James Herbert - Chairman & Chief Executive Officer Lon Bohannon - President Rick Current - Chief Financial Officer

Steven Crowley - Craig-Hallum Capital Tony Brenner - Roth Capital Partners Marco Rodriguez - Stonegate Securities Steve O'Neil - Hilliard Lyons Brian Geep - Sidoti & Co. Travis Williams - Stephens Peter Coil - Private Investor

Good morning ladies and gentlemen and welcome to the first quarter fiscal year 2010 earnings announcement conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. James Herbert. Mr. Herbert, you may begin.

Good morning and welcome to our regular quarterly conference call for investors and analyst. As indicated today, we’ll be reporting on Neogen’s fiscal year 2010 first quarter that ended on August 31. To start with, I’d 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, and the actual results may differ from those that we’ll be discussing here today. These risks that are associated with our business are covered in part in the company’s Form 10-K that’s filed with the Securities and Exchange Commission. In addition, to those of you who are joining us today by live telephone conference, I’d also welcome those who maybe joined by way of simulcast on the worldwide web. These comments along with some exhibits will be available on the web for approximately 90 days. Following the comments this morning, we’ll entertain questions from participants who are joined in this live telephone conference, and I’m joined today by Lon Bohannon, Neogen’s President; and Rick Current, our Chief Financial Officer. Earlier today Neogen issued a press release announcing the results of this first quarter of the company’s 2010 year. Given the worldwide economic situation and the financial position of a number of our customers, I’m very pleased with the results. Revenues for our first quarter were approximately $32.3 million, or 12% increase from the previous years first quarter. First quarter net income increased 18% over the same quarter a year ago, to approximately $4.4 million or $0.29 a share in the current year, compared to the previous years $0.25 per share. The result of this quarter extends the consistency record that we built over time and one that I think we take great pride in. This is a 66th consecutive profitable quarter from operations for the company, and was the 70th in the past 75 quarters, when Neogen reported revenue increases as compared to the previous year. That’s a record that now stands almost 19 years. The company achieved these results, even though the currency translations had an unfavorable impact this quarter. They were approximately $1 million when we compared to a year ago and income taxes were almost 1% higher this quarter, than the same quarter last year. The credit goes to Lon Bohannon and his operating group, and in fact the credit goes to all of Neogen’s over 500 employees scattered around the world. Months ago, we realized that the year that we were facing was not going to be Business As Usual. We asked employees to look for ways once again to reduce costs, without jeopardizing the company’s future growth. We asked our sales organization to identify ways in which they could be more effective in their sales and marketing activities, and we ask all of these employees to convert these strategies into some recent plants, and we remained them that hope was not a strategy. Over the quarter, since then we’ve been able to continue that top line growth, while at the same time improving income. In fact, operating income for the quarter that we just finished equaled 21.5% of revenues. Now, I’d be remiss if I didn’t acknowledge that our favorable product mix this past quarter helped push up, both our gross margins and our operating profit. Though our product diversification has helped to take out a lot of the seasonality in our business, there’s still certain of our product lines that yield higher margins than others. Our worldwide diversification of revenues continues to help propel both the top line and the bottom line. For the quarter just completed, over 41% of total revenues were derived from sources outside the U.S. Because of some timing issues, it was a particularly good quarter from a cash flow standpoint as we generated $9 million in cash from operations for this first quarter. Of course, all of these factors continue to strengthen Neogen’s balance sheet and resulted in a 4.8% increase in shareholder equity compared to just three months ago. At this point, I’ll stop talking about the quarter and in a few minutes Lon Bohannon can give you some of the real color of the various areas of our operation, but instead let me talk a bit about, what I see in the upcoming quarters. First of all, let me talk about specific Neogen activities. Our combined expenses for sales, marketing and administrative expenses for this first quarter, were up only 8% compared to the prior year, but gave us a 12% increase in revenue. However, our research and development expenses were up over 50%, as we compared them to the prior year. This was very much inline with the strategy that we announced last year, when we advised that we expected to almost double the size or our research staff because of new development opportunities. The return on this investment won’t really begin to fully show up for a few more quarters; however, our R&D groups at five locations have 66 projects either underway right now or that will be instituted before the end of the fiscal year. Some of these are aimed at new products, some with the improvement of current products, and still others aimed at technologies designed to spur us ahead of the competition. As an example, our food safety R&D group has now completed seven new or improved product releases. This group alone has about 19 such projects that should yield new or improved products before the end of the fiscal year. Looking at another opportunity for the quarters ahead of us, commodity grain prices should also be on our side as we look out over these next few quarters. Remember that our rodenticide operation by several million pounds of corn, wheat and soybeans for the manufacturing of our rodent baits. Our forecasts for all of these are to be less expensive than they were a year ago. As an example, last fall we were paying almost $12 a bushel for wheat and this year’s bookings look like we could be at about half that price. It’s difficult to forecast what’s