Document and Entity Information
Document and Entity Information | 3 Months Ended |
Aug. 31, 2016shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Aug. 31, 2016 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q1 |
Trading Symbol | NEOG |
Entity Registrant Name | NEOGEN CORP |
Entity Central Index Key | 711,377 |
Current Fiscal Year End Date | --05-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 37,709,433 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Thousands | Aug. 31, 2016 | May 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 76,187 | $ 55,257 |
Marketable securities (at fair value, which approximates cost) | 53,039 | 52,539 |
Accounts receivable, less allowance of $1,500 and $1,500 | 59,354 | 67,652 |
Inventories | 69,839 | 64,371 |
Deferred income taxes | 1,756 | 1,775 |
Prepaid expenses and other current assets | 8,432 | 8,407 |
Total Current Assets | 268,607 | 250,001 |
Net Property and Equipment | 54,739 | 54,683 |
Other Assets | ||
Goodwill | 88,215 | 88,506 |
Other non-amortizable intangible assets | 9,170 | 9,170 |
Total Assets | 468,615 | 451,715 |
Current Liabilities | ||
Accounts payable | 17,966 | 15,800 |
Accrued compensation | 4,938 | 4,986 |
Income taxes | 1,821 | 0 |
Other accruals | 7,913 | 7,812 |
Total Current Liabilities | 32,638 | 28,598 |
Deferred Income Taxes | 16,533 | 16,533 |
Other Long-Term Liabilities | 2,224 | 2,423 |
Total Liabilities | 51,395 | 47,554 |
Commitments and Contingencies (note 7) | ||
Equity | ||
Preferred stock, $1.00 par value, 100,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.16 par value, 60,000,000 shares authorized 37,709,433 and 37,567,689 shares issued and outstanding at August 31, 2016 and May 31, 2016, respectively. | 6,033 | 6,011 |
Additional paid-in capital | 155,681 | 150,000 |
Accumulated other comprehensive loss | (6,524) | (3,946) |
Retained earnings | 262,014 | 252,133 |
Total Neogen Corporation Stockholders' Equity | 417,204 | 404,198 |
Non-controlling interest | 16 | (37) |
Total Equity | 417,220 | 404,161 |
Total Liabilities and Equity | 468,615 | 451,715 |
Customer-based intangibles | ||
Other Assets | ||
Amortizable intangible assets, net of accumulated amortization | 28,877 | 30,909 |
Other Intangible Assets | ||
Other Assets | ||
Amortizable intangible assets, net of accumulated amortization | $ 19,007 | $ 18,446 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Thousands | Aug. 31, 2016 | May 31, 2016 |
Accounts receivable, allowance | $ 1,500 | $ 1,500 |
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 | 60,000,000 | 60,000,000 |
Common stock, shares issued | 37,709,433 | 37,567,689 |
Common stock, shares outstanding | 37,709,433 | 37,567,689 |
Customer-based intangibles | ||
Accumulated Amortization | $ 17,300 | $ 17,277 |
Other Intangible Assets | ||
Accumulated Amortization | $ 8,879 | $ 7,530 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Revenues | ||
Product revenues | $ 72,245 | $ 65,036 |
Service revenues | 11,400 | 9,824 |
Total Revenues | 83,645 | 74,860 |
Cost of Revenues | ||
Cost of product revenues | 35,535 | 30,630 |
Cost of service revenues | 7,631 | 6,438 |
Total Cost of Revenues | 43,166 | 37,068 |
Gross Margin | 40,479 | 37,792 |
Operating Expenses | ||
Sales and marketing | 14,797 | 13,571 |
General and administrative | 8,262 | 6,753 |
Research and development | 2,678 | 2,573 |
Total Operating Expenses | 25,737 | 22,897 |
Operating Income | 14,742 | 14,895 |
Other Income (Expense) | ||
Interest income | 123 | 68 |
Other income (expense) | 369 | (524) |
Total Other Income (Expense) | 492 | (456) |
Income Before Taxes | 15,234 | 14,439 |
Provision for Income Taxes | 5,300 | 5,150 |
Net Income | 9,934 | 9,289 |
Net (Income) Loss Attributable to Non-controlling Interest | (53) | 34 |
Net Income Attributable to Neogen | $ 9,881 | $ 9,323 |
Net Income Attributable to Neogen Per Share | ||
Basic | $ 0.26 | $ 0.25 |
Diluted | $ 0.26 | $ 0.25 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Net Income | $ 9,934 | $ 9,289 |
Other comprehensive income (loss), net of tax: currency translation adjustments | (2,578) | (713) |
Comprehensive income | 7,356 | 8,576 |
Comprehensive (income) loss attributable to non-controlling interest | (53) | 34 |
Comprehensive income attributable to Neogen Corporation | $ 7,303 | $ 8,610 |
Consolidated Statement of Equit
Consolidated Statement of Equity - 3 months ended Aug. 31, 2016 - 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 | $ 404,161 | $ 6,011 | $ 150,000 | $ (3,946) | $ 252,133 | $ (37) |
Beginning Balance (in shares) at May. 31, 2016 | 37,567,689 | 37,567,689 | ||||
Exercise of options, share based compensation and income tax benefit (in shares) | 132,956 | |||||
Exercise of options, share based compensation and income tax benefit | $ 5,275 | $ 21 | 5,254 | |||
