8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

   PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 25, 2004

Commission File Number: 0-14820

IMMUCOR, INC.
(Exact name of registrant as specified in its charter)

                      Georgia                                                                                       22-2408354
(State or other jurisdiction of incorporation or organization)            (I.R.S. Employer Identification No.)

3130 Gateway Drive       P.O. Box 5625       Norcross, Georgia 30091-5625
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code, is (770) 441-2051

Not applicable

(Former name, former address and formal fiscal year,
if changed since last report)

Item 12. Results of Operations and Financial Condition

        Immucor, Inc. (the “Company”) issued a press release on March 25, 2004 announcing the Company’s earnings and certain other results of operations for the fiscal third quarter ended Febrary 29, 2004 and discussed the Company’s outlook for fiscal years 2004 and 2005. This press release is furnished with this Current Report as Exhibit 99.1. Edward Gallup, the Company's Chief Executive Officer, Nino De Chirico, the Company's Chief Operating Officer, and Steven Ramsey, the Company's Chief Financial Officer, hosted a conference call on March 25, 2004 to review the contents of the press release and to answer questions from investors. A transcript of this conference call is furnished with this Current Report as Exhibit 99.2.

Item 7. Financial Statements and Exhibits.

        (c) Exhibits.

       EXHIBIT NO.          DESCRIPTION

       99.1                            Press Release dated March 25, 2004.

       99.2                            Transcript of Conference Call held on March 25, 2004.

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

IMMUCOR, INC.

Date:   March 25, 2004                                                               By: /s/ Steven C. Ramsey
                                                                                                            Steven C. Ramsey
                                                                                                            Chief Financial Officer

EXHIBIT INDEX

       EXHIBIT NO.          DESCRIPTION

       99.1                            Press Release dated March 25, 2004.
       99.2                            Transcript of Conference Call held on March 24, 2004.

EX-99

Exhibit 99.1

FOR IMMEDIATE RELEASE
CONTACT:  Edward Gallup
770-441-2051 

IMMUCOR ANNOUNCES FISCAL THIRD QUARTER RESULTS

GROSS MARGIN REDUCTIONS LOWER PROFITABILITY

NORCROSS, GA. (March 25, 2004) — Immucor, Inc. (Nasdaq/NM: BLUD), the global leader in providing automated instrument-reagent systems to the blood transfusion industry, today reported financial results for the fiscal third quarter and nine months ended February 29, 2004 and estimated that earnings per diluted share for the fiscal year ending May 31, 2004, would be approximately $0.13 below the guidance published by the Company on January 7, 2004.

Revenues for the fiscal third quarter were $27.9 million, up 10.7% from $25.2 million in the same period last year. $760 thousand of this increase was due to price increases including group contract renewals at higher prices. Gross margin (gross profits as a percentage of sales) fell to 53.1% during the quarter compared to 57.6% in the prior year quarter. Net income for the third quarter was $2.0 million, down $1.7 million from the same quarter last year. Diluted earnings per share totaled $0.10 on 21.0 million weighted average shares outstanding for the third quarter compared with $0.18 on 20.4 million weighted average shares outstanding for the same period last year. All share and per share amounts have been adjusted to reflect the 3-for-2 stock split effected in the form of a 50% stock dividend which was distributed in the second quarter of this year.

Sales of instruments grew to $2.6 million in the third quarter of fiscal 2004, up from $2.3 million in the fiscal 2003 third quarter. The timing of instrument sales is difficult to predict due to the long sales cycle. During the third quarter, 16 Galileo instruments were placed resulting in 109 Galileo placements in Europe to date. The backlog of purchase orders received and instruments installed at customers sites but not yet recorded as sales grew to $1.7 million during the third quarter of which approximately one third is higher margin Rosys instruments.

Gross margin was adversely impacted by worldwide expenses related to CE marking on products intended for sale within the European Union that grew to $366 thousand during the third quarter compared to minimal expenditures in the prior year quarter. This reduced gross margin percentage for the third quarter by approximately 1.3%. European gross margin was further impacted by increased sales through distributors, which are at lower margins. Instrument gross profit was negative for the quarter due in part to product mix, as a higher proportion of US instrument sales are now ABS2000 sales at considerably lower margins to the Company than sales of the higher margin Rosys instrument. The cost of providing instrument service increased considerably during the quarter with service costs for older model ABS2000 instruments growing faster than service revenues. The balance of the gross margin erosion was due to expenses incurred in preparation for the consolidation of red cell manufacturing to the Norcross, Georgia factory which reached $171 thousand.

On December 18, 2003 the Company entered into a new, more favorable, credit facility. As a result, the Company recorded a non-cash, pre-tax charge of $924 thousand in the third quarter to write off unamortized deferred financing charges related to its old credit facility. This charge, less the corresponding effect, reduced third quarter earnings by approximately $0.03 per diluted share.

Research and development expenses were $1.1 million in the third quarter, up 97.8% from $573 thousand in the prior year quarter. Spending on the development of a new third generation instrument targeted for the small to medium hospital market was $315 thousand in the third quarter. The total spent on this third generation product during the current year has reached $632 thousand. In addition, start-up expenses associated with the production of human collagen in our Houston facility were $110 thousand in the quarter versus nothing in the year ago quarter. The Company expects the human collagen project to begin producing revenues in the fiscal fourth quarter. The balance of the increase was expense associated with clinical trial of the Galileo instrument in the United States. The 510(k) pre-market notification for the Galileo instrument was submitted to the Food and Drug Administration on January 30, 2004.

Commenting on the quarter, Edward L. Gallup, Chairman and Chief Executive Officer said, “We are disappointed by the third quarter results. We will focus our efforts for the balance of this fiscal year on the consolidation of our red cell products to the Norcross facility and the elimination of redundant products. We expect these initiatives to lead to a significant improvement in operations during 2005. The costs of CE marking and the associated pressure on gross margin are largely behind us. We do not, however, see much improvement in margins during the fourth quarter as there will be additional costs incurred to effect red cell product consolidation.”

