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FORM 10-Q

United States
Securities and Exchange Commission
Washington, D. C. 20549

                                                        (Mark One)

                                                               X           Quarterly Report Pursuant to Section 13 or 15(d)
                                                                                     of the Securities Exchange Act of 1934

For Quarter Ended: November 30, 2004

OR

                                                               _            Transition Report Pursuant to Section 13 or 15(d)
                                                                                     of the Securities Exchange Act of 1934

Commission File Number: 0-14820

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

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

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

Registrant's telephone number: (770) 441-2051

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X    No

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes X    No

     Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of December 31, 2004: Common Stock, $0.10 Par Value - 45,090,998

See notes to consolidated financial statements.

See notes to consolidated financial statements.

See notes to consolidated financial statements.

See notes to consolidated financial statements.

IMMUCOR, INC.
Notes to Consolidated Financial Statements
(Unaudited)

1.     BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. However, there has been no material change in the information disclosed in the Company’s annual financial statements dated May 31, 2004, except as disclosed herein. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended November 30, 2004 are not necessarily indicative of the results that may be expected for the year ending May 31, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2004.

Certain prior year balances have been reclassified to conform to the current year presentation.

2.     STOCK-BASED COMPENSATION

The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of the grant. The Company accounts for stock option grants in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, and accordingly does not recognize compensation expense for the stock option grants.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FASB Statement No. 123. This Statement provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.

3.     INVENTORIES

Inventories are stated at the lower of first-in, first-out cost or market:

4.     EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, Earnings per Share. The Company distributed a three-for-two stock split, effected in the form of a 50% stock dividend on July 16, 2004 to the shareholders of record as of the close of business on June 30, 2004. On November 15, 2004 the Board of Directors approved a three-for-two stock split, effected in the form of a 50% stock dividend, to shareholders of record as of the close of business on November 22, 2004. The stock split was distributed on December 13, 2004 and increased the number of shares outstanding by 15,061,379 net of 82.5 fractional shares for which cash dividends were paid. All share and per share amounts disclosed in this document have been restated to reflect the stock splits discussed in Note 8 to the consolidated financial statements.

5.     DOMESTIC AND FOREIGN OPERATIONS

Information concerning the Company’s domestic and foreign operations is summarized below (in 000s):

The Company’s U.S. operations made net export sales to unaffiliated customers of approximately $1,783,000 and $1,211,000 for the three months ended November 30, 2004 and 2003, respectively, and approximately $3,612,000 and $2,603,000 for the six months ended November 30, 2004 and 2003, respectively. The Company’s German operations made net export sales to unaffiliated customers of approximately $630,000 and $1,296,000 for the three months ended November 30, 2004 and 2003, respectively, and approximately $1,750,000 and $2,163,000 for the six months ended November 30, 2004 and 2003, respectively. The Company’s Canadian operations made net export sales to unaffiliated customers of approximately $514,000 and $538,000 for the three months ended November 30, 2004 and 2003, respectively, and approximately $985,000 and $898,000 for the six months ended November 30, 2004 and 2003, respectively. Product sales to affiliates are valued at market prices.

6.     COMPREHENSIVE INCOME

The components of comprehensive income for the three and six-month periods ended November 30, 2004 and 2003 are as follows:

Accumulated comprehensive income (loss) as of November 30, 2004 and May 31, 2004 was $3,318,753 and ($328,146), respectively. The balance, consisting primarily of net gains on foreign currency translation adjustments, has been disclosed in the shareholders’ equity section of the consolidated balance sheets.

7.     IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In November 2002, the EITF reached a consensus on EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables (“EITF 00-21”). The Issue addresses certain aspects of the accounting for arrangements under which a vendor will perform multiple revenue-generating activities. EITF 00-21 addresses when a revenue arrangement with multiple deliverables should be divided into separate units of accounting and, if separation is appropriate, how the arrangement consideration should be allocated to the identified accounting units. The Company adopted the provisions of EITF 00-21 effective July 1, 2003, without material impact on its financial statements.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin (ARB) No. 51 (“FIN No. 46”). FIN No. 46 requires certain variable interest entities, or VIEs, to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN No. 46 is effective for all VIEs created or acquired after January 31, 2003. For VIEs created or acquired prior to February 1, 2003, the provisions of FIN No. 46 must be applied for the first interim or annual period beginning after March 15, 2004. The Company adopted the provisions of FIN No. 46 effective June 1, 2004, without material impact on its financial statements.

