James Herbert – Chairman and Chief Executive Officer Lon Bohannon – President, Chief Operating Officer and Director Richard Current – Chief Financial Officer, Vice President and Secretary

Steven Crowley – Craig-Hallum Capital Group LLC Stephen O’Neil – Hilliard Lyons Inc. [Ken Reeds - Paragon Financial] Lawrence Southam – My Broker LLC Joseph Pottman – Wachovia Securities Steve Crowley – Craig-Hallum

Welcome to the Neogen Corporation first quarter fiscal year 2009 earnings results conference call. (Operator Instructions) At this time for opening remarks and introductions, I would like to turn the conference over to Jim Herbert.

Good morning and welcome to our regular quarterly conference call for investors and analysts. And as was just reported today, we will be discussing with the Neogeon’s first quarter that ended on the 31 of August, 2008. First, I will remind you that some of the statements that are made here today could be termed as forward-looking statements. These forward-looking statements, of course, are subject to certain risks and uncertainties. The actual results may differ from those we discuss today and part of the risks that are associated with our business are covered at least in part in the Company’s Form 10-K as filed with the Securities and Exchange Commission. In addition to those of you joining us today by live telephone conference, I would also welcome those who may be joining by way of simulcast on the World Wide Web. These comments, along with some exhibits, will be available on the Web for approximately 90 days. Following comments this morning, we will entertain questions from participants who are joined in this live call, and I am joined today by Lon Bohannon, Neogen’s President, and Rick Current, Neogen’s Chief Financial Officer. Earlier today Neogen issued a press release announcing the results of our first quarter that ended on the 31 of August. These results, again, demonstrate our ability to deliver solid consistent performance. Our first quarter revenues, our net income, and our earnings per share all represent quarterly records for our 26-year history. This fact, in-total this was I think the 66th of the past 71 quarters, when Neogen reported revenue increases over the previous year. That is a record now that expands almost 18 years. Let me stop here now though, and turn the program over to Lon Bohannon, Neogen’s President and Chief Operating Officer and let Lon fill you in on more of the details of the quarter and in turning this over to Lon. I would say that he and his team can certainly take justifiable pride again in this period again in this very outstanding performance for the quarter.