going to happen with currency evaluations, but in the near term it appears that we won’t be beset with that unfavorable translation on a year-to-year comparison, as we’ve seen in the last few quarters. Currently I think we’d expect the currency translation for the second quarter to be approximately neutral to what they were in the second quarter of last year. Looking at the international situation, we again expect to see the same kind of growth in these markets that we had experienced in the last few quarters. These revenues are strengthened now by the fact that we have approximately 40 more international distributors than we did a year ago. Our Neogen Europe operations continue to turn in good strong growth. Our Mexico operations though still establishing traction, are turning in above year earlier results. We’ve been asked several times recently about the food safety announcements from China and what these are up to mean to Neogen. I think we’re doing the right things there, but I am still not hearing the cash register ring that often. Dr. Richard Crowder, who is by the way a nominee for our Board of Directors coming up, had a personal meeting earlier in the month with a long time acquaintance of who is currently the Deputy Director of China’s food safety programs. China I think, clearly understands that they must establish more active programs, if they’re going to continue to be a world exporter of food products. We’re working on new diagnostic test now to more rapidly monitor food adulteration, and some of these will be introduced in the next few months. They’ll find a place either in China or in the ports where China products are being exported. Looking at other opportunities in the quarters ahead, there’ll be more acquisition opportunities. Our corporate development group has several possibilities right now that are on our radar screen, and quite honestly we’d like to give some of that surplus cash to work, but we’re not letting the money burn a hole in our pocket. I guess I’d said to you on this call this morning, be patient with us in the way of the acquisitions, and remember that we’ve done 15 successful acquisitions now, over the past eight years. Increased regulations are likely to have a positive impact on our business in the quarters ahead. We heard a great deal about the U.S. Food Safety Enhancement Act, when it was passed by the house and its now for eventual consideration by the Senate. Of course the healthcare issue has pushed both the discussion and action on these new regulations temporarily to a back seat. However different from the controversy that surrounds the healthcare issue, there is more bipartisan support here, not only in the congress, but also in the public. Just during Neogen’s last quarters, there were 47 food recalls covering a laundry list of products like cheese, ham, salmon, raisins, milk, ground beef, peanuts, lettuce and even cookie dough. The causes of these recalls ranged all the way from bacterial contamination of food, to food just containing undeclared food allergens. The U.S. center for disease control is now on record with an estimate that some $76 million Americans and that’s about a quarter of our population, are stricken with some form of foodborne illness each year. Their statistics show that more than 300,000 of this group ends up in the hospital and some 5000 die. This widespread news coverage of these recent outbreaks makes it seem that hardly anything in our food supply today is safe. Food companies, particularly those larger companies protecting valuable brands, understand that they have to do something to renew consumer confidents. While the details of the new federal plan are yet to be established, I think it does appear certain that the legal framework and the requirements for regulating food safety in the United States is going to change. I think it’s also being recognized that much of the food safety crisis is going to have to be dealt with back at the food production level or back inside the farm gate if you will. This of course further verifies Neogen’s strategy of providing solutions for both food and animal safety. As an example here on July the 7, Food and Drug Administration announced new regulations aimed at reducing the occurrence of Salmonella in eggs. FDA estimates that these new regulations will reduce food poisoning cases from eggs by 60% or 79,000 people a year. Prior to this, there’s been no mandatory food testing at the farm production level. Though regulation has prohibit the sale of adulterated food products, there’s not been a regulation requiring mandatory testing. When this latest regulations goes into effect, which won’t be until next July, every flock of egg laying chickens in the United States above a certain size, which represents approximately 95% of the total laying in population, will have to be tested twice during their productive lives. Other biosecurity measures are also mandated by this FDA announcement. Neogen is continuing its strategy of producing and supplying rodenticides, disinfectants and fly-control products that clearly help the nation’s eggs producers comply with this regulation. Furthermore, Neogen currently has their only rapid test available to quick and economically detect the presence of Salmonella enteritidis. This is the specie of Salmonella, that’s a target of these regulations. Though I could continue with other examples that bode well for Neogen’s future, let me stop now before I totally dominate this entire call, but before turning the call over to Lon Bohannon, let me remind you that Neogen’s annual meeting of shareholders is coming up on October 8, to be held at the University Club of Michigan State University here in Lansing. We continue to extend the invitation to all to attend, and shareholders should have recently received the proxy statement, covering the measures that are up for vote at this meeting. I’d encourage everyone to please complete their proxy and get them submitted as soon as possible. In fact, I think I’ll go a little bit further and solicit your votes based on management’s recommendation on those three measures. Now, let me turn the call over to Lon Bohannon to give you better color on the quarter that we just completed and perhaps even more important, the things that we continue to learn about our business and the market, that I believe help ensure our continued profitable growth. Lon.

