Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
May 31, 2019 | Jun. 30, 2019 | Nov. 30, 2018 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | May 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --05-31 | ||
Entity Interactive Data Current | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Registrant Name | NEOGEN CORP | ||
Entity Central Index Key | 0000711377 | ||
Trading Symbol | NEOG | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Shell Company | false | ||
Entity Small Business | false | ||
Entity Public Float | $ 3,378,030,000 | ||
Entity Emerging Growth Company | false | ||
Entity Common Stock, Shares Outstanding | 52,281,700 | ||
Title of 12(g) Security | COMMON STOCK | ||
Entity Address, State or Province | MI | ||
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | May 31, 2019 | May 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 41,688 | $ 83,074 |
Marketable securities | 225,836 | 127,736 |
Accounts receivable, less allowance of $1,700 and $1,550 at May 31, 2019 and 2018, respectively | 82,582 | 79,086 |
Inventories | 85,992 | 76,005 |
Prepaid expenses and other current assets | 13,431 | 9,888 |
Total Current Assets | 449,529 | 375,789 |
Property and Equipment | ||
Land and improvements | 5,324 | 4,730 |
Building and improvements | 46,205 | 44,008 |
Machinery and equipment | 82,752 | 74,911 |
Furniture and fixtures | 3,895 | 3,568 |
Construction in progress | 2,294 | 2,654 |
Property, Plant and Equipment, Gross | 140,470 | 129,871 |
Less accumulated depreciation | 65,623 | 56,802 |
Net Property and Equipment | 74,847 | 73,069 |
Other Assets | ||
Goodwill | 103,619 | 99,558 |
Other non-amortizable intangible assets | 15,649 | 14,938 |
Amortizable intangible assets, net of accumulated amortization of $40,835 and $37,049 at May 31, 2019 and 2018, respectively | 52,096 | 54,655 |
Total Other Assets | 171,364 | 169,151 |
Total Assets | 695,740 | 618,009 |
Current Liabilities | ||
Accounts payable | 19,063 | 20,750 |
Accrued compensation | 7,085 | 6,065 |
Income taxes | 601 | 165 |
Other accruals | 11,502 | 11,708 |
Total Current Liabilities | 38,251 | 38,688 |
Deferred Income Taxes | 15,618 | 14,103 |
Other Non-Current Liabilities | 3,972 | 5,043 |
Total Liabilities | 57,841 | 57,834 |
Commitments and Contingencies (note 7) | ||
Equity | ||
Preferred stock, $1.00 par value — shares authorized 100,000; none issued and outstanding | 0 | 0 |
Common stock, $0.16 par value — shares authorized 120,000,000; 52,216,589 and 51,735,732 shares issued and outstanding at May 31, 2019 and 2018, respectively | 8,355 | 8,278 |
Additional paid-in capital | 221,937 | 202,572 |
Accumulated other comprehensive loss | (11,640) | (9,746) |
Retained earnings | 419,247 | 359,071 |
Total Neogen Corporation and Subsidiaries Stockholders' Equity | 637,899 | 560,175 |
Total Liabilities and Stockholders' Equity | $ 695,740 | $ 618,009 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | May 31, 2019 | May 31, 2018 |
Accounts receivable, allowance | $ 1,700 | $ 1,550 |
Accumulated Amortization | $ 40,835 | $ 37,049 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.16 | $ 0.16 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 52,216,589 | 51,735,732 |
Common stock, shares outstanding | 52,216,589 | 51,735,732 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Revenues | |||
Total Revenues | $ 414,186 | $ 397,930 | $ 358,277 |
Cost of Revenues | |||
Total Cost of Revenues | 222,266 | 211,658 | 189,353 |
Gross Margin | 191,920 | 186,272 | 168,924 |
Operating Expenses | |||
Sales and marketing | 70,230 | 66,929 | 59,380 |
General and administrative | 40,791 | 38,294 | 34,214 |
Research and development | 12,805 | 10,855 | 10,385 |
Total Operating Expenses | 123,826 | 116,078 | 103,979 |
Operating Income | 68,094 | 70,194 | 64,945 |
Other Income | |||
Interest income, net | 4,683 | 2,043 | 838 |
Royalty income | 150 | 147 | 171 |
Other, net | 32 | 1,081 | 719 |
Total Other Income | 4,865 | 3,271 | 1,728 |
Income Before Income Taxes | 72,959 | 73,465 | 66,673 |
Provision for Income Taxes | 12,783 | 10,250 | 22,700 |
Net Income | 60,176 | 63,215 | 43,973 |
Net Income Attributable to Non-controlling Interest | 0 | (70) | (180) |
Net Income Attributable to Neogen | $ 60,176 | $ 63,145 | $ 43,793 |
Net Income Attributable to Neogen per Share | |||
Basic | $ 1.16 | $ 1.23 | $ 0.87 |
Diluted | $ 1.15 | $ 1.21 | $ 0.86 |
Product Revenues | |||
Revenues | |||
Total Revenues | $ 339,439 | $ 331,288 | $ 303,148 |
Cost of Revenues | |||
Total Cost of Revenues | 179,660 | 173,725 | 156,295 |
Service Revenues | |||
Revenues | |||
Total Revenues | 74,747 | 66,642 | 55,129 |
Cost of Revenues | |||
Total Cost of Revenues | $ 42,606 | $ 37,933 | $ 33,058 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Net Income | $ 60,176 | $ 63,215 | $ 43,973 |
Other comprehensive loss, net of tax: foreign currency translations | (1,894) | (2,543) | (3,257) |
Comprehensive income | 58,282 | 60,672 | 40,716 |
Comprehensive income loss attributable to non-controlling interest | (70) | (180) | |
Comprehensive income attributable to Neogen | $ 58,282 | $ 60,602 | $ 40,536 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non - Controlling Interest |
Beginning Balance at May. 31, 2016 | $ 404,160 | $ 8,014 | $ 147,996 | $ (3,946) | $ 252,133 | $ (37) |
Beginning Balance (in shares) at May. 31, 2016 | 50,090,252 | |||||
Exercise of options, share-based compensation | 26,720 | $ 131 | 26,589 | 0 | 0 | 0 |
Exercise of options, share-based compensation (in shares) | 817,284 | |||||
Issuance of shares under employee stock purchase plan | $ 925 | $ 4 | 921 | 0 | 0 | 0 |
Issuance of shares under employee stock purchase plan (in shares) | 24,953 | 24,953 | ||||
Purchase of minority interest | $ (764) | $ 0 | (764) | 0 | 0 | 0 |
Net income | 43,973 | 0 | 0 | 0 | 43,793 | 180 |
Other comprehensive loss | (3,257) | 0 | 0 | (3,257) | 0 | 0 |
Ending Balance at May. 31, 2017 | 471,757 | $ 8,149 | 174,742 | (7,203) | 295,926 | 143 |
Ending Balance (in shares) at May. 31, 2017 | 50,932,489 | |||||
Exercise of options, share-based compensation | 27,117 | $ 125 | 26,992 | 0 | 0 | 0 |
Exercise of options, share-based compensation (in shares) | 781,116 | |||||
Issuance of shares under employee stock purchase plan | $ 1,052 | $ 4 | 1,048 | 0 | 0 | 0 |
Issuance of shares under employee stock purchase plan (in shares) | 22,127 | 22,127 | ||||
Purchase of minority interest | $ (423) | $ 0 | (210) | 0 | 0 | (213) |
Net income | 63,215 | 0 | 0 | 0 | 63,145 | 70 |
Other comprehensive loss | (2,543) | 0 | 0 | (2,543) | 0 | 0 |
Ending Balance at May. 31, 2018 | $ 560,175 | $ 8,278 | 202,572 | (9,746) | 359,071 | 0 |
Ending Balance (in shares) at May. 31, 2018 | 51,735,732 | 51,735,732 | ||||
Exercise of options, share-based compensation | $ 21,417 | $ 82 | 21,335 | 0 | 0 | 0 |
Exercise of options, share-based compensation (in shares) | 512,527 | |||||
Issuance of shares under employee stock purchase plan | $ 1,160 | $ 3 | 1,157 | 0 | 0 | 0 |
Issuance of shares under employee stock purchase plan (in shares) | 18,330 | 18,330 | ||||
Shares repurchased | $ (3,135) | $ (8) | (3,127) | 0 | 0 | 0 |
Shares repurchased (in shares) | (50,000) | |||||
Net income | 60,176 | $ 0 | 0 | 0 | 60,176 | 0 |
Other comprehensive loss | (1,894) | 0 | 0 | (1,894) | 0 | 0 |
Ending Balance at May. 31, 2019 | $ 637,899 | $ 8,355 | $ 221,937 | $ (11,640) | $ 419,247 | $ 0 |
Ending Balance (in shares) at May. 31, 2019 | 52,216,589 | 52,216,589 |
Consolidated Statements of Eq_2
Consolidated Statements of Equity (Parenthetical) $ in Thousands | 12 Months Ended |
May 31, 2017USD ($) | |
Exercise of options, share-based compensation, income tax benefit | $ 3,922 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Cash Flows From Operating Activities | |||
Net Income | $ 60,176 | $ 63,215 | $ 43,973 |
Adjustments to reconcile net income to net cash from operating activities: | |||
Depreciation and amortization | 17,624 | 17,058 | 14,691 |
Deferred income taxes | 1,197 | (2,996) | (292) |
Share-based compensation | 5,543 | 4,909 | 5,261 |
Excess income tax benefit from exercise of stock options | (3,922) | ||
Changes in operating assets and liabilities, net of business acquisitions: | |||
Accounts receivable | (4,025) | (10,233) | 5,035 |
Inventories | (10,437) | (2,647) | (6,970) |
Prepaid expenses and other assets | (3,569) | (2,275) | 812 |
Accounts payable | (1,461) | 4,381 | (1,691) |
Accruals and other changes | (1,206) | (2,281) | 3,377 |
Net Cash From Operating Activities | 63,842 | 69,131 | 60,274 |
Cash Flows Used in Investing Activities | |||
Purchase of property, equipment and other non-current intangible assets | (14,661) | (20,946) | (14,578) |
Proceeds from the sales of marketable securities | 339,225 | 299,751 | 149,226 |
Purchase of marketable securities | (437,324) | (361,419) | (162,755) |
Business acquisitions, net of cash acquired | (6,388) | (468) | (34,029) |
Net Cash Used In Investing Activities | (119,148) | (83,082) | (62,136) |
Cash Flows From Financing Activities | |||
Exercise of stock options and other | 17,034 | 23,261 | 21,148 |
Repurchase of common stock | (3,135) | ||
Excess income tax benefit from the exercise of stock options | 3,922 | ||
Purchase of non-controlling minority interest | (423) | ||
Net Cash From Financing Activities | 13,899 | 22,838 | 25,070 |
Effect of Exchange Rate on Cash | 21 | (3,380) | (898) |
Net (Decrease) Increase in Cash and Cash Equivalents | (41,386) | 5,507 | 22,310 |
Cash and Cash Equivalents, Beginning of Year | 83,074 | 77,567 | 55,257 |
Cash and Cash Equivalents, End of Year | 41,688 | 83,074 | 77,567 |
Supplementary Cash Flow Information | |||
Income taxes paid, net of refunds | $ 13,027 | $ 14,966 | $ 17,704 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
May 31, 2019 | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Nature of Operations Neogen Corporation develops, manufactures and markets a diverse line of products and services dedicated to food and animal safety. Basis of Consolidation The consolidated financial statements include the accounts of Neogen Corporation and its subsidiaries, all of which are wholly-owned as of May 31, 2019. Neogen Latinoamérica was 100% 90% to 100%. 10% All intercompany accounts and transactions have been eliminated in consolidation. Share and per share amounts reflect the December 29, 2017 4-for-3 stock split as if it took place at the beginning of the period presented. Recently Adopted Accounting Standards Revenue Recognition On June 1, 2018, the Company adopted ASU No. 2014-09—Revenue from Contracts with Customers (Topic 606). Refer to the Revenue Recognition section of Note 1 to the consolidated financial statements for further information. Classification of Cash Receipts and Payments In August 2016 , the FASB issued ASU No. 2016-15—Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under FASB Accounting Standards Codification (FASB ASC) 230, Statement of Cash Flows. The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this ASU on June 1, 2018; the impact on its consolidated financial statements was immaterial. Recent Accounting Pronouncements Not Yet Adopted Leases In February 2016 , the FASB issued ASU No. 2016-02—Leases to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessor have not significantly changed from previous U.S. GAAP. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. Modified retrospective application is required with certain practical expedients. The Company will adopt this ASU on June 1, 2019. The Company has performed a review of its lessee and lessor arrangements, including revenue through leasing programs as well as lease expenses, which primarily result from operating lease arrangements at most of the Company’s facilities. The Company will record a right-of-use (ROU) asset and corresponding lease liability on the balance sheet in the first quarter of fiscal 2020 and has determined the impact of this pronouncement on its consolidated financial condition and results of operations is immaterial. Financial Instruments- Credit Losses In June 2016 , the FASB issued ASU No. 2016-13—Measurement of Credit Losses on Financial Instruments, which changes how companies measure credit losses on most financial instruments measured at amortized cost and certain other instruments, such as loans, receivables and held-to-maturity debt securities. Rather than generally recognizing credit losses when it is probable that the loss has been incurred, the revised guidance requires companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s contractual life. ASU 2016-13 is effective for fiscal periods beginning after December 15, 2019 and must be adopted as a cumulative effect adjustment to retained earnings. Early adoption is permitted. The Company does not believe adoption of this guidance will have an impact on its consolidated financial statements. Fair Value Measurements In August 2018 , the FASB issued ASU 2018-3, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements of fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company does not believe adoption of this guidance will have an impact on its consolidated financial statements. Cloud Computing Implementation Cost In August 2018 , the FASB issued ASU 2018-15, Intangible-Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Cost Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company does not believe adoption of this guidance will have an impact on its consolidated financial statements. Comprehensive Income Comprehensive income represents net income and any revenues, expenses, gains and losses that, under U.S. generally accepted accounting principles, are excluded from net income and recognized directly as a component of equity. Accumulated other comprehensive income (loss) consists solely of foreign currency translation adjustments. Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments other than cash equivalents and marketable securities, which include accounts receivable and accounts payable, approximate fair value based on either their short maturity or current terms for similar instruments. Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Cash and Cash Equivalents Cash and cash equivalents consist of bank demand accounts, savings deposits, certificates of deposit and commercial paper with original maturities of 90 days or less. s. $ 83,074,000 at May 31 , 2019 and 2018, res pectively. T he carrying value of these assets approximates fair value due to the short maturity of these instruments and meets the Level 1 criteria. Cash held by foreign subsidiaries was $8,711,000 and $7,101,000 at May 31, 2019 and 2018, respectively. Marketable Securities The Company has marketable securities held by banks or broker-dealers at May 31, 2019, consisting of short-term domestic certificates of deposit of $17,681,000 and commercial paper rated at least A-1/P-1 (short-term) and A/A2 (long-term) with maturities between 91 days and two years of $208,155,000. Total outstanding marketable securities at May 31, 2019 was $225,836,000; there were $127,736,000 in marketable securities outstanding at May 31, 2018. These securities are classified as available for sale. The primary objective of management’s short-term investment activity is to preserve capital for the purpose of funding operations, capital expenditures and business acquisitions; short-term investments are not entered into for trading or speculative purposes. These securities are recorded at fair value (that approximates cost) based on recent trades or pricing models and therefore meet the Level 2 criteria. Interest income on these investments is recorded within Other Income on the income statement. Marketable Securities as of May 31, 2019 and 2018 are listed below by classification and remaining maturities. Year ended May 31 Maturity 2019 2018 US Treasuries 0 – 90 days 2,470,000 19,910,000 91 – 180 days — — 181 days – 1 year 2,435,000 — 1 – 2 years 2,505,000 — Commercial Paper 0 – 90 days 84,338,000 47,740,000 91 – 180 days 47,960,000 32,673,000 181 days – 1 year 34,369,000 — 1 – 2 years 34,078,000 — Certificates of Deposit 0 – 90 days 7,732,000 5,446,000 91 – 180 days 5,000,000 8,747,000 181 days – 1 year 750,000 13,220,000 1 – 2 years 4,199,000 — Total Marketable Securities 225,836,000 127,736,000 Use of Estimates 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 disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates the estimates, including, but not limited to, variable consideration related to revenue recognition, allowances for doubtful accounts, the market value of, and demand for, inventories, stock-based compensation, provision for income taxes and related balance sheet accounts, accruals, goodwill and other 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. Accounts Receivable and Concentrations of Credit Risk Financial instruments which potentially subject Neogen to concentrations of credit risk consist principally of accounts receivable. 