Product trademarks and registered trademarks owned by Neogen include:

Neogen’s Animal Safety segment is primarily engaged in the development, manufacture, marketing and marketingdistribution of veterinary instruments, pharmaceuticals, vaccines, topicals, diagnostic products, a full suite of agricultural biosecurity products such as rodenticides, cleaners, disinfectants and insecticides, and genomics services.

Neogen is organized under two segments — Food Safety and Animal Safety. Within these segments, the Company’sour sales efforts are generally organized by specific markets, rather than by products or geography. During the fiscal year that ended May 31, 2017, the Company2020, we had approximately 23,00028,000 customers for itsour products. Since many of our customers for animal safety products are distributors, and certain animal safety products are offered to the general retail market, the total number of end users of the Company’sour products is considerably greater than 23,000.28,000. As of May 31, 2017,2020, a total of 375379 employees were assigned to sales and marketing functions, within the Company, compared to 348359 at the end of May 2016.2019. During the fiscal years ended May 31, 2017, 20162020, 2019 and 2015,2018, no single customer or distributor accounted for 10% or more of the Company’sour revenues.

FOOD SAFETY

To reach each customer and prospect with expertise and experience, Neogen has a staff of specialized food safety sales and technical service representatives assigned to specific markets. This staff sells Companyour products directly to end users, and also handles technical support issues that arise with customers in the United States and Canada.

States.

Neogen’s staff of pharmaceuticals, vitamin injectables, wound carespecialized animal safety sales, marketing, customer and technical service representatives sell our products topicals, instruments, genomicsand services directly to consumers, dealers, veterinarians, distributors and biologicals to the veterinary market. The product range is focused on the food (e.g., cattle, swineother manufacturers and poultry) and companion (e.g., horses, dogs and cats) animal markets. Neogen’s sales group works directly with veterinarians, clinics and universities, and markets through established ethical distributors by supporting the efforts of over 1,000also handle domestic distributor sales representatives calling on 35,000 plus veterinarians.technical support issues. Neogen further supports its veterinary distribution channelchannels through product training, field support, promotions and technical service.

The Company believes the animal health market offers growth opportunities for Neogen and its products. Neogen offers a broad range of products including well-recognized brands of rodenticides, cleaners and disinfectants, insecticides, instruments and horse care products. To reach the OTC market, Neogen’s sales team works with a large network of animal health distributors including marketing groups, traditionaltwo-step distributors, catalogers and large retail chains. Support includes product training, field support, planogram solutions,various promotions and advertising.

As

Management maintains a strong commitment to Neogen’s research and development activities. The Company’sOur product development efforts are focused on the enhancement of existing products and in the development of new products that fit itsour business strategy. As of May 31, 2017, the Company2020, we employed 9289 individuals in itsour worldwide research and development group, including immunologists, chemists and microbiologists. Research and development costs were approximately $10.4$14.8 million, $9.9$12.8 million, and $9.6$10.9 million representing 2.9%3.5%, 3.1%, and 3.4%2.7% of total revenues in fiscal years 2017, 20162020, 2019 and 2015,2018, respectively. Management currently expects the Company’sour future research and development expenditures to approximate 3% to 4% of total revenues.

revenues annually.

Neogen uses trade secrets as proprietary protection in many of its food and animal safety products. In many cases, the Company haswe have developed unique antibodies capable of detecting microorganisms and residues at minute levels. The supply of these antibodies, and the proprietary techniques utilized for their development, may offer better protection than the filing of patents. Such proprietary reagents are maintained in secure facilities and stored in more than one location to reduce exposure to complete destruction by natural disaster or other means.

Neogen manufactures itsour products in Michigan, Kentucky, Wisconsin, North Carolina, Iowa, Tennessee, California, the United Kingdom and Brazil and provides genomics services in Nebraska, Scotland, Brazil, Australia, China and Brazil.Canada. As of May 31, 2017,2020, there were approximately 680965 full-time employees assigned to manufacturing and providing of services in these locations, operating on one or two shifts; with occasional 24/7 production during high demand periods. Future demand increases could be accommodated by adding shifts. Management believes itwe could increase the current output of itsour primary product lines by more than 50% using the current space available; however, to do so would require investment in additional capital equipment.