Thank you Jim, and welcome to our listeners on the conference call, as well as those joining us via Internet access. As Jim indicated, Neogen issued the press release earlier today describing our operating results for the first quarter of our 2009 fiscal year. Neogen’s results for those three months ended August 31, 2008, represented a terrific encore to our strong finish in the fourth quarter of last fiscal year. But I think, more importantly, was a great start to our current fiscal year. Total revenues of $28.8 million were 26% higher than sales in the first quarter last year. Net income increased to more than $3.7 million or $0.25 per share, compared to $3 million or $0.21 per share in last years’ first quarter. As Jim stated, but I think it is certainly worth repeating, total revenues, net income, and earnings per share all represent new quarterly records for Neogen. While successful integration of acquisitions contributed to the overall top line and bottom line growth for the quarter. Neogen experienced yet another quarter of outstanding organic sales growth with the Food Safety and Animal Safety segments both reporting a 13% increase in same store sales. The first quarter also demonstrated continued strong demand and opportunities in terms of sales to International markets, and totals sales to customers outside the United States were approximately 42% of total revenues of the three months ended August 31st. This percentage of business derived from sources outside the United States, represents yet another new quarterly record for Neogen. I will only take couple minutes to review performance for each of the two business segments. Sales for the Animal Safety group total more than $13.2 million in the first quarter representing a jump of 45% over the prior year. Last year’s acquisitions of Kane Enterprises and Rivard Instruments, along with our June 30th acquisition of a product line of cleaners and disinfectants from DuPont, helped drive this outstanding overall revenue growth for Animal Safety. However from my perspective, an even more encouraging aspect of Neogen’s first quarter performance was the return to strong double digit organic sales growth within in our Animal Safety group. Same-store sales increased 13% over the prior year. This sales increase was broad based. It included growth in products sold to veterinarians though ethical market channels, growth in products sold to large food animal producers and processors distributed through the traditional over-the-counter market channels including retail farm stores and a continued increase in sales of diagnostic products shipped to Life Science markets. It was especially gratifying, I think, to see a 14% organic growth in Rodenticide sold to domestic customers in the first quarter compared to the same period last year. In addition, the Animal Safety group did experience exceptional same-store sales growth of some important product lines like vitamin injectables, companion animal supplements, and drug residue Test Kits that are sold to the forensic market which were up 30%, 80%, and 40% respectively. If I can turn my attention to Food Safety for a few minutes, sales for this business segment also increased 13% to more than $15.5 million in the first quarter. I think it was a significant accomplishment considering the Food Safety segment had such an outstanding first quarter last year. Our Neogen Europe Operations continued their trend of superlative performance, with organic growth of 20% lead by strong shipments of diagnostic products for Mycotoxins and histamine, along the solid growth in sales of Dehydrated Culture Media. The breadth of Neogen’s line of Food Safety solutions, which I think is a definite strength for the Company was evident in the first quarter, as a number of products exhibited strong sales growth. Diagnostic tests for natural toxics increased 12% lead by increases in sales of Test Kits for aflatoxin, DON, and histamine. Sales of products used to detect harmful pathogens like E. coli, Salmonella, and Listeria were up 14% compared to last year. Sales of Diagnostic Test Kits for Food Allergens achieved a remarkable 48% increase with growth and sales of Diagnostic Test Kits for milk, peanut, and egg allergens particularly strong. The exceptional sales growth in these product lines helped support sales of dairy antibiotic Test Kits which experienced the more modest single digit sales increase in the first quarter. That was partly because of the timing and size of warehouse shipments to our exclusive international distributor Chris Hansen, and partly due to delays in obtaining final approval for our new BetaStar United States product. Another area of strength within Neogen’s product portfolio of Food Safety solutions is evidence by the first quarter sales of disposable Test Kits that are used in conjunction with Instrument Based Test Systems. The timing of placement of high value instruments can vary from quarter to quarter and impact quarter to quarter sales comparison for those instruments. This was in fact the case in our first quarter for Neogen’s Soleris line of Test Systems, used for the detection of general microbial contamination and spoilage organisms, and also was the case for AccuPoint readers used in ATP general sanitation testing. Placement of instruments for both these product lines was significant in the first quarter last year, making comparisons for instrument sales in the first quarter this year unfavorable. However much of the shortfall in instrument sales for the quarter was offset by the ongoing growth of the sales of disposable Test Kits, that are used in conjunction with the Soleris and AccuPoint reader instruments. For example, sales of disposable Test Kits consumed daily by customers who own the Soleris instruments continued to grow, and increased 15% in the first quarter this year compared the last year. In the same way, the sales of samplers used by customers who own AccuPoint readers to test for ATP increased 25% in the first quarter compared to the same period last year. This increase in ATP sampler usage is reflective of our past success in placing ATP readers. In fact an independent market survey reported that more AccuPoint ATP readers have been placed worldwide in the past three years than all other Test Systems combined. Furthermore we continue to find new opportunities to keep the pipeline full for placement of both the AccuPoint and Soleris reader instruments, so even though we may have some quarter to quarter timing differences in instrument sales, we fully expect year-over-year growth in placement of instruments for both of these important product lines and of course, this helps ensures sustainable future growth of repeat disposable kit sales like we saw in the first quarter just completed. Gross margins in the first quarter this year were a solid 51.4%. The primary reason that this percentage is lower than last year is product mix. Total revenues in the first quarter this year had a lower overall mix of diagnostic test kit products, which I think is, most of you know generally have higher gross margins than many other products sold by Neogen. In this year’s first quarter, diagnostic product saled accounted for approximately 55% of total revenues compared to approximately 61% of total revenues in the first quarter last year. Part of this percentage difference is due to the non-diagnostic product sales added through acquisitions and part of the difference is due to exceptional organic sales growth of existing non-diagnostic product lines. In terms of protecting gross margins, we did put in place price increases for many Food Safety products midway through the first quarter. We also implemented another round of price increases for Animal Safety products that took effect of September 1st, and which should help gross margins going forward. As we have mentioned in other conference calls earlier this calendar year, we continue to monitor raw material and other operating costs, and when justified, we will increase prices as necessary to protect those margins. In addition we continue to aggressively pursue measures to improve productivity, and achieve other cost savings in virtually all of our operating units. Management still believes that the best way to evaluate Neogen’s overall performance is to look at the operating profit line. In our first quarter operating margin result was outstanding, with Neogen’s profit from operations coming in at 19.6% of sales. This percentage is 200 basis points higher than we achieved for our 2008 fiscal year, when operating profit margin ended up at 17.6%. In fact the first quarter operating profit margin was almost the same as last year’s first quarter when as I mentioned earlier, we really experienced an unusually high product sales mix of Diagnostic Test Kits. I think this is an example of our success in getting significant incremental operating profit from acquisitions even in cases where products obtained in those acquisitions carry proportionately lower gross margins. We are fortunate to be selling products in the markets that are growing and we are equally fortunate to have a team of employees dedicated, to providing the best possible Food and Animal solutions for our customers. Management is excited about the prospects for the remainder of our current fiscal year and