Issuance of shares under employee stock purchase plan (in shares) | 8,788 | |||||
Issuance of shares under employee stock purchase plan | 428 | $ 1 | 427 | |||
Net income (loss | 9,934 | 9,881 | 53 | |||
Other comprehensive loss | (2,578) | (2,578) | ||||
Ending Balance at Aug. 31, 2016 | $ 417,220 | $ 6,033 | $ 155,681 | $ (6,524) | $ 262,014 | $ 16 |
Ending Balance (in shares) at Aug. 31, 2016 | 37,709,433 | 37,709,433 |
Consolidated Statement of Equi7
Consolidated Statement of Equity (Parenthetical) $ in Thousands | 3 Months Ended |
Aug. 31, 2016USD ($) | |
Exercise of options, share based compensation , income tax benefit | $ 728,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Cash Flows From Operating Activities | ||
Net Income | $ 9,934 | $ 9,289 |
Adjustments to reconcile net income to net cash provided from operating activities: | ||
Depreciation and amortization | 3,476 | 2,704 |
Share based compensation | 1,516 | 1,297 |
Excess income tax benefit from the exercise of stock options | (728) | (1,880) |
Changes in operating assets and liabilities, net of business acquisitions: | ||
Accounts receivable | 7,684 | 1,209 |
Inventories | (5,910) | (3,310) |
Prepaid expenses and other current assets | 42 | (2,725) |
Accounts payable, accruals and other changes | 4,262 | 16 |
Net Cash From Operating Activities | 20,276 | 6,600 |
Cash Flows Used In Investing Activities | ||
Purchases of property, equipment and other non-current intangible assets | (3,446) | (2,821) |
Proceeds from the sale of marketable securities | 28,116 | 28,648 |
Purchases of marketable securities | (28,616) | (49,174) |
Business acquisitions, net of cash required | 0 | (13,126) |
Net Cash Used In Investing Activities | (3,946) | (36,473) |
Cash Flows From Financing Activities | ||
Exercise of stock options | 4,053 | 4,293 |
Excess income tax benefit from the exercise of stock options | 728 | 1,880 |
Net Cash From Financing Activities | 4,781 | 6,173 |
Effect Of Exchange Rate On Cash | (181) | (35) |
Net Increase (Decrease) In Cash And Cash Equivalents | 20,930 | (23,735) |
Cash And Cash Equivalents At Beginning Of Period | 55,257 | 66,061 |
Cash And Cash Equivalents At End Of Period | $ 76,187 | $ 42,326 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Aug. 31, 2016 | |
Basis of Presentation | 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three-month period ended August 31, 2016 are not necessarily indicative of the results to be expected for the fiscal year ending May 31, 2017. For more complete financial information, these consolidated financial statements should be read in conjunction with the May 31, 2016 audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended May 31, 2016. |
Inventories
Inventories | 3 Months Ended |
Aug. 31, 2016 | |
Inventories | 2. INVENTORIES Inventories are stated at the lower of cost, determined on the first-in, first-out method, or market. The components of inventories follow: August 31, May 31, (in thousands) Raw Materials $ 31,208 $ 29,501 Work-in-process 5,168 4,498 Finished and purchased goods 33,463 30,372 $ 69,839 $ 64,371 |
Net Income per Share
Net Income per Share | 3 Months Ended |
Aug. 31, 2016 | |
Net Income per Share | 3. NET INCOME PER SHARE The calculation of net income per share attributable to Neogen Corporation follows: Three Months Ended August 31, 2016 2015 (in thousands, except per share amounts) Numerator for basic and diluted net income per share - Net income attributable to Neogen $ 9,881 $ 9,323 Denominator for basic net income per share –Weighted average shares 37,615 37,213 Effect of dilutive stock options 550 542 Denominator for diluted net income per share 38,165 37,755 Net income attributable to Neogen per share: Basic $ 0.26 $ 0.25 Diluted $ 0.26 $ 0.25 |
Segment Information
Segment Information | 3 Months Ended |
Aug. 31, 2016 | |
Segment Information | 4. SEGMENT INFORMATION The Company has two reportable segments: Food Safety and Animal Safety. The Food Safety segment is primarily engaged in the development, production and marketing of diagnostic test kits, dehydrated culture media and related products used by food producers and processors to detect harmful natural toxins, foodborne bacteria, allergens and levels of general sanitation. The Animal Safety segment is primarily engaged in the development, production and marketing of products dedicated to animal safety, including a complete line of consumable products marketed to veterinarians and animal health product distributors; this segment also provides genomic identification and related interpretive bioinformatic services. Additionally, the Animal Safety segment produces and markets rodenticides, disinfectants and insecticides to assist in control of rodents, insects and