Thank you, Jim and I too would like to welcome everyone listening on the conference call, as well as those joining us via the internet. As Jim has already stated, Neogen issued a press release earlier today reporting yet another quarter of record breaking operating results and like Jim, I think it is important to recognize the outstanding contributions of Neogen’s team of more than 500 employees, who are primarily responsible for our consistent track record of growth and quarterly revenues and earnings. Jim has already commented on the first quarter total revenues of $32.3 million, net income of $4.4 million, which represented growth rates of 12%, 18% respectively, compared to the first quarter of last years. So I’d like to provide a few more details on some of the outstanding performance behind those overall results. I will begin by discussing performance at our animal safety division. The animal safety group experienced a very solid first quarter with overall sales growth of 12%. The majority of this increase in revenues did come from the contributions of acquisitions, but also included a very respectable organic sales growth of more than 4%, and I think that same store sales growth is particularly noteworthy, considering the overall depressed economic environment that continues to exist for some of the important customers, serviced by our animal safety division. For example customers involved in any aspect of animal protein production continue to struggle, and they do remain focused on cost containment in virtually every facet of their operations. We have seen the impact of these cost control measures in a couple of our product lines, including OB gloves and hoof care products that are sold at dairy farmers, as well as veterinary instruments, cleaners and disinfectants used by poultry and swine integrators. Unfortunately, our animal safety sales team has been successful in uncovering new opportunities and in gaining market share, which has helped to offset much of the lower demand brought about by the poor economic conditions in the overall animal protein markets. Now in addition, product lines sold to distributor, servicing companion in food animal veterinarians experienced a very strong first quarter. Sales of our high margin BotVax B vaccine used to prevent Type B botulism in horses, combined with sales of our EqStim biological, used primarily to aid in the treatment of equine respiratory infections, achieved 60% growth in the first quarter. Sales of injectable vitamins sold under the Neogen vet brand, and used primarily to prevent and treat vitamin deficiencies in food animals also achieved first quarter sales growth of more than 60%. Sales of veterinary products sold through over-the-counter, what we call the OTC distributor channels, represented another area strong first quarter revenue growth for animal safety. The company’s ideal instruments brand of products, including disposable needles and syringes continued its tradition of solid growth, with a revenue increase of 11% in the first quarter. Other OTC lines that experience exceptional first quarter sales growth included product’s position with biosecurity solutions, including sales of domestic rodenticides which increased 8%, and sales of fly control products, which more than doubled in the first quarter compared to the same period last year. Turning to food safety; Neogen’s food safety division also had a stellar first quarter, with overall same store sales growth of 12%. The negative impact of currency translation kept this organic growth from being an even higher growth percentage. Once again, as Jim indicated, our Neogen Europe subsidiary experienced outstanding quarterly unit volume growth that exceeded 20%. After an impressive record that now stands several years for that group; however, for the first quarter all of this growth disappeared upon the conversion to pound sterling to dollars that is required for financial consolidation purposes. Fortunately, in addition to Neogen Europe, the food safety division had a number of strong performing business segments in the first quarter. Sales of diagnostic tests for drug residues, including antibiotics used to treat dairy cows increased more than 35% for the quarter. International sales were particularly strong, including a significant increase in sales of our new BetaStar Combo test. This test detects the presence of violated levels of beta-lactam and tetracycline drug residues on a single device. Growth has been especially strong in the Eastern Europe country of Belarus, which exports virtually all additional production to Russia. Sales of test kits to detect food allergens continue their recent trend of exception growth, with an overall increase of 25% in the first quarter. Sales of diagnostics for milk allergens led the way, and we also saw solid growth in sales of allergen test kits for eggs, almonds, processed soy and wheat gluten. There are probably two other food safety product lines worth mentioning in terms of first quarter growth. Neogen’s line of test kits to detect naturally occurring toxins achieved solid growth of 10% for the quarter that was led by an increase in sales of our diagnostic tests for DON and histamine. I suspect that some of you have probably heard, we did see a number of regions throughout the U.S., where mold was a problem in wheat harvest, leading to strong sales for our DON test kits. I guess lastly for food safety, I’d say that our Soleris product line of test for general microbial contamination such as yeast and mold also had a strong quarter with sales growth of 16%. In fact, as the economy improves and perspective customers move to relax current restrictions on capital expenditures, we are optimistic that the Soleris instrument based optical, microbial test system will continue to generate strong organic sales growth in future quarters. I’m sure that everyone who saw the press release noticed the exceptional gross margin and operating profit performance in our first quarter. Obviously we were very pleased to see such strong gross margins and to report at 23% increase in operating profit and a 12% increase in sales. There are a couple of reasons why we experience such as significant improvement in gross margin and operating profit, compared to the first quarter last year. First as Jim already mentioned, product mix was defiantly in our favor in the first quarter. There have been quarters when we’ve experienced a less than favorable product mix that resulted in lower margins than probably otherwise would have been expected. I know that many of you have heard me use that explanation to address less than expected margins on those occasions when that occurred. However in the three month period reported today, we had one of those quarters, when the product mix was extraordinarily favorable and which resulted in higher gross margins in normal. Our animal safety division had a big quarter of sales for our high margin vaccines and food safety’s gross margins were certainly boosted by extremely strong sales of test to detect drug residues. I wish I could say this will be the case in every quarter we report, but history tells us that’ll be overly optimistic, and we have to look at margins over a longer time period, based on a more normal mix of product sales. The second reason for the improved margins, and probably more importantly from my perspective, is that we do continue to focus attention on maintaining effective cost control from the use of employee based improvement teams in our manufacturing, customers services and administrative areas. These improvement teams have succeeded in finding a number of ways to reduce costs to improve productivity. Because of the success of these improvement teams, the favorable product mix and our overall sales growth in the first quarter, expense categories for raw material, direct labor, overhead, sales and marketing and G&A were all less than the prior year, when expressed as a percent of sales. We continue to believe that it is critically important to maintain a mindset of supplying the highest quality product at the lowest possible unit cost when compared to competition, and we believe we still do have a number of operational areas where we can further improve our cost structure or improve productivity as we push forward $200 million in sales. Let me close by saying that we are particularly pleased with our solid organic revenue growth for the first quarter. Although many economist and investment strategist are predicting an end to the recession, I think it’s important to point out that most companies are preserving or achieving their profitability almost entirely by cutting costs. I read last week that one of the biggest things missing from the recovery so far has been growth and revenue. During the second calendar quarter, the combined revenue of companies in the S&P 500 was 25% lower than for the same quarter in 2008. This was the third consecutive quarter of lower revenue on a combined basis, for companies in the S&P 500, and analysts expect revenue of companies in this important index to fall below 2008 levels again in the calendar third quarter. Of course Neogen has been somewhat unique in this area, as we have consistent while reported sale growth, in addition to our earnings growth for each of our quarters throughout the current economic current downturn. For our first quarter reported earlier today, we believe our organic growth exceeded 10% on a unit shipped basis, and we believe overall revenue growth was more than 15% after adjustment for currency translation. Even if we are in the early stages of the recovery, it remains difficult to predict how strong that recovery might be, as well as how it might impact future results, but our shareholders can be assured, that we will do everything possible to continue to expand revenues, and to aggressively pursue growth opportunities that we see throughout our domestic and international markets. Our first quarter results represent another successful and significant step forward as we begin the second year of our five year plan to reach $200 million in annual revenue. That concludes our prepared comments for today and at this time, Jim, Rick and I will be happy to answer to your questions.

