See notes to interim consolidated financial statements

NEOGEN CORPORATION AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (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 of 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 adjustments) considered necessary for a fair presentation have been included. The results of operations for the ninethree month period ended February 29,August 31, 2012 are not necessarily indicative of the results to be expected for the fiscal year ending May 31, 2012.2013. For more complete financial information, these consolidated financial statements should be read in conjunction with the May 31, 20112012 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, 2011.2012.

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 attributable to Neogen Corporation follows:

4. 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, foodborne bacteria, allergens and levels of general sanitation. The Animal Safety segment is primarily engaged in the production and marketing of products dedicated to animal health, including a complete line of consumable products marketed to veterinarians and animal health product distributors; the segment also provides genetic identification services. Additionally, Animal Safety produces and markets rodenticides and disinfectants to assist in control of rodents and disease in and around agricultural, food production and other facilities.

Segment information for the three months ended February 29/28,August 31, 2012 and 2011 follows:

Segment information for the nine months ended February 29/28, 2012 and 2011 follows:

5. EQUITY COMPENSATION PLANS

Options are generally granted under the employee and director stock option plan for 5 year periods and become exercisable in equal annual installments during that period. Certain non-qualified options are granted for 10 year periods. A summary of stock option activity during the ninethree months ended February 29,August 31, 2012 follows:

During the three and nine month periodsperiod ended February 29,August 31, 2012 and February 28, 2011, the Company recorded $685,000$682,000 and $584,000 and $1,757,000 and $1,824,000, respectively,$600,000 of compensation expense related to its share-based awards.

The weighted-average fair value of stock options granted during FY-2012, and 2011, estimated on the date of grant using the Black-Scholes option pricing model was $10.42 and $8.60 respectively, per option. The fair value of stock options granted was estimated using the following weighted-average assumptions. No options were granted in FY-2013 to date.

The Company has an Employee Stock Purchase plan that provides for employee stock purchases at a 5% discount to market price. The discount is expensed as of the date of purchase.

6. NEW ACCOUNTING PRONOUNCEMENTS

In June 2011, the FASB issued an accounting standards update titledPresentation of Comprehensive Income. This update eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. An entity can elect to present items of net income and other comprehensive income in one continuous statement or in two separate consecutive statements. Each component of net income and each component of other comprehensive income, together with totals for comprehensive income and its two parts, net income and other comprehensive income, must be displayed under either alternative. The new disclosure requirements are effective for fiscal years beginning after December 15, 2011.Company has complied with the required presentation in this first quarter report; the adoption of the required presentation did not affect the results of the Company’s operations, only the presentation of such results.

In September 2011, the FASB issued an accounting standards update titledIntangibles — Goodwill and Other: Testing Goodwill for Impairment. This update gives the option of performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount and, in some cases, skip the two-step impairment test. This standard is effective for fiscal years beginning after December 15, 2011, and early adoption is permitted.

The above ASU’s issued bycompany performs its qualitative assessment in the FASB, upon adoption, arefourth quarter of its fiscal year, and at that time will determine which approach to use. It is not expected by management tothat the adoption of this update will have a material effect on the Company’s consolidated financial statements.

In July 2012, the FASB issued an accounting standard update titledIntangibles – Goodwill and Other: Testing Indefinite Lived Intangible Assets for Impairment. This update gives the option of performing a qualitative assessment to determine whether it is more likely than not that the fair value of the intangible amount is less than its carrying amount and, in some cases, skip the quantitative impairment test. This standard is effective for fiscal year beginning after September 15, 2012, and early adoption is permitted. It is not expected that the adoption of this update will have a material effect on the Company’s consolidated financial statements.

