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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended February 28, 2005

or

For the transition period from              to             

Commission file number 0-17988

Neogen Corporation

(Exact name of registrant as specified in its charter)

620 Lesher Place

Lansing, Michigan 48912

(Address of principal executive offices including zip code)

(517) 372-9200

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12B – 2 of the Exchange Act).    YES  x    NO  ¨

As of April 1, 2005, there were 8,149,542 outstanding shares of Common Stock.

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NEOGEN CORPORATION AND SUBSIDIARIES

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PART I – FINANCIAL INFORMATION

ITEM 1. Interim Consolidated Financial Statements (Unaudited)

NEOGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

See notes to interim consolidated financial statements

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NEOGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

See notes to interim consolidated financial statements

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NEOGEN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

See notes to interim consolidated financial statements

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NEOGEN CORPORATION SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

See notes to interim consolidated financial statements

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NEOGEN CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENT (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles) for interim financial information and with the instructions to Form 10-Q and Article 10 Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three and nine month periods ended February 28, 2005 are not necessarily indicative of the results to be expected for the fiscal year ending May 31, 2005. For more complete financial information, these consolidated financial statements should be read in conjunction with the May 31, 2004 audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended May 31, 2004.

2. INVENTORIES

Inventories are stated at the lower of cost, determined on the first-in, first-out method, or market. The components of inventories follow:

3. NET INCOME PER SHARE

The calculation of net income per share follows:

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4. STOCK REPURCHASE

The Company’s Board of Directors has authorized the purchase of up to 1,250,000 shares of the Company’s Common Stock. As of February 28, 2005, the Company has purchased 871,000 shares in negotiated and open market transactions. Shares purchased under this buy-back program were retired. There were no shares repurchased in the three or nine months ended February 28, 2005 or February 29, 2004.

5. SEGMENT INFORMATION

The Company has two reportable segments: Food Safety and Animal Safety. The Food Safety segment produces and markets diagnostic test kits and related products used by food producers and processors to detect harmful natural toxins, drug residues, foodborne bacteria, food allergens, pesticide residues, disease infections and levels of general sanitation. The Animal Safety segment is primarily engaged in the production and marketing of products dedicated to animal health, including veterinary instruments and a complete line of consumable products marketed to veterinarians and animal health product distributors. Additionally the Animal Safety segment produces and markets a line of rodenticides to assist in the control of rats and mice in and around agricultural, food production and other facilities.

These segments are managed separately because they represent strategic business units that offer different products and require different marketing strategies. The Company evaluates performance based on total sales and operating income of the respective segments.

Segment information for the three months ended February 28, 2005 and February 29, 2004 was as follows:

Segment information for the nine months ended February 28, 2005 and February 29, 2004 was as follows:

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6. STOCK OPTIONS

The Company follows Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for its stock option plan. Under Opinion No. 25, no compensation expense is recognized because the exercise price of the Company’s stock options equals the market price of underlying stock on the date of grant. Had compensation expense for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, the Company’s net income and net income per share would have been as follows:

New Accounting Pronouncement

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123 (revised 2004) Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123 (R) supersedes Accounting Principal Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, and amends FASB No. 95, Statement of Cash Flows. Generally, the approach to accounting in Statement 123 (R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Currently the Company accounts for these payments under the intrinsic value provisions of APB No. 25 with no expense recognition in the financial statements. Statement 123 (R) is effective for the Company beginning September 1, 2005. The Statement offers several alternatives for implementation. At this time, management has not made a decision as to the alternative it may select, however, the impact is expected to approximate the pro forma amounts disclosed above.

7. LEGAL PROCEEDINGS

The Company is subject to certain legal proceedings in the normal course of business that, in the opinion of management, will not have a material effect on its future results of operations or financial position.

8. BUSINESS ACQUISITIONS

On November 21, 2003, Neogen Corporation purchased 100% of the common stock of Hacco, Inc. and of Hess & Clark, Inc. from United Agri Products, Inc. a then wholly owned subsidiary of ConAgra, Inc. Hacco has principal offices in Randolph, Wisconsin, and is a producer of rodenticide products. Hess & Clark is a producer of disinfectants and antibacterials.

Consideration for the November 21, 2003 acquisitions was $10,000,000 in cash, including related acquisition costs. Allocation of the purchase price included current assets of $1,800,000; property, plant and equipment of $2,600,000; intangible assets of $7,400,000 (including customer intangibles of $1,900,000; patents and trademarks of $200,000 and goodwill of $5,300,000); and liabilities of $1,800,000, including an environmental remediation liability of $1,200,000. The customer based asset is expected to be amortized over 20 years. The companies are believed to be strong synergistic fits into Neogen’s overall strategy of providing food and animal safety solutions.