In April 2003, the FASB issued SFAS No. 149, Amendments of Statement 133 on Derivative Instruments and Hedging Activities (“SFAS No. 149”). SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain instruments embedded in other contracts and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. This statement requires that contracts with comparable characteristics be accounted for similarly. In particular, this statement clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative, clarifies when a derivative contains a financing component, amends the definition of an underlying hedged risk to conform to language used in FIN No. 45 and amends certain other existing pronouncements. This statement, the provisions of which are to be applied prospectively, is effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149, on July 1, 2003, did not have a material impact on the Company’s financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (“SFAS No. 150”). SFAS No. 150 establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires that an issuer classify a financial instrument that is within SFAS No. 150‘s scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. Many of those instruments were previously classified as equity. SFAS No. 150 requires an issuer to classify the following instruments as liabilities (or assets in some circumstances): mandatorily redeemable financial instruments; obligations to repurchase the issuer’s equity shares by transferring assets; and certain obligations to issue a variable number of its equity shares. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise shall be effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150, on September 1, 2003, did not have a material effect on the Company’s financial condition or results of operations.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs—an amendment of ARB No. 43, Chapter 4 (“SFAS No. 151”). SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “. . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges . . .”  SFAS No. 151 requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This new standard is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years beginning after November 23, 2004. The Company is in the process of evaluating the impact SFAS No. 151 will have upon adoption but does not anticipate it will have a significant impact on its financial position or results of operations.

In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions (“SFAS No. 153”). The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. Previously, Opinion 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. By focusing the exception on exchanges that lack commercial substance, the Board believes SFAS No. 153 produces financial reporting that more faithfully represents the economics of the transactions. This statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not believe the adoption of this new statement will have a material impact on its financial condition or results of operations.

In December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based Payment (“SFAS No. 123 (R)”), which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation.  Generally, the approach in SFAS No. 123(R) is similar to the approach described in Statement 123.  However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for public entities (excluding small business issuers) in the first interim or annual reporting period beginning after June 15, 2005. See Note 2 to the consolidated financial statements for pro forma disclosure of the effect this new standard on the Company’s net income and earnings per share calculations for the three and six months ended November 30, 2004 and 2003.

8.     STOCK SPLITS

Immucor distributed a three-for-two stock split, effected in the form of a 50% stock dividend on November 14, 2003 to the shareholders of record on October 24, 2003, which resulted in the issuance of 6,542,601 shares of common stock, net of 2,048 fractional shares for which cash dividends were paid. On June 1, 2004, the Board of Directors approved a three-for-two stock split, effected in the form of a 50% stock dividend, to shareholders of record as of the close of business on June 30, 2004. The stock split was distributed on July 16, 2004 and increased the number of shares outstanding by 10,066,940, net of 326 fractional shares for which cash dividends were paid. On November 15, 2004 the Board of Directors approved a three-for-two stock split, effected in the form of a 50% stock dividend, to shareholders of record as of the close of business on November 22, 2004. The stock split was distributed on December 13, 2004 and increased the number of shares outstanding by 15,061,379 net of 82.5 fractional shares for which cash dividends were paid. All share and per share amounts disclosed in this document have been restated to reflect the stock splits described above.

9.     STOCK REPURCHASE PROGRAM

The Company instituted a stock repurchase program in June of 1998 for up to 4,050,000 shares, of which 3,624,750 shares had been purchased prior to the end of the 2004 fiscal year, leaving 425,250 shares available for repurchase. On June 1, 2004, the Board of Directors authorized the Company to repurchase up to an additional 450,000 shares of its common stock. On August 2, 2004, the Board of Directors authorized the Company to repurchase up to an additional 750,000 shares of its common stock. In the quarter ended August 31, 2004, the Company repurchased 622,500 shares at an average per share price of $12.87, bringing the aggregate number of shares to 4,247,250 repurchased to date since implementation of the 1998 repurchase program. There were no share repurchases during the quarter ended November 30, 2004. The aggregate amount remaining available for repurchase under the program is 1,002,750 shares as of November 30, 2004.

10.     LITIGATION AND OTHER MATTERS

The Company is subject to various claims and contingencies related to lawsuits and other matters arising out of the normal course of business. Other income (loss) for the quarter ended November 30, 2004 includes a $0.2 million charge representing a legal settlement agreed upon in December 2004 regarding a claim that existed as of November 30, 2004. In addition, as reported in a press release issued by the Company on November 2, 2004, the Company’s Italian subsidiary and Dr. Gioacchino De Chirico, the former President of the Italian subsidiary, are the subjects of a criminal investigation by Italian authorities in Milan, Italy centered on the activities of a well-known Italian physician and hospital administrator. The investigation concerns alleged improper cash payments by several companies to the physician in exchange for favorable contract awards by his hospital in Italy. Based on the Company’s internal investigation discussed further below, it does not appear that the Italian subsidiary made any improper payments to the physician in question. However, the doctor rendered services as the organizer and chairman of a convention sponsored by the Italian subsidiary in October 2003, for which he received 13,500 Euros, and the invoice for those services did not properly identify the doctor or the nature of his services, in violation of the books and records provisions of the Foreign Corrupt Practices Act. On November 1, 2004, the Company self-reported to the Securities and Exchange Commission the potential violation of the Foreign Corrupt Practices Act. Neither the Italian investigation nor the Company's internal investigation are complete, and no determination can yet be made as to whether the Company, in connection with the circumstances surrounding the Italian investigation, will become subject to any fines, penalties and/or other charges imposed by any governmental authority, or any other damages or costs that may arise in connection with those circumstances.