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 doubtful accounts on accounts receivable is established based upon factors surrounding the credit risk of specific customers, historical trends and other information. Collateral or other security is generally not required for accounts receivable. Once a receivable balance has been determined to be uncollectible, that amount is charged against the allowance for doubtful accounts. No customer accounted for more than 10% of accounts receivable at May 31, 2019 or 2018, respectively. The activity in the allowance for doubtful accounts was as follows: Year ended May 31 (in thousands) 2019 2018 2017 Beginning Balance $ 1,550 $ 2,000 $ 1,500 Provision 263 152 645 Recoveries 38 40 25 Write-offs (151 ) (642 ) (170 ) Ending Balance $ 1,700 $ 1,550 $ 2,000 Inventories Inventories are stated at the lower of cost or net realizable value, determined on the first-in, first-out method. The components of inventories were as follows: Year ended May 31 (in thousands) 2019 2018 Raw Materials $ 41,594 $ 36,702 Work-in-process 5,581 5,993 Finished goods 38,817 33,310 $ 85,992 $ 76,005 The Company’s inventories are analyzed for slow moving, expired and obsolete items on a quarterly basis and the valuation allowance is adjusted as required. The valuation allowance for inventory was $2,250,000 and $2,200,000 at May 31, 2019 and 2018, respectively. Property and Equipment Property and equipment is stated at cost. Expenditures for major improvements are capitalized while repairs and maintenance are charged to expense. Depreciation is provided on the straight-line method over the estimated useful lives of the respective assets, which are generally seven to 39 years for buildings and improvements and three to ten years for furniture, fixtures, machinery and equipment. Depreciation expense was $11,315,000, $10,315,000 and $8,783,000 in fiscal years 2019, 2018 and 2017, respectively. Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over fair value of tangible net assets of acquired businesses after amounts are allocated to other identifiable intangible assets. Other intangible assets include customer relationships, trademarks, licenses, trade names, covenants not-to-compete and patents. Amortizable intangible assets are amortized on either an accelerated or a straight-line basis, generally over 5 to 25 years. and other non-amortizable intangible assets annually, or when indications of impairment exist, to determine if such assets may be impaired by performing a quantitative assessment. If the carrying amounts of these assets are deemed to be less than fair value based upon a discounted cash flow analysis and comparison to comparable earnings multiples of peer companies, such assets are reduced to their estimated fair value and a charge is made to operations. The remaining weighted-average amortization period for intangibles was 10 31 , 2019 and May 31 , 2018 , respectively. Long-lived Assets Management reviews the carrying values of its long-lived assets to be held and used, including definite-lived intangible assets, for possible impairment whenever events or changes in business conditions warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated separately identifiable undiscounted cash flows over the remaining useful life of the asset are less than the carrying value of the asset. In such an event, fair value is determined using discounted cash flows, and if lower than the carrying value, impairment is recognized through a charge to operations. Reclassifications Certain amounts in the fiscal 2018 and 2017 financial statements have been reclassified to conform with the fiscal 2019 presentation. Equity Compensation Plans At May 31, 2019, the Company had stock option plans which are described more fully in Note 5 to the consolidated financial statements. The weighted-average fair value per share of stock options granted during fiscal years 2019, 2018 and 2017, estimated on the date of grant using the Black-Scholes option pricing model, was $14.91, $14.47 and $11.89, respectively. The fair value of stock options granted was estimated using the following weighted-average assumptions: Year ended May 31 2019 2018 2017 Risk-free interest rate 2.6 % 1.6 % 1.2 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected stock volatility 27.0 % 27.7 % 35.2 % Expected option life 3.5 4.0 4.0 The risk-free interest rate for periods within the expected life of options granted is based on the United States Treasury yield curve in effect at the time of grant. Expected stock price volatility is based on historical volatility of the Company’s stock. The expected option life, representing the period of time that options granted are expected to be outstanding, is based on historical option exercise and employee termination data. Prior to the fiscal 2017 grants, Neogen recognized the fair value of stock options using the accelerated method over their requisite service periods which management has determined to be the vesting periods; for options granted in fiscal years 2019, 2018 and 2017, the Company recognized the fair value of stock options using the straight-line method. Shipping and Handling Costs Shipping and handling costs that are charged to and reimbursed by the customer are recognized as revenues, while the related expenses incurred by Neogen are recorded in sales and marketing expense; these expenses totaled $13,503,000, $ 12,147 10,185 Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and for tax credit carryforwards and are measured using the enacted tax rates in effect for the years in which the differences are expected to reverse. Deferred income tax expense represents the change in net deferred income tax assets and liabilities during the year. The Company’s wholly-owned foreign subsidiaries are comprised of Neogen Europe, Lab M Holdings, Quat-Chem, Neogen do Brasil, Rogama Industria e Comercio Ltda, Neogen Latinoamérica, Neogen Bio-Scientific Technology Co (Shanghai), Neogen Food and Animal Security (India), Neogen Canada, and Neogen Australasia Pty Limited. Based on historical experience, as well as management’s future plans, earnings from these subsidiaries are expected to be re-invested indefinitely for future expansion and working capital needs. Furthermore, Neogen’s domestic operations have historically produced sufficient operating cash flow to mitigate the need to remit foreign earnings. On an annual basis, the Company evaluates the current business environment and whether any new events or other external changes might require a re-evaluation of the decision to indefinitely re-invest foreign earnings. At May 31 , 2019 , unremitted earnings of the Company’s foreign subsidiaries were $55,553,000. On December 22 , 2017 , the Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include a federal corporate tax rate reduced from 35% to 21 the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. 1 , 2018 . See Note 6 to the consolidated financial statements for further information. Research and Development Costs Research and development costs, which consist primarily of compensation costs, administrative expenses and new product development, among other items, are expensed as incurred. Advertising Costs Advertising costs are expensed as incurred and totaled $1,471,000, $ 1,411,000 1,426,000 Net Income Attributable to Neogen per Share Basic net income per share is based on the weighted average number of common shares outstanding during each year. Diluted earnings per share is based on the weighted average number of common shares and dilutive potential common shares outstanding. Our dilutive potential common shares outstanding during the years result entirely from dilutive stock options. The following table presents the net income per share calculations: Year ended May 31 (in thousands, except per share) 2019 2018 2017 Numerator for basic and diluted net income per share - Net Income attributable to Neogen $ 60,176 $ 63,145 $ 43,793 Denominator for basic net income per share - Weighted average shares 51,888 51,358 50,544 Effect of dilutive stock options 537 791 621 Denominator for diluted net income per share 52,425 52,149 51,165 Net income attributable to Neogen per share Basic $ 1.16 $ 1.23 $ 0.87 Diluted $ 1.15 $ 1.21 $ 0.86 At May 31, 2019, 5,000 shares were excluded from the computation of diluted net income per share, as the option exercise prices exceeded the average market price of the common shares. In 2018 and 2017, all shares were included in the computation. Revenue Recognition On June 1 , 2018 , Neogen adopted ASC Topic 606 —Revenue from Contracts with Customers (Topic 606) . This guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Neogen adopted this standard using the full retrospective approach. This approach was chosen to provide appropriate comparisons against the Company’s prior year financial statements; accordingly, historical information for the years ended May 31 , 2018 and 2017 has been adjusted to conform to the new standard. The adoption of Topic 606 did not have a material impact on the consolidated financial statements. Under Topic 606, the Company determines the amount of revenue to be recognized through application of the following steps: • Identification of the contract with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when or as the Company satisfies the performance obligations. Essentially all of Neogen’s revenue is generated through contracts with its customers. A performance obligation is a promise in a contract to transfer a product or service to a customer. The Company generally recognizes revenue at a point in time when all of its performance obligations under the terms of a contract are satisfied. With the adoption of Topic 606, revenue is recognized upon transfer of control of promised products and services in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The collectability of consideration on the contract is reasonably assured before revenue is recognized. To the extent that customer payment has been received before all recognition criteria are met, these revenues are initially deferred in other accruals on the balance sheet and the revenue is recognized in the period that all recognition criteria have been met. In certain situations, Neogen provides rebates, marketing support, credits or incentives to select customers, which are accounted for as variable consideration when estimating the amount of revenue to recognize on a contract. Variable consideration reduces the amount of revenue that is recognized. These variable consideration estimates are updated at the end of each reporting period based on information currently available. The performance obligations in Neogen’s contracts are generally satisfied well within one year of contract inception. In such cases, management has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component. Management has elected to utilize the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred because the amortization period for the prepaid costs that would otherwise have been deferred and amortized is one year or less. The Company accounts for shipping and handling for products as a fulfillment activity when goods are shipped. Revenue is recognized net of any tax collected from customers; the taxes are subsequently remitted to governmental authorities. The Company’s terms and conditions of sale generally do not provide for returns of product or reperformance of service except in the case of quality or warranty issues. These situations are infrequent; due to immateriality of the amount, warranty claims are recorded in the period incurred. The Company derives revenue from two primary sources — product revenue and service revenue. Product revenue consists primarily of shipments of: • Diagnostic test kits, culture media and related products used by food producers and processors to detect harmful natural toxins, foodborne bacteria, allergens and levels of general sanitation; • Consumable products marketed to veterinarians, retailers, livestock producers and animal health product distributors; and • Rodenticides, disinfectants and insecticides to assist in the control of rodents, insects and disease in and around agricultural, food production and other facilities. Revenue for Neogen’s products are recognized and invoiced when the product is shipped to the customer. Service revenue consists primarily of: • Genomic identification and related interpretive bioinformatic services; and • Other commercial laboratory services. Revenues for Neogen’s genomics and commercial laboratory services are recognized and invoiced when the applicable laboratory service is performed and the results are conveyed to the customer. Payment terms for products and services are generally 30 to 60 days. The following table presents disaggregated revenue by major product and service categories for the years ended May 31, 2019 and 2018: Year Ended Increase/ Increase/ May 31, 2019 (Decrease) May 31, 2018 (Decrease) May 31, 2017 (dollars in thousands) Food Safety: Natural Toxins, Allergens & Drug Residues $ 78,373 7 % $ 72,962 3 % $ 70,926 Bacterial & General Sanitation 41,966 10 % 38,156 10 % 34,706 Culture Media & Other 49,857 13 % 44,271 12 % 39,367 Rodenticides, Insecticides & Disinfectants 25,584 7 % 23,821 75 % 13,620 Genomics Services 17,694 16 % 15,267 34 % 11,415 213,474 10 % 194,477 14 % 170,034 Animal Safety: Life Sciences 7,858 (25 )% 10,411 7 % 9,704 Veterinary Instruments & Disposables 44,582 (7 )% 47,749 15 % 41,693 Animal Care & Other 29,941 (3 )% 30,930 11 % 27,891 Rodenticides, Insecticides & Disinfectants 66,389 (2 )% 67,646 (3 )% 69,429 Genomics Services 51,942 11 % 46,717 18 % 39,526 200,712 (1 )% 203,453 8 % 188,243 Total Revenue $ 414,186 4 % $ 397,930 11 % $ 358,277 See Note 9 to the consolidated financial statements for disaggregated revenues by geographical location. Revision of Previously Issued Financial Statements The Company has historically classified certain variable consideration components resulting from volume rebates, distributor support, and other marketing discounts as cost of revenues or sales and marketing expense in its consolidated financial statements of income. These amounts should have been classified as contra revenue in product or service revenues. The Company had determined in prior periods that the misstatements were clearly immaterial, individually and in the aggregate, to each of the reporting periods affected. The Company began properly classifying these items as contra revenues beginning in the fiscal year ended May 31, 2019 and has revised the financials for prior fiscal years 2018 and 2017 to conform to the current period presentation. These immaterial adjustments had no impact on the Company’s operating income, income before taxes, net income or reported earnings per share, and no change to stockholders’ equity. Presented below are the effects of the revisions on the line items within our previously issued consolidated statements of income for the years ended May 31, 2018 and 2017. Revised consolidated statements of income related to these periods are presented in this Form 10-K. Year Ended Year Ended May 31, 2018 May 31, 2017 As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised (in thousands) (in thousands) Revenues Product revenues $ 335,554 $ (4,266 ) $ 331,288 $ 306,512 $ (3,390 ) $ 303,148 Service revenues 66,698 (56 ) 66,642 55,082 73 55,129 Total revenues 402,252 (4,322 ) 397,930 361,594 (3,317 ) 358,277 Cost of revenues Cost of product revenues 174,067 (342 ) 173,725 156,568 (273 ) 156,295 Cost of service revenues 37,933 — 37,933 33,058 — 33,058 Total cost of revenues 212,000 (342 ) 211,658 189,626 (273 ) 189,353 Gross margin 190,252 (3,980 ) 186,272 171,968 (3,044 ) 168,924 Operating expenses Sales and marketing 70,909 (3,980 ) 66,929 62,424 (3,044 ) 59,380 Total operating expenses 120,058 (3,980 ) 116,078 107,023 (3,044 ) 103,979 Operating income 70,194 — 70,194 64,945 — 64,945 The revisions had no impact on our audited consolidated balance sheets as of May 31, 2018 and 2017 and no impact on our audited consolidated statements of equity or audited consolidated statements of cash flows for the fiscal years ended May 31, 2018 and 2017. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