(Operator Instructions) Your first question comes from Steven Crowley - Craig-Hallum Capital. Steven Crowley - Craig-Hallum Capital: In terms of a couple questions, but maybe first to clarification; you referenced some numbers, obviously you reported growth. Also the company overall and international, and you referenced a unit growth number. I think you said internationally it was over 20%; domestically for the whole company it exceeded 10%. Does that number differ from just a pure currency adjustment for FX translation, because if I do that for international, just add that $1 million back to your international total, I actually get a constant currency growth of international high teams. I think for the company overall, you referenced a similar constant currency growth rate statistic of about 9%. I just want to make sure there are three different numbers not two, if you follow me?

Steve, I don’t know that we can answer that here. May we can huddle back on that this afternoon and see if I can answer that question. I think that you’ll find Steve that probably three different numbers as they were put together is some change, because of currency translations, but it also takes into account what the price variance might be on an average selling price for some of those products. I think all of that probably gets calculated into that total. But I think if your question is, is it three different numbers, I think the answer is yes. You can’t go back and make two numbers out of it. Steven Crowley - Craig-Hallum Capital: That makes sense to me. I just wanted to run up the flag pole. More important stuff, you’re reference to 66 projects, kind of in-process or assumed to be in-process related to new products sounds like an impressive number. Do you have any reference point for us, as to where that number was ballparked a year ago?

I can speculate about where it was; it was probably less than half of that. It was probably more in the range of 20. Steven Crowley - Craig-Hallum Capital: That’s a good reference point for us. Than in terms of the performance of the DuPont business, there’s obviously some pressure on some of the end customers you referenced for that DuPont effective line or some of your own different factors. Can you give us a little bit of status update as to how the product line is doing, and where you are in converting manufacturing to your own plant?

Let me start and then Lon can add to it, because he just came back from our Wisconsin operations last night, but we’re pleased with the way it’s moving. It’s probably one of the areas that’s faced the greatest pressure out there today, because a large share of that business goes to the large producers worldwide, of both poultry and hogs, and anybody that’s watched the numbers know how bad those two industries have been beset with the economic situation. So they sometimes take away prudent activities just in favor cash flow. So our sales there have been good, but there’s been a lot of price pressure on it too and we’ve got some competition there; there’s some price pressure there. We are about a month behind I guess on where we meant to be as far as integration of the manufacturing activities. We do not manufacture any product right now in the U.K., that manufacturing operation was a total manufacturing for us, but we’re now out of that, and we’re moving toward getting more products up to speed in what we’re doing at Hacco. We’re also in final throws of putting together an agreement for total manufacturing of those products for the Pacific RIM area. We’ve got a good total manufacturer lined up for over there. It doesn’t make any sense to make that product here, and it’s got heavy and it’s got a lot of liquids in it to ship that product around the world, when we can make it in some other places. :