disease in and around agricultural, food production and other facilities. These segments are managed separately because they represent strategic business units that offer different products and require different marketing strategies. The Company evaluates performance based on total sales and operating income of the respective segments. The accounting policies of each of the segments are the same as those described in Note 1. Segment information as of and for the three months ended August 31, 2016 and 2015 follows: Food Animal Corporate and Total (in thousands) Fiscal 2017 Product revenues to external customers $ 35,642 $ 36,603 $ 0 $ 72,245 Service revenues to external customers 3,361 8,039 0 11,400 Total revenues to external customers 39,003 44,642 0 83,645 Operating income (loss) 8,083 7,696 (1,037 ) 14,742 Total assets 142,339 211,827 114,449 468,615 Fiscal 2016 Product revenues to external customers $ 32,051 $ 32,985 $ 0 $ 65,036 Service revenues to external customers 2,408 7,416 0 9,824 Total revenues to external customers 34,459 40,401 0 74,860 Operating income (loss) 8,421 7,340 (866 ) 14,895 Total assets 132,115 179,453 97,818 409,386 (1) Includes corporate assets, consisting principally of 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. |
Equity Compensation Plans
Equity Compensation Plans | 3 Months Ended |
Aug. 31, 2016 | |
Equity Compensation Plans | 5. EQUITY COMPENSATION PLANS Qualified and non-qualified options to purchase shares of common stock may be granted to directors, officers and employees of the Company under the terms of the Company’s 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. Options vest ratably over three and five year periods and the contractual terms are generally five or ten years. A summary of stock option activity during the three months ended August 31, 2016 follows: Shares Weighted- Options outstanding at June 1, 2016 2,081,000 $ 36.71 Granted 0 0 Exercised (136,000 ) 28.93 Forfeited (3,000 ) 39.14 Options outstanding at August 31, 2016 1,942,000 37.25 During the three month periods ended August 31, 2016 and 2015 the Company recorded $1,516,000 and $1,297,000, respectively, of compensation expense related to its share-based awards. The weighted-average fair value per share of stock options granted during fiscal 2016, estimated on the date of grant using the Black-Scholes option pricing model was $13.11. No options have yet been granted in fiscal 2017. The fair value of stock options granted was estimated using the following weighted-average assumptions. FY2016 Risk-free interest rate 1.2 % Expected dividend yield 0 % Expected stock price volatility 33.3 % Expected option life 4.0 years The Company has an Employee Stock Purchase plan that provides for employee stock purchases at a 5% discount to market price. The discount is recorded in administrative expense as of the date of purchase. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Aug. 31, 2016 | |
New Accounting Pronouncements | 6. NEW ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU No. 2014-09—Revenue from Contracts with Customers. The new standard 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. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. In April 2016, the FASB issued Accounting Standards Update No. 2016-10— Revenue from Contracts with Customers (Topic 606), which amends and adds clarity to certain aspects of the guidance set forth in ASU 2014-09 related to identifying performance obligations and licensing. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11—Inventory: Simplifying the Measurement of Inventory. The update requires inventory not measured using either the last in, first out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The update is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the impact of ASU 2015-11 on its consolidated financial condition and results of operations. In September 2015, the FASB issued ASU 2015-16—Simplifying the Accounting for Measurement - Period Adjustments. Changes to the accounting for measurement-period adjustments relate to business combinations. Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts of the acquiree recognized at the acquisition date with a corresponding adjustment to goodwill as a result of changes made to the balance sheet amounts of the acquiree. The measurement period is the period after the acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination (generally up to one year from the date of acquisition). The changes eliminate the requirement to make such retrospective adjustments, and instead require the acquiring entity to record these adjustments in the reporting period they are determined. The new standard is effective for public companies for fiscal years beginning after December 15, 2015. The Company has adopted this standard, which does not have a material impact on its consolidated financial condition and results of operations. The FASB recently issued ASU No. 2015-17—Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes as part of its Simplification Initiative. The amendments eliminate the guidance in Topic 740, Income Taxes 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 lessee 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 permitted with certain practical expedients. Early adoption is permitted. The Company is currently evaluating the impact of ASU No. 2016-02 on its consolidated financial condition and results of operations. In March 2016, the FASB issued ASU No. 2016-09 — Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting to provide guidance that changes the accounting for certain aspects of share-based payments to employees. The guidance requires the recognition of the income tax 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 the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016 with early adoption permitted. The Company is currently evaluating the impact of ASU No. 2016-09 on its consolidated financial condition and results of operations. 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. Early adoption is permitted, including adoption during an interim period. The Company has not yet adopted this update and is currently evaluating the impact of ASU No. 2016-15 on its consolidated financial statements. |
Business and Product Line Acqui
Business and Product Line Acquisitions | 3 Months Ended |
Aug. 31, 2016 | |
Business and Product Line Acquisitions | 7. BUSINESS AND PRODUCT LINE ACQUISITIONS 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 discussed below relates primarily to enhancing the Company’s strategic platform for the expansion of available product offerings. On October 1, 2014, the Company acquired all of the stock of BioLumix, Inc., a manufacturer and marketer of automated systems for the detection of microbial contaminants located in Ann Arbor, Michigan. Consideration for the purchase was $4,514,000 in cash. The final purchase price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included accounts receivable of $499,000, other receivable of $178,000, net inventory of $421,000, prepaid assets of $48,000, property and equipment of $159,000, current liabilities of $155,000, long-term liabilities of $780,000, intangible assets of $2,090,000 (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. This business was relocated to Lansing, Michigan and integrated with the Company’s operations there, reporting within the Food Safety segment. On December 8, 2014, the Company acquired the food safety and veterinary genomic assets of its Chinese distributor Beijing Anapure BioScientific Co., Ltd. Consideration for the purchase was $2,040,000 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 $525,000, property and equipment of $64,000, intangible assets of $422,000 (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. This business was integrated into the Company’s subsidiary in China and reports within the Food Safety segment. On June 1, 2015, the Company acquired the assets of Sterling Test House, a commercial food testing laboratory based in India. Consideration for the purchase was $1,118,000 in cash and approximately $102,000 of a contingent consideration liability, due in installments on the first two anniversary dates, based on an excess sales formula. The final purchase price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included accounts receivable of $43,000, inventory of $14,000, property and equipment of $141,000, contingent consideration accrual of $102,000, intangible assets of $345,000 (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. This business continues to operate in its current location and reports within the Animal Safety segment. In July 2016, the Company paid the former owner $70,000 for contingent consideration based on the achievement of sales targets, and reduced the recorded liability by a corresponding amount. On August 26, 2015, the Company acquired all of the stock of Lab M Holdings, a developer, manufacturer and supplier of microbiological culture media and diagnostic systems located in the United Kingdom. Consideration for the purchase was $12,436,000 in cash. The final purchase price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included cash of $285,000, accounts receivable of $975,000, inventory of $1,169,000, property and equipment of $3,337,000, other current assets of $309,000, current liabilities of $948,000, long-term deferred tax liability of $784,000, intangible assets of $3,611,000 (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. This business continues to operate in