May 31, 2019 | |
Goodwill and Other Intangible Assets | 2. Goodwill and Other Intangible Assets Management has completed the annual impairment analysis of goodwill and intangible assets with indefinite lives using a quantitative assessment as of the first day of the fourth quarter of fiscal years 2019, 2018 and 2017, respectively, and determined that recorded amounts were not considered impaired and that no write-down was necessary. The following table summarizes goodwill by reportable segment: (in thousands) Food Safety Animal Safety Total Balance, May 31, 2017 $ 45,920 $ 58,839 $ 104,759 Goodwill acquired — 757 757 Goodwill adjustments and/or currency (1) (5,919 ) (39 ) (5,958 ) Balance, May 31, 2018 $ 40,001 $ 59,557 $ 99,558 Goodwill acquired 3,796 1,196 4,992 Goodwill adjustments and/or currency (1) (1,244 ) 313 (931 ) Balance, May 31, 2019 $ 42,553 $ 61,066 $ 103,619 (1) Includes final purchase price allocation adjustment. At May 31, 2019, non-amortizable intangible assets included licenses of $569,000, trademarks of $13,717,000 and other intangibles of $1,363,000. At May 31, 2018, non-amortizable intangible assets included licenses of $ 569 12,989 1,380 Amortizable intangible assets consisted of the following and are included in customer-based intangibles and other non-current assets within the consolidated balance sheets: (in thousands) Gross Carrying Amount Less Accumulated Amortization Net Carrying Amount Licenses $ 9,813 $ 3,182 $ 6,631 Covenants not to compete 862 542 320 Patents 8,158 3,570 4,588 Customer-based intangibles 57,634 28,017 29,617 Other products and service-related intangibles 16,464 5,524 10,940 Balance, May 31, 2019 $ 92,931 $ 40,835 $ 52,096 Licenses $ 9,491 $ 2,523 $ 6,968 Covenants not to compete 801 483 318 Patents 9,693 5,013 4,680 Customer-based intangibles 56,420 24,579 31,841 Other products and service-related intangibles 15,299 4,451 10,848 Balance, May 31, 2018 $ 91,704 $ 37,049 $ 54,655 Amortization expense for intangibles totaled $6,309,000, $6,743,000 and $5,908,000 in fiscal years 2019, 2018, and 2017, respectively. The estimated amortization expense for each of the five succeeding fiscal years is as follows: $6,664,000 in 2020, $6,025,000 in 2021, $5,673,000 in 2022, $5,299,000 in 2023 and $4,989,000 in 2024. The amortizable intangible assets useful lives are 2 to 20 years for licenses, 5 to 13 years for covenants not to compete, 5 to 25 years for patents, 5 to 20 years for customer-based intangibles and 5 to 20 years for other product and service-related intangibles, which primarily consist of product formulations. All definite-lived intangibles are amortized on a straight-line basis with the exception of definite-lived customer-based intangibles and product and service-related intangibles, which are amortized on either a straight-line or an accelerated basis. |
Business Combinations
Business Combinations | 12 Months Ended |
May 31, 2019 | |
Business Combination Disclosure [Text Block] | 3. Business Combinations The Consolidated Statements of Income reflect the results of operations for business acquisitions since the respective dates of purchase. All are accounted for using the acquisition method. Goodwill recognized in the acquisitions described below relates primarily to enhancing the strategic platform for the expansion of available product offerings. Fiscal 2017 On December 1, 2016, the Company acquired the stock of Quat-Chem Ltd., a chemical company that manufactures biosecurity products, based in Rochdale, England. Consideration for the purchase was $ 21,606 3,778 4,684 1,243,000 2,526 2,197 1,758 1,058 604 1,889 6,900 249 255 554 This business continues to operate in its current location and is managed by Neogen Europe, reporting within the Food Safety segment. On December 27, 2016, the Company acquired the stock of Rogama Industria e Comercio, Ltda., a company that develops and manufactures rodenticides and insecticides, based near São Paulo, Brazil. Consideration for the purchase was $ 12,423 2,069 1,866 26 960 4,734 2,562 213 2,034 870 5,112 130 83 This business continues to operate in its current location and is managed by Neogen do Brasil, reporting within the Food Safety segment. Fiscal 2018 On September 1, 2017, the Company acquired the assets of The University of Queensland Animal Genetics Laboratory, an animal genomics laboratory located near Brisbane, Australia. This acquisition is intended to accelerate the growth of animal genomics business in Australia and New Zealand. Consideration for the purchase was $ 2,063 468 19 419 1,629 902 Fiscal 2019 On August 1, 2018, the Company acquired the stock of Clarus Labs, Inc., a manufacturer of water testing products. Neogen has distributed Clarus’ Colitag water test to the food and beverage industries since 2004 and this acquisition gives the Company access to sell this product to new markets. Consideration for the purchase was $4,204,000 in cash and approximately $1.3 million of contingent consideration, due semiannually for the first five years, based on an excess net sales formula. The final purchase price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included inventory of $32,000, machinery and equipment of $120,000, accounts payable of $53,000, contingent consideration accrual of $1,256,000, non-current deferred tax liability of $544,000, non-amortizable intangible assets of $878,000, intangible assets of $1,487,000 (with an estimated life of 5-15 years) and the remainder to goodwill (non-deductible for tax purposes). These values are Level 3 fair value measurements. In February 2019, $90,000 was paid to the former owners as contingent consideration from the accrual. Manufacturing of these products was moved to the Company’s Lansing, Michigan location in October 2018, reporting within the Food Safety segment. On September 4, 2018, the Company acquired the assets of Livestock Genetic Services, LLC, a Virginia-based company that specializes in genetic evaluations and data management for cattle breeding organizations. Livestock Genetic Services has been a long-time strategic partner of Neogen and the acquisition enhances the Company’s in-house genetic evaluation capabilities. Consideration for the purchase was $1,100,000 in cash, with $700,000 paid at closing and $400,000 payable to the former owner on September 1, 2019, and approximately $385,000 of contingent consideration, payable over the next three years. The final purchase price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included office equipment of $15,000, contingent consideration accrual of $385,000, intangible assets of $942,000 (with an estimated life of 5-15 years) and the remainder to goodwill (deductible for tax purposes). These values are Level 3 fair value measurements. Services provided by this operation are now performed at the Company’s Lincoln, Nebraska location, reporting within the Animal Safety segment. On January 1, 2019, the Company acquired the assets of Edmonton, Alberta-based Delta Genomics Centre, an animal genomics laboratory in Canada. Delta’s laboratory operations were renamed Neogen Canada and the acquisition is intended to accelerate growth of the Company’s animal genomics business in Canada. Consideration for the purchase was $1,485,000 in cash. The final purchase price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included inventory of $38,000, machinery and equipment of $371,000, unearned revenue liability of $125,000, intangible assets of $532,000 (with an estimated life of 5 to 10 years) and the remainder to goodwill (deductible for tax purposes). These values are Level 3 fair value measurements. Services provided by this operation continue to be performed in Edmonton, reporting within the Animal Safety segment. |
Long Term Debt
Long Term Debt | 12 Months Ended |
May 31, 2019 | |
Long Term Debt | 4. Long-Term Debt The Company has a financing agreement with a bank providing for a $15,000,000 unsecured revolving line of credit, which was amended on November 30, 2018 to extend the maturity from September 30, 2019 September 30, 2021 LIBOR plus 100 |
Equity Compensation Plans
Equity Compensation Plans | 12 Months Ended |
May 31, 2019 | |
Equity Compensation Plans | 5. Equity Compensation Plans Incentive and non-qualified options to purchase shares of common stock may be granted to directors, officers and employees of Neogen under the terms of the stock option plans. These options are granted at an exercise price of not less than the fair market value of the stock on the date of grant. Remaining shares available for grant under stock option plans were 3,997,000, 1,913,000 and 2,525,000 at May 31, 2019, 2018 and 2017, respectively. Options vest ratably over three five five ten (options in thousands) Options Weighted-Average Exercise Price Weighted-Average Grant Date Fair Value Outstanding at May 31, 2016 ( 875 2,775 $ 27.53 $ 7.97 Granted 828 40.68 11.89 Exercised (827 ) 22.82 6.77 Forfeited (77 ) 32.04 9.17 Outstanding at May 31, 2017 ( 661 2,699 32.88 9.51 Granted 829 59.37 14.47 Exercised (821 ) 28.18 8.20 Forfeited (208 ) 39.57 11.12 Outstanding at May 31, 2018 ( 508 2,499 42.63 11.44 Granted 527 62.92 14.91 Exercised (513 ) 31.28 8.92 Forfeited (128 ) 47.08 12.42 Outstanding at May 31, 2019 ( 617 2,385 49.37 12.70 The following is a summary of stock options outstanding at May 31, 2019: Range of Exercise Price Number (in years) Exercise Price Number Exercise Price $ 10.17 37.26 575 1.7 $ 32.07 290 $ 30.62 $ 37.27 40.91 492 2.8 40.45 147 40.44 $ 40.92 59.78 172 4.0 51.03 54 49.19 $ 59.79 61.56 614 3.5 60.43 124 60.43 $ 61.57 68.96 532 4.5 63.03 2 68.36 2,385 3.2 49.37 617 40.68 The weighted average exercise price of shares that were exercisable at May 31, 2019 and 2018 was $40.68 and $31.23, respectively. Compensation expense related to share-based awards was $5,543,000, $4,909,000 and $5,261,000 in fiscal years 2019, 2018 and 2017, respectively. Remaining compensation cost to be expensed in future periods for non-vested options was $15,880,000 at May 31, 2019, with a weighted average expense recognition period of 3.4 years. Year Ended (in thousands) May 31, 2019 May 31, 2018 May 31, 2017 Aggregate intrinsic value of options outstanding $ 22,798 $ 82,649 $ 39,388 Aggregate intrinsic value of options exercisable $ 10,222 $ 22,572 $ 13,929 Aggregate intrinsic value of options exercised $ 21,382 $ 25,844 $ 18,067 Common stock totaling 365,395 of the 712,500 authorized shares are reserved for issuance under the terms of the 2011 Employee Stock Purchase Plan. The plan gives eligible employees the option to purchase common stock at a 5% discount to the lower of the market value of the stock at the beginning or end of each participation period; the discount is recorded in general and administrative expense. Total individual purchases in any year are limited to 10% of compensation. Shares purchased by employees were 18,330 in fiscal 2019, 22,127 in fiscal 2018 and 24,953 in fiscal 2017. |
Income Taxes
Income Taxes | 12 Months Ended |
May 31, 2019 | |
Income Taxes | 6. Income Taxes Income before income taxes by source consists of the following amounts: Year ended May 31 (in thousands) 2019 2018 2017 U.S. $ 58,479 $ 62,310 $ 55,171 Foreign 14,480 11,155 11,502 $ 72,959 $ 73,465 $ 66,673 The provision for income taxes consists of the following: Year ended May 31 (in thousands) 2019 2018 2017 Current: U.S. Taxes $ 8,451 $ 10,129 $ 20,259 Foreign 3,758 3,066 2,514 Deferred 574 (2,945 ) (73 ) Provision for Income Taxes $ 12,783 $ 10,250 $ 22,700 The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense is as follows: Year ended May 31 (in thousands) 2019 2018 2017 Tax at U.S. statutory rate $ 15,321 $ 21,459 $ 23,336 Section 199 domestic production deduction — (1,167 ) (1,057 ) Global intangible low-taxed income (GILTI) 840 — — Foreign derived intangible income deduction (FDII) (1,531 ) — — Foreign rate differential 495 (461 ) (1,247 ) Subpart F income 842 816 996 Tax benefits on stock-based compensation (2,586 ) (4,816 ) (535 ) FIN 48 reserve adjustments 13 (1,035 ) 576 Provision for state income taxes, net of federal benefit 1,251 975 972 Remeasurement of deferred taxes — (6,022 ) — Transition tax on foreign earnings and profits — 1,223 — Tax credits (1,726 ) (1,151 ) (1,213 ) Other (136 ) 429 872 $ 12,783 $ 10,250 $ 22,700 On June 1, 2017, the Company adopted ASU No. 2016-09—Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting for share-based payments to employees. The guidance requires the recognition of the income effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid-in capital pools. The guidance also allows for a policy election to account for forfeitures as they occur, rather than on an estimated basis, and requires that excess tax benefits be classified as an operating activity on the Statement of Cash Flows. The adoption of this ASU decreased income tax expense by $2.6 million in fiscal 2019 and by $ million in fiscal . On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the U.S. Tax Act) was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% In fiscal 2018, the Company recorded a net benefit of $4.8 million related to the U.S. Tax Act, due to the impact of the reduction in the tax rate on deferred tax assets and liabilities of $ 6.0 $1.2 Foreign tax credits, primarily offsetting taxes associated with Subpart F and GILTI income, were $1,296,000, $791,000 and $729,000 in fiscal years 2019, 2018 and 2017, respectively. The Company’s U.S. R & D credit was $430,000 in fiscal 2019 and $422,000 in fiscal years 2018 and 2017. Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred income tax liabilities and assets are as follows: Year ended May 31 (in thousands) 2019 2018 Deferred income tax liabilities Indefinite and long-lived assets $ (18,963 ) $ (17,503 ) Prepaid expenses (586 ) (573 ) (19,549 ) (18,076 ) Deferred income tax assets Stock Options 1,497 1,489 Inventories and accounts receivable 1,315 1,593 Tax loss carryforwards 417 134 Valuation allowance on tax loss carryforwards (407) — Accrued expenses and other 1,109 757 3,931 3,973 Net deferred income tax liabilities $ (15,618 ) $ (14,103 ) The Company is no longer subject to examination by the Internal Revenue Service for 2016 and earlier tax years. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
May 31, 2019 | |
Commitments and Contingencies | 7. 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 currently utilizes a pump and treat remediation strategy, which includes semi-annual monitoring and reporting, consulting, and maintenance of monitoring wells. Neogen expenses these annual costs of remediation, which have ranged from $38,000 to $131,000 per year over the past five $916,000 15 years; $100,000 The Company has agreements with unrelated third parties that provide for the payment of license fees and royalties on the sale of certain products. Royalty expense, recorded in sales and marketing, under the terms of these agreements was $2,795,000, $2,876,000 and $2,659,000 for fiscal years 2019, 2018 and 2017, respectively. Some of these agreements provide for guaranteed minimum royalty payments to be paid each fiscal year by the Company for certain technologies. Future minimum royalty payments are as follows: 2020—$183,000, 2021—$191,000, 2022—$114,000, 2023—$109,000 and 2024—$109,000. Neogen leases office and manufacturing facilities under non-cancelable operating leases. Rent expense for fiscal years 2019, 2018 and 2017 was $871,000, $799,000 and $729,000, respectively. Future fiscal year minimum rental payments for these leases over their remaining terms are as follows: 2020—$1,112,000, 2021—$810,000, 2022—$297,000, 2023—$101,000, and 2024 and later—$0. 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. |