Concerning expectations for 2005, Dr. Gioacchino De Chirico, President and Chief Operating Officer said, “We have submitted the Galileo 510(k) to the United States Food and Drug Administration and are encouraged by the quantity and responsiveness of their inquiries. Based on the nature of the inquiries we now believe we will receive clearance to market the Galileo in the United States in the fall of 2004. As we enter fiscal 2005 we believe we will see 130 more Galileo instruments placed worldwide, with corresponding reagent trail increases of higher margin proprietary Capture® products. At the end of the 2005 fiscal year we expect to have a total of 265 Galileo instruments installed.”

“Manufacturing efficiencies during 2005 will be driven in part by the red cell consolidation which we expect to improve margins in the neighborhood of approximately 80 basis points and an additional reduction of operating expense of approximately $800 thousand primarily in the area of distribution,” said Dr. De Chirico.

Commenting on the development of the third generation instrument Dr. De Chirico noted, “The Galileo is targeted to the large volume account. We have identified the need for a fast, lightweight, fully automated instrument to serve the small to medium accounts, the largest segment of our customers, which number 2,500 worldwide. The instrument as designed will be over two times faster and provide more efficiency than the ABS2000 and will appeal to customers throughout the world. The cost of development will total $1.0 million during fiscal 2004 and is expected to reach $2.8 million in fiscal 2005 before dropping to $1.5 million in fiscal 2006. We anticipate a European launch in mid 2006. We plan to service the machine utilizing a depot approach which should significantly reduce service costs.”

For the nine months ended February 29, 2004, revenues totaled a record $82.3 million, a $10.1 million (14.0%) increase over the prior year. Net income for the nine months decreased to $9.2 million, a $0.9 million or 9.7% decrease over the prior year.

Selected Highlights:

-Sales of traditional reagent products, i.e., products not utilizing the Company’s patented Capture® technology, increased $1.6 million, or 9.0%, from $18.2 million in the third quarter of 2003 to $19.8 million in the third quarter of 2004. Sales of Capture® products increased approximately $0.8 million to $5.5 million, a 17.3% increase over the prior year quarter.

-The gross margin on traditional reagents was 57.6% for the current quarter, compared with 60.2% in the prior year quarter for the reasons stated above. The gross margin on Capture® products was 63.2% for the current quarter, compared with 67.5% in the prior year quarter. The margin on Capture® products was diminished by increased sales through the distributor network in Europe at significantly lower margins to the Company. However, the Company believes that utilizing distributors established in key European markets is far more advantageous to the Company than developing its own sales and distribution network in these markets.

-For the current fiscal year-to-date, sales of traditional reagent products were $59.3 million compared with $53.4 million in the prior year period, an increase of 11.0%. Capture® product sales increased approximately $2.3 million to $16.0 million, an increase of 17% over the comparable 2003 period.

-Gross margin on traditional reagents was 59.3% year-to-date, compared with 60.5% in the prior year period, and gross margin on Capture® products was 63.2%, compared with 68.1% in the prior year period.

-Sales of instruments were $2.6 million in the third quarter of 2004 compared to $2.3 million in the third quarter of 2003. Instrument sales for the nine months grew by approximately $2.0 million to $7.1 million, a 39% increase over the prior year. The gross margin on instruments, including the impact of cost of service was (3.3%) for the current quarter, compared to 17% for the same quarter last year.

-The effect on revenues of the change in the Euro exchange rate was an increase of $0.8 million for the quarter and $3.5 million for the nine months ended February 29, 2004. The effect on net income of the change in the Euro exchange rate was minor for both the quarter and nine-month period ended February 29, 2004.

-Selling, distribution and general & administrative expenses increased by $1.4 million for the quarter, as compared to the prior year quarter, due to additional personnel and expenditures to support domestic and international efforts to expand Company presence, and assure compliance with European Union quality regulations and accounting and SEC regulatory mandates in the United States. The effect on operating expenses of the change in the Euro exchange rate was an increase of $0.4 million for the quarter and $1.6 million for the nine months ended February 29, 2004.

2004 Outlook

The following guidance reflects Immucor’s expectations as of March 25, 2004 and is being provided so that the Company can discuss its future outlook during its upcoming investor conference call with investors, potential investors, the media, financial analysts and others. These forward-looking statements are subject to the cautionary paragraph at the end of this press release and assume that the factors mentioned in that paragraph will not have a material impact on expected results. Investors are cautioned against attributing undue certainty to management’s assessment of the future and that actual results could differ. The Company does not intend to update its outlook.

The Company expects revenues for the fiscal year ended May 31, 2004 to range from $110 million to $112 million, an increase of approximately 11% to 14% over fiscal 2003 revenues. Net income is expected to be in the range of $11.8 to $12.3 million, an approximate 18% to 14% decrease over fiscal 2003. We expect to generate earnings per diluted share in the range of $0.58 to $0.60 for the fiscal year. All per share amounts have been adjusted for the recent 3-for-2 stock split. We base our projections on our history of operations and experience, the recurring nature of our revenues, including contractually committed purchases from large customers, and the predictability of our expenses through the fiscal year. In making this projection, management has made the following assumptions:

With respect to revenues, the Company has extrapolated recent past results and assumed the Company will generate additional revenues from the renewal of customer contracts at higher prices, the additional sales of instruments and its related reagent revenue in the US, the sales of the new Galileo instrument in Europe and the related reagent revenue, and from a general increase in sales of the Company’s reagents.

With respect to diluted earnings per share, the Company’s projection assumes no additional capital stock will be issued but diluted shares will increase under applicable accounting rules based on the assumption that higher share prices will cause currently outstanding stock options to be included in the calculation of diluted shares.