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Unaudited pro forma financial information pertaining to the fiscal 2003 interim periods, as if the acquisitions of Hacco and Hess & Clark had taken place on June 1, 2003 is as follows:

As of October 1, 2004, Neogen Europe, Ltd., the Company’s subsidiary in Scotland, UK, acquired the distribution business of BiologischeAnalysensysteme GmbH (BAG), a privately held company based in Lich, Germany. BAG was a distributor of Neogen Corporation’s products in Germany. BAG’s revenues in the 12 months ended September 30, 2004 were approximately $600,000. Consideration for the acquisition was cash of $448,000. The allocation of the purchase price included inventory of $68,000, equipment of $21,000 and intangibles of $359,000. The acquisition is expected to improve distribution of the Company’s products in Germany.

On October 13, 2004, the Company acquired the UriCon product line of Animal Health Ventures, Inc., a privately held company. UriCon is a product used for the treatment of urinary incontinence in dogs. Consideration for the purchase was cash of $200,000. The allocation of the purchase price included inventory of $23,000 and intangibles of $177,000. The acquisition adds to the Company’s product lines directed toward the treatment of medical disorders in companion animals.

During the quarter ended November 30, 2004, the Company completed the calculation and payment of a $226,000 secondary payment due the former owners of Neogen Europe, Ltd. An additional secondary payment based on fiscal 2005 revenues in excess of agreed upon levels will be payable, if earned, in fiscal 2006.

9. LONG TERM DEBT

The Company has a financing agreement with a bank providing for an unsecured revolving line of credit of $15,000,000. Interest is at prime less 1.25% or Eurodollar prime equivalent, plus 150 basis points at the Company’s option (rate elected was 4.0% at February 28, 2005). Financial covenants include maintaining current ratios and debt to earnings ratios (as defined) and specified levels of tangible net worth, all of which are complied with at the balance sheet date. The agreement matures September 1, 2006.

10. GRANT FROM THE STATE OF MICHIGAN

The Company has a $500,000 grant from Ingham County that is restricted for the purchase of machinery and equipment at its location in Lansing, Michigan. The grant is repayable in cash plus interest to the extent not offset by allowances for new employees hired in Lansing over a period of 6 years. Grant monies received from the County for eligible purchases are recognized as a long-term liability. The liability is reduced and other income is recognized for the allowances granted as eligible new employees are hired. The Company has recognized other income of $30,000 and $250,000 related to the grant in the three and nine month periods ended February 28, 2005 respectively.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations contains both historical financial information and forward-looking statements. Neogen does not provide forecasts of future performance. While management is optimistic about the Company’s long-term prospects, historical financial information may not be indicative of future financial performance.

Safe Harbor and Forward-Looking Statements

Forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, are made throughout this Quarterly Report on Form 10-Q. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” and similar expressions are intended to identify forward-looking statements. There are a number of important factors, including competition, recruitment and dependence on key employees, impact of weather on agriculture and food

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production, identification and integration of acquisitions, research and development risks, patent and trade secret protection, government regulation and other risks detailed from time to time in the Company’s reports on file at the Securities and Exchange Commission, that could cause Neogen Corporation’s results to differ materially from those indicated by such forward-looking statements, including those detailed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

In addition, any forward-looking statements represent management’s views only as of the day this Quarterly Report on Form 10-Q was first filed with the Securities and Exchange Commission and should not be relied upon as representing management’s views as of any subsequent date. While management may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if its views change.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of the Company’s financial condition and results of operations are based on the consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires that management make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates the estimates, including those related to receivable allowances, inventories and intangible assets. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The following critical accounting policies reflect management’s more significant judgments and estimates used in the preparation of the consolidated financial statements.

Revenue Recognition

Revenue from sales of products is recognized at the time title of goods passes to the buyer and the buyer assumes the risks and rewards of ownership. This is generally at the time of shipment. Where right of return exists, allowances are made at the time of sale to reflect expected returns based on historical experience.

Accounts Receivable Allowance

Management attempts to minimize credit risk by reviewing customers’ credit history before extending credit and by monitoring credit exposure on a regular basis. An allowance for possible losses on accounts receivable is established based upon factors surrounding the credit risk of specific customers, historical trends and other information, such as overall changes in customer credit and general credit conditions. Actual collections can differ from historical experience, and if economic or business conditions deteriorate significantly, adjustments to these reserves could be required.

Inventory

A reserve for obsolescence is established based on an analysis of the inventory taking into account the current condition of the asset as well as other known facts and future plans. Product obsolescence may be caused by shelf-life expiration, discontinuance of a product line, replacement products in the marketplace or other competitive situations. The amount of reserve required to record inventory at lower of cost or market may be adjusted as conditions change.