Although competitors vary in individual markets, management knows of no competitor that is pursuing Neogen’s fundamental strategy of developing and marketing a broad line of products, ranging from disposable tests and dehydrated culture media to veterinary pharmaceuticals and instruments for a large number of food safety and animal safety concerns. For each of itsour individual products the Company facesor product lines, we face intense competition from companies ranging from small businesses to divisions of large multinational companies. Some of these organizations have substantially greater financial resources than the Company. Neogen competesNeogen. We compete primarily on the basis of ease of use, speed, accuracy and other similar performance characteristics of itsour products. The breadth of the Company’sour product line, the effectiveness of itsour sales and customer service organizations, and pricing are also components in management’s competitive plan.

strategy.

With a large professional sales organization offering a comprehensive catalog of food safety solutions, management believes the Company maintainswe maintain a general advantage over competitors offering only limited product lines. In most cases, Neogen sales and technical service personnel can offer unique insight into a customer’s numerous safety and quality challenges, and offer testing and other solutions to help the customer overcome those challenges.

Neogen’s Animal Safety segment faces no one competitor across the products and markets it serves.we serve. In the racing industry market, the Company believes it holdswe believe we hold a leading market share position. In the life sciences and forensicforensics markets, the Company competeswe compete against several other diagnostic and reagent companies with similar product offerings.

A significant portion of Neogen’s products and revenues are affected by the regulations of various domestic and foreign government agencies, including the U.S. Department of Agriculture (USDA), the Environmental Protection Agency (EPA), and the U.S. Food and Drug Administration (FDA). Changes in these regulations could affect revenues and/or costs of production and distribution.

As of May 31, 2017, the Company2020, we employed 1,4131,764 full-time persons worldwide. None of the employees are covered by collective bargaining agreements. There have been no work stoppages or slowdowns due to labor-related problems, and management believes that itsour relationship with itsour employees is generally good. Employees havingwith access to proprietary information have executed confidentiality agreements with the Company.

Neogen.

An investment in Neogen Corporation’s common shares involves a high degree of risk. The risks described below are not the only ones that an investor faces. Additional risks that are not yet known to us or that we currently think are immaterial could also impair our business, financial condition or results of operations. If any of the following risks actually occurs, our business, financial condition or results of operations could be adversely affected.

Our business has grown significantly over the past several years as a result of both internal growth and acquisitions of existing businesses and their products. Management initiatives may be attempted to augment internal growth, such as strengthening our presence in select markets, reallocating research and development funds to higher growth potential products, development of new applications for our technologies, enhancing our service offerings, continuing key customer efforts, and finding new markets for our products. Failure of these management initiatives may have a material adverse effect on our operating results and financial condition.

We rely on third partythird-party suppliers to provide raw materials and other components in our products, manufacture products that we do not manufacture ourselves and perform services that we do not provide ourselves, including package delivery services.ourselves. Because these suppliers are independent third parties with their own financial objectives, actions taken by them could have a negative effect on our results of operations. The risks of relying on suppliers include our inability to enter into contracts with third party suppliers on reasonable terms, inconsistent or inadequate quality control, relocation of supplier facilities, supplier work stoppages and suppliers’ failure to comply with their contractual obligations. In addition, we currently purchase some raw materials and products from sole or single sources. Some of the products that we purchase from these sources are proprietary and, therefore, cannot be readily or easily replaced by alternative sources. Problems with suppliers could negatively impact our ability to supply the market, substantially decrease sales, lead to higher costs or damage our reputation with our customers.