Steve, let me just add a couple of other points to Jim’s comments. We do an analysis at the end of first year of any acquisition, to see how we do against our pro formas. In terms of the DuPont cleaners and disinfectants, we actually well exceeded the pro forma and our own internal budgets for the first year. Some of that is because we were able to work with DuPont and then we thought we would be able to do this from a collaborative effort, in terms of finding other areas to act as their distributor for products. In addition, in reviewing our first quarter results, some of the synergies that we thought would be there are actually taking place. For example, the disinfectants that we owned ourselves, prior to getting access to the DuPont cleaners and disinfectants, we’re not doing very well, but now that we have a complete product line, sales of those products are up, and we’re up almost 20% in the first quarter. Also because we’re approaching this from this total biosecurity solutions standpoint, we have seen an increase in Rodenticid sales. So we’re very pleased with the performance so far. Some of our customers are facing some tough times out there, and that’s why I commented that fortunately our sales team down there has been successful in finding some new opportunities and taking some market share in a couple of places to continue to grow that business. So it’s very much on track. We will be producing our first batch of product in our Randolph operations in the October and more to be produced in November, and then of course we’ll begin the season of those other improvements from a cost structure standpoint as we bring those products in-house. So I think it certainly was a very good acquisition for Neogen Corporation and all of the concerns out there right now in H1N1 and the swine flu. We can use a little bit to our advantage to make sure that the kinds of security issues are in place, or programs are in place that should include some kind of a cleaner and disinfectant usage. So it’s going along well.

Your next question comes from Tony Brenner - Roth Capital Partners. Tony Brenner - Roth Capital Partners: Regarding gross margins, you had a 200 basis point improvement in the quarter year-over-year, and you cited three broad reasons for that improvement; to lower commodity costs, various cost efficiency measures and favorable product mix. I am wondering if you could sort of quantify each of those, or at least rank them in importance, and I wonder what the predictability of favorable product mix might be going forward.

Well, I would rank product mix first. From quarter-to-quarter, in terms of changes of the gross margin line, the product mix in terms of diagnostics or other high margin products can move that percentage more than any other single factor. I think the overall revenue growth continues to be positive and is why over the long term we think we can continue to bring up the overall gross margin percentage. Of course, we want to continue to focus our attention on continuous improvement in terms of productive and cost reduction measures, and they’re going to add intermittently in terms of the quarter, but they would probably be the least. If I had to rank those in importance, it would be product mix in this particular quarter first, and then volume growth and then our cost improvements. So it is virtually impossible however, to predict that going forward. Tony Brenner - Roth Capital Partners: My second question is, what accounted for the smaller gain relative to sales in your sales and marketing expense?

I think that once again as we increase, we expect some of those percentages in some of those areas to come down over time as sales volume increases. I mean we don’t need to add the senior manager levels and we’ve always got some open positions as we expand and grow. I think we’re probably a little aggressive in terms of timing and when those will come onboard. So we probably got some saddles that we still need to fill or did need to fill in the first quarter and that helped, not had as much of an increase there; but over time we expect that to come down, but it was certainly a lower percentage in the first quarter, than we would expect going forward. Tony Brenner - Roth Capital Partners: If you could comment on the progress of the IDS integration?

It’s coming well. First step there was to move all of the manufacturing or move 80% of the manufacturing operations from the St. Joe operation to Lexington, that’s now been affected. All of that large group of product is being now manufactured in Lexington, and as consequence, well we’ve further reduced the overall staff a bit at St. Joe. Its down to our core group now of the product managers and R&D team that’s their. That R&D team is our very strong core team that is working well with the R&D staffs at both Lexington and Lansing. They have already been productive on some things. They’re one of those six operations Tony spoke of, on where our R&D expenses are. They’ve got a couple of new products there that look very promising, that were in fact in place when we acquired the business. It will be ringing the cash register here probably towards the end of the second quarter. So we’re very pleased of what’s happened there.

Your next question comes from Marco Rodriguez - Stonegate Securities. Marco Rodriguez - Stonegate Securities: I was wondering, kind of a follow-up to on the previous questions here on gross margin. Would it be fair to say that the product mix impact on the increasing 200 basis points year-over-year to say maybe over 50% of that was from product mix?

I don’t know. We haven’t done that calculation.

I would have estimated it would be probably three quarters of mix, if that helps you. Marco Rodriguez - Stonegate Securities: Then can you kind of help us think about what might be more of, I guess we can back that out and that would probably more of a normalized gross margin trend going forward, if we just assumed that product mix were to stay there?