its current location and reports within the Food Safety segment. On December 22, 2015, the Company acquired the rodenticide assets of Virbac Corporation, the North American affiliate of the France-based Virbac group, a global animal health company. The acquired assets include a rodenticide active ingredient that complements Neogen’s existing active ingredients, and more than 40 regulatory approvals for a variety of formulations in the United States, Canada and Mexico. The acquired assets also include a large retail and OEM customer base. Consideration for the purchase was $3,525,000 in cash and up to $300,000 of contingent consideration. The preliminary purchase price allocation included inventory of $317,000, property and equipment of $60,000, intangible assets of $2,545,000 (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. The products are manufactured at the Company’s production facility in Randolph, Wisconsin and reports within the Animal Safety segment. On April 26, 2016, the Company acquired the stock of Deoxi Biotecnologia Ltda, an animal genomics laboratory located in Aracatuba, Brazil. Deoxi was a competitor of Neogen’s in the livestock genomics market and this acquisition is intended to help accelerate the growth of Neogen’s GeneSeek animal genomics services in Brazil. Consideration for the purchase was $1,560,000 in cash and up to $2,552,000 of contingent consideration, due at the end of the each of the first two years, based on an excess net sales formula. The preliminary purchase price allocation included accounts receivable of $150,000, inventory of $89,000, other current assets of $6,000, property and equipment of $229,000, current liabilities of $246,000, contingent consideration liabilities of $741,000, intangible assets of $852,000 (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. This business continues to operate in its current location and reports within the Food Safety segment. On May 1, 2016, the Company acquired the stock of Preserve International and its sister company, Tetradyne LLC., manufacturers and marketers of cleaners, disinfectants and associated products to the swine, poultry, food processing and dairy markets. Preserve and Tetradyne have manufacturing locations in Memphis, Tennessee and Turlock, California. Consideration for the purchase was $24,086,000 in cash. The preliminary purchase price allocation included accounts receivable of $1,629,000, inventory of $1,964,000, other current assets of $269,000, land, property and equipment of $1,625,000, current liabilities of $868,000, long-term liabilities of $660,000, intangible assets of $10,590,000 (with an estimated life of 5-15 years) and the remainder to goodwill (partially deductible for tax purposes). These values are Level 3 fair value measurements. This business continues to operate in its current locations and reports within the Animal Safety segment. |
Long Term Debt
Long Term Debt | 3 Months Ended |
Aug. 31, 2016 | |
Long Term Debt | 8. LONG TERM DEBT The Company has a financing agreement with a bank providing for an unsecured revolving line of credit of up to $12,000,000, which expires on September 1, 2017. There were no advances against this line of credit in fiscal year 2016 and there have been none thus far in fiscal 2017, and there is no balance outstanding at August 31, 2016. Interest is at LIBOR plus 100 basis points (rate under the terms of the agreement was 1.66% at August 31, 2016). Financial covenants include maintaining specified levels of tangible net worth, debt service coverage, and funded debt to EBITDA, each of which the Company was in compliance with at August 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Aug. 31, 2016 | |
Commitments and Contingencies | 9. COMMITMENTS AND CONTINGENCIES The Company is involved in environmental remediation and monitoring activities at its Randolph, Wisconsin manufacturing facility and accrues for related costs when such costs are determined to be probable and estimable. The Company expenses annual costs of remediation, which have ranged from $47,000 to $57,000 per year over the past five years. The Company’s estimated liability for these costs is $916,000 at August 31, 2016 and May 31, 2016, measured on an undiscounted basis over an estimated period of 15 years; $60,000 of the liability is recorded within current liabilities and the remainder is recorded within other long-term liabilities in the consolidated balance sheet. The Company is subject to certain legal and other proceedings in the normal course of business that, in the opinion of management, should not have a material effect on its future results of operations or financial position. |
Stock Purchase
Stock Purchase | 3 Months Ended |
Aug. 31, 2016 | |