2005 Outlook

The following guidance reflects Immucor’s expectations as of March 25, 2004 and is being provided so that the Company can discuss its future outlook during its upcoming investor conference call with investors, potential investors, the media, financial analysts and others. These forward-looking statements are subject to the cautionary paragraph at the end of this press release and assume that the factors mentioned in that paragraph will not have a material impact on expected results. Investors are cautioned against attributing undue certainty to management’s assessment of the future and that actual results could differ. The Company does not intend to update its outlook until its year-end earnings announcement, which is tentatively planned for mid July 2004.

The Company expects revenues for the fiscal year ended May 31, 2005 to range from $127 million to $130 million, an increase of approximately 15% to 16% over fiscal 2004 revenues. Gross margin is expected to be in the range of 55% to 56% with human collagen sales reducing gross margin by 1.1%. This gross margin projection reflects the impact of the allocation of $1.4 million of support function expenses to cost of goods sold resulting in an additional 1.1% reduction of gross margin from fiscal 2004. Net income is expected to be in the range of $19.9 to $21.0 million, an approximate 63% to 65% increase over fiscal 2004. We expect to generate record earnings per diluted share in the range of $0.95 to $1.00 for the fiscal year. We base our projections on our history of operations and experience, the recurring nature of our revenues, including contractually committed purchases from large customers, and the predictability of our expenses through the fiscal year. In making this projection, management has made the following assumptions:

With respect to revenues, the Company has extrapolated recent past results and assumed the Company will generate additional revenues from the renewal of customer contracts at higher prices, the additional sales of instruments and the related reagent revenue in the US, the sales of the new Galileo instrument in Europe, Japan and the United States and sales of the human collagen product. The Company has assumed that the regulatory clearance to market the Galileo in Japan will occur in the summer of 2004 followed by the United States in the fall of 2004. The Company has also assumed 2005 sales of human collagen under the Inamed agreement ranging between $5.0 and $6.0 million dollars and an addition to earnings of approximately $0.06 per diluted share. With respect to the operations of its foreign subsidiaries the Company has assumed that there will be no significant change in foreign exchange conversion rates.

With respect to diluted earnings per share, the Company’s projection assumes no additional capital stock will be issued but diluted shares will increase under applicable accounting rules based on the assumption that higher share prices will cause currently outstanding stock options to be included in the calculation of diluted shares.

Immucor, Inc. will host a conference call March 25, 2004 at 10:00 a.m. (EST) to review the results. Investors are invited to participate in this conference call, with Edward L. Gallup, Chairman and Chief Executive Officer, Dr. Gioacchino De Chirico, President and Chief Operating Officer and Steven C. Ramsey, Vice President, Finance and Chief Financial Officer. The call will focus on the results for the third quarter, general business trends, and the Company’s outlook for FY2004 and FY2005. This earnings release will be posted on Immucor’s website, as well as any financial information that may be discussed by Messrs. Gallup or Ramsey during this call not contained in the earnings release. Both this earnings release and the additional financial information, if any, will be posted as soon as practicable after the call on the investor news section of Immucor’s website. To access this information once posted, go to Immucor’s website at www.immucor.com and click on “Investor News.”

To participate in the telephone conference call, dial 1-800-642-9808. Replays of the conference call will be available for one week beginning at 2:00 PM on March 25 by calling 1-800-642-1687 and entering conference ID 6419915. Beginning April 2, 2004, audio of the conference call or a transcript of the audio will be available on the “Investor News” page of the Immucor website.

Founded in 1982, Immucor manufactures and sells a complete line of reagents and systems used by hospitals, reference laboratories and donor centers to detect and identify certain properties of the cell and serum components of blood prior to transfusion. Immucor markets a complete family of automated instrumentation for all of our market segments.

For more information on Immucor, please visit our website at www.immucor.com.  

Statements contained in this press release that are not statements of historical fact are “forward-looking statements” as that term is defined under federal securities laws, including, without limitation, all statements concerning Immucor’s expectations, beliefs, intentions or strategies for the future. Forward-looking statements may be identified by words such as “plans,” “expects,” “believes,” “anticipates,” “estimates,” “projects,” “will,” “should” and other words of similar meaning used in conjunction with, among other things, discussions of future operations, financial performance, product development and new product launches, FDA and other regulatory applications and approvals, market position and expenditures. Factors that could cause actual results to differ materially from those expressed in any forward-looking statement include the following: the decision of customers to defer capital spending, increased competition in the sale of instruments and reagents, product development or regulatory obstacles, changes in interest rates, fluctuations in foreign currency conversion rates and general economic conditions. Further risks are detailed in the Company’s filings with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on any forward-looking statements. Immucor assumes no obligation to update any forward-looking statements.  

IMMUCOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended				Nine Months Ended
	February 29,		February 28,		February 29,		February 28,
	2004		2003		2004		2003
NET SALES	$ 27,876,322		$ 25,170,258		$ 82,345,404		$ 72,230,110
COST OF SALES	13,081,783		10,683,214		37,031,504		30,575,000
GROSS PROFIT	14,794,539		14,487,044		45,313,900		41,655,110
OPERATING EXPENSES:
Research and development	1,133,541		572,956		2,595,056		1,352,963
Selling and marketing	3,768,088		3,517,426		11,740,011		10,213,870
Distribution	2,386,870		1,635,389		6,268,795		5,189,160
General and administrative	3,123,111		2,725,295		8,481,779		7,425,688
Amortization expense	92,094		115,502		276,282		315,249
	10,503,704		8,566,568		29,361,923		24,496,930
INCOME FROM OPERATIONS	4,290,835		5,920,476		15,951,977		17,158,180
OTHER:
Interest income	5,888		21,793		12,782		109,076
Interest expense	(162,176	)	(535,949	)	(801,015	)	(1,908,903	)
Other, net	(683,959	)	(101,491	)	(722,550	)	68,528
	(840,247	)	(615,647	)	(1,510,783	)	(1,731,299	)
INCOME BEFORE INCOME TAXES	3,450,588		5,304,829		14,441,194		15,426,881
INCOME TAXES	1,412,377		1,556,000		5,285,327		5,282,427
NET INCOME	$   2,038,211		$   3,748,829		$   9,155,867		$   10,144,454
EARNINGS PER SHARE
Basic	$            0.10		$            0.20		$            0.47		$         0.54
Diluted	$            0.10		$            0.18		$            0.44		$         0.50
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	19,746,778		19,022,546		19,572,546		18,672,305
Diluted	20,952,853		20,372,726		20,828,956		20,130,959