Well, if the product mix stayed there, you’re going to get the same gross margin, but it was an extraordinary quarter from a mix standpoint, that’s all I can tell you, and beyond that we have another extraordinary product mix quarter, we’ll have similar kinds of margins, but they should be better sequentially through the year, would be the best thing that I could tell you. It depends on what products you’re selling in the quarter? I can look out right now and say, we’ll probably pickup some volume in the second quarter as we move into times of possible infections and cleaned out, and overall in the animal safety side that we’ll have maybe a higher percentage of cleaners and disinfectants that may be forwarded into that second quarter, which carries a lower gross margin. At the same time, we’ve got a corn crop to harvest here yet, and we got a milo crop to harvest yet. It’s too early to tell what that’s going to look like, so it’s always our second quarter when we’re get the mycotoxin issues. If we get weather conditions, so that we’ve got a problem in the crop, we’ll see an increase in our group of products that used to detect natural toxins and those carry a good margin with them. So, they’re just pieces. As I said in my earlier comments we’ve done a lot to stabilize our quarter-to-quarter variation in revenues, but even in that, some of those carry higher gross margins and others. Marco Rodriguez - Stonegate Securities: Then in your prepared remarks you talked about the R&D projects. I think you said about 19 of those 65 or 66 were going to close if you will by year end. Can you give any other sort of color regard to how the rest of those fall through in the remainder of the couple of years?

Fortunately, our research, our R&D programs provide marketable results pretty quickly. We’re out sometimes in eight months from the time we start a project depending on what it is, until we get one out. Sometimes it’s seldom ever more than about a year. So those will all fold up pretty quick. Some of those 66 projects, as I indicated improved much on our current products to make them either more sensitive or easier to use or other areas that will make us more competitive. Some of those are to increase the product offering. For instance, we have a test that might be used to detect an organism in certain meat products, but it doesn’t work in high sugar the product. So we need a product out there that we need to make some variations and do some validation in order to get it to work there. We’re doing some things, and as an example, our Soleris business that Lon talked about is doing very well, but there’s a lot of opportunities that are out there, that we’re not quite able to take advantage of yet; there’s a lot of opportunities in the brewery business, where they’d like to have more rapid test to be able to detect certain yeast contamination in the overall brewing process. We’re working on some areas there, which if we get those completed successfully, we’ll increase the size of that market. So it’s not like we got 66 products that are fixed in the commodity pipeline. A lot of those are improvements or expansion of our current products. Now there are some new products that are in there. I can’t tell you right off the top of my head how many brand new ones they’ve got. Three out of the four of those that were released I think in this first quarter were brand new products that hadn’t seen the light of day before, so it’s overall. It’s sort of a combination of those three. We’re working on some new technology that probably won’t get out this year, because we don’t enough of this year left that would probably get out within a year; that if we’re successful in that, we’ll hear a big boost in the overall platform and the technology that’s in use, that could impact and spur us ahead of some competition. Marco Rodriguez - Stonegate Securities: Lastly you mentioned you got some timing issues on the cash flow from operations. I was wondering if you could talk a little about that, and expectations going forward?

The cash flow was positively affected by the timing, and so when some of the payables were made in the payments for taxes, which there was a heavier amount accrued at the end of this August than there was a year ago. The total of that if I factored it our, would have positively reduced the cash flow from operations by maybe a little more than $2 billion. Nonetheless, it was still a very, very nice quarter from that standpoint and I expect to see that continue on as we move into the second quarter.

Your next question comes from Steve O'Neil - Hilliard Lyons. Steve O'Neil - Hilliard Lyons: Lon you talked about Soleris, I didn’t hear you mention of AccuPoint. I wondered if you could discuss that please?

I didn’t mention AccuPoint. I try to focus on the largest items that are having a significant impact. That product line continues to do well for us. It was minimal growth in the first quarter. I think that was primarily more of a comparison purpose as to how things went in the first quarter last year. We continue to experience a significant number of opportunities in the general sanitation area. We’re even looking at a couple of different markets. I’d like not to spend a lot of time talking about that on the conference call, but we continue to see opportunities for that product line and think that there’s a very broad based market for that product that will show solid growth, very much inline with our budgets, and which has been double digit growth for that product line for the last several years, and we anticipate similar kinds of growth this year and budget for it that didn’t happen in the first quarter. Steve O'Neil - Hilliard Lyons: With the larger or growing installed based, how are you seeing your sales of the disposables and the items that go with it progressing?

Well, I know last year they increase significantly. I think this year in the first quarter they had continued to grow about up 8% or some number like that. So we continue to see a growth in the sampler area relative to the prior year. Steve O'Neil - Hilliard Lyons: Switching subjects, you reported strong 30% plus growth in the dairy, antibiotic testing, were there any meaningful US sales in the number?