Defined Contribution Benefit Pl
Defined Contribution Benefit Plan | 12 Months Ended |
May 31, 2019 | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | 8. Defined Contribution Benefit Plan The Company maintains a defined contribution 401(k) benefit plan covering substantially all domestic employees. Employees are permitted to defer compensation up to IRS limits, with Neogen matching 100% of the first 3% of deferred compensation and 50% of the next 2% deferred. expense under this plan was $1,361,000, $1,325,000, and $1,259,000 in fiscal years 2019, 2018 and 2017, respectively. |
Segment Information
Segment Information | 12 Months Ended |
May 31, 2019 | |
Segment Information | 9. Segment Information The Company has two Neogen’s international operations in the United Kingdom, Mexico, Brazil, China and India originally focused on the sales and marketing of our Food Safety products, and each of these units reports through the Food Safety segment. The accounting policies of each of the segments are the same as those described in Note 1. Segment information is as follows: (in thousands) Food Safety Animal Safety Corporate and Eliminations (1) Total Fiscal 2019 Product revenues to external customers $ 190,675 $ 148,764 $ — $ 339,439 Service revenues to external customers 22,799 51,948 — 74,747 Total revenues to external customers 213,474 200,712 — 414,186 Operating income (loss) 39,020 33,875 (4,801 ) 68,094 Depreciation and amortization 9,525 8,099 — 17,624 Total Assets 206,267 221,950 267,523 695,740 Expenditures for long-lived assets 8,916 5,745 — 14,661 Fiscal 2018 Product revenues to external customers $ 174,553 $ 156,735 $ — $ 331,288 Service revenues to external customers 19,924 46,718 — 66,642 Total revenues to external customers 194,477 203,453 — 397,930 Operating income (loss) 34,561 39,529 (3,896 ) 70,194 Depreciation and amortization 9,083 7,975 — 17,058 Total Assets 186,570 220,629 210,810 618,009 Expenditures for long-lived assets 10,538 10,408 — 20,946 Fiscal 2017 Product revenues to external customers $ 154,431 $ 148,717 $ — $ 303,148 Service revenues to external customers 15,603 39,526 — 55,129 Total revenues to external customers 170,034 188,243 — 358,277 Operating income (loss) 33,971 34,841 (3,867 ) 64,945 Depreciation and amortization 7,088 7,603 — 14,691 Total Assets 190,895 210,927 126,587 528,409 Expenditures for long-lived assets 10,332 4,246 — 14,578 (1) Includes corporate assets, including cash and cash equivalents, marketable securities, current and deferred tax accounts, and overhead expenses not allocated to specific business segments. Also includes the elimination of intersegment transactions and non-controlling interests. The following table presents the Company’s revenue disaggregated by geographical location: Year ended May 31 2019 2018 (in thousands) Revenues by Geographic Location Domestic $ 248,304 $ 248,236 International 165,882 149,694 Total revenue 414,186 397,930 |
Stock Repurchase
Stock Repurchase | 12 Months Ended |
May 31, 2019 | |
Stock Purchase | 10. Stock Repurchase In October 2018, the Company’s Board of Directors passed a resolution canceling the Company’s prior stock buyback program, which had been approved in December 2008, and authorized a new program to purchase, subject to market conditions, up to 3,000,000 shares of the Company’s common stock. In December 2018, the Company purchased 50,000 shares under the new program in negotiated and open market transactions for a total price, including commissions, of $3,134,727. Shares |
Summary of Quarterly Data (Unau
Summary of Quarterly Data (Unaudited) | 12 Months Ended |
May 31, 2019 | |
Quarterly Financial Information [Text Block] | 11. Summary of Quarterly Data (Unaudited) Quarter Ended (in thousands, except per share) August 2018 November 2018 February 2019 May 2019 Total Revenue $ 99,626 $ 107,098 $ 97,700 $ 109,762 Gross Margin 46,729 50,033 44,628 50,530 Net income 15,237 16,051 13,073 15,815 Basic net income per share 0.29 0.31 0.25 0.31 Diluted net income per share 0.29 0.31 0.25 0.30 Quarter Ended (in thousands, except per share) August 2017 November 2017 February 2018 May 2018 Total Revenue $ 94,209 $ 100,698 $ 94,903 $ 108,120 Gross Margin 44,924 48,249 44,601 48,498 Net income 11,936 17,153 16,581 17,545 Net income attributable to Neogen 11,914 17,100 16,586 17,545 Basic net income per share 0.23 0.33 0.32 0.34 Diluted net income per share 0.23 0.33 0.32 0.33 Quarterly net income per share is based on weighted-average shares outstanding and potentially dilutive stock options for the specific period, and as a result, will not necessarily aggregate to total net income per share as computed for the year as disclosed in the consolidated statements of income. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
May 31, 2019 | |
Nature of Operations | Nature of Operations Neogen Corporation develops, manufactures and markets a diverse line of products and services dedicated to food and animal safety. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of Neogen Corporation and its subsidiaries, all of which are wholly-owned as of May 31, 2019. Neogen Latinoamérica was 100% 90% to 100%. 10% All intercompany accounts and transactions have been eliminated in consolidation. Share and per share amounts reflect the December 29, 2017 4-for-3 stock split as if it took place at the beginning of the period presented. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards Revenue Recognition On June 1, 2018, the Company adopted ASU No. 2014-09—Revenue from Contracts with Customers (Topic 606). Refer to the Revenue Recognition section of Note 1 to the consolidated financial statements for further information. Classification of Cash Receipts and Payments In August 2016 , the FASB issued ASU No. 2016-15—Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under FASB Accounting Standards Codification (FASB ASC) 230, Statement of Cash Flows. The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this ASU on June 1, 2018; the impact on its consolidated financial statements was immaterial. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted Leases In February 2016 , the FASB issued ASU No. 2016-02—Leases to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessor have not significantly changed from previous U.S. GAAP. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. Modified retrospective application is required with certain practical expedients. The Company will adopt this ASU on June 1, 2019. The Company has performed a review of its lessee and lessor arrangements, including revenue through leasing programs as well as lease expenses, which primarily result from operating lease arrangements at most of the Company’s facilities. The Company will record a right-of-use (ROU) asset and corresponding lease liability on the balance sheet in the first quarter of fiscal 2020 and has determined the impact of this pronouncement on its consolidated financial condition and results of operations is immaterial. Financial Instruments- Credit Losses In June 2016 , the FASB issued ASU No. 2016-13—Measurement of Credit Losses on Financial Instruments, which changes how companies measure credit losses on most financial instruments measured at amortized cost and certain other instruments, such as loans, receivables and held-to-maturity debt securities. Rather than generally recognizing credit losses when it is probable that the loss has been incurred, the revised guidance requires companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s contractual life. ASU 2016-13 is effective for fiscal periods beginning after December 15, 2019 and must be adopted as a cumulative effect adjustment to retained earnings. Early adoption is permitted. The Company does not believe adoption of this guidance will have an impact on its consolidated financial statements. Fair Value Measurements In August 2018 , the FASB issued ASU 2018-3, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements of fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company does not believe adoption of this guidance will have an impact on its consolidated financial statements. Cloud Computing Implementation Cost In August 2018 , the FASB issued ASU 2018-15, Intangible-Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Cost Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company does not believe adoption of this guidance will have an impact on its consolidated financial statements. |
Comprehensive Income | Comprehensive Income Comprehensive income represents net income and any revenues, expenses, gains and losses that, under U.S. generally accepted accounting principles, are excluded from net income and recognized directly as a component of equity. Accumulated other comprehensive income (loss) consists solely of foreign currency translation adjustments. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments other than cash equivalents and marketable securities, which include accounts receivable and accounts payable, approximate fair value based on either their short maturity or current terms for similar instruments. Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of bank demand accounts, savings deposits, certificates of deposit and commercial paper with original maturities of 90 days or less. s. $ 83,074,000 at May 31 , 2019 and 2018, res pectively. T he carrying value of these assets approximates fair value due to the short maturity of these instruments and meets the Level 1 criteria. Cash held by foreign subsidiaries was $8,711,000 and $7,101,000 at May 31, 2019 and 2018, respectively. |
Marketable Securities | Marketable Securities The Company has marketable securities held by banks or broker-dealers at May 31, 2019, consisting of short-term domestic certificates of deposit of $17,681,000 and commercial paper rated at least A-1/P-1 (short-term) and A/A2 (long-term) with maturities between 91 days and two years of $208,155,000. Total outstanding marketable securities at May 31, 2019 was $225,836,000; there were $127,736,000 in marketable securities outstanding at May 31, 2018. These securities are classified as available for sale. The primary objective of management’s short-term investment activity is to preserve capital for the purpose of funding operations, capital expenditures and business acquisitions; short-term investments are not entered into for trading or speculative purposes. These securities are recorded at fair value (that approximates cost) based on recent trades or pricing models and therefore meet the Level 2 criteria. Interest income on these investments is recorded within Other Income on the income statement. Marketable Securities as of May 31, 2019 and 2018 are listed below by classification and remaining maturities. Year ended May 31 Maturity 2019 2018 US Treasuries 0 – 90 days 2,470,000 19,910,000 91 – 180 days — — 181 days – 1 year 2,435,000 — 1 – 2 years 2,505,000 — Commercial Paper 0 – 90 days 84,338,000 47,740,000 91 – 180 days 47,960,000 32,673,000 181 days – 1 year 34,369,000 — 1 – 2 years 34,078,000 — Certificates of Deposit 0 – 90 days 7,732,000 5,446,000 91 – 180 days 5,000,000 8,747,000 181 days – 1 year 750,000 13,220,000 1 – 2 years 4,199,000 — Total Marketable Securities 225,836,000 127,736,000 |
Use of Estimates | Use of Estimates 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 disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates the estimates, including, but not limited to, variable consideration related to revenue recognition, allowances for doubtful accounts, the market value of, and demand for, inventories, stock-based compensation, provision for income taxes and related balance sheet accounts, accruals, goodwill and other 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. |
Accounts Receivable and Concentrations of Credit Risk | Accounts Receivable and Concentrations of Credit Risk Financial instruments which potentially subject Neogen to concentrations of credit risk consist principally of accounts receivable. 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 doubtful accounts on accounts receivable is established based upon factors surrounding the credit risk of specific customers, historical trends and other information. Collateral or other security is generally not required for accounts receivable. Once a receivable balance has been determined to be uncollectible, that amount is charged against the allowance for doubtful accounts. No customer accounted for more than 10% of accounts receivable at May 31, 2019 or 2018, respectively. The activity in the allowance for doubtful accounts was as follows: Year ended May 31 (in thousands) 2019 2018 2017 Beginning Balance $ 1,550 $ 2,000 $ 1,500 Provision 263 152 645 Recoveries 38 40 25 Write-offs (151 ) (642 ) (170 ) Ending Balance $ 1,700 $ 1,550 $ 2,000 |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value, determined on the first-in, first-out method. The components of inventories were as follows: Year ended May 31 (in thousands) 2019 2018 Raw Materials $ 41,594 $ 36,702 Work-in-process 5,581 5,993 Finished goods 38,817 33,310 $ 85,992 $ 76,005 The Company’s inventories are analyzed for slow moving, expired and obsolete items on a quarterly basis and the valuation allowance is adjusted as required. The valuation allowance for inventory was $2,250,000 and $2,200,000 at May 31, 2019 and 2018, respectively. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost. Expenditures for major improvements are capitalized while repairs and maintenance are charged to expense. Depreciation is provided on the straight-line method over the estimated useful lives of the respective assets, which are generally seven to 39 years for buildings and improvements and three to ten years for furniture, fixtures, machinery and equipment. Depreciation expense was $11,315,000, $10,315,000 and $8,783,000 in fiscal years 2019, 2018 and 2017, respectively. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over fair value of tangible net assets of acquired businesses after amounts are allocated to other identifiable intangible assets. Other intangible assets include customer relationships, trademarks, licenses, trade names, covenants not-to-compete and patents. Amortizable intangible assets are amortized on either an accelerated or a straight-line basis, generally over 5 to 25 years. and other non-amortizable intangible assets annually, or when indications of impairment exist, to determine if such assets may be impaired by performing a quantitative assessment. If the carrying amounts of these assets are deemed to be less than fair value based upon a discounted cash flow analysis and comparison to comparable earnings multiples of peer companies, such assets are reduced to their estimated fair value and a charge is made to operations. The remaining weighted-average amortization period for intangibles was 10 31 , 2019 and May 31 , 2018 , respectively. |
Long-lived Assets | Long-lived Assets Management reviews the carrying values of its long-lived assets to be held and used, including definite-lived intangible assets, for possible impairment whenever events or changes in business conditions warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated separately identifiable undiscounted cash flows over the remaining useful life of the asset are less than the carrying value of the asset. In such an event, fair value is determined using discounted cash flows, and if lower than the carrying value, impairment is recognized through a charge to operations. |