Valuation of Intangible Assets and Goodwill

Management assesses goodwill and other non-amortizable intangible assets for possible impairment on no less often than an annual basis. This test was performed in the fourth quarter of fiscal 2004 and it was determined that no impairment exists. There was also no impairment indicated for 2003. In the event of changes in circumstances that indicate the carrying value of these assets may not be recoverable, management will make an assessment at any time. Factors that could cause an impairment review to take place would include:

When management determines that the carrying value of intangible assets may not be recoverable based on the existence of one or more of the above indicators of impairment, the carrying value is compared to a value determined based on

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projected discounted cash flows using a discount rate commensurate with the risk inherent in the Company’s current business model. Any impairment identified in this computation is given current recognition in any unissued financial statements. Changes to the discount rate used in the analysis or discounted cash flows can have a significant impact on the results of the impairment test.

RESULTS OF OPERATIONS

Executive Overview

Neogen Corporation’s three month period ended February 28, 2005 had a 2% decrease in revenues and a 3% increase in net income. In the nine month period ended February 28, 2005 revenues increased 16% and net income increased 11%. Revenues in the three month period were affected by the Company’s transition of its general sanitation product from distribution to manufacturing and distribution and the natural fluctuations related to weather for natural toxin products. Additionally disruptions in supplies of certain injectable products resulted in unfilled customer demand in the Animal Safety segment. Revenues in the nine month period were principally affected by revenue provided by Hacco, Inc., a company that was acquired in late November 2003 and by the same factors that affected the three month period. Net income in the nine month period was primarily affected by a decrease in gross margins as a result of extra costs incurred in the relocation of the Company’s dehydrated culture media operation “Acumedia” to Lansing, Michigan and changes in product mix. The cost of the move of Acumedia, all of which was recognized in the November 30, 2004 quarter, was $.03 per share.

The Company has made several changes over the past five quarters that are expected to positively affect margins and net income in the future. This included the acquisitions of Hacco and Hess & Clark as well as the German distribution business of BAG. Additionally the move of Ideal Instruments to Lansing and Lexington in the fourth quarter of fiscal 2004 and the move of Acumedia to Lansing are expected to improve margins over time as efficiencies grow. In particular, the addition of Hacco has allowed the Company to move into the important rodenticide market with a well known brand name. This acquisition, while contributing lower gross margins, has had a very positive effect on operating income since it requires relatively lower distribution and general and administrative costs.

Management believes that the expansion of international sales is important for continued long-term growth, particularly in food safety, since international markets are growing on a more rapid basis than domestic markets. International sales for the nine month period were 27% of total sales.

See the discussions below for more detailed analysis of the results for the Company’s operations for the three and nine month periods ended February 28, 2005 as compared to the same three and nine month periods of the prior year.

Three and Nine Months Ended February 28, 2005 Compared to Three and Nine Months Ended February 29, 2004

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Revenues from sales of products related to food safety were down 8% for the three months and up 1% for the nine month periods ended February 28, 2005 and revenues from animal safety products were up 3% and 33% for the same periods. The decreases in sales in the Food Safety segment in the three month period were primarily related to a 9% decrease in sales of natural toxins and allergen sales and a 13% decrease in bacteria and general sanitation sales. For the nine month period natural toxin and allergen sales are comparable to the prior year. Bacteria and general sanitation product sales are down 5% due to the Company’s continued efforts to shift the sales of these products from a former distributor relationship to internally produced products. The goal of this change to internally produced general sanitation products is to increase gross margins from these sales.

The increases in sales of the Animal Safety segment were primarily related to the sales of the products of Hacco, Inc. and Hess & Clark, Inc. both of which were purchased in November 2003. Without these acquisitions, other sales increased 4% for the three month period and 9% for the nine month period. Life sciences, drug detection and vaccine products increased 2% for the three month period and 12% for the nine month period principally from strong shipments of vaccine products and products used for drug detection. Other sales in 2005 were generally comparable to those in the prior year period.

Gross margins in the three month period increased from 47% in the prior year to 48% and decreased from 50% to 48% in the nine month period. Food Safety margins increased from 52% to 57% in the three month period and decreased from 58% to 56% in the nine month period. Animal Safety gross margins decreased to 42% from 43% in the three month period and remained at 42% for the nine month period. The overall changes in gross margins were a result of changes in product mix and the costs associated with new manufacturing facilities that came on line in Lansing in fiscal 2004 and 2005, and for the nine month period the cost of the move of the Company’s dry culture media operation. These new facilities will provide significantly expanded production capability and are expected to provide greater efficiencies in future periods.