probably more excited about Neogen’s longer term opportunities to build itself in to a $200 million Company. With that, I will turn the call back over to Jim Herbert. Mr. Jim Herbert: Thanks, Lon. Well it was a good quarter, and it is obviously fun to be able to give our shareholders this kind of report. I think our stock price has continued to benefit from our ability to report this kind of quarter, however I have been known on occasion to say to employees when they get excited about a high volume day with rising stock prices that we need to quit talking and go back to work, since we now have new owners that have a new and even higher expectation of us than we did at the beginning of the day. Over 15 years ago, my friend Ted Doan, who was a member of Neogen’s Board of Directors for a number of years, sent me a quote that said, “The toughest thing about success is that you have got to keep on being a success.” In fact, many of our managers have this quote in a frame plaque in their office, and I would like to visit with you for the next few minutes, on how we see the continued success of Neogen in quarters that are ahead. And this is particularly important today as we are facing economic times that are truly unparalleled for our management group. Over the course of the past several days, we saw Neogen’s stock trading at high volumes and reaching an all-time high price per share while most public stocks and stocks encountered substantial declines in their share price. I believe that a part of this success is due to the fact that we are perceived as a safe place for investments, as well as an investment opportunity with good potential growth. Our consistency of growth is almost certainly had some impact in the recent market performance. We strive to make sure that this confidence is well placed. I think the strength of our balance sheet is certainly important in this time of financial uncertainties. At the end of August if you have noticed the press release this morning, we had approximately $9.6 million in cash. No bank borrowing and an unused bank line credit of about $10 million. Given our continued strong cash flow, I think our real potential for bank borrowing could be considerably higher, given the right investment opportunity. Our financial stability have also given us the opportunity to make wise investments, to insure that continued success that I mentioned. As an example over the price two months, we had the ability to step up our R&D activities through the construction of new laboratories and making a notable increase in our scientific staff. As I announced a few months ago this is important since we can now identify more opportunities for products in our Food and Animal Safety divisions than ever before. Not only will this group help us bring new products to the marketplace but they will also allow us to continue to make improvements in many of our already existing important products. The financial stability has also allowed us to increase the reach of our Sales and Marketing activities. Our investment in Mexico a few months ago will open opportunities for revenue growth in the quarters ahead from Mexico in the neighboring Central American countries. We have also expanded our Sales and Marketing group at Neogen Europe, in order to continue to garner great a market share in the important countries of France, United Kingdom, and Germany. I think also it will also give us the opportunity to expand into certain of the Eastern European countries, particularly those that must now abide by the Food Safety regulations of the European Union. Of course, it also gives us the opportunity to continue to look at synergistic acquisitions, and to make investments to more completely integrate some of those more recent acquisitions. The June 30th acquisition of the disinfectant and cleaner product line from DuPont is a good example of this. Though DuPont is clearly a worldwide leader in a development of chemistry based products, it found that they did not have a clear distribution channel to reach the producers of animal proteins, such as swine and poultry. At the same time, this extensive line of cleaners and disinfectants fits well in the Neogen’s biosecurity strategy, when we pair it up with our complete line of rodenticides. We expect these disinfectants to provide in excess of $7 million of revenue for our 2009 fiscal year, however we will continue to have these products manufactured by third party on a total manufacturing basis, until we can complete a number of registration changes. As these changes become effective, we will begin to move products to our Randolph, Wisconsin plant and we estimate that as a result of that we can improve our gross margins in the area of about 10%. This integration will likely require $300,000 to $400,000 in additional holding tanks and equipment, over and above what we are to have in place at Randolph. Fortunately we also have sufficient cash to produce above normal inventories to insure that we do not back order customers as we move to the integration of acquisitions and get positioned to operate on a more just-in-time basis. Not only does this DuPont acquisition put Neogen in a good position currently with outstanding chemistries. But DuPont will look to Neogen as its marketing channel as they continue to develop new and improve products in the future. These acquisitions also enhance our international sales expansion since the products from this acquisition are sold to customers in 36 countries outside the United States. The DuPont product line acquisition was really not unlike the one that we did a number of months ago, when we acquired the Food Safety Diagnostic Business from Eastman Chemical. At the time that Eastman became involved in the Food Safety diagnostic business, it seemed to them that it fit their core technology base, but they found they did not have market access to the food processing industry. That business of course became a bolt-on opportunity for Neogen, since we had the existing on the manufacturing in Sales and Marketing capabilities that fit the exact same marketplace. As the Food and Animal Safety business is continue to consolidate, I think there are likely other opportunities similar to the ones that we found at DuPont and at Eastman. We have move along from the economy and aside really from that national financial situation, we must also view here at Neogen the impact of the political ramifications, as we near the Presidential elections. Regardless of who wins in November and Neogen is apt to experience increased market potential, is on as both parties accelerate their concerns about food safety in the United States and from international imports. We know that both USDA and FDA are considering new regulations to improve Food Safety at the processing of plant level, as well as back inside the farm gate. However, since the senior positions in both of these agencies were change after the election, most changes will be postponed until the new political appointees are in position, but regardless of which party wins the election, I think there is no doubt that there will be tighter controls and an attempt to prevent the reoccurrence of the contaminated food issues that have occurred over the past several months. I think that as I make these comments, I certainly would not want indicate that I believe that Neogen has total immunity against the financial uncertainties that are taken place in the United States or the value of the dollar and the international monetary system or the whims of national politics, however I do believe that Neogen’s mission of developing the best available solutions for Food and Animal Safety cares somewhat of an immunity against the sort of economic ills that could strike other business sectors. I do believe that Neogen’s mission matters, even at tough times, the food industry cannot back down from it is goal of providing the safest, high quality products possible, and even this household budgets are squeezed, consumers will not back away from demanding safe and wholesome food. If we compare the performance of Neogen stock at a price of $29 today with the well-known indexes of the Dow Jones Industrial and NASDAQ composite, and Standard & Poor’s 500, two years ago with today, we find that those indexes are down anywhere from 3% to 9%, while Neogen’s stock is up over 100%. We greatly appreciate this support many of you have provided us. We now have four firms with research analysts report on the Company, as Craig-Hallum has now instituted research coverage on Neogen stock, to join Roth Capital, Hilliard Lyons, and Stonegate Securities. In summary I would say we are pleased to report this additional new big quarter but we fully recognize that the toughest thing about success is that to keep on being a success and I believe we have got the Company positioned to do just that. In closing I would remind you that the Company’s annual meeting will be held on Thursday, October 9th at 10:00 at the University Club here in Lansing, Michigan. We usually have a nice crowd for that meeting, and certainly wish to reissue the invitation to any shareholders who might wish to attend. Dustin, this concludes our prepared comments for the morning and at this point we would turnover the conference call to you, for any questions or comments from the audience.