7. BUSINESS AND PRODUCT LINE ACQUISITIONS

On April 1, 2010, Neogen Corporation acquired GeneSeek, Inc. of Lincoln, Nebraska, a leading commercial agricultural genetic laboratory. GeneSeek’s technology employs high-resolution DNA genotyping for identity and trait analysis in a variety of important animal and agricultural plant species. Consideration for the purchase was $14,050,000 in cash and secondary payment obligations of up to $7,000,000. The allocation of the purchase price included accounts receivable of $1,923,000, inventory of $1,512,000, fixed assets of $847,000, current liabilities of $905,000, deferred tax liabilities of $2,530,000, secondary payment liabilities of $3,583,000, and the remainder to goodwill (not deductible for tax purposes) and other intangible assets (with estimated lives of 5-20 years). The allocation was generally based on the fair value of these assets determined using the income approach. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 fair value measurements. The secondary payment was based upon future operating results of the GeneSeek business through 2013, and payable annually over a three year period, measured at fair value, and is considered a Level 3 fair value measurement. The Company recorded a charge within other income (expense) of approximately $787,000 for the year ended May 31, 2011, representing the increase from its original estimate in fair value of the secondary payment liability. As of May 31, 2011, the balance of the secondary payment liability recorded was approximately $4,370,000. A payment of $1,856,000 was made in June, 2011 to the former owners of GeneSeek,Geneseek, comprised of $1,537,000 for the first year contingent payment and an additional $319,000 for inventory purchased post acquisition and settlement of other liabilities. During the three and nine months ended February 29,In 2012, and February 28, 2011 the Company recorded approximately $180,000 and $130,000 and ($218,000) and ($618,000), respectively, within other income (expense), representing the change in fair market valuereversed $154,000 of the secondary payment liability. Asliability, based on a lower calculated second year payout than had been estimated at May 31, 2011 due to lower 2012 earnings. In May 2012, the second year payment of February 29, 2012$1,263,000 was made to the former owners; the balance of the secondary payment liability recorded at August 31, 2012 was approximately $2,653,000.$1,408,000 for the third and final year of the agreement, expected to be paid in the fourth quarter of fiscal year 2013. The acquisition has been integrated into the Animal Safety segment.

On June 21, 2011, Neogen Corporation acquired the assets of VeroMara seafood testing laboratory for approximately $813,000 in cash and a potential secondary payment of approximately $200,000 from its parent company, GlycoMar Ltd. The potential secondary payment wasFormerly based on VeroMara being awarded a contract in FY 12, which did not occur.Oban, Scotland, VeroMara offers commercial testing services tofor the shellfish and salmon aquaculture industries. VeroMara’s servicesofferings include testingtests for shellfish toxins, general foodborne pathogens, includingE. coli, noroviruses, and salmon husbandry. VeroMara recorded revenues of approximately $800,000 (U.S.) in its most recently completed fiscal year. The purchase accounting for this transaction will be completedbusiness has been relocated to the Company’s location in fiscal year 2012. The acquisition is expected to provide a strong synergistic fitAyr, Scotland, which reports within the Food Safety segment.

On May 1, 2012, the Company purchased the assets of the Igenity animal genomics business from Merial Limited. Consideration for the Company’s Foodpurchase, which was determined through arm’s length negotiations, was $3,200,000 in cash and $600,000 accrued for secondary consideration. The preliminary purchase price allocation included net current assets of $335,000, fixed assets of $340,000 and intangible assets of $3,125,000. The allocation was generally based on the fair value of these assets determined using the income approach. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 fair value measurements. In the past, GeneSeek conducted the genetic testing of samples for Igenity, and Igenity used the information with its extensive bioinformatics system to identify the animal’s positive or negative traits. The Igenity business has been moved to GeneSeek’s operations in Lincoln, Nebraska, and operates as part of the GeneSeek subsidiary, within the Animal Safety segment.

8. LONG TERM DEBT

The Company has a financing agreement in place with a bank (no amounts drawn at February 29, 2012 or May 31, 2011) which, through the first quarter of fiscal 2011, providedproviding for an unsecured revolving line of credit of $10,000,000. Effective$12,000,000, which maturity was extended to September 1, 2014 during the first quarter of fiscal year 2013. There were no advances against this line of credit during FY-2013 and FY-2012 and no balance outstanding at August 31, 2011, the Company extended the agreement by one year through November 30, 2013 and increased the total available credit to $12,000,000. The incremental credit is to provide for flexibility for potential foreign currency hedging strategies. The interest rate2012. Interest is at LIBOR plus 100 basis points (rate under the terms of the agreement was 1.24%1.23% at February 29,August 31, 2012). Financial covenants include maintaining specified levels of tangible net worth, debt service coverage, and funded debt to EBITDA, each of which the Company was in compliance with at February 29,August 31, 2012.