IMMUCOR, INC
Selected Consolidated Balance Sheet Items
	February 29, 2004	May 31, 2003
Cash	$   10,273,584	$   11,183,317
Accounts receivable – trade	25,452,211	25,693,973
Inventory	20,871,863	16,921,216
Total current assets	62,524,916	61,882,312
Property and equipment-net	22,583,886	21,051,235
Total assets	117,825,037	116,886,192
Current portion-Long-Term Debt and Capital Leases	4,803,893	7,909,650
Accounts payable	8,368,767	7,949,590
Total current liabilities	17,613,100	21,010,635
Long-term debt and other liabilities	12,658,189	22,180,080
Shareholders' equity	87,553,748	73,695,477

EX-99

Operator: Good day, Ladies and Gentlemen. Thank you for standing by and welcome to the Immucor, Inc. Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session, and instructions will follow at that time.

As a reminder, this conference call is being recorded. Certain statements on this conference call constitute forward looking statements and actual results and events could differ materially. Specifically, the statements regarding the full year earnings estimate and increasing Galileo placements are forward looking statements and were developed based on current estimates and numerous assumptions. These estimates and assumptions represent subjective judgments concerning future events and circumstances, and may be incomplete or incorrect, and unanticipated events and circumstances may occur causing these estimates or assumptions to be wrong. The company does not intend to update or revise its projections, unless required to do so by the Federal Securities Laws. For a detailed discussion of factors that could cause actual result to vary from these forward looking statements, please refer to the companies most recent filings with the SEC including our Annual Report on Form 10-K for fiscal year ended May 31st, 2003 and our quarterly report on Form 10-Q for the quarter ended November 30th, 2003.

I would now like to introduce your host for today’s conference, Mr. Edward L. Gallup, Chairman and Chief Executive Officer. Mr. Gallup, you may begin.

Ed Gallup: Good morning and thanks for joining us for our third quarter conference call. Participating with me are Nino DeChirico our President and COO, and Steve Ramsey, our Vice President and CFO.

Folks, obviously we’re disappointed in the decline in gross margin over the past few months. We’ve talked about our inefficiencies in operating three manufacturing facilities and the number of redundant products make. We’ve talked repeatedly about the plan to correct this. As most of you probably know, we are eliminating almost 100 products. That should take place somewhere around the end of May taking us from 450 SKU’s down to about 350. We do not expect a revenue decline from that. In addition, our major plan is the red cell consolidation meaning that we will begin to manufacturer all of our red cell products in our Norcross facility. That represents 40% of our total revenue and as you probably are aware, we make these products in all three facilities today. The planning was started in October. It will be implemented on May the 24^th, so we will see none of this efficiency pick up in this fiscal year. Obviously, being on a June fiscal, we expect to become much more efficient and a conservative estimate is about a total of $1.8 million will be in gross profit improvement and in cost savings from the red cell consolidation.

As you’ve noted, our CE marking we had said in our last conference call that we expected CE marking to have carry over effect in the third quarter of about $150,000. That number actually came in at $366,000. We will have going forward CE marking of about $40,000 per month that deals with product submissions for CE marking. And this is a new expense; it is however in our fiscal year ‘05 estimates that you see, and other than that CE marking costs are essentially behind us.

You’ll also note that our R&D expense is up significantly. For competitive reasons, we had chosen up until now not to release the information that we do have a third generation instrument. We refer to it currently as the G3. The G3 will be the only automated solution for the small to medium sized hospital. We think there are a minimum of 2,500 customers worldwide that this addresses. The G3 is well into where we finished feasibility some time ago. You see the number of about $600,000 spent year-to-date. The project of course is budgeted for going forward. The G3 is approximately twice as fast as the ABS2000. It weighs only 75 pounds which allows us to do what we call ‘depot service’. By that, we mean that customers will send the instrument to us and we will overnight a new instrument to them; obviously much more cost effective than sending engineers out into the field. The G3 we are targeting for release in 2006, and other than through put, it has essentially all of the features of the Galileo.

Just a final comment – we have taken some drastic measures here in looking into ‘05 and you will see going into ‘05 our costs, our expense items will be less than in fiscal year ‘04. With that, I’ll turn this back to the Operator, and we’ll open it up for Q&A.

Operator: Thank you. If you have a question at this time, please press star then the number one on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please depress the star then the number two. One moment please for your first question.

Your first question comes from Arnold Ursaner from CJS Securities.

Arnie Ursaner: Ed, good morning. I’m backing up for John who’s out this morning. A quick question to ask you – it sounds in your tone that you’re a little more optimistic about Galileo being more of an event this year and you talk about some kind of language that you’re getting. Can you give us a little more color on kind of why you’re more optimistic about Galileo being more than next?

Ed: Sure. And for those of you who may not be aware, Arnie is referring to the Galileo approval in the United States. We submitted the Galileo January 30^th, and our guidance was approximately one year from that date we would have approval. The FDA operates quite differently today than they did when we submitted the ABS2000. Many of you may remember it took 27 months to get it approved, and the only other benchmark we had was the 90 day approximate approval for the ProVue, Ortho’s competitive instrument. Within I believe it was five days, we received comments initially from the FDA saying they had received it and we have had an on–going dialogue with them – I’m going to give you a guess of two to three times per week with questions. And the quality of the questions, Arnie, leads us to believe that we will be approved sometime this fall and not next February. So, it’s based totally on the dialogue and the quality of the questions.