(Operator’s Instruction) Your first question comes from Steve Crowley - Craig-Hallum. Steven Crowley – Craig-Hallum Capital Group LLC: Question for you, obviously it seems like your Animal Safety business is firing on some more cylinders versus last year, and you bolted at a few more. I am wondering, what kind of opportunity there is for you to improve the gross margins and make be more importantly the operating margins of that business? I am wondering what that picture of improvement might look like? Is it one of steady improvement? Are there some step functions in front of you? How can we look at that?

I think that we will see it is going to tend to look more like steps I think, rather than steady, as I mentioned in my comments, right now the products that the are marketing are made in two different plants. One in the United Kingdome and one in the United States on our total manufacturing basis, we do have the capability at our Randolph, Wisconsin plant to manufacture those. The only thing holding us there are about 234 registrations around the world with EPA-like registrations that we have to get in place, which will move the products and allow us to move the products to a different manufacturing site. Obviously one of the first ones we want to close down is the one in the United Kingdom or not close it down but we want to get our products out there, but then we have others. So, if we look at the fact that we are to have in place most of the infrastructure in Randolph in a way of other than I mentioned $300,000 to $400,000 probably of additional equipment, but we have got the people, we have got the facility to do that. So that would make kind of step-wise, as we begin to be able to manufacture more products our self. I think you asked the right question that, what improvements or will it make to the operating line. This from a marketing standpoint is pretty much a bolt-on of what we are doing in Sales and Marketing. We are already had a group that was part of the Animal Safety that was addressing. What we call the integrator business or the large producers of swine and poultry. We have added a few to that, added a few product management spots but basically, it is that same sales organization, that has already proven what good relationships with a lot of customers, they are going to be carrying these products forward. So that is on of those that is not unlike some of the others that we have done it and as we wear along over the next year, I think we will see that particular product line it was improvement of both of the gross margin line as well as the operating line. I think there are some other opportunities that Lon might want to address.

Of course in time of economic times are dealing with right now. You have to focus on both gross margins and operating margins and we do that at over single monthly meeting. Jim is right in that, any time we have had an acquisition, we have had some generally good success right away in leveraging our Sales and Marketing and general administrative costs so that we can improve the operating margin line. It sometimes takes a little longer on the gross margin line until we can do some consolidation and move the manufacturing to some of our own locations. Aside from the acquisitions, we continue to move and work on transferring product that is currently manufactured by outside third party tollers to existing facilities, and this has been on ongoing program for a couple of years. We have identified the products that we want to do that. We know that those will improve gross margins as we go forward. At the same time we are also taking a more, I think aggressive look, in terms of where we focus our sales energies on products that will provide greater returns in terms of those products that have higher margins, and that is where we want to make sure we incentivize our sales force, and what them spending their time so that we get increase sales in most areas that will also help out gross margins. And all of that is a separate and apart from constantly looking at the raw materials every day to see if there are alternative suppliers out there, that can provide us quality products at a better price and other things that we can do from the system standpoint, in terms of automation to improve productivity and efficiency. So it is an ongoing program and that is true for Food Safety as well as Animal Safety but certainly for Animal Safety. Steven Crowley – Craig-Hallum Capital Group LLC: So if we look at the division as a whole, the Animal Safety division as whole, it seems like you are doing a bunch of the appropriate things to drive the profitability that business and I guess that essence of my question is, at one in time admittedly it was a business of different components, but this was in mid-teens operating margin business. You have continue to grow successfully but there have been some pressures and there has been transition that is made it something less than that, and I wondering, if the script that you are writing here, one that ultimately generates mid-teens operating margins for your Animal Safety business if you are successful.

If mid-teens is a pretty good range, so I guess I could say, “Yes”, if we are talking about 14% to 18% in there – it is that kind of business. We have got some diagnostic portions of that which bring in higher margins. There are better probably in total, there may be better opportunities of high operating margins on the Food Safety side, but a lot of that is divisible by what your dollar revenue volume is, the higher the revenue is the better that looks as you spread it over your sales organization in the G&A. And we are doing some things certainly to grow that revenue side. Steven Crowley – Craig-Hallum Capital Group LLC: Now one follow-on question that jumps over to the Food Safety side, I was struck by that very strong increase in your line of diagnostic test for Food Allergens. You talked about new customers, a number of high profile food recalls, I guess there have been discussions at and with the FDA by the industry on new labeling requirements. Could you tell us a little bit about the nature of new customers who have adopted? Is there a lot of Greenfield there for you, for folks who could adopt? Are you seeing a little bit of a knee in the curve, in terms of the rate of adoption? What can you tell us about that phenomenon?

I will address the international side of that, and the let Lon follow-up with what is happening in United States. Just back this last week from 10 days in Europe, and I have a dozen countries over there or seeing more and more pressure coming out of EU-based countries for the testing of Food Allergens and it is kind of unusual and if it is a Food Allergen it is under the regulation and even though you might not consider that it would be in the product, you have to prove that has been tested which is a little different that what is happening in the United States. So that is propelled our Food Allergen business over there, that will continue to propel our Food Allergen business in the European Union as we add additional products. For instance, we are now working on a diagnostic test to be able to detect lupine, which most of you probably do not even know what that is. I remember it is being the Texas bluebonnet, but it is also a plant used as a seed production, and sometimes in animal feed, but that is now one of that is on the list. Sesame, we do not worry about sesame seed allergens in this country, though they are beginning to worry about those in Europe. So I do think that there is some continued opportunity for a new product development and I think we have got three in-house right now that are under development. And there is also room for development for increases in the European Union or in products that are going to be shipped to the European Union. That is a little different than what I would say is the more realistic concrete stuff that is happening in the United States, that maybe Lon could talk about.

