Major Customers and Segment Information

9 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Major Customers and Segment Information

4. Major Customers and Segment Information

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

Our reportable segments are U.S. Diagnostics, European Diagnostics and Life Science. Initial segmentation between Diagnostics and Life Science has been determined based upon products and customers, with further segmentation of Diagnostics between U.S. and European being based upon geographic regions served and management responsibility. The U.S. Diagnostics segment consists of manufacturing operations in Cincinnati, Ohio, and the sale and distribution of diagnostic test kits in the U.S. and countries outside of Australia, Europe, Africa and the Middle East. The European Diagnostics segment consists of the sale and distribution of diagnostic test kits in Australia, Europe, Africa and the Middle East. The Life Science segment consists of manufacturing operations in Memphis, Tennessee; Boca Raton, Florida; London, England; Luckenwalde, Germany; and Sydney, Australia, and the sale and distribution of bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells and bioresearch reagents domestically and abroad. The Life Science segment also includes the contract development and manufacture of cGMP clinical grade proteins and other biologicals for use by biopharmaceutical and biotechnology companies engaged in research for new drugs and vaccines.

Amounts due from two U.S. Diagnostics distributor customers accounted for 12% and 14% of consolidated accounts receivable at June 30, 2013 and September 30, 2012, respectively. Sales to these two distributor customers accounted for 48% and 49% of the U.S. Diagnostics segment third-party sales during the three months ended June 30, 2013 and 2012, respectively, and 51% and 49% during the nine months ended June 30, 2013 and 2012, respectively.

In addition, approximately $4,600 of our accounts receivable at both June 30, 2013 and September 30, 2012 is due from Italian hospital customers whose funding ultimately comes from the Italian government, representing 18% and 19% of consolidated accounts receivable in each of the respective periods. Sales to Italian hospital customers accounted for 33% and 31% of the European Diagnostics segment third-party sales during the three months ended June 30, 2013 and 2012, respectively, and 33% and 29% during the nine months ended June 30, 2013 and 2012, respectively.

Within our Life Science segment, two diagnostic manufacturing customers accounted for 18% and 11% of the segment’s third-party sales during the three months ended June 30, 2013 and 2012, respectively, and 18% and 20% during the nine months ended June 30, 2013 and 2012, respectively.

Segment information for the interim periods is as follows:

	U.S. Diagnostics		European Diagnostics		Life Science		Eliminations(1)			Total
Three Months Ended June 30, 2013
Net sales -
Third-party	$	29,535	$	5,770	$	11,803	$	—		$	47,108
Inter-segment		2,771		3		356		(3,130	)		—
Operating income		11,876		439		3,543		(159	)		15,699
Goodwill (June 30, 2013)		1,250		—		21,137		—			22,387
Other intangible assets, net (June 30, 2013)		1,716		—		6,593		—			8,309
Total assets (June 30, 2013)		94,566		12,869		105,942		(42,386	)		170,991
Three Months Ended June 30, 2012
Net sales -
Third-party	$	26,008	$	5,897	$	10,010	$	—		$	41,915
Inter-segment		2,464		5		133		(2,602	)		—
Operating income (2)		9,442		998		2,118		54			12,612
Goodwill (September 30, 2012)		1,250		—		21,896		—			23,146
Other intangible assets, net (September 30, 2012)		2,239		—		8,025		—			10,264
Total assets (September 30, 2012)		82,654		15,443		101,706		(38,422	)		161,381
Nine Months Ended June 30, 2013
Net sales -
Third-party	$	90,211	$	17,166	$	32,347	$	—		$	139,724
Inter-segment		7,353		9		864		(8,226	)		—
Operating income		34,731		1,169		8,223		(80	)		44,043
Nine Months Ended June 30, 2012
Net sales -
Third-party	$	79,472	$	18,326	$	31,431	$	—		$	129,229
Inter-segment		7,428		9		793		(8,230	)		—
Operating income (2)		29,377		2,398		5,526		(57	)		37,244

(1) Eliminations consist of inter-segment transactions.

(2) Life Science includes $366 and $1,013 of costs related to consolidation of the Maine operations into the Tennessee facility during the three and nine months ended June 30, 2012, respectively.

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