Stock Purchase | 10. STOCK PURCHASE The Company has a stock repurchase program, authorized by the Board of Directors in calendar year 2008, to purchase, subject to market conditions, up to 1,125,000 shares of the Company’s common stock. As of August 31, 2016, 1,012,974 shares are available to be repurchased under the program. There were no purchases in fiscal year 2016 and there have been none thus far in fiscal 2017. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Inventories | The components of inventories follow: August 31, May 31, (in thousands) Raw Materials $ 31,208 $ 29,501 Work-in-process 5,168 4,498 Finished and purchased goods 33,463 30,372 $ 69,839 $ 64,371 |
Net Income per Share (Tables)
Net Income per Share (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Calculation of Net Income Per Share | The calculation of net income per share attributable to Neogen Corporation follows: Three Months Ended August 31, 2016 2015 (in thousands, except per share amounts) Numerator for basic and diluted net income per share - Net income attributable to Neogen $ 9,881 $ 9,323 Denominator for basic net income per share –Weighted average shares 37,615 37,213 Effect of dilutive stock options 550 542 Denominator for diluted net income per share 38,165 37,755 Net income attributable to Neogen per share: Basic $ 0.26 $ 0.25 Diluted $ 0.26 $ 0.25 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Segment Information | Segment information as of and for the three months ended August 31, 2016 and 2015 follows: Food Animal Corporate and Total (in thousands) Fiscal 2017 Product revenues to external customers $ 35,642 $ 36,603 $ 0 $ 72,245 Service revenues to external customers 3,361 8,039 0 11,400 Total revenues to external customers 39,003 44,642 0 83,645 Operating income (loss) 8,083 7,696 (1,037 ) 14,742 Total assets 142,339 211,827 114,449 468,615 Fiscal 2016 Product revenues to external customers $ 32,051 $ 32,985 $ 0 $ 65,036 Service revenues to external customers 2,408 7,416 0 9,824 Total revenues to external customers 34,459 40,401 0 74,860 Operating income (loss) 8,421 7,340 (866 ) 14,895 Total assets 132,115 179,453 97,818 409,386 (1) Includes corporate assets, consisting principally of 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. |
Equity Compensation Plans (Tabl
Equity Compensation Plans (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Stock Option Activity | A summary of stock option activity during the three months ended August 31, 2016 follows: Shares Weighted- Options outstanding at June 1, 2016 2,081,000 $ 36.71 Granted 0 0 Exercised (136,000 ) 28.93 Forfeited (3,000 ) 39.14 Options outstanding at August 31, 2016 1,942,000 37.25 |
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. FY2016 Risk-free interest rate 1.2 % Expected dividend yield 0 % Expected stock price volatility 33.3 % Expected option life 4.0 years |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Thousands | Aug. 31, 2016 | May 31, 2016 |
Inventory [Line Items] | ||
Raw Materials | $ 31,208 | $ 29,501 |
Work-in-process | 5,168 | 4,498 |
Finished and purchased goods | 33,463 | 30,372 |
Inventories | $ 69,839 | $ 64,371 |
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 | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Earnings Per Share [Line Items] | ||
Numerator for basic and diluted net income per share - Net income attributable to Neogen | $ 9,881 | $ 9,323 |
Denominator for basic net income per share - Weighted average shares | 37,615 | 37,213 |
Effect of dilutive stock options | 550 | 542 |
Denominator for diluted net income per share | 38,165 | 37,755 |
Net income attributable to Neogen per share: | ||
Basic | $ 0.26 | $ 0.25 |
Diluted | $ 0.26 | $ 0.25 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended |
Aug. 31, 2016Segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 2 |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | ||
Segment Reporting Information [Line Items] | ||||
Product revenues to external customers | $ 72,245 | $ 65,036 | ||
Service revenues to external customers | 11,400 | 9,824 | ||
Total revenues to external customers | 83,645 | 74,860 | ||
Operating income (loss) | 14,742 | 14,895 | ||
Total assets | 468,615 | 409,386 | $ 451,715 | |
Operating Segments | Food Safety | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues to external customers | 35,642 | 32,051 | ||
Service revenues to external customers | 3,361 | 2,408 | ||
Total revenues to external customers | 39,003 | 34,459 | ||
Operating income (loss) | 8,083 | 8,421 | ||
Total assets | 142,339 | 132,115 | ||
Operating Segments | Animal Safety | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues to external customers | 36,603 | 32,985 | ||
Service revenues to external customers | 8,039 | 7,416 | ||
Total revenues to external customers | 44,642 | 40,401 | ||