Sales and marketing expenses increased by $307,000 in the three month period and by $1,260,000 in the nine month period. As a percentage of revenues these expenses increased to 23% for the three month period and decreased to 21% for the nine month period from 20% and 22%, respectively in the prior year. Food Safety sales and marketing expense increased to 29% from 25% in the three month period and remained at 26% for the nine month period. Animal Safety sales and marketing expense increased to 18% from 16% for the three month period and remained at 17% for the nine month period. Increases in sales and marketing expenses in dollars and as a percentage of revenues resulted from expenditures during the periods in anticipation of additional sales. Overall Animal Safety sales and marketing percentage relationships were positively affected by the relationship between added Hacco sales and added sales and marketing expense to service those sales during the nine month period.

General and administrative expenses decreased $199,000 for the three month period and increased by $426,000 for the nine month period. For both the three and nine month periods, these expenses decreased to 8% from 9% of revenues. The decreased expenses in dollars during the three month period are in part related to reductions in accruals for bonuses related to net income objectives. The increased expenses in dollars in the nine month period arose primarily from the same factor that affected the three month period and the addition of Hacco, expenses related to the increased levels of operations of the Company and $130,000 of expenses related to the move of the Acumedia manufacturing facility. Additionally in the comparable nine months of the prior year, administrative expenses were credited for $273,000 of reimbursements by third parties for legal costs that were previously expensed.

Research and development expenses decreased $88,000 for the three month period and increased $13,000 for the nine month period, but remained at 5% of revenues. Although on a quarter to quarter basis, some fluctuations of research and development expense will occur, management expects research and development expense to approximate 5% to 6% of revenues over time. These expenditures approximate 8% to 10% of revenues from products and product lines that are supported by research and development.

Other income increased $36,000 for the nine month period. Other income recognized in the three month and nine month periods is related to the forgiveness of certain repayments due under local government grants. Other income in the prior year nine month period represented revenues from limited partnership income. The limited partnership was liquidated in November 2003.

Federal and state income tax rates used in the computation of income tax expense in the three and nine month periods remained comparable to those in the prior year.

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Financial Condition and Liquidity

At February 28, 2005, the Company had $1,372,000 in cash and marketable securities, working capital of $22,528,000 and stockholders’ equity of $53,319,000. In addition, available bank lines totaled $13,000,000. The Company’s cash balance is a factor of drawings on the Company’s credit line.

Accounts receivable were $1,146,000 higher than at May 31, 2004. Days outstanding in account receivables increased from 58 days at May 31, 2004 to 64 days as of February 28, 2005. Despite the increase in days outstanding, management believes that the recorded allowance is adequate to provide for accounts that may become uncollectable. Inventories at February 28, 2005 were at substantially the same level as at May 31, 2004. The decrease of $854,000 in current liabilities results from the timing of payments.

During the nine month period ended February 28, 2005, the Company continued to convert a facility in Lansing, Michigan to serve as its principal dehydrated culture media manufacturing operation. The expenditures of approximately $1,000,000 were financed by cash flows. Additionally, $900,000 of acquisitions during the nine month period were financed by cash flows.

Inflation and changing prices are not expected to have a material effect on operations.

Management believes that the Company’s existing cash as of February 28, 2005, along with its available bank revolving line of credit and cash expected to be generated from future operations, will be sufficient to fund activities for the foreseeable future. However, existing cash and bank lines may not be sufficient to meet the Company’s cash requirements to commercialize products currently under development or its plans to acquire other organizations, technologies or products that fit within the Company’s mission statement. Accordingly, the Company may be required to issue equity securities or enter into other financing arrangements for a portion of the Company’s future capital needs.

NEW ACCOUNTING PRONOUNCEMENTS

See discussion of New Accounting Pronouncements in Note 6 to Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has minimal interest rate and foreign exchange rate risk exposure and no fixed rate investments or borrowings. The Company’s primary interest rate risk is due to potential fluctuations of interest rates for variable rate borrowings.

Generally, sales are denominated in U.S. dollars; however, because Neogen markets and sells its products throughout the world, it could be significantly affected by weak economic conditions in foreign markets that could reduce demand for its products.

Neogen has assets, liabilities and operations outside of the United States that are located primarily in Ayr, Scotland where the function currency is the British Pound. The Company’s investment in its foreign subsidiary is considered long-term, accordingly, it does not hedge the net investment or engage in other foreign currency hedging activities due to the insignificance of these balances to the Company as a whole.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s Chief Executive and Chief Financial Officers, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of February 28, 2005. Based on that evaluation, the Company’s Chief Executive and Chief Financial Officers concluded that the Company’s disclosure controls and procedures were effective as of February 28, 2005. There were no material changes to the Company’s internal control over financial reporting in the quarter ended February 28, 2005.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is subject to certain legal proceedings in the normal course of business that, in the opinion of management, will not have effect on its future results of operations or financial position.

Items 2,3, 4 and 5 are not applicable and have been omitted.

ITEM 6. EXHIBITS

(a) Exhibit Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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