Not enough in my perspective. We have the BetaStar US product launch, the sales there have been minimal as we commented last quarter. This is one of those areas that you get a product out there, we had one of the drug residues that was fairly important that we detected, but not at the level that it needed to be detected at. So that’s one of those where we need to go back to the product from an improvement standpoint. We think we can do that, and that’s one of those projects that’s currently in R&D, and we still think that the opportunity is very good there in the US. We’ve got good relationships with the customers of where that product can be sold and a number of cases are already providing them some of our other products, and so we continue to be very excited about the prospects there and are anxious to get that tweaking done for that product, so that we can realize the kinds of sales growth there that we now exist, and that and we can get with our current product.

I can comment on where that is in R&D now. Steve, I think within three months it will out of R&D, but we still got to back in and jump through some hoops before we can make label claims with it at FDA. So fortunately, I think we’re a little bit better wired with the FDA than we were. We really need to get that done in the U.S. to be able to gain the kind of market we need there. The competition has effectively used that, and I would too if I had been in their case. We just need to have that antibiotic, it wasn’t required for FDA approval, but we didn’t do it at the time of the FDA approval, but its sense to be now. Now the positive side of that is that quickly we’re able to put tetracycline on that same test and that’s a big concern outside of the U.S. We don’t use a lot of tetracycline in the U.S. to control mammary infections like they do in certain parts, particularly in Europe. We were able to put a second line on our product, which now lets it detect all of the beta-lactams, but also the same milk sample then can detect tetracycline. That product was launched I guess really only somewhere in the early part of this quarter, and we’re already also trying to keep up with it, just trying to keep that production going on. Lon mentioned a bit about what was happening in Belarus. That was a part of our success over there. Steve O'Neil - Hilliard Lyons: I guess the 30% plus growth was primary Europe. Do you have a feel for what it was in local currencies?

You mean before translation? Steve O'Neil - Hilliard Lyons: Yes.

Again, if we try to get back and work for a specific product line, the unit volume growth was in excess of 30% for a drug residues used in the area of testing dairy antibiotics.

That number would to be about $400,000, Steve, greater. Then we kind of got very interesting; then we’ve got the euro versus the dollar, and then we’ve got the euro versus the pound, and then the pound versus the dollar as they get translated back and forth through the statements between our operations in the U.K. and those here.

(Operator Instructions) Your next question comes from Brian Geep - Sidoti & Co. Brian Geep - Sidoti & Co.: My first question, you mentioned that we should be patient on the acquisition front. I’m only asking because you’ve made so many acquisitions in the past few years. Could you tell us anything about how patient or I mean is it just…?

We are not at a point of letter of intent, signed a letter of intent on anything that we’re looking at. When I say looking at them, I don t mean that we’re just under the cover and either looking at what they’ve got on their websites. I mean there’s active conversations going on I think four different opportunities now. They’ll mature one way or another. I think they’ll either be sold or they won’t be sold or somebody else will buy them or we’ll buy them, you just never know when you get into those situations, but I think we’ll start to see some of that. We’ll get some answers to some of that certainly within this quarter. Every one of them may tell us that we’re too cheap and they don’t want to sell to us or whatever, but we’ll begin to sort those out and what’s left to the next couple of months. Brian Geep - Sidoti & Co: So you’re not taking a breather there, just nothing like that?

No, no. We’re not taking a breather. Brian Geep - Sidoti & Co: Shifting gears on the Soleris front, I think in the past conference calls, you’ve given kind of an idea of the backlog of the people waiting in the wings that maybe don’t have the resources now, but are looking at it. Has that grown? Are you seeing some growth in these people you’re talking to?

We make that an emphasis in our monthly operational meetings with our food safety group that sells that product. It’s very important that we keep the pipeline full and that we have an adequate number of prospects, because the sales cycle is a little bit longer in terms of the placements of the instruments there, because it is a capital expenditure. Everything I have seen would indicate that pipeline continues to be as full as ever in terms of prospects and opportunities and nobody is telling us, no. They’re just saying, not now, or they have to go further up the approval process line in terms of executive approvals within their organizations before they can pull the trigger and buy an instrument. So, in terms of the big markets that we’ve got there, that we’ve seen so far, which is included nutraceutical, which is included dairy; those, we still got a very, very full pipeline of prospects. We expect to see some of those close in the second quarter, and in the third quarter, and in the fourth quarter, and I think some of that actually in the first quarter probably moved to the second quarter or third quarter, just because of the economic situation that exists out there. I made in my comments, but I think as the economy improves and some of these restrictions on capital expenditures are eased a little bit with some of these organizations, that’s one of the areas we would certainly expect see some benefit from an improved economy.

It’s not unusual when you’re searching for cash conservation, sometime profit maximization gets pushed aside, and it’s from a stand point of our customers. Brian Geep - Sidoti & Co: Shifting gears one more time, on the new technology front, I think it was Jim that mentioned platform moves there; are you looking at molecular and do you think there is a need out there from molecular?

I don’t think I want to answer any of those questions, because I know my competition are going to listen to this call sometime or another.

