Company: NEOG
Filing Date: 2025-01-15
Form Type: 10-Q
Source: 0000950170-25-005818
Chunk: 12

Company: NEOGEN CORP
Filing Date: 2025-01-15
Form: 10-Q
Item: Item 1
Chunk 12
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 currency exchange rates and changes in interest rates. To reduce the potential effects of foreign currency exchange rate movements on net earnings, the Company enters into derivative financial instruments in the form of foreign currency exchange forward contracts with major financial institutions and has also entered into interest rate swap contracts as a hedge against changes in interest rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. On the date the derivative is established, the Company designates the derivative as either a fair value hedge, a cash flow hedge or a net investment hedge in accordance with its established policy. Each reporting period, derivatives are recorded at fair value in other current assets, other assets, accrued liabilities and other long-term liabilities. The change in fair value is recorded in accumulated other comprehensive loss, and amounts are reclassified into earnings on the condensed consolidated statements of operations when transactions are realized. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding adjustment to earnings. The Company does not enter into derivative financial instruments for trading or speculative purposes. Derivatives Not Designated as Hedging Instruments The Company forecasts its net exposure in various receivables and payables to fluctuations in the value of various currencies, and has entered into a number of foreign currency forward contracts each month to mitigate that exposure. These contracts are recorded net at fair value on our consolidated balance sheets, classified as Level 2 in the fair value hierarchy. Gains and losses from these contracts are recognized in other income in our condensed consolidated statements of operations. The notional amount of forward contracts in place was $88,753 and $70,315 as of November 30, 2024 and May 31, 2024, respectively, and consisted of hedges of transactions up to January 2025.  

        Fair Value of Derivatives Not Designated as Hedging  Instruments
         
        Balance Sheet Location
         
        November 30, 2024

        May 31, 2024

        Foreign currency forward contracts, net
         
        Other current liabilities
         
        $
        323

        $
        265

13

The location and amount of gains (losses) from derivatives not designated as hedging instruments in our condensed consolidated statements of operations were as follows: 

        Three months ended November 30,

        Derivatives Not Designated as Hedging Instruments
         
        Location in statements of operations
         
        2024