Yes. Thanks, Jim. I think the one thing if you noticed in the press release, it is kind of interesting to see that the bit increases in our first quarter in terms of this product line wherein the very first three products that we developed, and the ones that are most important, peanut, egg, and milk, and particularly in milk, I think that, what you talked about in terms of FDA continue to look at this area. They passed new labeling laws about two years ago. There are not apparently totally happy with the way some of the producers and processors are using the may contain, and they want to get more specifics on those labels, at least that is the kind of thing that they are about in their press releases. All of that is served to have the industry or the people that need to be concerned about the kinds of labels that they have. Looking at Allergen Tests as part of their regular protocols and QC programs, and we certainly expect that to continue. We were benefited in the first quarter, there were some food recalls, particularly related to milk and dairy products, and so that certainly helped drive the specific quarter in three-month period. However, this particular product line has been a strong grower permission corporation or I do not know, eight years now, the first two years it was kind of slow to take off, but the last eight it has just steadily grown, because of the increased scrutiny by FDA, and interest in United States markets, as well as European, and there is not a lot of testing that goes on for allergens right now in some of the other international markets. But I have no doubt that when you look at from a little longer term standpoint, they will be faced with some of the issues, and there will be good opportunities in other international markets as well. So we feel good about that product line. We continue to add and look at other products to add to the product line. We want to continue to maintain what we call our leadership position out there with that. We think we are in a good leadership position, and that we will get the opportunities to grow that market going forward.

Your next question comes from Steve O’Neil - Hilliard Lyons. Stephen O’Neil – Hilliard Lyons: Just a few items here, if I use your 13% organic growth for Animal Safety, I come up with an incremental contribution from acquisitions of about $2.9 million, and that is a little higher than what I had originally estimated, and I wonder it is possible for you to break that down between Kane and DuPont, just to give me an idea where I may have been low? Inc.: Just a few items here, if I use your 13% organic growth for Animal Safety, I come up with an incremental contribution from acquisitions of about $2.9 million, and that is a little higher than what I had originally estimated, and I wonder it is possible for you to break that down between Kane and DuPont, just to give me an idea where I may have been low?

No. I am sure we can do it right at the moment, because Kane was in for a part of the quarter. We bought them midway in the quarter a year ago so part of the Kane business would have been organic, and part of it would have been new acquisitions. I do not have that in my head. I do not know whether Rick does or not?

Yes. The Kane one is a little foggier from being able to give it to you right here on the phone. DuPont was $1.6 million. That we can tell you, and there is a little bit of…

I guess probably $1 million for Kane. Stephen O’Neil – Hilliard Lyons: That sounds about right, because you had Kane for a full quarter versus only a month last time. Inc.: That sounds about right, because you had Kane for a full quarter versus only a month last time.

Yes. That is correct. Stephen O’Neil – Hilliard Lyons: That is probably about right then. Inc.: That is probably about right then.

There is still a little of our business that is in there too. Stephen O’Neil – Hilliard Lyons: Also in terms of the Mycotoxins, I am familiar with Aflatoxin and Vomitoxin, I am not real familiar with DON. Can you tell me a little bit about that? Inc.: Also in terms of the Mycotoxins, I am familiar with Aflatoxin and Vomitoxin, I am not real familiar with DON. Can you tell me a little bit about that?

Well, we have got all kinds of different references about that. You probably heard it under the name of Vomotoxin. And same of Vomotoxin, Some of us want to get sophisticated. We call it deoxyniyalenol also that we can see if our tongue still works. But the, that is the one that we see beyond an issue in small grains in wheat, barley, oats to some degree. It was a situation in Europe this year, one of the things that is nice about being more global is that, generally somewhere in the world, there is an opportunity that pops out for it may not be anywhere else. So United States crop was pretty clean this year. The wheat barley crop was in most cases are, however, we saw branch with a big problem in their barley and wheat this year because of the weather as it related with DON. So our DON sales over there were up as a result to that. Stephen O’Neil – Hilliard Lyons: Also you did not really mention culture media and that has been a very strong area, how did that perform in the quarter. Inc.: Also you did not really mention culture media and that has been a very strong area, how did that perform in the quarter.

Overall, that business is up. It was kind of a tale of two cities; almost the traditional sales had it an exceptional year last year. And so, they add, they were a little bit above the prior year. But, we did see some very nice increase, particularly in international sales of the dehydrated culture media business. So, I know I go through such a long laundry list, most all of the product lines shows some kind of increase on the food safety side compared to last year except for those instrument sales that I talked about. So, we had growth across the board in dehydrated culture media, we were stronger in international when it was in the traditional market. Stephen O’Neil – Hilliard Lyons: Along the same line here and you did have a long list and I appreciate that line. But, can you give us an idea of how veterinary pharmaceuticals and products performed? You mentioned some highlights within that. How did the overall segment do? Inc.: Along the same line here and you did have a long list and I appreciate that line. But, can you give us an idea of how veterinary pharmaceuticals and products performed? You mentioned some highlights within that. How did the overall segment do?

There are a number of those products we had an increase on our BotVax B vaccine, which is a very high margin product for the Animal Safety Group, which is nice to see. That business from the Animal Safety business in general is still influenced by the timing of orders that go out to distributors. In the case of those biologics, we have a significant distributor that is international, based in Scandinavia actually, but can impact sale. We did not have an order them for BOT-B in the first quarter. In spite of that, we had an increase in sale. So, we expect a large order from them in the second quarter, so that looks good for that business. Wheat, a lot of those products are in what we call the ethical markets. These are sales of products that end up going to that veterinarian through ethical distributors, and we have a couple of product lines there that we have then deemphasizing, in fact, if you go back and you have been on the calls, you will remember a little over a year ago, we started to deemphasize some of the buy and sell items that are used, have uses that are not label claims on the product and those actually continued to decline as it go through the year. The rest of the sales moving through those ethical distribution channels were up 37%, included some of those products that I mentioned. So, we had a really good first quarter in Animal Safety side and it was broad based across the number of products. Stephen O’Neil – Hilliard Lyons: Sound like it. What about the specialty needles? Inc.: Sound like it. What about the specialty needles?