Arnie: Okay. And you gave some targeted numbers for placements at the end of '05. obviously, you're predicating that on the assumption that you will have approval at some point.

Ed: Yes, that assumption is based on a November approval, and we're estimating 130 instruments between Europe and the U.S. in fiscal '05.

Arnie: Okay. And final question - again, you obviously appear to be moving toward the next generation product. You mentioned it's two times as fast as the ABS. Can you give us a feel for what sort of - obviously it's very premature, but selling price relative to the Galileo?

Ed: The selling price will in round numbers be about 40% of the Galileo.

Arnie: Okay. Thank you very much.

Operator: Your next question comes from Bill Quirk with RBC Capital Markets.

Bill Quirk: Good morning. Thanks guys. Hey Ed, can you give us a little – a sense as to your confidence in the transition of the – or I should say the consolidation of the red cell manufacturing from the three plants down to the one. I guess can you just talk about your confidence that this is one, going to deliver the efficiencies that we’ve talked about and then, two; can you just help us think a little bit about the expenses that we should expect to be incurred with this move?

Ed: Sure. There's been about 110, Steve?

Steve Ramsey: About 170.

Ed: About 170 incurred to date. I’ll come back to that and I’ll let either Steve or Nino give you a comment on the expenses that we’ll incur in the fourth quarter. As I mentioned in my comments, the plan was initiated in October and what Nino did was put together marketing, manufacturing, accounting and sales. The customers were notified in February because these are standing order products, and the customers need to change their standing orders with us and we wanted to give them a three month notice. The planning has been so well done and the lady who is in charge of this project has been in charge of our red cell manufacturing for I think 19 years, maybe 20, of our 21 plus years. It is extremely detailed, Bill, and I’m reasonably confident we won’t hit a glitch. I think the more important thing is the customer will receive a better product. And the reason for that – and the customers have already been notified about this – we make today between Immucor, Gamma, and Dominion far too many panels. And panels are used to identify an antibody once you have detected it. By law, you must identify it. To put those panels together, we have donors coming in – shipments coming in – from all over the United States. I’ll give you a guess that it may be as many as 150 blood bags per week – it could be more. And that limits when you’re putting together a large number of panels – it limits your ability to give the customer the best selection. We have by far the best donors in the United States because we’ve been – when we acquired Pfizer and on and on and on, we of course acquired the donors with them. Our product that we are now delivering, that we begin delivery in May to the customer, is far superior to the competitive product in that we can separate antibodies – because very often you have multiple antibodies – we can separate them much easier than the competition can. So, the plan is in place. It will take place on May the 24^th, and Steve do you want to talk about the costs going forward?

Steve: Additional costs that will be incurred in the fourth quarter will be approximately $200,000, primarily relocation expense of the people that are being transferred from Houston to Norcross.

Bill: Okay, great. And then, just as a follow-up – with respect to kind of the regulatory pathway, on the transition here – has the FDA already come into the Norcross facility and kind of given you guys the green light to go ahead with this, or is this something that we’re still expecting, or because we’re making duplicative products at many of these plants that won’t even be necessary?

Ed: The latter.

Bill: The latter. Okay.

Ed: Same products, no FDA involvement.

Bill: I see. Thanks guys.

Operator: Your next question comes from Aaron Geist with Robert W. Baird.

Aaron Geist: Good morning. I have three questions. My first question is can you tell me how many sets of questions the FDA has come back to you on your submission for Galileo, and if you've responded to all of them?

Nino: Aaron, there was not enough future (UNINTELLIGIBLE). There were questions on the form where they asked qualification, you know what you want to say here and what you say there, and plus some additional documents. Because the instrument is made in Germany like you know, they asked for some documents that we did not have even Stratec in Germany. And some of these documents needed to be translated from German to English. Basically, not major questions, only information that leads us to tell what we say.

Ed: And Nino, I think as of yesterday, we had answered all the open questions?

Nino DeChirico: Not – again, it’s not a question of information. We are sending back a lot of information this week and additional information next week. All of our team has been focused on this.

Aaron: Okay. Second question, on the gross margin - can you talk a little bit about the anticipated effect of gross margins and reagent trail on the Galileo system? Do you plan on re-pricing the reagents on the Galileo in the U.S. at the same price point or higher than they're priced elsewhere?

Ed: The instrument itself will be considerably higher priced in the United States. The minimum price will be in the $150 range.

Nino: Yes, we are telling to all the customers that have been here looking at the instrument. We are telling a list price of $180, but of course we are going to base on the customer discounted price. The lowest would be average would be $150.

Ed: Reagents?

Nino: We have not factored in 2005 projection there's not much reagents on the instruments in US because we think between validation and things like that, we will start to see reagent put through on the U.S. instrument basically in 2006.

Aaron: Do you anticipate that the effect of gross margins from the Galileo instruments will be a positive delta on gross margin's for the whole company in 2006?

Nino: Absolutely. We see that in Europe. We are going to charge more per test for Galileo and of course the Galileo itself, you know if you consider $150-$160,000 selling price, we'll have a gross margin of 60%.

Aaron: Thank you. The last question that I had was can you talk about your assumptions for CAPTURE sales for 2005 and 2006?

Ed: For CAPTURE sales Aaron?

Aaron: Yes.

Nino: Well, we have minimal growth of CAPTURE sales - I'll give you a number now in U.S.

Steve: 10%.

Nino: 10%, yes. $1.1 million and again, this does not include any put through to the Galileo.

Aaron: Okay. Thank you very much.

Operator: Your next question comes from Steven Saba with Kilkenny Capital.

Steve Saba: Yes, hi. Thanks for taking my question. On the European margins, the distributor margins, what percent of your sales go through distributors? And since you’re going to be selling more products, I’m not sure why it should be surprising – through distributors – why it should be surprising that your margins would go down in Europe. And my second question is in Europe and the United States, what percentage of your placements are product sales versus product leases? Thanks.

