Major Customers and Segment Information

9 Months Ended

Jun. 30, 2011

Major Customers and Segment Information [Abstract]

5. 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 field of 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 operating segments are U.S. Diagnostics, European Diagnostics and Life Science. The U.S. Diagnostics operating 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 Europe, Africa and the Middle East. The European Diagnostics operating segment consists of the sale and distribution of diagnostic test kits in Europe, Africa and the Middle East. The Life Science operating segment consists of manufacturing operations in Memphis, Tennessee; Saco, Maine; 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 operating 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.

Two distributor customers accounted for 47% and 52% of the U.S. Diagnostics operating segment third-party sales during the three months ended June 30, 2011 and 2010, respectively, and 50% and 58% during the nine months ended June 30, 2011 and 2010, respectively. This lower percentage of sales reflects the fact that the majority of our illumigene^{^®} product sales are direct, as well as the comparative decline in the distributors’ inventory stocking of influenza and other products. Three customers accounted for 17% and 29% of the Life Science operating segment third-party sales during the three months ended June 30, 2011 and 2010, respectively, and 18% and 33% during the nine months ended June 30, 2011 and 2010, respectively, primarily reflecting the addition of the Bioline Group.

Segment information for the interim periods is as follows:


	U.S.		European		Life
	Diagnostics		Diagnostics		Science		Eliminations(1)			Total
Three Months Ended June 30, 2011
Net sales -
Third-party	$	23,829	$	6,612	$	9,611	$	—		$	40,052
Inter-segment		2,875		9		141		(3,025	)		—
Operating income		8,399		978		797		(43	)		10,131
Goodwill (June 30, 2011)		1,381		—		22,062		—			23,443
Other intangible assets, net (June 30, 2011)		1,741		—		9,891		—			11,632
Total assets (June 30, 2011)		71,831		20,680		94,164		(28,724	)		157,951


Three Months Ended June 30, 2010
Net sales -
Third-party	$	21,121	$	6,218	$	6,518	$	—		$	33,857
Inter-segment		2,723		8		177		(2,908	)		—
Operating income		8,104		726		752		194			9,776
Goodwill (September 30, 2010)		1,381		—		21,921		—			23,302
Other intangible assets, net (September 30, 2010)		2,283		9		11,035		—			13,327
Total assets (September 30, 2010)		72,030		18,044		90,388		(25,821	)		154,641


Nine Months Ended June 30, 2011
Net sales -
Third-party	$	72,007	$	18,926	$	27,441	$	—		$	118,374
Inter-segment		7,938		16		459		(8,413	)		—
Operating income		26,780		1,781		1,499		123			30,183


Nine Months Ended June 30, 2010
Net sales -
Third-party	$	70,018	$	19,103	$	18,340	$	—		$	107,461
Inter-segment		8,200		12		438		(8,650	)		—
Operating income		26,805		2,789		2,976		87			32,657


(1)		Eliminations consist of inter-segment transactions.

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