The specialty needle and OEM business in fact did increase in the first quarter. Rick just threw it over, we got all these percentage. It was up 36%. Again, we have got some very large, those are special relationships with very large, what we call OEM producers, but very large companies are typically on the Animal Health industry, and it was good quarter for them in terms of growth. We continued to work those and look for opportunities where we can sell more of our products in and special promotions with those kinds of companies, and we have had good success over the years, and it was not a good quarter for specialty needles in the first quarter as well.

Our detectable needle business continues to grow, and continues to show good opportunity. France has moved ahead very strongly, and we continue to keep our good business in Denmark. We are now beginning to supply that detectable needle to one of the large producers of pork in Poland, simply because their customers have demanded that they use that. Our people have been working closely with this within the past week or two with the National Pork Producers Council, as the whole United States industry tries to put more emphasis on making certain that the use in the needle that the producers are using a needle that will be detectable, if it happens to break off, it will be detectable when it goes through the processing plants, so that is customer pressure on that, and we were in good position there. It is a more expensive product, but when one figures the cost per injection, it is a very salable program, so that side of the business, part of it, we brought in back a few months ago, and it continues to grow and has good prospects too. Stephen O’Neil – Hilliard Lyons: And then finally, a couple of forward-looking things with the hurricanes occurring in the Southern United States and flooding, and that sort of things is. Is that a favorable environment for rats and your Rodenticide sales? Inc.: And then finally, a couple of forward-looking things with the hurricanes occurring in the Southern United States and flooding, and that sort of things is. Is that a favorable environment for rats and your Rodenticide sales?

I do not know for sure how to predict those kinds of things. I would say this; I think the rodent populations are up this year. Compared to the last year and that was good to see for us. Maybe not so for some of the people that have to buy those products. I think more importantly to us that we keep talking about this DuPont acquisition, we were always looking for strategic kinds of opportunities and being able to take those products the cleaners and disinfect products, and put it into a vial security program and go to those large integrators in poultry and swine markets represents a very good opportunity for the Rodenticides, and then we will not have to worry about, whether we have hurricane or not, and what that was doing to the sales of our Rodenticides. Stephen O’Neil – Hilliard Lyons: Last question and I will get off, of course China has got an absolute scandal going on with this milk production that they have had for the infant formula. Are there opportunities there for you in food testing in China, along with line? Inc.: Last question and I will get off, of course China has got an absolute scandal going on with this milk production that they have had for the infant formula. Are there opportunities there for you in food testing in China, along with line?

It is hard to predict something like Melamine, as Rick asked earlier we talked about what is Melamine really, what is it, and it is a component of plastics. Rick wanted to know if they could take some of that that contaminated dry milk and we will make dishes out of it and we decided it we probably had a little too much casein in it for that, but who would ever predicted this kind of occurrence. Now, we are working on some things that impact China that China impacts in the world market, you know, there is some dyes and stuff that are used unlawfully, at least unlawfully for us in fish production, that is one of the concerns that we have had in importing aquaculture species into the United States is a concern about couple of products called Malachite Green, Crystal Violet, that are old dyes that are used to dump in the fish ponds to hold down the biologic growth, and there are not good when they get into the flesh of the fish. We were working on that kind of things. But, we saw the first run when Melamine shown at the first time, in the gluten it went into the dog food, we thought that once that once they beheaded a couple of guys, and invited two or three more to jump off the top of high building, that that would be the end to that, but I guess it is not, I guess we experience an everyday greed is a powerful tool. So, we do not have anything for Melamine, and I do not know where the next odd thing may show up, but we are looking in the places where it is predictable when their food safety concerns are being predictable.

And I think what it does do is it does raise awareness about some food safety issues and problems that they have in China, and that certainly helps our overall efforts over there to market some of our food safety products and they were only going to be able to incur so many of these kinds of scandals as you put it and not put into place more testing to protect their food supplies and get the rest of the world comfortable which those products that they are exporting. It is not anything specific to Melamine that we have that is going to help us like next quarter, but it certainly helps our overall efforts to sell more food safety products into that country. Stephen O’Neil – Hilliard Lyons: That is what I was wondering. I was not really thinking about melamine specifically, but just some spillover benefit to you, as you pointed to growing awareness. That does make sense. Inc.: That is what I was wondering. I was not really thinking about melamine specifically, but just some spillover benefit to you, as you pointed to growing awareness. That does make sense.

Your next question comes from [[Ken Reeds - Paragon Financial]]. [Ken Reeds - Paragon Financial]: One of the things I proposed to a neighbor of yours, Spartan Motors that got detail in 97 wants to implement a small dividend, which would make you stock available to not only growth funds, but also income funds, and they followed that up with a $0.05 initiation. Have you thought about doing something like that, even at a nickel on your shares outstanding, that would only be about $72,000 a year and that would make you available for income funds to buy you at the same time?

Well, Ken we are great on dividends. We love them, and we gave a nice dividend a year ago in terms of stock dividend. We continue to believe that that is the right way to go. I know that there are people that talks about cash dividends, and I have got a famous speech and tell them not to repeat. But, we think that when it appears appropriate in the market to be able to reward shareholders with a stock dividend, then allows them to treat that and sell it and convert it to cash if they wanted cash or on the other hand they keep it where they have got it and treat it as a full growth stock, but I think we want to keep our money and grow our business and make it sound and not bait the market, within our small size and our growth, we will not try to bait the market with trying to stick some cash dividends out there. That has been our opinion and of the Board of Directors. I do not see that changing in time soon. [Ken Reeds - Paragon Financial]: A client of mine, Richard R. was just from the, is also a shareholder of Neogen, and he called me back. He could only stay on the call for a little while, and he was wondering why there were 2,900 shares bought in the last year. And has already have been a quarter million shares exercised, of which 95% of those shares have been sold at 25 or better. He was wondering if that is an impressive statement of saying that your stock is fairly valued? I know it is a tough question.