Operating income (loss) | 7,696 | 7,340 | ||
Total assets | 211,827 | 179,453 | ||
Corporate and Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Product revenues to external customers | [1] | 0 | 0 | |
Service revenues to external customers | [1] | 0 | 0 | |
Total revenues to external customers | [1] | 0 | 0 | |
Operating income (loss) | [1] | (1,037) | (866) | |
Total assets | [1] | $ 114,449 | $ 97,818 | |
[1] | Includes corporate assets, consisting principally of 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. |
Equity Compensation Plans - Add
Equity Compensation Plans - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense related to share based awards | $ 1,516,000 | $ 1,297,000 | |
Weighted-average fair value per share of stock options granted | $ 13.11 | ||
Employee Stock Purchase Plan | 2011 Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual maximum limit percentage of compensation to purchase shares | 5.00% | ||
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) | 3 Months Ended |
Aug. 31, 2016$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Shares Outstanding, Beginning Balance | shares | 2,081,000 |
Shares, Granted | shares | 0 |
Shares, Exercised | shares | (136,000) |
Shares, Forfeited | shares | (3,000) |
Shares Outstanding, Ending Balance | shares | 1,942,000 |
Weighted-Average Exercise Price, Beginning Balance | $ / shares | $ 36.71 |
Weighted-Average Exercise Price, Granted | $ / shares | 0 |
Weighted-Average Exercise Price, Exercised | $ / shares | 28.93 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 39.14 |
Weighted-Average Exercise Price, Ending Balance | $ / shares | $ 37.25 |
Fair Value of Stock Options Gra
Fair Value of Stock Options Granted, Estimated using Weighted-Average Assumptions (Detail) | 12 Months Ended |
May 31, 2016 | |
Schedule of Weighted Average Assumptions for Fair Values of Stock Options [Line Items] | |
Risk-free interest rate | 1.20% |
Expected dividend yield | 0.00% |
Expected stock price volatility | 33.30% |
Expected option life (in years) | 4 years |
Business and Product Line Acq30
Business and Product Line Acquisitions - Additional Information (Detail) - USD ($) | May 01, 2016 | Apr. 26, 2016 | Dec. 22, 2015 | Aug. 26, 2015 | Jun. 01, 2015 | Dec. 08, 2014 | Oct. 01, 2014 | Jul. 31, 2016 |
Beijing Anapure BioScientific Co., Ltd. | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration for purchase of business | $ 2,040,000 | |||||||
Purchase price allocation for inventory | 525,000 | |||||||
Purchase price allocation for land, property and equipment | 64,000 | |||||||
Purchase price allocation for intangible assets | $ 422,000 | |||||||
Beijing Anapure BioScientific Co., Ltd. | Minimum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 5 years | |||||||
Beijing Anapure BioScientific Co., Ltd. | Maximum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 15 years | |||||||
Sterling Test House | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration for purchase of business | $ 1,118,000 | |||||||
Purchase price allocation for accounts receivable | 43,000 | |||||||
Purchase price allocation for inventory | 14,000 | |||||||
Purchase price allocation for land, property and equipment | 141,000 | |||||||
Purchase price allocation for intangible assets | 345,000 | |||||||
Contingent consideration potential payment | 102,000 | |||||||
Allocation of purchase price for contingent consideration potential payment | $ 102,000 | |||||||
Cash paid for contingent consideration | $ 70,000 | |||||||
Sterling Test House | Minimum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 5 years | |||||||
Sterling Test House | Maximum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 15 years | |||||||
Lab M Holdings | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration for purchase of business | $ 12,436,000 | |||||||
Purchase price allocation for accounts receivable | 975,000 | |||||||
Purchase price allocation for inventory | 1,169,000 | |||||||
Purchase price allocation for land, property and equipment | 3,337,000 | |||||||
Purchase price allocation for current liabilities | 948,000 | |||||||
Purchase price allocation for intangible assets | 3,611,000 | |||||||
Purchase price allocation for cash | 285,000 | |||||||
Purchase price allocation for other current assets | 309,000 | |||||||
Purchase price allocation for deferred tax liability | $ 784,000 | |||||||
Lab M Holdings | Minimum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 5 years | |||||||
Lab M Holdings | Maximum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 15 years | |||||||
BioLumix, Inc. | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration for purchase of business | $ 4,514,000 | |||||||
Purchase price allocation for accounts receivable | 499,000 | |||||||