Reclassifications | Reclassifications Certain amounts in the fiscal 2018 and 2017 financial statements have been reclassified to conform with the fiscal 2019 presentation. |
Equity Compensation Plans | Equity Compensation Plans At May 31, 2019, the Company had stock option plans which are described more fully in Note 5 to the consolidated financial statements. The weighted-average fair value per share of stock options granted during fiscal years 2019, 2018 and 2017, estimated on the date of grant using the Black-Scholes option pricing model, was $14.91, $14.47 and $11.89, respectively. The fair value of stock options granted was estimated using the following weighted-average assumptions: Year ended May 31 2019 2018 2017 Risk-free interest rate 2.6 % 1.6 % 1.2 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected stock volatility 27.0 % 27.7 % 35.2 % Expected option life 3.5 4.0 4.0 The risk-free interest rate for periods within the expected life of options granted is based on the United States Treasury yield curve in effect at the time of grant. Expected stock price volatility is based on historical volatility of the Company’s stock. The expected option life, representing the period of time that options granted are expected to be outstanding, is based on historical option exercise and employee termination data. Prior to the fiscal 2017 grants, Neogen recognized the fair value of stock options using the accelerated method over their requisite service periods which management has determined to be the vesting periods; for options granted in fiscal years 2019, 2018 and 2017, the Company recognized the fair value of stock options using the straight-line method. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs that are charged to and reimbursed by the customer are recognized as revenues, while the related expenses incurred by Neogen are recorded in sales and marketing expense; these expenses totaled $13,503,000, $ 12,147 10,185 |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and for tax credit carryforwards and are measured using the enacted tax rates in effect for the years in which the differences are expected to reverse. Deferred income tax expense represents the change in net deferred income tax assets and liabilities during the year. The Company’s wholly-owned foreign subsidiaries are comprised of Neogen Europe, Lab M Holdings, Quat-Chem, Neogen do Brasil, Rogama Industria e Comercio Ltda, Neogen Latinoamérica, Neogen Bio-Scientific Technology Co (Shanghai), Neogen Food and Animal Security (India), Neogen Canada, and Neogen Australasia Pty Limited. Based on historical experience, as well as management’s future plans, earnings from these subsidiaries are expected to be re-invested indefinitely for future expansion and working capital needs. Furthermore, Neogen’s domestic operations have historically produced sufficient operating cash flow to mitigate the need to remit foreign earnings. On an annual basis, the Company evaluates the current business environment and whether any new events or other external changes might require a re-evaluation of the decision to indefinitely re-invest foreign earnings. At May 31 , 2019 , unremitted earnings of the Company’s foreign subsidiaries were $55,553,000. On December 22 , 2017 , the Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include a federal corporate tax rate reduced from 35% to 21 the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. 1 , 2018 . See Note 6 to the consolidated financial statements for further information. |
Research and Development Costs | Research and Development Costs Research and development costs, which consist primarily of compensation costs, administrative expenses and new product development, among other items, are expensed as incurred. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and totaled $1,471,000, $ 1,411,000 1,426,000 |
Net Income Attributable to Neogen per Share | Net Income Attributable to Neogen per Share Basic net income per share is based on the weighted average number of common shares outstanding during each year. Diluted earnings per share is based on the weighted average number of common shares and dilutive potential common shares outstanding. Our dilutive potential common shares outstanding during the years result entirely from dilutive stock options. The following table presents the net income per share calculations: Year ended May 31 (in thousands, except per share) 2019 2018 2017 Numerator for basic and diluted net income per share - Net Income attributable to Neogen $ 60,176 $ 63,145 $ 43,793 Denominator for basic net income per share - Weighted average shares 51,888 51,358 50,544 Effect of dilutive stock options 537 791 621 Denominator for diluted net income per share 52,425 52,149 51,165 Net income attributable to Neogen per share Basic $ 1.16 $ 1.23 $ 0.87 Diluted $ 1.15 $ 1.21 $ 0.86 At May 31, 2019, 5,000 shares were excluded from the computation of diluted net income per share, as the option exercise prices exceeded the average market price of the common shares. In 2018 and 2017, all shares were included in the computation. |
Revenue Recognition | Revenue Recognition On June 1 , 2018 , Neogen adopted ASC Topic 606 —Revenue from Contracts with Customers (Topic 606) . This guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Neogen adopted this standard using the full retrospective approach. This approach was chosen to provide appropriate comparisons against the Company’s prior year financial statements; accordingly, historical information for the years ended May 31 , 2018 and 2017 has been adjusted to conform to the new standard. The adoption of Topic 606 did not have a material impact on the consolidated financial statements. Under Topic 606, the Company determines the amount of revenue to be recognized through application of the following steps: • Identification of the contract with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when or as the Company satisfies the performance obligations. Essentially all of Neogen’s revenue is generated through contracts with its customers. A performance obligation is a promise in a contract to transfer a product or service to a customer. The Company generally recognizes revenue at a point in time when all of its performance obligations under the terms of a contract are satisfied. With the adoption of Topic 606, revenue is recognized upon transfer of control of promised products and services in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The collectability of consideration on the contract is reasonably assured before revenue is recognized. To the extent that customer payment has been received before all recognition criteria are met, these revenues are initially deferred in other accruals on the balance sheet and the revenue is recognized in the period that all recognition criteria have been met. In certain situations, Neogen provides rebates, marketing support, credits or incentives to select customers, which are accounted for as variable consideration when estimating the amount of revenue to recognize on a contract. Variable consideration reduces the amount of revenue that is recognized. These variable consideration estimates are updated at the end of each reporting period based on information currently available. The performance obligations in Neogen’s contracts are generally satisfied well within one year of contract inception. In such cases, management has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component. Management has elected to utilize the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred because the amortization period for the prepaid costs that would otherwise have been deferred and amortized is one year or less. The Company accounts for shipping and handling for products as a fulfillment activity when goods are shipped. Revenue is recognized net of any tax collected from customers; the taxes are subsequently remitted to governmental authorities. The Company’s terms and conditions of sale generally do not provide for returns of product or reperformance of service except in the case of quality or warranty issues. These situations are infrequent; due to immateriality of the amount, warranty claims are recorded in the period incurred. The Company derives revenue from two primary sources — product revenue and service revenue. Product revenue consists primarily of shipments of: • Diagnostic test kits, culture media and related products used by food producers and processors to detect harmful natural toxins, foodborne bacteria, allergens and levels of general sanitation; • Consumable products marketed to veterinarians, retailers, livestock producers and animal health product distributors; and • Rodenticides, disinfectants and insecticides to assist in the control of rodents, insects and disease in and around agricultural, food production and other facilities. Revenue for Neogen’s products are recognized and invoiced when the product is shipped to the customer. Service revenue consists primarily of: • Genomic identification and related interpretive bioinformatic services; and • Other commercial laboratory services. Revenues for Neogen’s genomics and commercial laboratory services are recognized and invoiced when the applicable laboratory service is performed and the results are conveyed to the customer. Payment terms for products and services are generally 30 to 60 days. The following table presents disaggregated revenue by major product and service categories for the years ended May 31, 2019 and 2018: Year Ended Increase/ Increase/ May 31, 2019 (Decrease) May 31, 2018 (Decrease) May 31, 2017 (dollars in thousands) Food Safety: Natural Toxins, Allergens & Drug Residues $ 78,373 7 % $ 72,962 3 % $ 70,926 Bacterial & General Sanitation 41,966 10 % 38,156 10 % 34,706 Culture Media & Other 49,857 13 % 44,271 12 % 39,367 Rodenticides, Insecticides & Disinfectants 25,584 7 % 23,821 75 % 13,620 Genomics Services 17,694 16 % 15,267 34 % 11,415 213,474 10 % 194,477 14 % 170,034 Animal Safety: Life Sciences 7,858 (25 )% 10,411 7 % 9,704 Veterinary Instruments & Disposables 44,582 (7 )% 47,749 15 % 41,693 Animal Care & Other 29,941 (3 )% 30,930 11 % 27,891 Rodenticides, Insecticides & Disinfectants 66,389 (2 )% 67,646 (3 )% 69,429 Genomics Services 51,942 11 % 46,717 18 % 39,526 200,712 (1 )% 203,453 8 % 188,243 Total Revenue $ 414,186 4 % $ 397,930 11 % $ 358,277 See Note 9 to the consolidated financial statements for disaggregated revenues by geographical location. |
Revision of Previously Issued Financial Statements | Revision of Previously Issued Financial Statements The Company has historically classified certain variable consideration components resulting from volume rebates, distributor support, and other marketing discounts as cost of revenues or sales and marketing expense in its consolidated financial statements of income. These amounts should have been classified as contra revenue in product or service revenues. The Company had determined in prior periods that the misstatements were clearly immaterial, individually and in the aggregate, to each of the reporting periods affected. The Company began properly classifying these items as contra revenues beginning in the fiscal year ended May 31, 2019 and has revised the financials for prior fiscal years 2018 and 2017 to conform to the current period presentation. These immaterial adjustments had no impact on the Company’s operating income, income before taxes, net income or reported earnings per share, and no change to stockholders’ equity. Presented below are the effects of the revisions on the line items within our previously issued consolidated statements of income for the years ended May 31, 2018 and 2017. Revised consolidated statements of income related to these periods are presented in this Form 10-K. Year Ended Year Ended May 31, 2018 May 31, 2017 As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised (in thousands) (in thousands) Revenues Product revenues $ 335,554 $ (4,266 ) $ 331,288 $ 306,512 $ (3,390 ) $ 303,148 Service revenues 66,698 (56 ) 66,642 55,082 73 55,129 Total revenues 402,252 (4,322 ) 397,930 361,594 (3,317 ) 358,277 Cost of revenues Cost of product revenues 174,067 (342 ) 173,725 156,568 (273 ) 156,295 Cost of service revenues 37,933 — 37,933 33,058 — 33,058 Total cost of revenues 212,000 (342 ) 211,658 189,626 (273 ) 189,353 Gross margin 190,252 (3,980 ) 186,272 171,968 (3,044 ) 168,924 Operating expenses Sales and marketing 70,909 (3,980 ) 66,929 62,424 (3,044 ) 59,380 Total operating expenses 120,058 (3,980 ) 116,078 107,023 (3,044 ) 103,979 Operating income 70,194 — 70,194 64,945 — 64,945 The revisions had no impact on our audited consolidated balance sheets as of May 31, 2018 and 2017 and no impact on our audited consolidated statements of equity or audited consolidated statements of cash flows for the fiscal years ended May 31, 2018 and 2017. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
May 31, 2019 | |
Schedule Of Classification And Maturities Of Marketable Securities | Marketable Securities as of May 31, 2019 and 2018 are listed below by classification and remaining maturities. Year ended May 31 Maturity 2019 2018 US Treasuries 0 – 90 days 2,470,000 19,910,000 91 – 180 days — — 181 days – 1 year 2,435,000 — 1 – 2 years 2,505,000 — Commercial Paper 0 – 90 days 84,338,000 47,740,000 91 – 180 days 47,960,000 32,673,000 181 days – 1 year 34,369,000 — 1 – 2 years 34,078,000 — Certificates of Deposit 0 – 90 days 7,732,000 5,446,000 91 – 180 days 5,000,000 8,747,000 181 days – 1 year 750,000 13,220,000 1 – 2 years 4,199,000 — Total Marketable Securities 225,836,000 127,736,000 |
Fair Value of Stock Options Granted, Estimated using Weighted-Average Assumptions | The fair value of stock options granted was estimated using the following weighted-average assumptions: Year ended May 31 2019 2018 2017 Risk-free interest rate 2.6 % 1.6 % 1.2 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected stock volatility 27.0 % 27.7 % 35.2 % Expected option life 3.5 4.0 4.0 |
Calculation of Net Income Per Share | The following table presents the net income per share calculations: Year ended May 31 (in thousands, except per share) 2019 2018 2017 Numerator for basic and diluted net income per share - Net Income attributable to Neogen $ 60,176 $ 63,145 $ 43,793 Denominator for basic net income per share - Weighted average shares 51,888 51,358 50,544 Effect of dilutive stock options 537 791 621 Denominator for diluted net income per share 52,425 52,149 51,165 Net income attributable to Neogen per share Basic $ 1.16 $ 1.23 $ 0.87 Diluted $ 1.15 $ 1.21 $ 0.86 |
Disaggregated Revenue | The following table presents the Company’s revenue disaggregated by geographical location: Year ended May 31 2019 2018 (in thousands) Revenues by Geographic Location Domestic $ 248,304 $ 248,236 International 165,882 149,694 Total revenue 414,186 397,930 |
Summary of Impact of Adoption of New Accounting Pronouncements on Unaudited Consolidated Statement of Income | Presented below are the effects of the revisions on the line items within our previously issued consolidated statements of income for the years ended May 31, 2018 and 2017. Revised consolidated statements of income related to these periods are presented in this Form 10-K. Year Ended Year Ended May 31, 2018 May 31, 2017 As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised (in thousands) (in thousands) Revenues Product revenues $ 335,554 $ (4,266 ) $ 331,288 $ 306,512 $ (3,390 ) $ 303,148 Service revenues 66,698 (56 ) 66,642 55,082 73 55,129 Total revenues 402,252 (4,322 ) 397,930 361,594 (3,317 ) 358,277 Cost of revenues Cost of product revenues 174,067 (342 ) 173,725 156,568 (273 ) 156,295 Cost of service revenues 37,933 — 37,933 33,058 — 33,058 Total cost of revenues 212,000 (342 ) 211,658 189,626 (273 ) 189,353 Gross margin 190,252 (3,980 ) 186,272 171,968 (3,044 ) 168,924 Operating expenses Sales and marketing 70,909 (3,980 ) 66,929 62,424 (3,044 ) 59,380 Total operating expenses 120,058 (3,980 ) 116,078 107,023 (3,044 ) 103,979 Operating income 70,194 — 70,194 64,945 — 64,945 |