I do not know where those figures come from. The people in this room own more stock today than they did a year ago.

Your next question comes from Lawrence Southam - My Broker LLC. Lawrence Southam – My Broker LLC: There was a brief mention of BetaStar. What was happening on that approval process?

I have been waiting on that question. Unfortunately, that question has been asked at too many of these meetings, I can report to you today that our United States version of the BetaStar test kit has been approved by the AOAC. It has been through all the hoops and has been approved for all of our claims by the Food and Drug Administration. It is now before we actively can market it in the United States, though we can market it, but, with the other approvals but before it is of any consequence, it needs the approval of the interstate milk shippers. Interstate milk shippers have a meeting scheduled for next week, in which this is the sole item on the agenda. Of course the game is not over until the fat lady sings. But, well I cannot fathom any reason why it would not win its final approval next week and we still get it marketed in September, I hope. Lawrence Southam – My Broker LLC: And also with discussing the Soleris and AccuPoint instruments and the lumpiness there, could you just give us some, I look at this as a razor and blade business, but could you give us some feel for what the instrument cost is, and then how much product a typical instrument might use, in terms of disposable over the course of a year or series of years. Can we have the basic economic model on those? Jim Herbert – Neogen, Chairman CEO: But the AccuPoint instrument is in the range, and it depends on a few things, but it is the range of about $1,800. So it is a pretty inexpensive instrument and it is easy pretty to run, I am sure to remember what that, what the average is for instrument out there, but I think of somewhere in the range of $5,000 in reagents that go with that, and of course, those instruments last for a long time if they do not happen to drop one on the vat of soup, or run over with a forklift, but, if those are, it is a pretty durable produce, and it is really a pretty staple razor/blade business. The Soleris Product line, the razor cost a little more, but it is finding a lot of favor with, we now have got, I believe we have got five test kits and vials on that instruments. We are continually adding new ones. This allow somebody, we got there, what we call it a 32 model, which has 32 sample holes in it. We got one which is the 128 which ironically holds 128 samples, but that means that they can take the sample from the floor, for instance if it is a salad dressing person, they can pull a sample if they want to know if it got a one or two or three different particular specific spoilage organisms, it goes into one of those program and then enter the machine and it is a walk away system, so they could be running in the big machine that could be running as many as a 128 samples at the time. So, it is a little easier for them to depreciate the cost of that. Most people are depreciating those probably on a five year basis. We fully expect it will last a lot longer than that. But, the costs there are not prohibitive and the returns are quite good in the way of reagents. There are few cases where we got high volume users of reagents that are buying a lot and it is an issue of capital expense approval, but, we do have our programmer, we call our reagent room program, which we place the instrument, actually loan the instrument to them, and then charge them so much a vial for the rental on that is added on to the cost to the reagents. We also have a rental program that has worked pretty good. Sometimes, you get into a situation where somebody is not sure whether they want to spend the money to implement a program and rather than saying, we will take and try it for three month, we said we will rent it to you for three and well, that program has worked, and which kept people’s attention when they are renting the machine, versus maybe just letting them just have it and sit on the bench not doing anything with it. So, both of those programs are, you characterized them exactly right, they are both razor/razor blade businesses. Lawrence Southam – My Broker LLC: Of the basic Soleris instrument of 32 and the 128, what sort of price tag?

A 32 would, you will probably got retail prices out there in $25,000 range or something like that. When you get up to the 128, you are talking about an instrument that can cost $40,000. Lawrence Southam – My Broker LLC: So that can cause some lumpiness.

There are a lot more sophisticated in the other things that has looked at in terms of the Soleris instrumentation quite often is laboratories might be looking at a labor savings there, because they are true walk away kind of instruments for the kind of testing. There they are doing, they are looking at stuff ways to minimize the amount of inventory that they have to hold, so there is a real economic benefit associated with that instrument as well. Lawrence Southam – My Broker LLC: Those prices are not outrageous for automated laboratory equipment.

No, no. Lawrence Southam – My Broker LLC: And then what sort of magnitude of reagents would or range would you like to see? Obviously, tremendous variation between users.

Yes, there is and I think Jim has correctly characterized the usage for an AccuPoint reader. We typically do not think that they should be even be looking at that instrument, unless they can run 25 test a week or so. And I get into that five to six or $7 thousand range and stuff, that is kind of minimum, we have got users that are doing a lot more than that in term of what they are running in kits, and because of what I said in terms of the way that the customers look at, at Soleris equipment, it does range widely, I mean, we got customers that can easily buy $50,000 and up of vial in a year for use on that equipment. Lawrence Southam – My Broker LLC: Pretty, very good. Thank you and obviously we are continuing to stay involved here.

Your next question comes from Joseph Pottman - Wachovia Securities. Joseph Pottman – Wachovia Securities: You continue to reinforce my sentiment that I pass along to my clients that the risk in Neogen is in not owning it, rather than owning it. The question I have is related to what you guys see happening down the road over the next two, three, four years. What happens?