9. COMMITMENTS AND CONTINGENCIES

The Company is involved in environmental remediation and monitoring activities at its Randolph, Wisconsin manufacturing facility and accrues for related costs when such costs are determined to be probable and estimable. The Company is currently expensing annual costs of remediation, which have ranged from $50,000 to $105,000 per year over the past five years. The Company’s estimated liability for these costs of $916,000 at February 29,August 31, 2012 and May 31, 2011,2012, measured on an undiscounted basis over an estimated period of 15 years, is recorded within other long termlong-term liabilities in the consolidated balance sheet.

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

10. STOCK PURCHASE

In December 2008, the Company’s Board of Directors authorized a program to purchase, subject to market conditions, up to 750,000 shares of the Company’s common stock. As of February 29,August 31, 2012, 74,684 cumulative shares had been purchased in negotiated and open market transactions for a total price, including commissions, of approximately $923,000. Shares purchased under the program were retired. There have been no purchases in fiscal year 20122013 and there were none in 2011.2012.

PART I – FINANCIAL INFORMATION

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 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'sCompany’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, accruals 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.

There have been no material changes to the critical accounting policies and estimates disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2011.2012.

Results of Operations

Executive Overview

Neogen Corporation revenues in the first quarter of FY-13 were $49.7 million, an increase of $4.0 million, or 8.8%, compared to $45.7 million in the first quarter of FY-12. Revenues for the Food Safety segment increased by 6.3% in12.5% and Animal Safety segment revenues increased by 5.0%, each compared with the thirdfirst quarter to $44.9 million and by 5.0% to $135.5 million for the nine-month period ended February 29, 2012, compared toof the prior year. On an organic basis, overall revenues increased by 8.1%, with the remainder of the increase due to the Igenity acquisition, completed in May 2012. Sales to international markets were 41.7% of total revenues, compared to 41.4% in last year’s first quarter. Gross margins increased from 50.3% in FY-12 to 53.3% in FY-13, largely the result of a shift in product mix toward diagnostic products in the Food Safety segment, which have higher margins. Additionally, margins improved within the Animal Safety segment due to increased sales of rodenticides and small animal supplements, which are higher margin products within that segment. Operating margins increased to 20.8% in the first quarter, from 20.5% in the prior year, primarily the result of the improved gross margins. Operating expenses increased 18.6%, reflecting the impact of investments made in personnel, primarily in sales and marketing related functions in the 2012 fiscal year, higher legal and professional fees, and increased project costs within research and development.

Revenues

Three months ended August 31, 2012 and August 31, 2011:

During the first quarter of FY-13, Food Safety revenues increased by 6.2%12.5% in comparison with FY-12. Natural Toxins, Allergens and 4.7% in the quarter and the nine-month period ended February 29, 2012, respectively. Animal SafetyDrug Residues revenues increased by 6.4% and 5.2% in the quarter and in the nine-month period ended February 29, 2012, respectively. Exclusive of the revenues from the VeroMara acquisition, which was made in June 2011, Food Safety revenue increases were 5.7% and 4.2% in the third quarter and year-to-date periods, respectively. Gross margins increased from 48.7% in the February 2011 quarter to 51.0% in the February 2012 quarter and decreased from 51.0% to 50.6% on a year-to-date basis. The change in margin percentage for the quarter was the result of a favorable shift in product mix and manufacturing efficiencies resulting from the increased product volume. Operating margins decreased in the comparative quarter and nine-month periods from 19.1% to 16.8% and from 21.1% to 18.5%14.9%, respectively. The decreases were primarily the result of investments in sales and customer support personnel and infrastructure, part of a long-term strategy that management believes should result in revenue gains and efficiencies in the future. International revenues were 40.7% of total revenues for the quarter and 40.7% for the nine month period ended February 29, 2012.