Operating Segments | |
Disaggregated Revenue | The following table presents disaggregated revenue by major product and service categories for the years ended May 31, 2019 and 2018: Year Ended Increase/ Increase/ May 31, 2019 (Decrease) May 31, 2018 (Decrease) May 31, 2017 (dollars in thousands) Food Safety: Natural Toxins, Allergens & Drug Residues $ 78,373 7 % $ 72,962 3 % $ 70,926 Bacterial & General Sanitation 41,966 10 % 38,156 10 % 34,706 Culture Media & Other 49,857 13 % 44,271 12 % 39,367 Rodenticides, Insecticides & Disinfectants 25,584 7 % 23,821 75 % 13,620 Genomics Services 17,694 16 % 15,267 34 % 11,415 213,474 10 % 194,477 14 % 170,034 Animal Safety: Life Sciences 7,858 (25 )% 10,411 7 % 9,704 Veterinary Instruments & Disposables 44,582 (7 )% 47,749 15 % 41,693 Animal Care & Other 29,941 (3 )% 30,930 11 % 27,891 Rodenticides, Insecticides & Disinfectants 66,389 (2 )% 67,646 (3 )% 69,429 Genomics Services 51,942 11 % 46,717 18 % 39,526 200,712 (1 )% 203,453 8 % 188,243 Total Revenue $ 414,186 4 % $ 397,930 11 % $ 358,277 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
May 31, 2019 | |
Goodwill by Business Segment | The following table summarizes goodwill by reportable segment: (in thousands) Food Safety Animal Safety Total Balance, May 31, 2017 $ 45,920 $ 58,839 $ 104,759 Goodwill acquired — 757 757 Goodwill adjustments and/or currency (1) (5,919 ) (39 ) (5,958 ) Balance, May 31, 2018 $ 40,001 $ 59,557 $ 99,558 Goodwill acquired 3,796 1,196 4,992 Goodwill adjustments and/or currency (1) (1,244 ) 313 (931 ) Balance, May 31, 2019 $ 42,553 $ 61,066 $ 103,619 (1) Includes final purchase price allocation adjustment. |
Amortizable of Intangible Assets | Amortizable intangible assets consisted of the following and are included in customer-based intangibles and other non-current assets within the consolidated balance sheets: (in thousands) Gross Carrying Amount Less Accumulated Amortization Net Carrying Amount Licenses $ 9,813 $ 3,182 $ 6,631 Covenants not to compete 862 542 320 Patents 8,158 3,570 4,588 Customer-based intangibles 57,634 28,017 29,617 Other products and service-related intangibles 16,464 5,524 10,940 Balance, May 31, 2019 $ 92,931 $ 40,835 $ 52,096 Licenses $ 9,491 $ 2,523 $ 6,968 Covenants not to compete 801 483 318 Patents 9,693 5,013 4,680 Customer-based intangibles 56,420 24,579 31,841 Other products and service-related intangibles 15,299 4,451 10,848 Balance, May 31, 2018 $ 91,704 $ 37,049 $ 54,655 |
Equity Compensation Plans (Tabl
Equity Compensation Plans (Tables) | 12 Months Ended |
May 31, 2019 | |
Stock Option Activity | Incentive and non-qualified options to purchase shares of common stock may be granted to directors, officers and employees of Neogen under the terms of the stock option plans. These options are granted at an exercise price of not less than the fair market value of the stock on the date of grant. Remaining shares available for grant under stock option plans were 3,997,000, 1,913,000 and 2,525,000 at May 31, 2019, 2018 and 2017, respectively. Options vest ratably over three five five ten (options in thousands) Options Weighted-Average Exercise Price Weighted-Average Grant Date Fair Value Outstanding at May 31, 2016 ( 875 2,775 $ 27.53 $ 7.97 Granted 828 40.68 11.89 Exercised (827 ) 22.82 6.77 Forfeited (77 ) 32.04 9.17 Outstanding at May 31, 2017 ( 661 2,699 32.88 9.51 Granted 829 59.37 14.47 Exercised (821 ) 28.18 8.20 Forfeited (208 ) 39.57 11.12 Outstanding at May 31, 2018 ( 508 2,499 42.63 11.44 Granted 527 62.92 14.91 Exercised (513 ) 31.28 8.92 Forfeited (128 ) 47.08 12.42 Outstanding at May 31, 2019 ( 617 2,385 49.37 12.70 |
Summary of Stock Options Outstanding | The following is a summary of stock options outstanding at May 31, 2019: Range of Exercise Price Number (in years) Exercise Price Number Exercise Price $ 10.17 37.26 575 1.7 $ 32.07 290 $ 30.62 $ 37.27 40.91 492 2.8 40.45 147 40.44 $ 40.92 59.78 172 4.0 51.03 54 49.19 $ 59.79 61.56 614 3.5 60.43 124 60.43 $ 61.57 68.96 532 4.5 63.03 2 68.36 2,385 3.2 49.37 617 40.68 |
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options Intrinsic Value | Year Ended (in thousands) May 31, 2019 May 31, 2018 May 31, 2017 Aggregate intrinsic value of options outstanding $ 22,798 $ 82,649 $ 39,388 Aggregate intrinsic value of options exercisable $ 10,222 $ 22,572 $ 13,929 Aggregate intrinsic value of options exercised $ 21,382 $ 25,844 $ 18,067 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
May 31, 2019 | |
Disclosure Text Block [Abstract] | |
Income Before Income Taxes | Income before income taxes by source consists of the following amounts: Year ended May 31 (in thousands) 2019 2018 2017 U.S. $ 58,479 $ 62,310 $ 55,171 Foreign 14,480 11,155 11,502 $ 72,959 $ 73,465 $ 66,673 |
Provision for Income Taxes | The provision for income taxes consists of the following: Year ended May 31 (in thousands) 2019 2018 2017 Current: U.S. Taxes $ 8,451 $ 10,129 $ 20,259 Foreign 3,758 3,066 2,514 Deferred 574 (2,945 ) (73 ) Provision for Income Taxes $ 12,783 $ 10,250 $ 22,700 |
Reconciliation of Income Taxes Computed at U.S. Federal Statutory Tax Rate to Income Tax Expense | The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense is as follows: Year ended May 31 (in thousands) 2019 2018 2017 Tax at U.S. statutory rate $ 15,321 $ 21,459 $ 23,336 Section 199 domestic production deduction — (1,167 ) (1,057 ) Global intangible low-taxed income (GILTI) 840 — — Foreign derived intangible income deduction (FDII) (1,531 ) — — Foreign rate differential 495 (461 ) (1,247 ) Subpart F income 842 816 996 Tax benefits on stock-based compensation (2,586 ) (4,816 ) (535 ) FIN 48 reserve adjustments 13 (1,035 ) 576 Provision for state income taxes, net of federal benefit 1,251 975 972 Remeasurement of deferred taxes — (6,022 ) — Transition tax on foreign earnings and profits — 1,223 — Tax credits (1,726 ) (1,151 ) (1,213 ) Other (136 ) 429 872 $ 12,783 $ 10,250 $ 22,700 |
Significant Components of Deferred Income Tax Liabilities and Assets | Significant components of our deferred income tax liabilities and assets are as follows: Year ended May 31 (in thousands) 2019 2018 Deferred income tax liabilities Indefinite and long-lived assets $ (18,963 ) $ (17,503 ) Prepaid expenses (586 ) (573 ) (19,549 ) (18,076 ) Deferred income tax assets Stock Options 1,497 1,489 Inventories and accounts receivable 1,315 1,593 Tax loss carryforwards 417 134 Valuation allowance on tax loss carryforwards (407) — Accrued expenses and other 1,109 757 3,931 3,973 Net deferred income tax liabilities $ (15,618 ) $ (14,103 ) |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
May 31, 2019 | |
Segment Information | Segment information is as follows: (in thousands) Food Safety Animal Safety Corporate and Eliminations (1) Total Fiscal 2019 Product revenues to external customers $ 190,675 $ 148,764 $ — $ 339,439 Service revenues to external customers 22,799 51,948 — 74,747 Total revenues to external customers 213,474 200,712 — 414,186 Operating income (loss) 39,020 33,875 (4,801 ) 68,094 Depreciation and amortization 9,525 8,099 — 17,624 Total Assets 206,267 221,950 267,523 695,740 Expenditures for long-lived assets 8,916 5,745 — 14,661 Fiscal 2018 Product revenues to external customers $ 174,553 $ 156,735 $ — $ 331,288 Service revenues to external customers 19,924 46,718 — 66,642 Total revenues to external customers 194,477 203,453 — 397,930 Operating income (loss) 34,561 39,529 (3,896 ) 70,194 Depreciation and amortization 9,083 7,975 — 17,058 Total Assets 186,570 220,629 210,810 618,009 Expenditures for long-lived assets 10,538 10,408 — 20,946 Fiscal 2017 Product revenues to external customers $ 154,431 $ 148,717 $ — $ 303,148 Service revenues to external customers 15,603 39,526 — 55,129 Total revenues to external customers 170,034 188,243 — 358,277 Operating income (loss) 33,971 34,841 (3,867 ) 64,945 Depreciation and amortization 7,088 7,603 — 14,691 Total Assets 190,895 210,927 126,587 528,409 Expenditures for long-lived assets 10,332 4,246 — 14,578 (1) Includes corporate assets, including cash and cash equivalents, marketable securities, current and deferred tax accounts, and overhead expenses not allocated to specific business segments. Also includes the elimination of intersegment transactions and non-controlling interests. |
Disaggregated Revenue | The following table presents the Company’s revenue disaggregated by geographical location: Year ended May 31 2019 2018 (in thousands) Revenues by Geographic Location Domestic $ 248,304 $ 248,236 International 165,882 149,694 Total revenue 414,186 397,930 |
Summary of Quarterly Data (Un_2
Summary of Quarterly Data (Unaudited) (Tables) | 12 Months Ended |
May 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information [Table Text Block] | Quarter Ended (in thousands, except per share) August 2018 November 2018 February 2019 May 2019 Total Revenue $ 99,626 $ 107,098 $ 97,700 $ 109,762 Gross Margin 46,729 50,033 44,628 50,530 Net income 15,237 16,051 13,073 15,815 Basic net income per share 0.29 0.31 0.25 0.31 Diluted net income per share 0.29 0.31 0.25 0.30 Quarter Ended (in thousands, except per share) August 2017 November 2017 February 2018 May 2018 Total Revenue $ 94,209 $ 100,698 $ 94,903 $ 108,120 Gross Margin 44,924 48,249 44,601 48,498 Net income 11,936 17,153 16,581 17,545 Net income attributable to Neogen 11,914 17,100 16,586 17,545 Basic net income per share 0.23 0.33 0.32 0.34 Diluted net income per share 0.23 0.33 0.32 0.33 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) | Dec. 31, 2017 | Dec. 22, 2017 | Dec. 29, 2017 | May 31, 2019USD ($)$ / sharesshares | May 31, 2018USD ($)$ / sharesshares | May 31, 2017USD ($)$ / sharesshares | Feb. 28, 2017 | May 31, 2016USD ($) |
Significant Accounting Policies [Line Items] | ||||||||
Stock split ratio | 1.33 | |||||||
Marketable securities, maturity period | 2 years | |||||||
Finite lived intangible assets, useful life | 10 years | 11 years | ||||||
Federal corporate tax rate | 35.00% | 21.00% | 21.00% | |||||
Commercial Paper | $ 208,155,000 | |||||||
Short-term domestic certificates of deposit | 17,681,000 | |||||||
Marketable securities | 225,836,000 | $ 127,736,000 | ||||||
Valuation allowance for inventory | 2,250,000 | 2,200,000 | ||||||
Depreciation expense | 11,315,000 | 10,315,000 | $ 8,783,000 | |||||
Cost of goods and services sold | 222,266,000 | $ 211,658,000 | $ 189,353,000 | |||||
Unremitted earnings of foreign subsidiaries | $ 55,553,000 | |||||||
Weighted-average fair value per share of stock options granted | $ / shares | $ 14.91 | $ 14.47 | $ 11.89 | |||||
Cash held at foreign subsidiaries | $ 8,711,000 | $ 7,101,000 | ||||||
Cash and cash equivalents | $ 41,688,000 | $ 83,074,000 | $ 77,567,000 | $ 55,257,000 | ||||
Shares excluded from computations of diluted net income per share | shares | 0 | 0 | 0 | |||||
Shipping and Handling | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Cost of goods and services sold | $ 13,503,000 | $ 12,147,000 | $ 10,185,000 | |||||
Advertising Cost | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Cost of goods and services sold | $ 1,471,000 | $ 1,411,000 | $ 1,426,000 | |||||
Customer One | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Account receivable percentage from major customer | 10.00% | 10.00% | ||||||
Neogen Do Brazil | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Percentage of ownership in subsidiaries | 10.00% | |||||||
Latin America | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Percentage of ownership in subsidiaries | 100.00% | 100.00% | ||||||
Percentage of ownership in subsidiaries before capital contribution | 90.00% | |||||||
Percentage of ownership in subsidiaries Before capital contribution | 100.00% | |||||||
Minimum | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Marketable securities, maturity period | 91 days | |||||||
Finite lived intangible assets, useful life | 5 years | |||||||
Minimum | Buildings And Improvements | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Property, Plant and Equipment, Useful Life | 7 years | 7 years | 7 years | |||||
Minimum | Furniture, fixtures, machinery and equipment | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||||
Maximum | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Finite lived intangible assets, useful life | 25 years | |||||||
Maximum | Buildings And Improvements | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Property, Plant and Equipment, Useful Life | 39 years | 39 years | 39 years | |||||
Maximum | Furniture, fixtures, machinery and equipment | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Property, Plant and Equipment, Useful Life | 10 years |
Marketable Securities (Detail)
Marketable Securities (Detail) - USD ($) | May 31, 2019 | May 31, 2018 |
Marketable Securities, Current | $ 225,836,000 | $ 127,736,000 |
US Treasury Securities | Maturing in 0 - 90 days | ||
Marketable Securities, Current | 2,470,000 | 19,910,000 |
US Treasury Securities | Maturing in 181 days - 1 year | ||
Marketable Securities, Current | 2,435,000 | |
US Treasury Securities | Maturing in 1 - 2 years | ||
Marketable Securities, Current | 2,505,000 | |
Commercial Paper | Maturing in 0 - 90 days | ||
Marketable Securities, Current | 84,338,000 | 47,740,000 |
Commercial Paper | Maturing in 91 - 180 days | ||
Marketable Securities, Current | 47,960,000 | 32,673,000 |
Commercial Paper | Maturing in 181 days - 1 year | ||
Marketable Securities, Current | 34,369,000 | |
Commercial Paper | Maturing in 1 - 2 years | ||
Marketable Securities, Current | 34,078,000 | |
Certificates of Deposit | Maturing in 0 - 90 days | ||
Marketable Securities, Current | 7,732,000 | 5,446,000 |
Certificates of Deposit | Maturing in 91 - 180 days | ||
Marketable Securities, Current | 5,000,000 | 8,747,000 |
Certificates of Deposit | Maturing in 181 days - 1 year | ||
Marketable Securities, Current | 750,000 | $ 13,220,000 |
Certificates of Deposit | Maturing in 1 - 2 years | ||
Marketable Securities, Current | $ 4,199,000 |
Activity in Allowance for Doubt
Activity in Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning Balance | $ 1,550 | $ 2,000 | $ 1,500 |
Provision | 263 | 152 | 645 |
Recoveries | 38 | 40 | 25 |
Write-offs | (151) | (642) | (170) |
Ending Balance | $ 1,700 | $ 1,550 | $ 2,000 |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Thousands | May 31, 2019 | May 31, 2018 |
Inventory [Line Items] | ||
Raw Materials | $ 41,594 | $ 36,702 |
Work-in-process | 5,581 | 5,993 |
Finished goods | 38,817 | 33,310 |
Inventories | $ 85,992 | $ 76,005 |
Fair Value of Stock Options Gra
Fair Value of Stock Options Granted, Estimated using Weighted-Average Assumptions (Detail) | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Schedule of Weighted Average Assumptions for Fair Values of Stock Options [Line Items] | |||
Risk-free interest rate | 2.60% | 1.60% | 1.20% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected stock volatility | 27.00% | 27.70% | 35.20% |
Expected option life (in years) | 3 years 6 months | 4 years | 4 years |
Calculation of Net Income Per S
Calculation of Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Earnings Per Share [Line Items] | |||||||||||
Numerator for basic and diluted net income per share - Net income attributable to Neogen | $ 17,545 | $ 16,586 | $ 17,100 | $ 11,914 | $ 60,176 | $ 63,145 | $ 43,793 | ||||
Denominator for basic net income per share - Weighted average shares | 51,888 | 51,358 | 50,544 | ||||||||
Effect of dilutive stock options | 537 | 791 | 621 | ||||||||
Denominator for diluted net income per share | 52,425 | 52,149 | 51,165 | ||||||||
Net income attributable to Neogen per share: | |||||||||||
Basic | $ 0.31 | $ 0.25 | $ 0.31 | $ 0.29 | $ 0.34 | $ 0.32 | $ 0.33 | $ 0.23 | $ 1.16 | $ 1.23 | $ 0.87 |
Diluted | $ 0.30 | $ 0.25 | $ 0.31 | $ 0.29 | $ 0.33 | $ 0.32 | $ 0.33 | $ 0.23 | $ 1.15 | $ 1.21 | $ 0.86 |
Disaggregated Revenue (Detail)
Disaggregated Revenue (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 414,186 | $ 397,930 | $ 358,277 |