We are going to continue to grow the business. We passed $100 million and put a milestone marker on that, and [Bohannon] is about three paces ahead of me heading toward the $200 million mile marker. But, we think that there is a great opportunity in the business is that we are in Joe. Both as we see, the markets grow and as we see consolidation. I know that it gets really unusual if you look at other industries back through time as to what happens, when you got a lot of people coming early on, they get some of the small companies gets flushed out, some others get to be bigger and then, you see consolidations in, I think it is interesting that the arrangement we have now DuPont and the arrangement that we had with Eastman, and before that, it was an arrangement with PerkinElmer, that they are very strong in certain technical areas, development technical areas, but, do not have access to the market place. So, I think the big part of our success is that we started out barely, barely in our own sales and marketing force, and we have continued to do that, we got a jump on competitions and we try to keep ourselves on that position. I see us continuing to do that as we go forward which means it is not only products that we develop internally, but, they may be some acquisition opportunities. But, we may find ourselves in the position of work and more closely with some other people as a strong distribution channel for those products. We would only do that if it was synergistic to what we were doing and does not distract our people, but I rhink we got good strong growth opportunities going forward. Joseph Pottman – Wachovia Securities: In you main presentation, I thought that I heard you say, a 10% growth margin improvement in some particular product line.

Yes, that was the disinfectant product line. That is somewhere north of $7 million in this fiscal year with revenue coming in, but it has been manufactured, a part of it is being manufactured in the United Kingdom, well, there is a lot of water between here and there, that you got to move product across for transportation. One we needed over here in these hemisphere, though we were working to get the registrations cleaned up fares so that we can begin to manufacture that product there, and particularly those products particularly [58:09], and then we have got some other tolled manufacturing arrangements, that some of which is certainly we would want to look at consolidation into our own business at some point of time. And if we do not have to pay the profit in the cost of the toll manufacture, I am not saying that they are not fair in their costs, but we already have a lot of those costs already in place, that was the part of that I was talking about being able to, I thought I could see, being able to gain 10% on the gross margin of that DuPont group of products. Joseph Pottman – Wachovia Securities: What do you see happening to your growth margin over the next 12 to 24 months? Will you be able to maintain it?

We always continues to look at upgrading profit, Joe, I think that is obviously gross margin is a part of operating profits, we still pushing hard to try to get that to 20% and get it stabilized to 20%, which I think is a pretty great accomplishment if we get that done. So, in some cases, if the gross margins are not quite as goods in some products as others if we do not have to spend the money on R & D, and G&A, and sales and marketing, if that side of the expenses are down, which then it comes to the bottom line, which is one of the great things about some of these bolt-ons. Today, I would not have gone out and been interested in us buying the DuPont product line. If we did not already have two very important aspects, we already had the plant property and equipment with filling lines that were not running at full capacity to be able to absorb that from the manufacturing standpoint, we already had a sales on marketing groups that were calling on the people who were the buyers or the would be buyers of these products, and sell them something else. So, that allowed us to go forward with that acquisition, where if we would had to go out and build there, our own manufacturing plants from scratch and had to start up our sales organization, and do nothing but sell this products, it would have been years to attract. Another gross margins are not as good as diagnostic test for aflatoxin, but neither are the R & D and sales marketing expenses.

Your next question is a follow-up from Steve Crowley - Craig-Hallum. Steve Crowley – Craig-Hallum: Related to your instrument business in sales and placements, what I gathered from your prepared comment were that, timing issues have sales and placement of instruments down slightly on the year over year basis, but the pipeline on the outlook, for that activity was good for the periods of whole, one is that an accurate take away for us to have.

I think that is a very accurate take away, and particularly that really that the area that saw some shortfall compared to the first quarter last year with that Soleris Instrument at the high value instrument, we have some very good placements last year, but the pipeline for that is good, or actually got an increase focus on adding to that, because there are so many opportunities out there and in terms of overall product lines from a budget standpoint, it has got one of the highest growth forecast for the year. So, that certainly the case for Soleris and we believe the same thing is true, with that great success as I mentioned on the ATP instruments, although last three years so we can continue to find opportunities out there. So, that we fully expect the increase placement of instruments going forward. So, we can increase that razor business following on. Steve Crowley – Craig-Hallum: And just give me or give us a little of a feel, I would think instrument sales as a whole are a very modest percent of you overall revenue, if we look, for example at last year, with the couple percent of revenue, or is it much more than that, under 5%?

Yes, it is under 5%. Steve Crowley – Craig-Hallum: It seems like acceptance of these products, AccuPoint or Soleris has really been driven by particular segments of an industry or particular applications, I think of things like beverage companies, or salad dressing comes up whenever Soleris comes up. I am wondering, are there some new, even vertical markets or applications or product there is that seem to be in embracing these products, areas like fast food or hospitality, or a particular food segment, or do you see some new applications bubbling up?

That is one of the things when you got a product like this and you are looking to expand, and grow yourselves, you are definitely always looking at other market and other potential, where the same technology can be utilized, that is true for both of those. We have had some very good strength in the dairy and beverage market. For the ATP product line there are equally good opportunities we talked about those poultry and swine integrators and standpoint of vial security for animal safety, but there is some good applications the ATP instrument in both processing facilities as well. The Soleris, it is really there, it is more matter of us determining where to best apply the resource we got. The opportunities there are really broad based; we want to continue to develop new vials for that product because all of the food safety market segments in which we operate virtually all of them have an opportunity for that instrument. So, we will continue to apply our resources in those areas that represent the best opportunity for growth for both of those and we think that we will continue to uncover those and find new applications in a number of those markets including some of those that you mentioned.

There appear to be no further questions at this time.

Well, thank you for you participation this morning, and again I remind you of the annual meeting, some of you may have proxies that haven't been returned. We would appreciate if you, if you got those lying around, if you could get those back for us there is nothing huge on the agenda for this year’s annual meeting. We have the opportunity to elect three directors and the name of the auditors for the Company, and if you happen to be in the area and can attend, it is usually a pretty fun event. We get a large number of people, and lots of questions. So, please keep that on mind if you are available, and thank you again and we will look forward to if nothing really important comes up, we will look forward to talking to you this time, next quarter.