In October 2004, the Company initiated an internal investigation into the matter discussed above regarding its Italian subsidiary. The Company had already identified certain deficiencies in internal control over financial reporting in that subsidiary in connection with its preparation for Sarbanes-Oxley Section 404 internal control assessment, and was in the process of strengthening those internal controls at the time the internal investigation was initiated. That process was accelerated in connection with the internal investigation, and the Company has now undertaken a thorough review of the books and records of the Italian subsidiary. That review identified a number of improperly recorded transactions totaling approximately $0.7 million, of which $0.5 million, $0.1 million and $0.1 million is included in Amortization and other, Selling and marketing, and Cost of sales, respectively, in the Consolidated Statements of Operations for the three and six months ended November 30, 2004.

11.     SALE OF LONG-TERM INVESTMENT

On November 10, 2004 the Company sold its common stock investment in Lionheart Technologies, Inc. (“Lionheart”), a long-term investment which was being accounted for using the cost method and had a carrying value of $770,000 on the date of sale. In exchange, the Company received $1.3 million in cash from the purchaser, Bio-Tek Instruments, Inc., a wholly owned subsidiary of Lionheart. Accordingly, the Company recorded a gain of $530,000 included in the caption, “Other –Net,” in the consolidated income statement for the three- and six-months ended November 30, 2004.

ITEM 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations.

Certain statements that Immucor may make from time to time, including all statements contained in this report that are not statements of historical fact, constitute “forward-looking statements” under the federal securities laws. 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 made by, or on behalf of, Immucor include the following, some of which are described in greater detail below: 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, changes in demand for the Company’s human collagen product and general economic conditions. In addition, the strengthening of the dollar versus the Euro would adversely impact reported European results. Investors are cautioned not to place undue reliance on any forward-looking statements. Immucor cautions that historical results should not be relied upon as indications of future performance. Immucor assumes no obligation to update any forward-looking statements.

Critical Accounting Policies

General

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 1, Note 2 and Note 7 to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Note that our preparation of this Form 10-Q requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, and certain assumptions could prove to be incorrect. Senior management has discussed the development and selection of critical accounting estimates and related Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure with the Audit Committee of the Board of Directors.

Revenue Recognition

The Company recognizes revenue when the following four basic criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectibility is reasonably assured. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected. Revenue from the sale of the Company’s reagents in the U.S. market is recognized upon shipment when both title and risk of loss transfer to the customer upon shipment. Revenue from the sale of the Company’s reagents in the export market is recognized FOB customs clearance when both title and risk of loss transfer to the customer. Revenue from the sale of the Company’s human collagen product is recognized upon shipment and passage of a 10-day inspection period. Revenue from the sale of the Company’s medical instruments is recognized upon shipment and completion of contractual obligations relating to training and/or installation based on terms of the related agreements. Revenue from rentals of the Company’s medical instruments is recognized over the life of the rental agreement. Instrument service contract revenue is recognized over the life of the contract.

In some situations, the Company sells an instrument to a third-party leasing company without recourse, and receives full cash payment for the instrument upon receipt of the ultimate customer’s signed delivery and acceptance. In certain limited situations involving third party lease arrangements, the Company enters into a repurchase agreement whereby if the ultimate customer terminates the lease, the Company agrees to repurchase the instrument for an amount equal to the remaining unpaid lease payments owed to the third party leasing company. In these limited situations, the Company defers the revenue related to the sale, along with the corresponding cost of sales, and subsequently recognizes the revenue and corresponding costs over the lease term as the lease payments are made to the third party leasing company and it is clear that the ultimate customer has not terminated the related lease.

The Company adopted Emerging Issues Task Force (“EITF”) Issue No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables, for agreements entered into beginning in the second quarter of fiscal year 2004. The Company’s medical instrument sales contracts involve multiple deliverables, including the sale or rental of an instrument (including training and installation), the subsequent servicing of the instrument during the first year, and reagent products provided to the customer during the validation period. The portion of the instrument sales price applicable to the instrument itself (including training and installation), which is determined based on fair value, is recognized upon shipment and completion of contractual obligations relating to training and/or installation based on the terms of the related agreement. The portion of the sales price applicable to reagent products provided to the customer during the validation period, based on fair value, are recognized when the instrument itself is recognized as generally such recognition occurs when the validation period is completed. The portion of the sales price applicable to servicing the instrument during the first year, based on fair value, is deferred and recognized over the first year of the contract. The portion, if any, of the sales price applicable to price guarantees, based on fair value, is deferred and recognized over the guarantee period. The allocation of the total consideration received based on the estimated fair value of the units of accounting requires judgment by management.