Percentage Increase Decrease In Revenue From Previous Period | 4.00% | 11.00% | |
Food Safety | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 213,474 | $ 194,477 | 170,034 |
Percentage Increase Decrease In Revenue From Previous Period | 10.00% | 14.00% | |
Food Safety | Natural Toxins, Allergens & Drug Residues | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 78,373 | $ 72,962 | 70,926 |
Percentage Increase Decrease In Revenue From Previous Period | 7.00% | 3.00% | |
Food Safety | Bacterial & General Sanitation | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 41,966 | $ 38,156 | 34,706 |
Percentage Increase Decrease In Revenue From Previous Period | 10.00% | 10.00% | |
Food Safety | Culture Media & Other | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 49,857 | $ 44,271 | 39,367 |
Percentage Increase Decrease In Revenue From Previous Period | 13.00% | 12.00% | |
Food Safety | Rodenticides, Insecticides & Disinfectants | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 25,584 | $ 23,821 | 13,620 |
Percentage Increase Decrease In Revenue From Previous Period | 7.00% | 75.00% | |
Food Safety | Genomics Services | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 17,694 | $ 15,267 | 11,415 |
Percentage Increase Decrease In Revenue From Previous Period | 16.00% | 34.00% | |
Animal Safety | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 200,712 | $ 203,453 | 188,243 |
Percentage Increase Decrease In Revenue From Previous Period | (1.00%) | 8.00% | |
Animal Safety | Life Sciences | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 7,858 | $ 10,411 | 9,704 |
Percentage Increase Decrease In Revenue From Previous Period | (25.00%) | 7.00% | |
Animal Safety | Animal Care & Other | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 29,941 | $ 30,930 | 27,891 |
Percentage Increase Decrease In Revenue From Previous Period | (3.00%) | 11.00% | |
Animal Safety | Veterinary Instruments & Disposables | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 44,582 | $ 47,749 | 41,693 |
Percentage Increase Decrease In Revenue From Previous Period | (7.00%) | 15.00% | |
Animal Safety | Rodenticides, Insecticides & Disinfectants | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 66,389 | $ 67,646 | 69,429 |
Percentage Increase Decrease In Revenue From Previous Period | (2.00%) | (3.00%) | |
Animal Safety | Genomics Services | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenues | $ 51,942 | $ 46,717 | $ 39,526 |
Percentage Increase Decrease In Revenue From Previous Period | 11.00% | 18.00% |
Summary of Unaudited Consolidat
Summary of Unaudited Consolidated Statement of Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Revenues | |||||||||||
Total revenues | $ 414,186 | $ 397,930 | $ 358,277 | ||||||||
Cost of revenues | |||||||||||
Total cost of revenues | 222,266 | 211,658 | 189,353 | ||||||||
Gross margin | $ 50,530 | $ 44,628 | $ 50,033 | $ 46,729 | $ 48,498 | $ 44,601 | $ 48,249 | $ 44,924 | 191,920 | 186,272 | 168,924 |
Operating Expenses | |||||||||||
Sales and marketing | 70,230 | 66,929 | 59,380 | ||||||||
Total operating expenses | 123,826 | 116,078 | 103,979 | ||||||||
Operating income | 68,094 | 70,194 | 64,945 | ||||||||
Product Revenues | |||||||||||
Revenues | |||||||||||
Total revenues | 339,439 | 331,288 | 303,148 | ||||||||
Cost of revenues | |||||||||||
Total cost of revenues | 179,660 | 173,725 | 156,295 | ||||||||
Service Revenues | |||||||||||
Revenues | |||||||||||
Total revenues | 74,747 | 66,642 | 55,129 | ||||||||
Cost of revenues | |||||||||||
Total cost of revenues | $ 42,606 | 37,933 | 33,058 | ||||||||
Accounting Standards Update 2014-09 | Calculated under Revenue Guidance in Effect before Topic 606 | |||||||||||
Revenues | |||||||||||
Total revenues | 402,252 | 361,594 | |||||||||
Cost of revenues | |||||||||||
Total cost of revenues | 212,000 | 189,626 | |||||||||
Gross margin | 190,252 | 171,968 | |||||||||
Operating Expenses | |||||||||||
Sales and marketing | 70,909 | 62,424 | |||||||||
Total operating expenses | 120,058 | 107,023 | |||||||||
Operating income | 70,194 | 64,945 | |||||||||
Accounting Standards Update 2014-09 | Adjustments | |||||||||||
Revenues | |||||||||||
Total revenues | (4,322) | (3,317) | |||||||||
Cost of revenues | |||||||||||
Total cost of revenues | (342) | (273) | |||||||||
Gross margin | (3,980) | (3,044) | |||||||||
Operating Expenses | |||||||||||
Sales and marketing | (3,980) | (3,044) | |||||||||
Total operating expenses | (3,980) | (3,044) | |||||||||
Accounting Standards Update 2014-09 | Product Revenues | Calculated under Revenue Guidance in Effect before Topic 606 | |||||||||||
Revenues | |||||||||||
Total revenues | 335,554 | 306,512 | |||||||||
Cost of revenues | |||||||||||
Total cost of revenues | 174,067 | 156,568 | |||||||||
Accounting Standards Update 2014-09 | Product Revenues | Adjustments | |||||||||||
Revenues | |||||||||||
Total revenues | (4,266) | (3,390) | |||||||||
Cost of revenues | |||||||||||
Total cost of revenues | (342) | (273) | |||||||||
Accounting Standards Update 2014-09 | Service Revenues | Calculated under Revenue Guidance in Effect before Topic 606 | |||||||||||
Revenues | |||||||||||
Total revenues | 66,698 | 55,082 | |||||||||
Cost of revenues | |||||||||||
Total cost of revenues | 37,933 | 33,058 | |||||||||
Accounting Standards Update 2014-09 | Service Revenues | Adjustments | |||||||||||
Revenues | |||||||||||
Total revenues | $ (56) | $ 73 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2016 | |
Other non-amortizable intangible assets | $ 15,649,000 | $ 14,938,000 | |
Amortization expense for intangible assets | 6,309,000 | $ 6,743,000 | $ 5,908,000 |
Estimated amortization expense for period, 2020 | 6,664,000 | ||
Estimated amortization expense for period, 2021 | 6,025,000 | ||
Estimated amortization expense for period, 2022 | 5,673,000 | ||
Estimated amortization expense for period, 2023 | 5,299,000 | ||
Estimated amortization expense for period, 2024 | $ 4,989,000 | ||
Finite lived intangible assets, useful life | 10 years | 11 years | |
Maximum | |||
Finite lived intangible assets, useful life | 25 years | ||
Minimum | |||
Finite lived intangible assets, useful life | 5 years | ||
Licenses | |||
Other non-amortizable intangible assets | $ 569,000 | $ 569,000 | |
Licenses | Maximum | |||
Finite lived intangible assets, useful life | 20 years | ||
Licenses | Minimum | |||
Finite lived intangible assets, useful life | 2 years | ||
Trademarks | |||
Other non-amortizable intangible assets | $ 13,717,000 | 12,989,000 | |
Other Intangible Assets | |||
Other non-amortizable intangible assets | $ 1,363,000 | $ 1,380,000 | |
Noncompete Agreements | Maximum | |||
Finite lived intangible assets, useful life | 13 years | ||
Noncompete Agreements | Minimum | |||
Finite lived intangible assets, useful life | 5 years | ||
Patents | Maximum | |||
Finite lived intangible assets, useful life | 25 years | ||
Patents | Minimum | |||
Finite lived intangible assets, useful life | 5 years | ||
Customer-based intangibles | Maximum | |||
Finite lived intangible assets, useful life | 20 years | ||
Customer-based intangibles | Minimum | |||
Finite lived intangible assets, useful life | 5 years | ||
Other products and service-related intangibles | Maximum | |||
Finite lived intangible assets, useful life | 20 years | ||
Other products and service-related intangibles | Minimum | |||
Finite lived intangible assets, useful life | 5 years |
Goodwill by Business Segment (D
Goodwill by Business Segment (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | ||
Goodwill [Line Items] | |||
Beginning Balance | $ 99,558 | $ 104,759 | |
Goodwill acquired | 4,992 | 757 | |
Goodwill adjustments and/or currency | [1] | (931) | (5,958) |
Ending Balance | 103,619 | 99,558 | |
Food Safety | |||
Goodwill [Line Items] | |||
Beginning Balance | 40,001 | 45,920 | |
Goodwill acquired | 3,796 | ||
Goodwill adjustments and/or currency | [1] | (1,244) | (5,919) |
Ending Balance | 42,553 | 40,001 | |
Animal Safety | |||
Goodwill [Line Items] | |||
Beginning Balance | 59,557 | 58,839 | |
Goodwill acquired | 1,196 | 757 | |
Goodwill adjustments and/or currency | [1] | 313 | (39) |
Ending Balance | $ 61,066 | $ 59,557 | |
[1] | Includes final purchase price allocation adjustment. |
Amortizable of Intangible Asset
Amortizable of Intangible Assets (Detail) - USD ($) $ in Thousands | May 31, 2019 | May 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 92,931 | $ 91,704 |
Less Accumulated Amortization | 40,835 | 37,049 |
Net Carrying Amount | 52,096 | 54,655 |
Licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 9,813 | 9,491 |
Less Accumulated Amortization | 3,182 | 2,523 |
Net Carrying Amount | 6,631 | 6,968 |
Noncompete Agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 862 | 801 |
Less Accumulated Amortization | 542 | 483 |
Net Carrying Amount | 320 | 318 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 8,158 | 9,693 |
Less Accumulated Amortization | 3,570 | 5,013 |
Net Carrying Amount | 4,588 | 4,680 |
Customer-based intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 57,634 | 56,420 |
Less Accumulated Amortization | 28,017 | 24,579 |
Net Carrying Amount | 29,617 | 31,841 |
Other products and service-related intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 16,464 | 15,299 |
Less Accumulated Amortization | 5,524 | 4,451 |
Net Carrying Amount | $ 10,940 | $ 10,848 |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) - USD ($) | Jan. 01, 2019 | Sep. 04, 2018 | Aug. 01, 2018 | Jan. 31, 2018 | Sep. 01, 2017 | Dec. 27, 2016 | Dec. 01, 2016 | May 31, 2019 | May 31, 2018 | Apr. 01, 2019 | Feb. 28, 2019 | Dec. 31, 2018 | Apr. 30, 2018 | Jan. 01, 2018 |
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 10 years | 11 years | ||||||||||||
Quat-Chem Ltd. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Cash consideration for purchase of business | $ 21,606,000 | |||||||||||||
Contingent consideration potential payment | $ 184,000 | 3,778,000 | $ 249,000 | |||||||||||
Purchase price allocation for accounts receivable | 4,684,000 | |||||||||||||
Purchase price allocation for inventory | 1,243,000 | |||||||||||||
Purchase price allocation for land, property and equipment | 2,526,000 | |||||||||||||
Allocation of purchase price for contingent consideration potential payment | 1,058,000 | $ 554,000 | ||||||||||||
Purchase price allocation for intangible assets | 6,900,000 | |||||||||||||
Reverse the remaining contingent consideration accrual to other income | $ 255,000 | |||||||||||||
Purchase price allocation for non-amortizable intangible assets | 1,889,000 | |||||||||||||
Purchase price allocation for accounts payable | 2,197,000 | |||||||||||||
Purchase price allocation for deferred tax liability | 1,758,000 | |||||||||||||
Purchase price allocation for other current liabilities | $ 604,000 | |||||||||||||
Rogama Industria e Comercio, Ltda. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Cash consideration for purchase of business | $ 12,423,000 | |||||||||||||
Contingent consideration potential payment | 2,069,000 | $ 23,000 | $ 130,000 | |||||||||||
Purchase price allocation for accounts receivable | 1,866,000 | |||||||||||||
Purchase price allocation for inventory | 960,000 | |||||||||||||
Purchase price allocation for land, property and equipment | 4,734,000 | |||||||||||||
Allocation of purchase price for contingent consideration potential payment | 213,000 | $ 83,000 | ||||||||||||
Purchase price allocation for intangible assets | 5,112,000 | |||||||||||||
Purchase price allocation for non-amortizable intangible assets | 870,000 | |||||||||||||
Purchase price allocation for deferred tax liability | 2,034,000 | |||||||||||||
Purchase price allocation for current liabilities | 2,562,000 | |||||||||||||
Purchase price allocation for other non-current assets | $ 26,000 | |||||||||||||
The University of Queensland Animal Genetics Laboratory | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Cash consideration for purchase of business | $ 468,000 | |||||||||||||
Purchase price allocation for inventory | 19,000 | |||||||||||||
Purchase price allocation for land, property and equipment | 419,000 | |||||||||||||
Purchase price allocation for intangible assets | 902,000 | |||||||||||||
Consideration for purchase of business | 2,063,000 | |||||||||||||
Purchase price allocation for long-term liabilities | $ 1,629,000 | |||||||||||||
Clarus Labs Inc [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Cash consideration for purchase of business | $ 4,204,000 | |||||||||||||
Contingent consideration potential payment | 1,300,000 | $ 90,000 | ||||||||||||
Purchase price allocation for inventory | 32,000 | |||||||||||||
Purchase price allocation for land, property and equipment | 120,000 | |||||||||||||
Allocation of purchase price for contingent consideration potential payment | 1,256,000 | |||||||||||||
Purchase price allocation for intangible assets | 1,487,000 | |||||||||||||
Purchase price allocation for non-amortizable intangible assets | 878,000 | |||||||||||||
Purchase price allocation for accounts payable | 53,000 | |||||||||||||
Purchase price allocation for deferred tax liability | $ 544,000 | |||||||||||||
Livestock Genetic Services LLC [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Cash consideration for purchase of business | $ 1,100,000 | |||||||||||||
Contingent consideration potential payment | 385,000 | |||||||||||||
Purchase price allocation for land, property and equipment | 15,000 | |||||||||||||
Allocation of purchase price for contingent consideration potential payment | 385,000 | |||||||||||||
Purchase price allocation for intangible assets | 942,000 | |||||||||||||
Cash payable to former owner for purchase of business | 400,000 | |||||||||||||
Cash paid for purchase of business | $ 700,000 | |||||||||||||
Edmonton Albertabased Delta Genomics Centre [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Cash consideration for purchase of business | 1,485,000 | |||||||||||||
Purchase price allocation for inventory | 38,000 | |||||||||||||
Purchase price allocation for land, property and equipment | $ 371,000 | |||||||||||||
Purchase price allocation for intangible assets | 532,000 | |||||||||||||
Purchase price allocation for deferred tax liability | $ 125,000 | |||||||||||||
Minimum | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 5 years | |||||||||||||
Minimum | Quat-Chem Ltd. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 5 years | |||||||||||||
Minimum | Rogama Industria e Comercio, Ltda. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 5 years | |||||||||||||
Minimum | The University of Queensland Animal Genetics Laboratory | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 5 years | |||||||||||||
Minimum | Clarus Labs Inc [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 5 years | |||||||||||||
Minimum | Livestock Genetic Services LLC [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 5 years | |||||||||||||
Minimum | Edmonton Albertabased Delta Genomics Centre [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 5 years | |||||||||||||
Maximum | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 25 years | |||||||||||||
Maximum | Quat-Chem Ltd. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 15 years | |||||||||||||
Maximum | Rogama Industria e Comercio, Ltda. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 15 years | |||||||||||||
Maximum | The University of Queensland Animal Genetics Laboratory | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 15 years | |||||||||||||
Maximum | Clarus Labs Inc [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 15 years | |||||||||||||
Maximum | Livestock Genetic Services LLC [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 15 years | |||||||||||||
Maximum | Edmonton Albertabased Delta Genomics Centre [Member] | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Finite lived intangible assets, useful life | 10 years |
Long Term Debt - Additional Inf
Long Term Debt - Additional Information (Detail) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 29, 2016 | May 31, 2019 | Nov. 30, 2018 | May 31, 2018 | |