Your next question comes from Travis Williams – Stephens. Travis Williams - Stephens: I just had a quick question for you. Most of my questions have been answered, but just regarding your inventory levels, I think if we look back, kind of last year we saw some destocking from some of your customers. I don’t even know if you have the visibility to be able to answer this question, but what do the inventory levels look like today at your customers, and is it your sense that maybe some of the growth we’re seeing today is some restocking activity?

I don’t know if I would say that it’s restocking activity. I think that it is true that in our third quarter of last year particularly, we saw a number of our customers reduce their inventory levels, and that certainly affected their ordering patterns, particularly with distributes that we work with for a number of different product lines. We did start to see an improvement in ordering in our fourth quarter, and I wouldn’t characterize that as restocking, I would just characterize it as they did as much destocking as they could do, and they had to buy product just to be able to service their customers. I think that’s what we continue to see. A number of our customers have gotten their levels down to the point where they have to reorder product, just in order to keep their operations going and/or service their customers in the case of where we’re selling to distributors. So I think some of those inventory levels, if the customers got as low as they can be, I’d be surprised if anybody tried to do anything to lower them any further. I’m not ready to say that we’ll see an improvement that they’ll bring those levels back to where they were a year ago, but they’re certainly down to the point where they have to order from us on a regular basis. Travis Williams - Stephens: So you are seeing reorders?

Yes. Travis Williams - Stephens: Jim, I think you commented in your opening remarks, lots of news coming out of China in terms of headlines, still not hearing the register ring. I think in the past you had given sort of a number for the year expected from China, somewhere below $500,000 in sales total, but I guess just bigger picture. What’s the key, what’s the linchpin to get that market moving, what’s the holdup to get things moving there basically?

I’d start it, but let Lon answer it, because he still is more of an expert on China than anybody here in-house. They’re in the process of getting their system up and they know they’ve got to do something. It’s not deliberate on the part of the Chinese, nor certainly on the part of the Chinese government. They do look for a cheaper, easier ways to run tests. As an example, we talked some about detection of antibiotics in milk, and I know for a fact, I even visited some of the Chinese plants, where almost everybody in the world today is using something like our test to be able to detect that. They’ve sought for an easier way to use it, because their focus is on making sure that they don’t have any antibiotics in the milk that they’re about to make yogurt or cheese out of, because if they do, the cultures won’t grow and they’ll end up with a tank of rotten milk. They’re doing that by using some, what I would say more antiquated, but that’s fairly effectively methods of being able to run antibiotic tests to see if there’s enough antibiotics in there for making yogurt, rather than using a test like ours. I think we’re beginning to see those are not fast enough. I think we’re beginning to see more and more of that beginning to disappear, but Lon frankly can even give you some numbers on what we’re looking at.

In terms of China, they’re not an insignificant country any longer to us in terms of overall product sales there when you include everything that we’ve got in the food safety and the animal safety side. They’re pushing a $1 million; I know they were over $1 million last year in terms of total sales to Neogen Corporation. I think as we look at it, what we’ve been interested in is what would happen on that diagnostic front, related to things like drug residues and other food safety issues, and I think they are doing more testing, particularly the products that are exported or particularly at companies, western companies that have brands over there to protect or have QC protocols here, that they’re able to enforce in their operations over there. What I have not seen yet so far is the same kind of testing taking place on their own production for domestic consumption, and I think that’s where the opportunity lies going forward. There are a couple of markets that we’re working on over there. We think there’s some opportunities for the Soleris product line. We think there’s better opportunities for drug residue testing over there, than what we have been able to achieve so far, and we think there’s some good opportunities for the general sanitation AccuPoint ATP testing. So those are some areas where we’re focusing on. It’s just very difficult to predict in that country, how fast they will move forward with their testing programs, and how much enforcement will take place to make sure that testing actually takes place.

We’re beginning to pickup more significant sales over there in our diagnostic test for plant diseases. That’s work that’s coming out of our Scotland group, where that whole technology is based, and that’s a very big concern to them. They do things like shifting to more potatoes, which has not been normally a staple and they are concerned about the potato diseases and being able to quarantine potato’s feed stock that's coming into the country, and begin able to diagnose it, and that’s fitting right into our overall program. So we’re beginning to get more and more attraction within the same places and we haven’t given up patients. I’m just listening intently to hear that cash register more often.

Your next question comes from Peter Coil - Private Investor. Peter Coil - Private Investor: To you’re knowledge, is Neogen being actively looked over for purchase by another corporation?

No, to our knowledge we have no barbarians at the gate.

At this time we have no further questions.

Thank you. We appreciate your attendance this morning. Let me once again remind you of the annual meeting of shareholders that’s coming up right away on October 8, here in Lansing. I also request again to check around and make sure your proxies are in. So we can make sure we can get all our proxy votes in. Thanks. We appreciate your continued support and confidence in the company. We’ll look forward to talking with you in about another three months.

Thank you ladies and gentleman. This concludes today’s conference. Thank you for participating. You may all disconnect.