Allowance for Doubtful Accounts

Immucor maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company’s current policy, based on historical collection experience, is to provide a minimum allowance of 4% of third-party gross receivables. In addition, any third-party invoices over three years old are provided for in the allowance, as are any third-party invoices over eighteen months old and under $50. At November 30, 2004, the allowance is approximately 4.7% of the gross accounts receivable balance. The Company continually monitors the collectibility of its customer accounts and when indications arise that an amount is not likely to be collected, the amount is charged to the allowance for doubtful accounts. If the financial condition of any of Immucor’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances could be required.

Inventory

Inventories are stated at the lower of first-in, first-out cost or market. Cost includes material, labor and manufacturing overhead. The Company uses a standard cost system as a tool to monitor production efficiency. The standard cost system applies estimated labor and manufacturing overhead factors to inventory based on budgeted production and efficiency levels, staffing levels and costs of operation, based on the experience and judgment of management. Actual costs and production levels may vary from the standard established and are charged to the consolidated statement of operations as a component of cost of sales. Since U.S. generally accepted accounting principles require that the standard cost approximate actual cost, periodic adjustments are necessary. The provision for obsolete inventory is reviewed on a quarterly basis. All finished good reagent products which will expire in less than six months are written down to zero in the period in which this expiration threshold is met. Any raw, intermediate, or finished product that has been quarantined because it has failed quality control (QC) is written down to zero in the period in which the product fails QC testing. Should the product be successfully reworked and pass final quality control checks, it is then valued at its standard cost. Obsolete and quarantined inventory is physically segregated from useable and saleable inventory and destroyed according to regulatory and fiscal guidelines. No material changes have been made to the inventory policy during the six-month period ended November 30, 2004.

Excess of Cost Over Net Assets Acquired and Other Long-lived Assets

In assessing the recoverability of the Company’s excess of cost over net assets acquired and other long-lived assets the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets not previously recorded. On June 1, 2002 the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, and is required to analyze its goodwill and intangible assets for impairment on an annual basis or more frequently if impairment indicators arise. In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. The Statement supercedes SFAS No. 121, Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of, however it retains the fundamental provisions of that statement related to the recognition and measurement of the impairment of long-lived assets to be “held and used.” The Company adopted SFAS No. 144 effective June 1, 2002 without impact on its financial position or results of operations.

Income Taxes

Our income tax policy records the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss and tax credit carry-forwards. We follow very specific and detailed guidelines regarding the recoverability of any tax assets recorded on the balance sheet and provide any allowances as required. The Company believes that the value of the Company’s deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets resulting in additional income tax expense in the Company’s consolidated statements of operations. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, carry-back opportunities, and tax-planning strategies in making this assessment. Management evaluates the realizability of the deferred tax assets and assesses the need for additional valuation allowances quarterly. No material changes have been made to the income tax policy during the six-month period ended November 30, 2004.

Stock-Based Employee Compensation

The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of the grant. The Company currently accounts for stock option grants in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, and accordingly does not recognize compensation expense for the stock option grants. In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-based Compensation – Transition and Disclosure – an amendment of FASB Statement No. 123. This Statement provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company adopted the interim disclosure requirements in the period ended May 31, 2003. See Note 2 of the consolidated financial statements.

In December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation.  Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123.  However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for public entities (excluding small business issuers) in the first interim or annual reporting period beginning after June 15, 2005. See Note 2 to the consolidated financial statements for pro forma disclosure of the effect this new standard on the Company’s net income and earnings per share calculations for the three and six months ended November 30, 2004 and 2003.

Overview

Founded in 1982, Immucor, Inc., a Georgia corporation (“Immucor” or the “Company”), develops, manufactures and sells a complete line of reagents and automated systems used primarily by hospitals, clinical laboratories and blood banks in a number of tests performed to detect and identify certain properties of the cell and serum components of human blood prior to blood transfusion. The Company continues to place increasing emphasis on the development and sale of instruments and instrument systems that use the Company’s proprietary reagents, while promoting increased sales of its traditional reagent product line.

For fiscal 2005, the Company’s strategy is focused primarily on improving gross margin and on developing its third generation automated assay instrument. Gross margin (gross profit as a percent of sales) improved during the quarter ended November 30, 2004 to 56.1% up from 55.5% in the prior year quarter. Gross margin for the six-month period ended November 30, 2004 increased as well, from 55.6% for the prior year period to 56.6%.