Debt Instrument [Line Items] | ||||
Unsecured revolving line of credit, total amount available | $ 15,000,000 | |||
Unsecured revolving line of credit, maturity date | Sep. 30, 2019 | Sep. 30, 2021 | ||
Unsecured revolving line of credit, interest terms | LIBOR plus 100 basis points | |||
Unsecured revolving line of credit, interest rate | 3.49% | |||
Unsecured revolving line of credit, balance outstanding | $ 0 | |||
Unsecured revolving line of credit, advances | $ 0 | $ 0 | ||
Libor Plus | Unsecured Revolving Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Unsecured revolving line of credit, spread | 1.00% |
Equity Compensation Plans - Add
Equity Compensation Plans - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for grant | 3,997,000 | 1,913,000 | 2,525,000 |
Options Exercisable, Weighted Average Exercise Price | $ 40.68 | $ 31.23 | |
Compensation expense related to share based awards | $ 5,543,000 | $ 4,909,000 | $ 5,261,000 |
Remaining compensation cost to be expensed in future periods for non-vested options | $ 15,880,000 | ||
Weighted average expense recognition period | 3 years 4 months 24 days | ||
Number of shares purchased by employees | 18,330 | 22,127 | 24,953 |
Employee Stock Purchase Plan | 2011 Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for grant | 365,395 | ||
Number of shares authorized for grant | 712,500 | ||
Annual maximum limit percentage of compensation to purchase shares | 5.00% | ||
Employee stock purchase plan stock price percentage | 10.00% | ||
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock option vesting period | 3 years | ||
Stock option contractual terms | 5 years | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock option vesting period | 5 years | ||
Stock option contractual terms | 10 years |
Stock Option Activity (Detail)
Stock Option Activity (Detail) - $ / shares shares in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Options Outstanding, Beginning Balance | 2,499 | 2,699 | 2,775 |
Options, Granted | 527 | 829 | 828 |
Options, Exercised | (513) | (821) | (827) |
Options, Forfeited | (128) | (208) | (77) |
Options Outstanding, Ending Balance | 2,385 | 2,499 | 2,699 |
Weighted-Average Exercise Price, Beginning Balance | $ 42.63 | $ 32.88 | $ 27.53 |
Weighted-Average Exercise Price, Granted | 62.92 | 59.37 | 40.68 |
Weighted-Average Exercise Price, Exercised | 31.28 | 28.18 | 22.82 |
Weighted-Average Exercise Price, Forfeited | 47.08 | 39.57 | 32.04 |
Weighted-Average Exercise Price, Ending Balance | 49.37 | 42.63 | 32.88 |
Weighted-Average Grant Date Fair Value, Beginning Balance | 11.44 | 9.51 | 7.97 |
Weighted-Average Grant Date Fair Value, Granted | 14.91 | 14.47 | 11.89 |
Weighted-Average Grant Date Fair Value, Exercised | 8.92 | 8.20 | 6.77 |
Weighted-Average Grant Date Fair Value, Forfeited | 12.42 | 11.12 | 9.17 |
Weighted-Average Grant Date Fair Value, Ending Balance | $ 12.70 | $ 11.44 | $ 9.51 |
Stock Option Activity (Parenthe
Stock Option Activity (Parenthetical) (Detail) - shares shares in Thousands | May 31, 2019 | May 31, 2018 | May 31, 2017 | May 31, 2016 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options Outstanding, Exercisable Beginning Balance | 617 | 508 | 661 | 875 |
Summary of Stock Options Outsta
Summary of Stock Options Outstanding (Detail) - $ / shares shares in Thousands | 12 Months Ended | |||
May 31, 2019 | May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options Outstanding, Number | 2,385 | 2,499 | 2,699 | 2,775 |
Options Outstanding, Average Contractual Life | 3 years 2 months 12 days | |||
Options Outstanding, Weighted-Average Exercise Price | $ 49.37 | $ 42.63 | $ 32.88 | $ 27.53 |
Options Exercisable, Number | 617 | 508 | 661 | 875 |
Options Exercisable, Weighted Average Exercise Price | $ 40.68 | $ 31.23 | ||
$10.17 - $37.26 | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Range of Exercise price, minimum | 10.17 | |||
Range of Exercise price, maximum | $ 37.26 | |||
Options Outstanding, Number | 575 | |||
Options Outstanding, Average Contractual Life | 1 year 8 months 12 days | |||
Options Outstanding, Weighted-Average Exercise Price | $ 32.07 | |||
Options Exercisable, Number | 290 | |||
Options Exercisable, Weighted Average Exercise Price | $ 30.62 | |||
$37.27 - $40.91 | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Range of Exercise price, minimum | 37.27 | |||
Range of Exercise price, maximum | $ 40.91 | |||
Options Outstanding, Number | 492 | |||
Options Outstanding, Average Contractual Life | 2 years 9 months 18 days | |||
Options Outstanding, Weighted-Average Exercise Price | $ 40.45 | |||
Options Exercisable, Number | 147 | |||
Options Exercisable, Weighted Average Exercise Price | $ 40.44 | |||
$40.92 - $59.78 | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Range of Exercise price, minimum | 40.92 | |||
Range of Exercise price, maximum | $ 59.78 | |||
Options Outstanding, Number | 172 | |||
Options Outstanding, Average Contractual Life | 4 years | |||
Options Outstanding, Weighted-Average Exercise Price | $ 51.03 | |||
Options Exercisable, Number | 54 | |||
Options Exercisable, Weighted Average Exercise Price | $ 49.19 | |||
$59.79 - $61.56 | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Range of Exercise price, minimum | 59.79 | |||
Range of Exercise price, maximum | $ 61.56 | |||
Options Outstanding, Number | 614 | |||
Options Outstanding, Average Contractual Life | 3 years 6 months | |||
Options Outstanding, Weighted-Average Exercise Price | $ 60.43 | |||
Options Exercisable, Number | 124 | |||
Options Exercisable, Weighted Average Exercise Price | $ 60.43 | |||
$61.57 - $68.96 | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Range of Exercise price, minimum | 61.57 | |||
Range of Exercise price, maximum | $ 68.96 | |||
Options Outstanding, Number | 532 | |||
Options Outstanding, Average Contractual Life | 4 years 6 months | |||
Options Outstanding, Weighted-Average Exercise Price | $ 63.03 | |||
Options Exercisable, Number | 2 | |||
Options Exercisable, Weighted Average Exercise Price | $ 68.36 |
Schedule of Share-based Compens
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options Intrinsic Value (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Aggregate intrinsic value of options outstanding | $ 22,798 | $ 82,649 | $ 39,388 |
Aggregate intrinsic value of options exercisable | 10,222 | 22,572 | 13,929 |
Aggregate intrinsic value of options exercised | $ 21,382 | $ 25,844 | $ 18,067 |
Income Before Income Taxes (Det
Income Before Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Income Before Income Taxes [Line Items] | |||
Income Before Income Taxes | $ 72,959 | $ 73,465 | $ 66,673 |
U.S. | |||
Income Before Income Taxes [Line Items] | |||
Income Before Income Taxes | 58,479 | 62,310 | 55,171 |
Foreign | |||
Income Before Income Taxes [Line Items] | |||
Income Before Income Taxes | $ 14,480 | $ 11,155 | $ 11,502 |
Provision for Income Taxes (Det
Provision for Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Current: | |||
U.S. Taxes | $ 8,451 | $ 10,129 | $ 20,259 |
Foreign | 3,758 | 3,066 | 2,514 |
Deferred | 574 | (2,945) | (73) |
Provision for Income Taxes | $ 12,783 | $ 10,250 | $ 22,700 |
Reconciliation of Income Taxes
Reconciliation of Income Taxes Computed at the U.S. Federal Statutory Tax Rate to Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Components Of Deferred Income Tax Assets And Liabilities [Line Items] | |||
Tax at U.S. statutory rate | $ 15,321 | $ 21,459 | $ 23,336 |
Section 199 domestic production deduction | (1,167) | (1,057) | |
Global intangible low-taxed income (GILTI) | 840 | ||
Foreign derived intangible income deduction (FDII) | (1,531) | ||
Foreign rate differential | 495 | (461) | (1,247) |
Subpart F income | 842 | 816 | 996 |
Tax benefits on stock-based compensation | (2,586) | (4,816) | (535) |
FIN 48 reserve adjustments | 13 | (1,035) | 576 |
Provision for state income taxes, net of federal benefit | 1,251 | 975 | 972 |
Remeasurement of deferred taxes | (6,022) | ||
Transition tax on foreign earnings and profits | 1,223 | ||
Tax credits | (1,726) | (1,151) | (1,213) |
Other | (136) | 429 | 872 |
Provision for Income Taxes | $ 12,783 | $ 10,250 | $ 22,700 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | Dec. 22, 2017 | May 31, 2019 | May 31, 2018 | May 31, 2017 |
Income Taxes [Line Items] | ||||
Decreased income tax expense | $ 2,600,000 | $ 4,800,000 | ||
Federal corporate tax rate | 35.00% | 21.00% | 21.00% | |
Current tax expense | $ 1,223,000 | |||
Net benefit | $ 4,800,000 | |||
Foreign tax credits | 1,296,000 | 791,000 | $ 729,000 | |
Research and development credit | $ 430,000 | 422,000 | $ 422,000 | |
Deferred tax assets and liabilities | 6,000,000 | |||
GILTI [Member] | ||||
Income Taxes [Line Items] | ||||
Income tax expense | 840,000 | |||
Tax benefit | $ 1,500,000 |
Significant Components of Defer
Significant Components of Deferred Income Tax Liabilities and Assets (Detail) - USD ($) $ in Thousands | May 31, 2019 | May 31, 2018 |
Deferred income tax liabilities | ||
Indefinite and long-lived assets | $ (18,963) | $ (17,503) |
Prepaid expenses | (586) | (573) |
Deferred Tax Liabilities, Gross | (19,549) | (18,076) |
Deferred income tax assets | ||
Stock Options | 1,497 | 1,489 |
Inventories and accounts receivable | 1,315 | 1,593 |
Tax loss carryforwards | 417 | 134 |
Valuation allowance on tax loss carryforwards | (407) | |
Accrued expenses and other | 1,109 | 757 |
Deferred Tax Assets, Net of Valuation Allowance, Total | 3,931 | 3,973 |
Net deferred income tax liabilities | $ (15,618) | $ (14,103) |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Commitments and Contingencies Disclosure [Line Items] | |||
Environmental remediation expense, period of remediation, years | 5 years | ||
Estimated liability costs of remediation | $ 916,000 | $ 916,000 | |
Estimated liability, measurement period, years | 15 years | ||
Estimated liability costs of remediation, current | $ 100,000 | 100,000 | |
Royalty Expense | 2,795,000 | 2,876,000 | $ 2,659,000 |
Future minimum royalty payment for period, 2020 | 183,000 | ||
Future minimum royalty payment for period, 2021 | 191,000 | ||
Future minimum royalty payment for period, 2022 | 114,000 | ||
Future minimum royalty payment for period, 2023 | 109,000 | ||
Future minimum royalty payment for period, 2024 | 109,000 | ||
Office and Manufacturing facilities operating lease expense | 871,000 | $ 799,000 | $ 729,000 |
Future minimum rental payments for 2020 | 1,112,000 | ||
Future minimum rental payments for 2021 | 810,000 | ||
Future minimum rental payments for 2022 | 297,000 | ||
Future minimum rental payments for 2023 | 101,000 | ||
Future minimum rental payments for 2024 | 0 | ||
Minimum | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Environmental remediation expense | 38,000 | ||
Maximum | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Environmental remediation expense | $ 131,000 |
Defined Contribution Benefit _2
Defined Contribution Benefit Plan - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Defined contribution 401(K) benefit expense | $ 1,361,000 | $ 1,325,000 | $ 1,259,000 |
First 3% employees deferred amount | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined contribution plan employer matching contribution | 100.00% | ||
Next 2% employees deferred amount | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined contribution plan employer matching contribution | 50.00% |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 12 Months Ended |
May 31, 2019Segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | Segment | 2 |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2019 | May 31, 2018 | May 31, 2017 | ||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | $ 109,762 | $ 97,700 | $ 107,098 | $ 99,626 | $ 108,120 | $ 94,903 | $ 100,698 | $ 94,209 | $ 414,186 | $ 397,930 | $ 358,277 | |
Operating income (loss) | 68,094 | 70,194 | 64,945 | |||||||||
Depreciation and amortization | 17,624 | 17,058 | 14,691 | |||||||||
Total assets | 695,740 | 618,009 | 695,740 | 618,009 | 528,409 | |||||||
Expenditures for long-lived assets | 14,661 | 20,946 | 14,578 | |||||||||
Operating Segments | Food Safety | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | 213,474 | 194,477 | 170,034 | |||||||||
Operating income (loss) | 39,020 | 34,561 | 33,971 | |||||||||
Depreciation and amortization | 9,525 | 9,083 | 7,088 | |||||||||
Total assets | 206,267 | 186,570 | 206,267 | 186,570 | 190,895 | |||||||
Expenditures for long-lived assets | 8,916 | 10,538 | 10,332 | |||||||||
Operating Segments | Animal Safety | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | 200,712 | 203,453 | 188,243 | |||||||||
Operating income (loss) | 33,875 | 39,529 | 34,841 | |||||||||
Depreciation and amortization | 8,099 | 7,975 | 7,603 | |||||||||
Total assets | 221,950 | 220,629 | 221,950 | 220,629 | 210,927 | |||||||
Expenditures for long-lived assets | 5,745 | 10,408 | 4,246 | |||||||||
Product Revenues | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | 339,439 | 331,288 | 303,148 | |||||||||
Product Revenues | Operating Segments | Food Safety | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | 190,675 | 174,553 | 154,431 | |||||||||
Product Revenues | Operating Segments | Animal Safety | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | 148,764 | 156,735 | 148,717 | |||||||||
Service Revenues | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | 74,747 | 66,642 | 55,129 | |||||||||
Service Revenues | Operating Segments | Food Safety | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | 22,799 | 19,924 | 15,603 | |||||||||
Service Revenues | Operating Segments | Animal Safety | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Product revenues to external customers | 51,948 | 46,718 | 39,526 | |||||||||
Corporate and Eliminations | Operating Segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Operating income (loss) | [1] | (4,801) | (3,896) | (3,867) | ||||||||
Total assets | [1] | $ 267,523 | $ 210,810 | $ 267,523 | $ 210,810 | $ 126,587 | ||||||
[1] | Includes corporate assets, including cash and cash equivalents, marketable securities, current and deferred tax accounts, and overhead expenses not allocated to specific business segments. Also includes the elimination of intersegment transactions and non-controlling interests. |
Disaggregated Revenue by Geogra
Disaggregated Revenue by Geographic Location (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Revenues by Geographic Location [Line Items] | |||
Total revenue | $ 414,186 | $ 397,930 | $ 358,277 |
Domestic | |||
Revenues by Geographic Location [Line Items] | |||
Total revenue | 248,304 | 248,236 | |
International | |||
Revenues by Geographic Location [Line Items] | |||
Total revenue | $ 165,882 | $ 149,694 |
Stock Repurchase - Additional I
Stock Repurchase - Additional Information (Detail) - USD ($) | 1 Months Ended | |
Dec. 31, 2018 | Oct. 31, 2018 | |
Stock Repurchase Program [Line Items] | ||
Shares authorized to purchase | 3,000,000 | |
Cost of repurchased shares, including commissions | $ 3,134,727 | |
Number of shares repurchased | 50,000 |
Summary of Quarterly Data (Deta
Summary of Quarterly Data (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2019 | May 31, 2018 | May 31, 2017 | |
Total Revenue | $ 109,762 | $ 97,700 | $ 107,098 | $ 99,626 | $ 108,120 | $ 94,903 | $ 100,698 | $ 94,209 | $ 414,186 | $ 397,930 | $ 358,277 |
Gross Margin | 50,530 | 44,628 | 50,033 | 46,729 | 48,498 | 44,601 | 48,249 | 44,924 | 191,920 | 186,272 | 168,924 |
Net Income | $ 15,815 | $ 13,073 | $ 16,051 | $ 15,237 | 17,545 | 16,581 | 17,153 | 11,936 | 60,176 | 63,215 | 43,973 |
Net income attributable to Neogen | $ 17,545 | $ 16,586 | $ 17,100 | $ 11,914 | $ 60,176 | $ 63,145 | $ 43,793 | ||||
Basic net income per share | $ 0.31 | $ 0.25 | $ 0.31 | $ 0.29 | $ 0.34 | $ 0.32 | $ 0.33 | $ 0.23 | $ 1.16 | $ 1.23 | $ 0.87 |
Diluted net income per share | $ 0.30 | $ 0.25 | $ 0.31 | $ 0.29 | $ 0.33 | $ 0.32 | $ 0.33 | $ 0.23 | $ 1.15 | $ 1.21 | $ 0.86 |