We ship a significant portion of our products to our customers through independent package delivery companies, such as UPS, Federal Express and DHL. We also ship our products through other carriers, including national and regional trucking firms, overnight carrier services and the U.S. Postal Service. If one or more of these third partythird-party package delivery providers were to experience a major work stoppage, preventing our products from being delivered in a timely fashion or causing us to incur additional shipping costs we could not pass on to our customers, our costs could increase and our relationships with some of our customers could be adversely affected. In addition, if one or more of our third partythird-party package delivery providers were to increase prices, and we were not able to find comparable alternatives or make adjustments inwithin our delivery network, our profitability could be adversely affected.

We sell many of our products, both within and outside of the U.S., through distributors. As a result, we are dependent on these distributors to sell our products and assist us in promoting and creating a demand for our products. Our distributors sometimes offer products from several different companies, and those distributors may carry our competitors’ products and promote our competitors’ products over our own. We have limited ability, if any, to cause our distributors to devote adequate resources to promoting, marketing, selling and supporting our products. We cannot assure that we will be successful in maintaining and strengthening our relationships with our distributors or establishing relationships with new distributors who have the ability to market, sell and support our products effectively. We may rely on one or more key distributors for a product or region, and the loss of one or more of these distributors could reduce our revenue. Distributors may face financial difficulties, including bankruptcy, which could harmimpact our collection ofability to collect our accounts receivable and negatively impact our financial results. In addition, violations of anti-corruption laws or similar laws by our distributors could have a material impact on our business, and any termination of a distributor relationship may result in increased competition in the applicable jurisdiction. Failing to manage the risks associated with our use of distributors may reduce sales, increase expenses and weaken our competitive position, which could have a negative impact on our operating results.

The markets in which the Company competeswe compete are subject to rapid and substantial changes in technology and are characterized by extensive research and development and intense competition. Many of ourOur competitors and potential competitors may have greater financial, technical, manufacturing, marketing, research and development and management resources than we do. These competitors might be able to use their resources, reputations and ability to leverage existing customer relationships to give them a competitive advantage over us. They might also succeed in developing products that are more reliable and effective than our products, make additional measurements, are less costly than our products or provide alternatives to our products.

Our primary customers are in the agricultural and food production industries. Economic conditions affecting agricultural industries are cyclical and are dependent upon many factors outside of our control, including weather conditions, changes in consumption patterns or commodity prices. Any of these factors in the agricultural marketplace could affect our sales and overall financial performance.

We have experienced, and may experience in the future, significant fluctuations in our quarterly operating results. The mix of products sold and the acceptance of new products, in addition to other factors, could contribute to this quarterly variability. We operate with relatively little backlog and have few long-term customer contracts. Substantially all of our product revenue in each quarter results from orders received in that quarter. In addition, our expense levels are based, in part, on our expectation of future revenue levels. A shortfall in expected revenue could, therefore, result in a disproportionate decrease in our net income.

Our success and ability to compete depends in part upon our ability to obtain protection in the United StatesU.S. and other countries for our products by establishing and maintaining intellectual property rights relating to or incorporated into our technology and products. Patent applications filed by the Companyus may not result in the issuance of patents or, if issued, may not be issued in a form that will be commercially advantageous to us. Even if issued, patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length of time we may have patent protection for our products. We also cannot assure that our nondisclosure agreements, together with trade secrets and other common law rights, will provide meaningful protection for the Company’sour trade secrets and other proprietary information. Moreover, the laws of some foreign jurisdictions may not protect intellectual property rights to the same extent as in the United States,U.S., and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. If we encounter such difficulties or we are otherwise precluded from effectively protecting our intellectual property rights domestically or in foreign jurisdictions, we may incur substantial costs and our business, including our business prospects, could be substantially harmed.

A portion of our products and facilities are regulated by various domestic and foreign government agencies including, but not limited to, the U.S. Department of Agriculture, the U.S. Food and Drug Administration and the Environmental Protection Agency. A significant portion of our revenue is derived from products used to monitor and detect the presence of residues that are regulated by various government agencies. Furthermore, the Company’sour growth may be adversely affected by the implementation of new regulations. The Company is not aware of any failures to comply with applicable laws and regulations; the costs of compliance or failure to comply with any obligations related to these laws or regulations could adversely impact theour business.