As discussed below under “Results of Operations,” the improvements in gross margin during the three- and six-month periods ended November 30, 2004, as compared to the prior year periods, were due to several factors, including:

The Company expects to achieve continued improvement in gross margin over the remainder of fiscal 2005 as compared to the previous periods in fiscal 2004, primarily as a result of implementation of the following strategic steps:

On April 25, 2004, the Company obtained FDA clearance to market its high-volume Galileo® instrument designed for the large-sized hospital market in the U.S. The instrument revenue and the related reagent revenue stream are expected to improve gross margins because the instrument requires proprietary reagents developed for automated technology, thus commanding a premium price over traditional reagent products. As of December 31, 2004, the Company has placed 168 Galileo® instruments worldwide, including 13 in North America and 9 in Japan.

In July 2004, the Company announced it is developing a third generation instrument, currently referred to as the “G3” and currently planned for release in the Company’s 2006 fiscal year. The G3 is targeted at the small- to medium-sized hospital market, the largest segment of the Company’s customers, which number approximately 5,000 to 6,000 worldwide, to which the Company’s ABS2000 instrument is currently marketed. The G3 is expected to be significantly smaller and faster than the ABS2000, and have substantially all of the features of the Company’s larger Galileo® product, apart from lower throughput. The G3‘s smaller size is designed to allow “depot service” where a customer delivers an instrument to a Company depot for servicing and receives a loaner instrument to use until servicing is complete. The Company expects this depot method to be more cost effective than sending repair personnel to the customer’s site, and accordingly expects instrument service costs will eventually decline as the G3 replaces the ABS2000.

In October 2004, the Company initiated an internal investigation into certain events involving its Italian subsidiary - see Note 10 to the consolidated financial statements for further details. As described below under Item 4--Controls and Procedures, the Company had already identified certain deficiencies in internal control over financial reporting in that subsidiary in connection with its preparation for Sarbanes-Oxley Section 404 internal control assessment, and was in the process of strengthening those internal controls at the time the internal investigation was initiated. That process was accelerated in connection with the internal investigation, and the Company has now undertaken a thorough review of the books and records of the Italian subsidiary. That review identified a number of improperly recorded transactions totaling approximately $0.7 million, of which $0.5 million, $0.1 million and $0.1 million is included in Amortization and other, Selling and marketing, and Cost of sales, respectively, in the Consolidated Statements of Operations for the three and six months ended November 30, 2004.

Liquidity and Capital Resources

As of November 30, 2004, the Company’s cash and cash equivalents balance totaled $18.1 million. Net cash provided by operating activities increased to $14.7 million for the six months ended November 30, 2004, up $3.8 million from the same period ended November 30, 2003. This increase was primarily driven by higher net income.

For the six months ended November 30, 2004, $1.3 million of cash was used in investing activities consisting primarily of capital expenditures totaling $2.6 million, partially offset by $1.3 million in proceeds from the November 2004 sale of the Company’s long-term investment in Lionheart Technologies, Inc. The sale of this investment resulted in a gain of $0.5 million which is included in the consolidated statement of operations’ caption, “Other – net” for the three- and six-month periods ended November 30, 2004. The $2.6 million in capital expenditures for the six-month period ended November 30, 2004 consisted primarily of $1.3 million for Galileo® and other instruments used for demonstration purposes by the sales force or placed at customer sites on reagent rental agreements to be depreciated over the life of the respective agreements and $0.7 million for computer hardware and software enhancements of the enterprise software system. Planned capital expenditures for fiscal 2005 total approximately $7.8 million, including approximately $3.7 million for planned upgrades at its Norcross facility for its manufacturing, quality and support systems, approximately $2.8 million for offsite placements of the Galileo® instruments by the foreign affiliates, and approximately $0.5 million for upgrades at the Company’s Canadian facility.

On December 18, 2003, the Company obtained a new $27.0 million secured credit facility with SunTrust Bank. Proceeds of these borrowings were primarily used to repay the Company’s previous arrangement with Wachovia Bank (which was cancelled upon repayment). The new credit facility matures in December 2006 and is comprised of a $15.0 million revolver and a $12.0 million term loan. The term loan is payable in quarterly installments of $1.0 million. The term loan and the revolver bear interest of LIBOR plus additional percentage points ranging from 1.0% to 1.75%, or SunTrust Bank prime rate plus additional percentage points ranging from (0.5%) to 1.0% based on certain calculations as defined in the Loan Agreement. The loans are collateralized by the capital stock of certain of the Company’s subsidiaries. The Company recorded a non-cash, pre-tax charge of $924,000 in the third quarter of fiscal 2004 to write off unamortized deferred financing charges related to its previous credit facility. As of November 30, 2004, there was $8.0 million outstanding on the term loan and none outstanding on the revolver.

Net cash used in financing activities totaled approximately $10.9 million and $8.8 million for the six months ended November 30, 2004 and 2003, respectively. The majority of the usage of cash for the current year period is attributable to $8.0 million in stock repurchases, as described more fully below.