Purchase price allocation for other receivable | 178,000 | |||||||
Purchase price allocation for inventory | 421,000 | |||||||
Purchase price allocation for prepaid assets | 48,000 | |||||||
Purchase price allocation for land, property and equipment | 159,000 | |||||||
Purchase price allocation for current liabilities | 155,000 | |||||||
Purchase price allocation for long-term liabilities | 780,000 | |||||||
Purchase price allocation for intangible assets | $ 2,090,000 | |||||||
BioLumix, Inc. | Minimum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 5 years | |||||||
BioLumix, Inc. | Maximum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 15 years | |||||||
Virbac Corporation | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration for purchase of business | $ 3,525,000 | |||||||
Purchase price allocation for inventory | 317,000 | |||||||
Purchase price allocation for land, property and equipment | 60,000 | |||||||
Purchase price allocation for intangible assets | 2,545,000 | |||||||
Contingent consideration potential payment | $ 300,000 | |||||||
Virbac Corporation | Minimum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 5 years | |||||||
Virbac Corporation | Maximum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 15 years | |||||||
Deoxi Biotecnologia Ltd | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration for purchase of business | $ 1,560,000 | |||||||
Purchase price allocation for accounts receivable | 150,000 | |||||||
Purchase price allocation for inventory | 89,000 | |||||||
Purchase price allocation for land, property and equipment | 229,000 | |||||||
Purchase price allocation for current liabilities | 246,000 | |||||||
Purchase price allocation for intangible assets | 852,000 | |||||||
Contingent consideration potential payment | 2,552,000 | |||||||
Allocation of purchase price for contingent consideration potential payment | 741,000 | |||||||
Purchase price allocation for other current assets | $ 6,000 | |||||||
Deoxi Biotecnologia Ltd | Minimum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 5 years | |||||||
Deoxi Biotecnologia Ltd | Maximum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 15 years | |||||||
Tetradyne LLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration for purchase of business | $ 24,086,000 | |||||||
Purchase price allocation for accounts receivable | 1,629,000 | |||||||
Purchase price allocation for inventory | 1,964,000 | |||||||
Purchase price allocation for land, property and equipment | 1,625,000 | |||||||
Purchase price allocation for current liabilities | 868,000 | |||||||
Purchase price allocation for long-term liabilities | 660,000 | |||||||
Purchase price allocation for intangible assets | 10,590,000 | |||||||
Purchase price allocation for other current assets | $ 269,000 | |||||||
Tetradyne LLC | Minimum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 5 years | |||||||
Tetradyne LLC | Maximum | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived intangible assets, useful life | 15 years |
Long Term Debt - Additional Inf
Long Term Debt - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Aug. 31, 2016 | May 31, 2017 | May 31, 2016 | |
Debt Instrument [Line Items] | |||
Unsecured revolving line of credit, total amount available | $ 12,000,000 | ||
Unsecured revolving line of credit, maturity date | Sep. 1, 2017 | ||
Unsecured revolving line of credit, interest terms | LIBOR plus 100 basis points | ||
Unsecured revolving line of credit, interest rate | 1.66% | ||
Unsecured revolving line of credit, balance outstanding | $ 0 | ||
Unsecured revolving line of credit, advances | $ 0 | ||
During fiscal 2017 | |||
Debt Instrument [Line Items] | |||
Unsecured revolving line of credit, advances | $ 0 | ||
Libor Plus | Unsecured Revolving Line of Credit | |||
Debt Instrument [Line Items] | |||
Unsecured revolving line of credit, spread | 1.00% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Aug. 31, 2016 | May 31, 2016 | |
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 | $ 60,000 | $ 60,000 |
Minimum | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Environmental remediation expense | 47,000 | |
Maximum | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Environmental remediation expense | $ 57,000 |
Stock Purchase - Additional Inf
Stock Purchase - Additional Information (Detail) - shares | 12 Months Ended | |||
May 31, 2017 | May 31, 2016 | Aug. 31, 2016 | Dec. 31, 2008 | |
Stock Repurchase Program [Line Items] | ||||
Shares authorized to purchase | 1,125,000 | |||
Number of shares available to be repurchased | 1,012,974 | |||
Number of shares repurchased | 0 | |||
During fiscal 2017 | ||||
Stock Repurchase Program [Line Items] | ||||
Number of shares repurchased | 0 |