Our success depends, in large part, on members of our management team. Our loss of any of these, or other key employees could have a material adverse effect on the Company.us. We maintain certain incentive plans for key employees, and most of these employees have been with the Company in excess of five years. However, we have not executed long-term employment agreements with any of these employees and do not expect to do so in the foreseeable future. Our success depends, significantly, on our ability to continue to attract and retain such personnel. We cannot assure that we will be able to retain our existing personnel or attract additional qualified persons when required and on acceptable terms.

The market prices for securities of technology companies have been volatile in the past and could continue to be volatile in the future. Fluctuations in our financial performance from period to period could have a significant impact on the market price of our common shares.

Operating

In fiscal 2020, sales to customers outside of the U.S. accounted for 39.4% of our total revenue. We expect that our international business will continue to account for a significant portion of our total sales. Foreign regulatory bodies may establish product standards different from those in the U.S. and with which our current products do not comply. Our potential inability to design products that comply with foreign standards could have a material adverse effect on our future growth. Other risks related to sales to customers outside of the U.S. include possible disruptions in transportation, difficulties in building and managing foreign distribution, fluctuation in the value of foreign currencies, changes in import duties and quotas and unexpected economic and political changes in foreign markets. These factors could negatively impact our competitiveness in these markets or otherwise adversely impact our business results or financial condition. Moreover, discriminatory or conflicting fiscal or trade policies in different countries, including potential changes to tariffs and existing trade policies and agreements, could be negatively impacted by economic,adversely affect our results.

Changes in countriesthe political conditions in markets in which we do business.

Future operatingmanufacture, sell or distribute our products may be difficult to predict and may adversely affect our business and financial results. For example, the U.K.’s decision to leave the European Union has created uncertainty regarding, among other things, the U.K.’s future legal and economic framework and how the U.K. will interact with other countries, including with respect to the free movement of goods, services, capital and people. In addition, results of elections, referendums or other political processes in certain markets in which our products are manufactured, sold or distributed could be negatively impacted by unstable economic, political and social conditions, including but not limited to fluctuations in foreign currency exchange rates, political instability, or changes in the creation or interpretation ofcreate uncertainty regarding how existing governmental policies, laws and regulations or administrative actions in eachmay change, including with respect to sanctions, taxes, the movement of goods, services, capital and people between countries and other matters. The potential implications of such uncertainty, which include, among others, exchange rate fluctuations, trade barriers and market contraction, could adversely affect the Company’s business and financial results.

We are subject to the tax laws and regulations of the countries whereU.S., including state and local governments, as well as foreign jurisdictions. Legislation may be enacted that could materially adversely affect our financial results There can be no assurance that our effective tax rate will not be adversely affected by legislation.

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

Neogen Common Stock is traded on the NASDAQ Global Select Market under the symbol “NEOG”. The following table sets forth, for the fiscal periods indicated, the high and low sales prices for the Common Stock as reported on the NASDAQ Stock Market.

		High				Low
Year ended May 31, 2017
First Quarter		$	60.56			$	49.30
Second Quarter		$	63.57			$	50.53
Third Quarter		$	69.09			$	61.25
Fourth Quarter		$	68.98			$	59.51
Year ended May 31, 2016
First Quarter		$	62.70			$	44.90
Second Quarter		$	59.76			$	43.00
Third Quarter		$	60.38			$	45.00
Fourth Quarter		$	53.02			$	43.79

HOLDERS:

NEOG.

As of June 30, 2017,2020, there were approximately 281245 stockholders of record of Common Stock and management believes there are a total of approximately 12,00010,000 beneficial holders.

DIVIDENDS:

Neogen has never paid cash dividends on its Common Stock and does not anticipate paying cash dividends in the foreseeable future.