Steve R.: We sold 15 Galileo’s during the quarter. All of those were through distributors, so that instrument margin is 24%. I don’t have exact numbers on the reagent for the quarter that went through distributors.

Ed: But the margin on those reagents - it's probably...

Steve R.: 40 to 45%.

Ed: 40 to 45% when we go through distributors, and I'll give you an estimate that about half of those sales were through distributors.

Steve R.: And of course, we avoid the SG&A expenses. They’re all on the distributors books, so it does hurt margin but it’s still good business for us.

Nino: The total instrument that we sell through distributors is 61, then it's half and half. Half sold through the distributor and half is through direct sales.

Steve S.: In the U.S.

Nino: I'm talking about Galileo in Europe now.

Steve S.: Oh, Galileo Europe.

Ed: No Galileo in the U.S. until we get approval sometime this Fall. We have been very active – we’ve had approximately now 40 customers that we have brought in here for VIP visits. And about 70% of those customers are Ortho Gel users. That’s what we asked our sales force to target. And the comments from these approximately 40 customers have been very similar to what we’ve seen in Europe and similar to what we saw at our trade show in November – extremely positive.

Steve S.: What percentage of your placements are leasing and what percent are purchases generally?

Steve R.: In the United States, a very small percentage are not recorded as sales. If the customer does lease it, it’s through a third party program and we record the sale and the cost of sales when we get a delivery and acceptance. We carry very few instruments on our books in the States.

Steve S.: Do you know how many?

Steve R.: In Italy for example, 100% of the instruments are placements that are on our books. And as you go through Europe, you know – Spain there are some sales, Germany there’s some sales and some leases – but the business model in the States is outright sales.

Steve S.: But somebody may lease - so you're selling it basically to the leasing company? (CONVERSATIONS OVERLAPPING)

Steve R.: That's correct.

Steve S.: Do you know how many – so how many are done through leasing companies? Do you know ballpark percentage?

Ed: About half.

Steve S.: About half? Okay.

Ed: And keep in mind that we have three programs – we sell instruments outright, we have the third party lease where we are paid as soon as a customers signs a delivery and acceptance, and we have what is called a ‘reagent rental’ where a customer puts down very little if any towards the instrument and they are up charged over the period of the contract between three and five years for the reagents so that we get our money back for the instrument, for the service costs, and for the interest. In Europe, and primarily in Italy and Spain, most of our placements – all of our placements in Italy –are reagent rentals. Most of our placements in Spain are reagent rentals, and today that’s of the Galileo that’s probably about 40 instruments, most in Italy.

Steve S.: Hm-mm. Okay. And, one of my questions is in your press release, it talks about why the margins are going down because you have more distributor sales, but shouldn’t you be expecting that? I’m puzzled as to why you’re surprised about that or seem to be surprised.

Ed: The mix changes quarter to quarter, and this quarter for example all of our sales were through the distributors. There were 16 sales and they were all – is that correct? How about Germany?

Nino: No, 16 all through distributors.

Ed: All through distributors, and the mix prior to them as been much closer to 50/50.

Steve S.: Okay. Alright, thanks.

Ed: You're welcome.

Operator: Your next question comes is from Randy Gwirtzman with Baron Capital.

Randy Gwirtzman: Hey. Good morning guys.

Ed: Good morning.

Randy: Just on the Galileo's for kind of looking at '04 and '05, obviously only European placements remaining in '04. You guys are still comfortable with the 75 placements that you had predicted earlier in the year?

Ed: That's correct. We are - with 16, we are now at 93 and...

Steve: We're at 109, and we're comfortable with 26 more by year end.

Ed: That means that we have to do 26 in the fourth quarter and fourth quarter last year we did 25.

Randy: Okay.

Ed: We have five under evaluation, so yes, we're comfortable with that, Randy.

Randy: Okay, good. And, in the number going forward, $130 million I think in the press release is what you're kind of expecting.

Nino: 130 units.

Randy: I'm sorry?

Ed: 130 Galileo?

Randy: Galileo for fiscal '05?

Ed: Yes.

Randy: Obviously that assumes some U.S. approval on some machines basically for - there's a quarter and a half or something of machines, right, that...?

Ed: We're expecting 20 to 30 in the U.S.

Randy: Okay. So basically the sales in Europe will continue at...?

Ed: 75 to 100.

Randy: 75 to 100. Does that take into account...? (CONVERSATIONS OVERLAPPING)

Ed: I'm sorry, Randy. That includes ten for Japan.

Randy: That was my next question. Okay. So, it's basically 75 again in Europe?

Ed: Yes.

Nino: And 10 to 15 to Japan, and the rest in Europe.

Randy: Can you give us a little update as to what’s going on in Japan both on the Galileo side as well as the reagent side? I know you guys have a very small share of that market right now.

Ed: Small share of the market. We still expect Galileo approval in May. If it slips, it would slip to June, but it is on track. Our consultant was here two weeks ago. As you’ll recall, in the second quarter, we had a short fall for third party distributor sales, one of which was our Japanese distributor, and that totally bounced back in the third quarter. So, we’re very optimistic about what’s going on in Japan, and again, we have so much upside. We do less, we do right at $3 million in Japan today, and that’s a $100 million market.

Randy: Okay. Just kind of looking at the R&D costs, just getting a sense going forward at the absolute number, I know you guys gave an incremental number for fiscal ‘05 that R&D costs are going to be up what is it $2.8 million for the G3 project.

Steve: Yes.

Randy: Can you give us a sense of the total R&D spends? I mean, is it going to be close to $5 million, or more like $4 million, or...?

Steve: More like $4.5.

Randy: $4.5 million?

Steve: Yes.

Randy: And the CE costs, incrementally going forward it's going to be an additional $120,000 a quarter.

Steve: That's Euro. 120,000 Euro a quarter.

Randy: 120,000 Euro. And what does that come out of? Is that part of SG&A? Is that Sales and Marketing?

Steve: It's Cost of Goods Sold.

Randy: It's part of Cost of Goods Sold.

