REQUIREMENTS |
Eligibility for participation in this Plan is limited to elected officers and the executives of the Company as determined in the sole discretion of the Compensation Committee of the Board (the Participants).
1. |
Executives hired after October 1, 2019 are eligible for a pro-rated bonus based on the number of days employed during the fiscal year. |
2. |
Executives who terminate before September 30, 2020 for any reason are not eligible for a bonus unless the Compensation Committee approves eligibility prior to termination and subject to the terms of any applicable Change in Control Agreement executed with the terminating Executive. |
3. |
Executives who terminate after September 30, 2020 but prior to the date the bonus is paid are eligible for bonus, except in the case where the Executive is terminated for Cause as defined in the Meridian Bioscience, Inc. 2012 Stock Incentive Plan. |
4. |
The Company expects that any payments earned under this Plan will be paid by December 15, 2020. |
IV. |
PERFORMANCE TARGETS AND PAYOUT PERCENTAGES |
The Plan consists of three components, with a weighting factor assigned to each: Consolidated Net Revenues (30% weighting), Consolidated Operating Income (30% weighting), and Individual Performance (40% weighting). The Plan is designed to payout 40% of base salary at target. The Compensation Committee shall be responsible for determining if the targets have been met and may not increase compensation payable under this Plan in excess of the amounts provided herein. Subsequent to the Compensation Committees determination that targets have been met, each Participant shall receive a cash lump sum payment of the bonus, less required payroll withholdings. In no event shall payment be made later than two and one-half (2 1⁄2) months following the Companys fiscal year end; provided¸ however, the Participant may make the deferral election described in Section VI.
See APPENDIX I for payout percentages at the various levels of Revenue, Operating Income and Individual Performance achievement.
1
V. |
NON-GAAP MEASUREMENT |
Non-GAAP items shall consist of items disclosed in the Companys Non-GAAP Financial Measures disclosures in the fiscal 2020 Form 10-K. Upon the proposal of the Compensation Committee, the Board may in its discretion consider non-GAAP items, which may include restructuring and extraordinary charges, in the calculation of Operating Income.
In the event of an acquisition during the Plan year, to the extent not already captured in the non-GAAP disclosures noted above, the Board, upon the proposal of the Compensation Committee, may in its discretion consider restructuring, purchase accounting and extraordinary charges associated with such acquisitions as disclosed in the Companys Form 10-K to be considered in the calculation of Operating Income.
Additionally, the Compensation Committee will determine the treatment of revenue and/or operating income or operating losses from acquired companies in the calculation (acquired during the fiscal year). For example, the Compensation Committee may exclude the revenue and/or operating income or loss of the acquired company from the calculation or the Compensation Committee may approve new revenue and operating income targets developed by management reflecting the impact of the acquisition.
The Compensation Committee shall evaluate certain events, in its discretion, for determination of treatment in the bonus calculation. Examples include the impact of tax legislation and the impact of implementing new accounting standards.
VI. |
DEFERRAL OF BONUS PAYMENT |
Executives may elect to defer payment of bonus to no later than January 15, 2021. Such election must be made in writing prior to March 31, 2020.
VII. |
GENERAL PROVISIONS |
1. |
Payments will be made in a cash lump sum payment, less required payroll withholdings, and will be paid on or about December 15, 2020. |
2. |
For U.S. Participants, appropriate withholdings will be deducted from the bonus award, including income taxes, FICA, and 401k plan contributions. Appropriate withholdings will also be made for international employees based on local requirements. |
3. |
A Participants rights and interests under the Plan may not be assigned, pledged or transferred. |
4. |
Participants who leave during the plan year due to death, long-term disability, retirement, or as the result of a reduction in force, are eligible for a pro-rated payout of the Individual Performance component of the plan upon termination of employment. Retirement shall be defined as termination of employment at age 55 or older with greater than 10 years of service. |
5. |
In the event the Participant terminates employment with the company prior to payout, for any reason other than those set forth in item VII.4. above, the Participant is not eligible for payout. |
6. |
Nothing in the Plan shall confer upon any Participant the right to continue in the employment of the Company or affect the right of the Company to terminate the employment of any Participant. |
7. |
It is intended that payments under the Plan qualify as short-term deferrals exempt from the requirements of Section 409A of the Code. |
8. |
Participants with an individual performance rating of Not Achieved will not be eligible for payout, unless an exception for payment is approved by the Compensation Committee. |
2
CASH-BASED INCENTIVE COMPENSATION PLAN
FISCAL YEAR 2020
OFFICERS AND SELECTED EXECUTIVES
LEVEL 8
APPENDIX I
CASH-BASED INCENTIVE COMPENSATION PLAN
FISCAL YEAR 2020
[***]
3
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 quarterly report on Form 10-Q of Meridian Bioscience, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 7, 2020 |
/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 quarterly report on Form 10-Q of Meridian Bioscience, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 7, 2020 |
/s/ Bryan T. Baldasare |
Bryan T. Baldasare |
Executive Vice President and Chief Financial Officer |
Exhibit 32
Meridian Bioscience, Inc.
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 Quarterly Report of Meridian Bioscience, Inc. (the Company) on Form 10-Q for the period ended December 31, 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 |
February 7, 2020 |
/s/ Bryan T. Baldasare |
Bryan T. Baldasare |
Executive Vice President and Chief Financial Officer |
February 7, 2020 |