Revenues

Three and nine months ended February 29, 2012 compared to three and nine months ended February 28, 2011:

Food Safety revenues increased 6.2% in the third quarter and 4.7% in the first nine months of FY-12, each compared towith the prior year periods. Exclusivequarter. In the first quarter of the VeroMara acquisition, revenues increased by 5.7% and 4.2% in the quarter and nine month periods, in comparison to the same periods of the prior year. Salesfiscal 2013, sales of Natural Toxin Allergenproducts were up 21.0% over the prior year due in large part to the occurrence of the abnormally dry, hot weather conditions which prevailed over much of the United States during the summer growing season for grains which resulted in a significant outbreak of aflatoxin. To a lesser degree, cool wet growing conditions in the United Kingdom and Drug Residue productsGermany resulted in an outbreak of deoxynivalenol, or DON, increasing our test kit sales for that toxin in our Neogen Europe subsidiary. Revenue from allergen test kits increased by 6.3% in the quarter and by 4.3% for the year-to-date in comparison with FY-11. Within this product group, mycotoxin revenues increased 11.1% in the third quarter, mainly the result of increased testing by corn and grain processors, and market acceptance of the new quantitative lateral flow devices introduced during the quarter. For the year to date, this17.5% as our expansive product line, was 1.0% lower thanincluding our new Reveal 3-D test for total milk, continues to gain market share. The market for these products also continues to grow due to increased worldwide concerns over the same periodpresence of allergens in FY-11, due primarily to unusually high salesfinished food products.

Revenue of deoxynivalenol (DON) test kits in the prior years caused by unusual weather conditions. Allergen Test Kit revenues increased by 11.6% in the third quarter and by 4.4%diagnostic products for the first nine months of the fiscal year. Bacteria and General Sanitation product revenues remained unchanged fromdetection increased 2.1% in comparison with the prior third fiscalyear quarter, butled by the Company’s pathogen detection and general environmental sanitation products. There are a number of potential new customers currently evaluating the Company’s new ANSR pathogen detection system; this product is expected to positively impact revenues in this product line in the second half of the year. Revenue from dehydrated culture media and other products increased by 9.2% for20.5% over the first nine months of FY-12 compared to FY-11prior year quarter, primarily due to higher sales earlier in the year of disposable test kits used in detecting spoilage organisms and microbial contamination. Despite the loss of a couple of significant customers in the early part of the fiscal year, one due to credit issues, the other the result of a plant closure, Dehydrated Culture Media and Other product revenues increased by 13.9% in the quarter and 0.5% for the year-to-date period. For the comparative quarter, growth includescontributions from certain genomics revenues to a number of European customers. The Company’s international operations contributed

During the first quarter of FY-13, Animal Safety revenue increased by 5.0% overall in comparison with FY-12. Organic revenue growth was 3.7%, with the remainder the result of the Igenity acquisition, which was made in May 2012. Life Science and Other revenues decreased by 10.5% in comparison with FY-12, primarily due to lower sales to the overall Food Safety revenue gains for the quarterracing market, where state budget cutbacks have resulted in lab closures and year-to-date. Neogen Europe recorded revenue increases of 18.3% in the fiscal third quarterless testing performed.

Rodenticide and 7.0% for the first nine months of FY-2012; sales of genomic testing services and incremental sales of other products in the United Kingdom offset continued weakness in a number of European Union countries. Neogen Latino America and Neogen do Brazil continued to expand their selling and marketing efforts; combined revenues for these subsidiaries increased by 17.3% for the quarter and 57.3% for the year to date period, albeit from small bases.

Animal SafetyDisinfectant revenues increased by 6.4%10.3% in comparison with FY-12, due primarily to a 29.6% increase in rodenticide sales. In the first quarter of FY-12, sales had declined following a strong 4^th quarter of FY-11 due to a packaging law change for rodenticides which went into effect in the thirdfirst quarter of FY-12 and, 5.2% for the year to date period ended February 29, 2012Company believes, pulled sales which might otherwise have occurred in FY-12 into FY-11. Veterinary instruments and other revenues decreased by 1.1% in comparison with the prior year periods. Life Science and Other revenues were up 5.7% and 3.9%quarter; the decline is reflective of the loss of business to a large customer in the third2^nd quarter of FY-12. Partially offsetting this loss were market share gains in our line of small animal supplement products.