Steve: Yes.

Randy: Okay. I guess the last question is the U.S. and Japan Galileo sales, are those going to be direct sales or would those - Japan I guess is distributor?

Ed: Japan is distributor. On the box itself, we're similar to European distributors, maybe a little bit higher than the 30% range on the box. But our margins on Galileo reagents in Europe are in the 45% range and Japan will be 65%.

Randy: And that's 65% through distributors?

Ed: Yes. And that's just because the end user prices are very high in Japan. The U.S., everything will be direct. We expect Galileo margins to be in the 75 to 80% range.

Randy: On reagents?

Ed: On reagents. 60% - let's be conservative - say 50 to 60% on the box.

Randy: Okay. Thanks very much, guys.

Ed: You're welcome.

Operator: Your next question comes from Eric Muse with Kilkenny Capital Management.

Eric Muse: Yes, I’m still a little confused on how the visibility on these issues that reduce gross margin’s just were not visible, particularly given on your conference call was practically in the middle of the quarter. How did these things just come out of right field and weren’t predicted at that time?

Steve: If you’re speaking to the CE marking expense, there’s been – we’ve replaced finance managers in Germany and the person just didn’t have the visibility to the real issues put together to provide guidance. I offer no excuse.

Eric: Okay. Well, what's going to be - what can be done in the future to prevent this - to get better visibility on these things?

Steve: We’ve got a top notch individual that speaks fluent English. She’s an American that’s been living in Germany for approximately 12 years. She’s done fees control (Phonetic) out there and I sleep a lot better at night having her there.

Eric: Okay. What about - obviously the CE marking was the biggest issue, but even with some of the other things like the consolidation of the red cell manufacturing, increased ABS2000 sales - how were these not - in January, how were these not seen as being something that were going to lower your gross margin's.

Ed: A lot of the ABS – I think three but I’m not positive of the number – of the ABS2000 sales were at very close to cost where we were dealing with a ProVue threat, and we put a price out there that made it even more attractive. These were competitive Gel users. If you look at our backlog however, going forward, which is about $1.7 million – the biggest backlog we’ve had in instruments. We will not, by the way, close all of those in the fourth quarter. I think we’ll close a significant number. Those instrument margins we have a better mix, and by that I mean we have more Rosys instrument than ABS’s, and there are no ABS’s any where near the price that we sold those three instruments for. Those instruments were closed very late in the quarter.

Eric: Oh, okay.

Ed: We also had a higher than usual service expense for the quarter just simply driven by the number of calls that we make in the field.

Eric: Okay. Is this something that you expect to be steady going forward, or increasing as those instruments get older?

Ed: I think the overall picture, the gross margins on instruments will improve going forward. The service will not decrease because we will...(CONVERSATIONS OVERLAPPING)

Steve: We will continue to lose money on service throughout 2005.

Ed: And that's older instruments.

Eric: Okay. Thank you.

Operator: Your next question comes from Quinton Lai with Robert W. Baird.

Quinton Lai: Good morning. I wanted to get an update on Inamed. What are you anticipating in Q4 for revenues and I see that you're looking at 2005 between $5 and $6 million.

Ed: Q4 we're expecting a little over $800,000.

Steve: We got our first purchase order in February, the 26th. We'll ship $860,000 worth of mesh Inamed       in Q4.

Quinton: And you talked earlier about improving some of the manufacturing processes and in 2005 you're seeing a 110 basis point reduction in gross margin due to the collagen sales.

Ed: That's without the improvement.

Quinton: Okay. Alright.

Ed: The improvement is still unknown. I mean, I think we’ve talked before – it involves a more automated method of producing the collagen mesh. We have done the initial studies. If that works, we’ll pick up as many as 15 margin points, but the number that is out there does not have the improvement in it.

Quinton: Alright. And then, just on another follow-up question on CE marking, have there been any delays in sales? It sounds like everything has been going very well with the approval process, even despite the higher than expected expenses.

Ed: No delays in sales whatsoever. We CE marked everything that we wanted to. About 150 List A products and another...

Nino: 50 List A products. All together there's more than 120 products.

Quinton: Thank you.

Operator: Your next question comes from Sean McKenna with Merriman.

Sean McKenna: Hey, guys. Can you hear me?

Ed: Sure can, Sean. Go ahead, please.

Sean: Great. So, I want to switch the topic to something (UNINTELLIGIBLE) positive. Looking at the (UNINTELLIGIBLE)…

Ed: I'm sorry, Sean. You're breaking up a little bit.

Sean: Can you hear me now?

Ed: Yes.

Sean: Okay. I want to switch the topic to something a little more positive here. It looks like accounts receivables came down sequentially and I was wondering if you guys could kind of give us an update on what's happening with the DSO's in Europe and the receivables management. Thanks.

Nino: That's a good point. Our accounts receivables in Italy and I'm answering you instead of Steve because I'm Italian. Accounts receivable is going much, much better in Italy because we factored the receivables. That's cost us four percent in gross profit basically.

Sean: Okay.

Nino: Our accounts receivables are doing much better and our day sales (Phonetic) are much better, but we discount the sales in Italy by four percent and that percentage goes down to the gross profit completely. And it’s a big number if you look at the year-to-date because Italy is spending for $8 to $9 million sales this year.

Ed: And that’s – we’re able to do that a) because I think it’s better management of our business, and b) the gross margin that we get out of Italy is one of the highest in the world.

Nino: 67%, consolidated to 75%.

Sean: Okay, great. And receivables in the other rest of the world markets, how are those?

Nino: They're improving from distributors. Our export manager is focusing a lot of receivables and we have a dramatic improvement there. And overall, Canada is improving and...

Steve: Right, and the United States is improving. We focused on receivables this year.

Sean: Okay, great. Thanks a lot guys.

Ed: You're welcome.

Operator: Once again, if you would like to ask a question, please press star then the number one on your telephone key pad.

Your next question comes from Fred Toney with MedCap Management.