The Company instituted a stock repurchase program in June of 1998 for up to 4,050,000 shares, of which 3,624,750 shares had been purchased prior to the end of the 2004 fiscal year, leaving 425,250 shares available for repurchase. On June 1, 2004, the Board of Directors authorized the Company to repurchase up to an additional 450,000 shares of its common stock. On August 2, 2004, the Board of Directors authorized the Company to repurchase up to an additional 750,000 shares of its common stock. In the quarter ended August 31, 2004, the Company repurchased 622,500 shares at an average per share price of $12.87, bringing the aggregate number of shares to 4,247,250 repurchased to date since implementation of the 1998 repurchase program. There were no share repurchases during the quarter ended November 30, 2004. The aggregate amount remaining available for repurchase under the program is 1,002,750 shares as of November 30, 2004.

At November 30, 2004 and November 30, 2003, the Company had an interest rate swap agreement in the Company’s functional currency, maturing in 2005 with an initial notional principal amount of $15.0 million, which amortizes over the life of the instrument. The fair value of the interest rate swap agreement represents the estimated receipts or payments that would be made to terminate the agreement and is included with other long-term liabilities on the balance sheet. At November 30, 2004 and November 30, 2003, the Company would have paid $68,272 and $263,039, respectively, to terminate the agreement in the Company’s functional currency. The interest rate swap agreement is guaranteed by the Company. See Item 7A—Quantitative and Qualitative Disclosures About Market Risk—Interest Rates in the Company’s Form 10-K for the fiscal year ended May 31, 2004.

As of November 30, 2004, the Company has spent approximately $0.4 million in professional fees associated with the Italian investigation discussed in Note 10 to the consolidated financial statements. The Company expects to spend an additional $2.0 million over the remainder of fiscal 2005 in professional fees related to this investigation. As discussed more fully in Note 10 to the consolidated financial statements, no determination can yet be made as to whether the Company, in connection with the circumstances surrounding the Italian investigation, will become subject to any fines, penalties and/or other charges imposed by any governmental authority, or any other damages or costs that may arise in connection with these circumstances.

Management expects that cash and cash equivalents and cash flows from operations will be sufficient to support operations, scheduled debt repayments and planned capital expenditures for the next 12 months, as well as fund future long-term debt payments. There are no restrictions on the Company’s foreign subsidiaries in the matter of sending dividends, or making loans or advances to the parent Company.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet financial arrangements as of November 30, 2004.

Results of Operations

Immucor generated revenues of $32.6 million and $64.7 million, respectively, for the three- and six-month periods ended November 30, 2004. These revenue results represented respective increases of $5.4 million and $10.3 million over the same fiscal periods in the prior year. Net income for the three- and six-month periods ended November 30, 2004 totaled $4.2 million and $9.2 million, respectively. These results also compared favorably with those of the same fiscal periods in the prior year.

Diluted earnings per share, totaling $0.09 on 47.3 million weighted average shares outstanding for the three-month period ended November 30, 2004, compared with diluted earnings per share of $0.07 on 46.9 million weighted average shares outstanding in the three-month period ended November 30, 2003. Diluted earnings per share, totaling $0.19 on 47.4 million weighted average shares outstanding for the six-month period ended November 30, 2004, compared with diluted earnings per share of $0.15 on 46.7 million weighted average shares outstanding in the six-month period ended November 30, 2003. All share and per share amounts have been adjusted to reflect the three-for-two stock splits effected in the form of 50% stock dividends that were distributed on July 16, 2004 and December 13, 2004.

For the three-month period ended November 30, 2004, the effect on net sales and gross margin of the change in the Euro exchange rate was an approximate increase of $0.6 million and $0.3 million, respectively, and minimal for net income. For the six-month period ended November 30, 2004, the effect on net sales and gross margin of the change in the Euro exchange rate was an approximate increase of $1.2 million and $0.5 million, respectively, and minimal for net income.

Net Sales

Reagent revenues grew to $28.2 million compared to $25.1 million in the prior year quarter, a 12.3% increase. The growth in reagent revenue occurred as a result of price increases in North America, which contributed $1.9 million to the increase, and volume increases in proprietary Capture® products. Capture® product sales were $6.6 million versus $5.6 million in the three-month period ended November 30, 2003. Human collagen sales were $0.7 million during the quarter. There were no sales of collagen in the corresponding prior year period. Sales of instruments were $3.7 million in the second quarter of 2005 compared to $2.1 million in the second quarter of 2004. Instrument revenues grew in part due to higher service contract revenue as a result of new placements under service contracts, as well as increases in service contract pricing.