Revenues increased at GeneSeek by 19.5% in FY-13 compared to the first quarter of FY 2012 and included revenues from the nine-month periods compared with the prior year; the launchIgenity acquisition. Exclusive of an improved substrate product led to an increase in sales of test reagents which Neogen offers to other test kit manufacturers. Vaccinethat acquisition, GeneSeek revenues increased by 46.7% for12.1%, and reflects increased volume due to the third quarter and increased by 12.3%execution of a number of large contracts. The Igenity business is being integrated into Geneseek’s business; the bioinformatics acquired in the first nine months of FY-12, dueacquisition is expected to timing of orders and the shipment ofadd to Geneseek’s product to key large distributors. Rodenticide and Disinfectant product revenues decreased by 10.4% in the third quarter and 2.8% on a year-to-date basis. This product group declined in the quarter due primarily to a large stocking order of cleaners and disinfectants to Asian markets in the third quarter of prior year. For the year to date, rodenticides have declined due to strong 4^th quarter FY-2011 sales ahead of a June 2011 change in EPA rules regarding labeling of these products. The strong fourth quarter sales pulled revenues from FY-12 into FY-11, resulting in lower FY-2012 revenues. Veterinary Instruments and other product revenues increased by 29.0% and 24.4% in the quarter and nine months, respectively, in comparison with the prior year periods. Increases were due to strong detectable needle revenues and significant sales increases in companion animal products, veterinary gloves and apparel products sold through key veterinary distribution channels. Animal Safety revenues for the third quarter decreased in DNA Testing by 4.3% and 13.0% for the year-to-date due primarily to lower pricing for testing services; sample volumes have increased for both comparative periods. While opportunities for the DNA testing business continue to grow, contract business is not necessarily consistent or predictable from period-to-period as to its timing or amount.offerings.

Gross margins increased from 48.7%50.3% in FY-12 to 53.3% in FY-13, due primarily to the growth in revenue of diagnostic products in the third quarterFood Safety segment, resulting in a greater proportion of FY-11 to 51.0% in the third quarter of FY-12. This resulted principally from favorable shifts in product mix towardFood Safety revenues, which have higher margin products in each segment and manufacturing efficiencies achieved duegross margins, to the higher volumes in the quarter. For the year- to-date,overall Company revenues. Additionally, gross margins were 50.6% compared to 51.0% in FY-11. The decrease was primarily due to product mix shift, particularlyincreased within the Animal Safety segment.

segment due to a shift in product mix resulting from higher sales of rodenticides and small animal supplements, which have higher gross margins. Operating margins decreased from 19.1%increased to 16.8% in the third quarter and from 21.1% to 18.5%20.8% in the first nine months of FY-12 as compared to the first nine months of FY-11. Sales and marketing expenses, expressed as a percentage of revenues, increasedquarter, from 16.7% to 19.9%20.5% in the third quarter andprior year, primarily the result of the improved gross margins offset partly by increased from 17.1% to 18.9% on a year-to-date basis. The increaseoperating expenses. Operating expenses increased 18.6%, reflecting the impact of investments made in personnel, primarily in sales and marketing expenses isrelated functions, and other infrastructure improvements in the direct effect of additional sales, marketing and customer service representatives added during the2012 fiscal year. These positions were added to helpAdditionally, the Company captureincurred higher legal and support available market opportunities. General and administrative expenses increased from 8.7% to 10.4% of revenuesprofessional fees in the third quarter, and from 8.7% to 9.5% on a year to date basis. The changelargely in general and administrative expense is due to increased personnel and related compensation costs, legal costs related toprotection of our intellectual property, amortization of customer based intangibles from acquired businesses, and increased project costs associated with increased governmental licensing and regulatory affairs. Research expense decreased from 4.3% to 3.9% in the third quarter and from 4.1% to 3.7% in the first nine months of FY-12. While these expenses vary on a quarter- to-quarter basis, depending on the timing of new projects and the completion of existing projects, management expects thatwithin research and development efforts will range between 4% to 5% of revenues in support of existing products and for development of future products.the new product commercialization efforts.

The Company recorded $595,000 oftotal amount included in other income in the thirdfirst quarter and $543,000of FY 2013 of $72,000 represents an increase compared to expense of $37,000 recognized in the first nine monthsquarter of FY-12, includingFY 2012. A charge of $13,000 was recorded in the reversalfirst quarter of a portion2013 to increase the liability for the Company’s expected payout to the former owners of Geneseek, based on its earnings as part of the GeneSeek purchase consideration of $180,000Company; $26,000 was recorded in the three and nine month periods. In the three and nine months ended February 28, 2011, the Company recorded chargesfirst quarter of $218,000 and $618,000, respectively, to adjust the fair value of the secondary consideration for GeneSeek. Royalty income in the three and nine month periods of FY-12 were $165,000 and $283,000. In the comparative FY-11 periods the royalty income was $30,000 and $90,000, respectively.FY 2012.