Fred Toney: Good morning, guys. Edward, let me dig into the distributor mix versus direct a little bit more. It sounds like that was a very large swing, and is that just because U.S. sales in anticipation of the new product have shrunk so significantly in terms of the mix, and that will swing back once Galileo is launched in the U.S.?

Steve: What we have seen is the dramatic fall off of in sales of Rosys in the United States, and Rosys was a very good gross margin to us, 45 to 50% depending upon the deal. So once the Galileo – although there are some in the backlog; I think there are six in the backlog – we have seen some drop off in Rosys.

Fred: And those are sold directly?

Steve: Yes.

Fred: So you had none of those in the previous quarter?

Steve: We had one.

Fred: Okay. I thought you said earlier all the sales in the previous quarter were through distributors.

Steve: All the Galileo sales in Q3 were through distributors.

Fred: Okay. And what exactly was that number again?

Ed: 16.

Fred: That's the 16. And that's historically been 50/50?

Ed: Yes.

Fred: Okay. So that's overseas - you're selling less through your direct efforts overseas?

Ed: Well, we continue to – in Italy and in Spain, most of our instruments are pure reagent rentals where we’ve just placed the instrument and we get the money back through an up charge. The number of instruments under evaluation, Nino, I believe are all in Italy? The five?

Nino: Three in Germany, two in Italy.

Ed: Okay. Three Germany, two Italy. Germany's is the one country that does some of each - they do some reagent rental and they do some purchases. But 16 through the distribution network is a highly usual mix.

Fred: And it had historically been 50/50. So, I'm just trying to figure out going forward, is this a new trend where most of them will go through the distributors again, or is this a one time trend...?

Nino: I think it's a one time trend because we are ranking 60% of distributors and 40% direct.

Ed: Overall.

Nino: Overall.

Fred: I'm sorry, could you say that again?

Ed: The overall placements to date are about 60% distributor and 40% direct.

Fred: Okay. Your entire installed base?

Ed: Yes. So it is our expectation that our affiliate sales will become larger than the distributor sales. We only have two distributors in Europe, Bio-Rad in France and a smaller company IBG...

Steve: We have smaller (UNINTELLIGIBLE).

Ed: Yes, we have some smaller one in some Eastern block countries.

Fred: Let me try this in a more pointed way. What happened to the affiliate sales or more direct sales during the quarter, and why were they zero of the mix?

Ed: They’re always very lumpy. The second quarter we had much better and I’m sorry I don’t have the number with me, but we had much better affiliate sales, and for what we see looking at the fourth quarter, affiliate sales jump up significantly. We’re expecting to place a minimum of 26 instruments and there will be more in the affiliate sales than there will be in distributor.

Fred: Okay, so the mix goes back to greater than 50%, tilted away from distributors.

Ed: Yes. Absolutely.

Fred: And it's just that lumpy of a sales cycle. That's just the way the channels work. Is that what I’m hearing?

Ed: That's exactly right. And we validate that by looking at the $1.7 million backorder that we're carrying which is all in the U.S.. It's just so lumpy, it's incredible. I don't think we've ever had a backorder bigger than $1.1 million before.

Fred: And there's really no better way to manage that so you don't have this kind of lumpiness that makes your gross margin's flop around?

Ed: No, it’s – fourth quarter we always sell more instruments driven somewhat by – you would hope that you would always have the same sense of urgency in your sales force, but our folks are paid as the more instruments they sell, the higher the commission rate. And we always book the extreme being two years ago we sold $5.3 million worth of instruments for a year and $2.8 million of it was in the fourth quarter. I’m expecting a big fourth quarter in instrument sales.

Fred: So, looking forward to Q1 fiscal '05 then, is there anything in the affiliate network that makes you nervous about that mix staying 50/50?

Nino: No. Our plan for next year - you know, we have 40 customer (UNINTELLIGIBLE) affiliates and the ratio will be exactly the same. Maybe next year we see with the coming year - I think the ratio will be more in favor of direct, but not a big change.

Fred: Because of the U.S. mix, though, right?

Ed: Yes.

Fred: Okay. So, from that standpoint, it will be a little bit more manageable and you may not have a quarter next year where all of a sudden everything was distributor sales.

Nino: We hope so.

Ed: Yes, this is very unusual.

Fred: Okay. That's good. Thank you very much.

Ed: You're welcome.

Operator: Your next question comes from Andrea Bici with Schroders.

Andrea Bici: Hi. I apologize. I'm hopping on the call late. Did you address what you've baked into your 2005 guidance with respect to renegotiating your GPO agreements with the various hospital GPO's.

Ed: No, it was not addressed, but we've said all along between $9 and $12 million, and we had budgeted for $10 million.

Andrea: Okay. Can you elaborate? You have budgeted that you will pay them $10 million or that you'll get $10 million in savings?

Ed: No, we will pay them three percent so it will be in the $1 million range next year versus approximately $750,000 this year. The GPO’s roll out – the first one was supposed to roll out in April, and that has been extended until June. That happens occasionally..

Andrea: And which one is that?

Ed: That is Health Trust. So we will start - we thought we would get a little benefit from Health Trust in this quarter. We will not and that's kind of good news for '05. We'll have a full 12 months. Premier rolls over in June, Broadlane rolls over in August, and Novation rolls over in October.

Andrea: Great. Thanks.

Operator: Once again, if you would like to ask a question, please press star then the number one on your telephone key pad.

Your next question comes from the line of Ben Robertson with Daruma.

Ben Robertson: Yes, my question has already been answered. Thanks.

Operator: Again, if you do have a question, please press star then the number one.

At this time, Mr. Gallup, there are no further questions, Sir.

Ed: Okay. Once again, thanks to all of you for joining us. We are looking forward to what we believe is going to be a very exciting '05 and we will do a much better job of managing our margins in the future. Thank you very much.

Operator: This concludes today's Immucor, Inc. conference call. You may now all disconnect.

** End of Call **