For the six-month period ended November 30, 2004, reagent revenues increased $6.9 million (or 13.9%) over the prior year period. This growth for the year-to-date period was attributable to the same reasons as outlined above for the quarterly period, with price increases in North America contributing $3.8 million to the overall increase. For the six-month period ended November 30, 2004, Capture® product sales were $13.1 million as compared to $10.5 million for the same period in fiscal 2004. Human collagen sales contributed $1.5 million to the year-to-date revenue increase. Instrument revenues for the six-month period ended November 30, 2004 totaled $6.5 million as compared to $4.6 million in the prior year period, the increase resulting from the same reasons for the quarter-over-quarter increase.

Gross Margin

The gross margin on traditional reagents for the quarter ended November 30, 2004 benefited from the price increases discussed above, increasing to 56.7% for the current quarter from 56.3% for the prior year quarter. The gross margin on Capture® products was 76.7% for the current quarter, compared with 76.1% in the prior year quarter. The improvement was due primarily to higher volume of sales due in part to the timing of Capture® product shipments. The gross margin on human collagen sales was 25.4% during the quarter. The gross margin on instruments, including the impact of the cost of providing service was 22.1% for the current quarter, compared to a negative 2.8% for the same quarter last year. Instrument gross margin benefited from higher service contract revenue as discussed above.

The gross margin of 57.0% on traditional reagents for the six-month period ended November 30, 2004 was slightly lower than the 57.4% achieved in the prior year period, the decrease primarily due to higher on-going regulatory costs in the first quarter of fiscal 2005 to support CE-marking in Europe. The gross margin on Capture® products improved to 77.3% from 73.5% in the prior six-month period, primarily as a result of higher volume. The gross margin on human collagen sales was 27.6% during the six months ended November 30, 2004. The gross margin on instruments was 18.6% as compared to 4.1% in the six-month period in the prior year, benefiting from higher service revenue as discussed above.

Operating expenses

Research and development expenses were $1.2 million in the second quarter, up 71.8% from $0.7 million in the prior year quarter. For the six-month period ended November 30, 2004, the Company spent $2.2 million as compared to $1.5 million in the prior year period. Spending on the development of the new third generation instrument targeted for the small to medium hospital market (the “G3”) was $0.4 million and $0.8 million, respectively, for the three- and six-month periods ended November 30, 2004. In these same periods in the prior year, only $0.1 million and $0.2 million, respectively, were spent on the G3.

Selling and marketing expenses increased $0.2 million and $0.6 million, respectively, over the three- and six- month periods ended November 30, 2003, but decreased as a percentage of sales for both periods. This decrease as a percentage of sales was due primarily to higher period-over-period sales as discussed more fully above.

Distribution expenses for the three- and six-month periods ended November 30, 2004 decreased by less than $0.1 million and by $0.3 million, respectively, compared to the same periods ended November 30, 2003, primarily benefiting from the consolidation of the manufacture of red blood cell products into the Norcross facility. The quarter ended August 31, 2004 was the first quarter in which the Company’s red blood cell manufacturing was fully consolidated into the Norcross facility during the entire quarter.

General and administrative expenses for the three- and six-month periods ended November 30, 2004, rose approximately $1.2 million and $1.6 million, respectively over the same periods ended November 30, 2003. The quarter and year-to-date increases were attributable primarily to higher legal fees due mainly to the Italian investigation as discussed more fully above in Note 10 to the consolidated financial statements.

Amortization and other expenses for the three- and six-month periods ended November 30, 2004 include a $0.5 million charge related to improperly recorded transactions on the Company’s Italian subsidiary’s books. See Note 10 to the consolidated financial statements.

Interest expense

When compared to the three- and six-month periods ended November 30, 2003, interest expense decreased $0.1 million and $0.3 million, respectively, in the same periods ended November 30, 2004. The decrease is primarily the result of reduced levels of long-term debt at more favorable interest rates.

Other income (expense)

Other income, net, for the three-month period ended November 30, 2004, primarily reflects a $0.5 million gain on the sale of the Company’s long-term investment in Lionheart Technologies, Inc. in November 2004, as well as a net gain on foreign currency transactions. These gains were partially offset by a $0.2 million charge representing a legal settlement agreed upon in December 2004 regarding a claim that existed as of November 30, 2004. The six-month period ended November 30, 2004 also includes a $0.3 million charge associated with the buyout of a distribution agreement in the first quarter of fiscal 2005.

Income taxes

The provision for income taxes rose $1.0 million and $1.9 million from the three- and six-month periods ended November 30, 2003, due to a higher effective tax rate as well as higher pre-tax income. State tax rates are estimated to be higher as the Company refines its state tax structure.

ITEM 3.   Quantitative and Qualitative Disclosures On Market Risk.

There have been no material changes regarding the Company’s market risk position from the information provided in its Annual Report on Form 10-K for the fiscal year ended May 31, 2004. The quantitative and qualitative disclosures about market risk are discussed in Item 7A-Quantitative and Qualitative Disclosures About Market Risk, contained in the Company’s Annual Report on Form 10-K.