Financial Condition and Liquidity

The overall cash and marketable securities position of the companyCompany was $61,335,000$74,504,000 at February 29,August 31, 2012, compared to $56,083,000$68,645,000 at May 31, 2011. Accounts receivable increased by $5,695,000 due to increases in revenues and in the timing of receipt of payments; inventories increased by $4,363,000, primarily the result of bulk purchases made to receive more favorable pricing, and to a lesser extent, inventory build ahead of a move to a new production facility.

2012. Approximately $13,235,000$4,444,000 in cash was generated from operations during the nine months ended February 29, 2012. The Company spent $10,822,000 on property and equipment and other assets for the nine-months ended February 29, 2012. Included in this amount is the August purchasefirst fiscal quarter of a 128,000 square foot office and warehouse facility in Lexington, Kentucky for $4,950,000. This facility was purchased to accommodate the expansion of the Company’s animal safety operations. In June 2011, the Company closed its purchase of VeroMara for approximately $813,000.2013. Net cash proceeds of $3,024,000$2,494,000 were realized fromwith the exercise of stock options and issuance of shares under the Employee Stock Purchase Plan during the first nine monthsquarter of FY-12.FY-13. The Company spent $1,923,000 for equipment and other non-current assets in the first quarter of 2012. Accounts receivable increased by $1,790,000 due to the increase in revenues and the timing of receipt of payments from an international distributor; inventory levels were essentially unchanged for the quarter compared to May 31, 2012.

Inflation and changing prices are not expected to have a material effect on operations, as management believes it has and will be successful in offsetting increased input costs with price increases.

Management believes that the Company’s existing cash and marketable securities balances at February 29,August 31, 2012, along with available borrowings under its credit facility and cash expected to be generated from future operations, will be sufficient to fund activities for the foreseeable future. However, existing cash and borrowing capacity 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 choose to issue equity securities or enter into other financing arrangements for a portion of its future financing needs. The Company has never paid a cash dividend and currently has no plans to do so.

PART I – FINANCIAL INFORMATION

The Company has interest rate and foreign exchange rate risk exposure and no long-term fixed rate investments or borrowings. Primary interest rate risk is due to potential fluctuations of exposure to interest rates for variable rate borrowings.

Foreign exchange risk exposure arises because the Company markets and sells its products throughout the world. The Company also could be affected by weak economic conditions in foreign markets that could reduce demand for its products. Additionally, revenues in certain foreign countries as well as certain expenses related to those revenues are transacted in currencies other than the U.S. Dollar. The Company'sCompany’s operating results are primarily exposed to changes in exchange rates between the U.S. Dollar, the British Pound Sterling and the Euro. When the U.S. Dollar weakens against foreign currencies, the dollar value of revenues denominated in foreign currencies increases. When the U.S. Dollar strengthens, the opposite situation occurs. Additionally, previously recognized revenues in the course of collection can be affected positively or negatively by changes in exchange rates. The Company uses derivative financial instruments to help manage the economic impact of fluctuations in certain currency exchange rates. These contracts are adjusted to fair value through earnings.

Neogen has assets, liabilities and operations outside of the United States, which are located in Scotland, Brazil and Mexico where the functional currency is the British Pound Sterling, Brazilian Real and Mexican Peso, respectively. The Company’s investments in foreign subsidiaries are considered to be long-term.

PART I – FINANCIAL INFORMATION

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of February 29,August 31, 2012 was carried out under the supervision and with the participation of the Company’s management, including the Chairman & Chief Executive Officer and the Vice President & Chief Financial Officer (“the Certifying Officers”). Based on the evaluation, the Certifying Officers concluded that the Company’s disclosure controls and procedures are effective.

Changes in Internal Controls Over Financial Reporting

There was no change to the Company’s internal control over financial reporting during the quarter ended February 29,August 31, 2012 that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

The Company is subject to certain legal and other proceedings in the normal course of business. In the opinion of management, the outcome of these matters shouldwill not have a material effect on its future results of operations or financial position.

Items 1A, 2, 3, 4, and 5 are not applicable or removed or reserved and have been omitted.

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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