ITEM 4.   Controls and Procedures.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) under the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

As discussed above under Item 5-Management’s Discussion and Analysis of Financial Condition and Results of Operations-Overview, during the period covered by this report, the Company identified certain deficiencies in the internal control over financial reporting in the Company’s Italian subsidiary. These deficiences related to the subsidiary’s procedures for recording and verifying certain transactions, which were managed by a single employee who is no longer with the Company or the subsidiary. At the Company’s direction, the subsidiary replaced this individual, added a finance manager, and implemented a system of verifying and documenting transactions. The Company believes that these efforts have corrected any material weakness or significant deficiencies in the internal control over financial reporting in the Italian subsidiary.

Other than described in the preceding paragraph, there were no significant changes in the Company’s internal control over financial reporting or in other factors identified in connection with this evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1.    Legal Proceedings.

The Company is subject to various claims and contingencies related to lawsuits and other matters arising out of the normal course of business. Other income (loss) for the quarter ended November 30, 2004 includes a $0.2 million charge representing a legal settlement agreed upon in December 2004 regarding a claim that existed as of November 30, 2004. In addition, as reported in a press release issued by the Company on November 2, 2004, the Company’s Italian subsidiary and Dr. Gioacchino De Chirico, the former President of the Italian subsidiary, are the subjects of a criminal investigation by Italian authorities in Milan, Italy centered on the activities of a well-known Italian physician and hospital administrator. The investigation concerns alleged improper cash payments by several companies to the physician in exchange for favorable contract awards by his hospital in Italy. Based on the previously-reported internal investigation into this matter initiated by the Company it does not appear that the Italian subsidiary made any improper payments to the physician in question. However, the doctor rendered services as the organizer and chairman of a convention sponsored by the Italian subsidiary in October 2003, for which he received 13,500 Euros, and the invoice for those services did not properly identify the doctor or the nature of his services, in violation of the books and records provisions of the Foreign Corrupt Practices Act. On November 1, 2004, the Company self-reported to the Securities and Exchange Commission the potential violation of the Foreign Corrupt Practices Act. Neither the Italian investigation nor the Company's internal investigation are complete, and no determination can yet be made as to whether the Company, in connection with the circumstances surrounding the Italian investigation, will become subject to any fines, penalties and/or other charges imposed by any governmental authority, or any other damages or costs that may arise in connection with those circumstances.

ITEM 2.   Unregistered Sales of Equity Securities and Use of Proceeds.

As described below under Item 4 – Submission of Matters to a Vote of Security Holders, at the Company’s Annual Meeting of Shareholders on November 10, 2004, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to increase the number of shares of Common Stock that the Company is authorized to issue from 45,000,000 to 60,000,000.

The Company did not repurchase any shares of its Common Stock during the quarter ended November 30, 2004. As of November 30, 2004, an aggregate of 1,002,750 shares of Common Stock remain available for repurchase under the Company’s stock repurchase programs.

ITEM 4.   Submission of Matters to a Vote of Security Holders.

The Company held its 2004 Annual Meeting of Shareholders on November 10, 2004. The following is a summary of the matters voted on at that meeting:

The shareholders voted on the election of seven directors, all incumbent directors of the Company, to serve for a one-year term or until their successors are duly elected and qualified. Each of these directors was elected by the affirmative vote of a plurality of the votes cast at the Annual Meeting. The number of shares cast for and the number of shares withheld, with respect to each of these persons, were as follows:

At the Annual Meeting, the shareholders also voted to approve an amendment to the Immucor, Inc. 2003 Stock Option Plan. The number of shares cast for, votes cast against, abstentions and broker non-votes, with respect to this matter, were as follows:

As a third item of business at the Annual Meeting, the shareholders also voted to approve an amendment to the Company’s Articles of Incorporation to increase the number of shares of Common Stock that the Company is authorized to issue from 45,000,000 to 60,000,000. The number of shares cast for, votes cast against, abstentions and broker non-votes, with respect to this matter, were as follows:

ITEM 6.    Exhibits and Reports on Form 8-K

(a)     The Company has filed the following exhibits with this report.

            3.1        Amended and Restated Articles of Incorporation.

          31.1       Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).*

          31.2       Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).*

          32.1       Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

          32.2       Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

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.
(Registrant)

Date: January 14, 2005                                             By:   /s/ Edward L. Gallup

Edward L. Gallup, Chief Executive Officer                                              (on behalf of Registrant and as Principal Executive Officer)

Date: January 14, 2005                                             By:   /s/ Steven C.Ramsey

Steven C. Ramsey, Vice President - Chief Financial Officer and Secretary                                                                                           (Principal Accounting Officer)

EXHIBIT INDEX

Number                                    Description

  3.1        Amended and Restated Articles of Incorporation.

31.1       Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).*

31.2       Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).*

32.1       Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2       Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*