Menlo Park, California
January 23, 2002

Landec Corporation (Nasdaq: LNDC), a developer and marketer of technology-based polymer products for food, agricultural and licensed partner applications, today reported results for the fourth quarter and fiscal year ended October 28, 2001.

Consistent with the Company's stated objective to strengthen its cash position by selling non-strategic assets, the Company has decided to sell its specialty chemicals subsidiary, Dock Resins Corporation. As a result of this decision, the financial results of Dock Resins have been reclassified to discontinued operations for all years presented in the income statement and its net assets are shown as assets held for sale in the balance sheet.

Total revenues from continuing operations for the quarter were $39.3 million versus $50.7 million in the fourth quarter of fiscal year 2000. Landec reported a net loss from continuing operations of $2.9 million, or $0.17 per share, compared with a net loss of $1.7 million, or $0.11 per share, for the same quarter in fiscal year 2000. Included in the loss for the prior year quarter was a one-time charge of $525,000 related to the shutdown of Apio's fruit processing operations. EBITDA -- earnings before interest, taxes, depreciation and amortization -- for the fourth quarter were a negative $610,000 versus a negative $36,000 in the fourth quarter of last year.

The loss from discontinued operations for the fourth quarter was $2.9 million, or $0.18 per share and for all of fiscal year 2001 the loss from discontinued operations was $3.0 million, or $0.19 per share.

Gary Steele, President and CEO of Landec commented, "Results for our fourth quarter and fiscal year were disappointing. The results reflect the impact of operating challenges in fiscal year 2001 and strategic initiatives underway which are designed to position the Company for profitability in fiscal year 2002. The financial impact from the steps taken thus far has been year-to-year decreases in revenues and margins, and recognition of restructuring costs, in the third and fourth quarters of fiscal year 2001. These initiatives are expected to lead to higher margins, lower cash needs and greater predictability of operating results in fiscal year 2002 and beyond."

"The outlook for our continuing operations is positive. Significant progress in fiscal year 2001 included the expanded use of our proprietary Intelimer(R) technology in nearly 40% of our total revenues in fiscal year 2001, up from 28% in fiscal year 2000, all directly related to Intellipac(TM) specialty packaging products, Intellicoat(R) seed coatings and Intelimer licensing/R&D collaborations. In our food business, sales from our value- added specialty packaging products grew over 25% year-to-year and the related gross profits grew over 30% in fiscal year 2001. Our goal is to continue to grow Apio's value-added
technology-based products, which are less affected by commodity market fluctuations, while working with our current and new grower partners to expand and grow our 'fee-for-service' produce marketing and sales business based on a more focused, lower cost structure. In our agricultural seed business, our expanded Intellicoat coated seed trials for Early Plant(TM) hybrid seed and Relay Crop(TM) System for wheat/soybean met Company expectations and our first Intellicoat coated seed product, Pollinator Plus(TM) coatings, was sold to 31 of the leading corn seed companies in our first year of full commercial sales," stated Steele.

"Looking to fiscal year 2002, we expect to grow total revenues, to increase gross margins by 3-percentage points or more, to decrease operating expenses, to generate positive earnings per share and to strengthen our balance sheet," added Steele.

Revenues for all of fiscal year 2001 were $190.9 million versus revenues of $197.2 million a year ago. The Company reported a net loss from continuing operations of $4.8 million or $0.29 per share, compared with a net loss of $2.1 million, or $.13 per share, in fiscal year 2000. For fiscal year 2001, EBITDA was $2.8 million versus $4.3 million for the same period last year.

"In fiscal year 2001, we experienced significant overall losses and unacceptable levels of performance in the non-technology areas of our business. First, we were adversely impacted in both the fourth quarter and fiscal year 2001 by lower volumes and margins in Apio's "fee-for-service" whole produce business that does not utilize Landec's proprietary packaging technology. Second, Apio incurred $2.0 million of losses during the first half of the year from investments in farming activities during the 2000-2001 winter season. Third, Landec Ag was hurt by lower than expected uncoated seed corn sales during the 2000-2001 sales season due to lower corn acreage being planted because of high input costs for fertilizers used for corn, and fourth, our sales of specialty chemical products by Dock Resins were down due to the decline in the U.S. economy," said Gary Steele.

"As outlined in our third quarter results press release, during the second half of fiscal year 2001 we began to restructure Apio's 'fee-for-service' business. This restructuring focuses primarily on exiting the cash, labor and equipment-intensive field harvesting and packing operations in order to focus on the marketing and sales of whole produce in the 'fee-for-service' business. The short-term effects of this restructuring were decreases in service revenues and margins during the fourth quarter and the second
half of fiscal year 2001. During the fourth quarter of fiscal year 2001, Apio's service revenues were $11.0 million compared to $18.4 million in the fourth quarter of fiscal year 2000 and gross profits on service revenues decreased during the quarter from $2.9 million last year to $2.2 million during the fourth quarter this year. For the year, Apio's service revenues were $55.5 million compared to $73.2 million in fiscal year 2000 and gross profits on service revenues decreased for the year from $10.1 million last year to $6.7 million this year," added Steele.

"Although the impact of implementing these strategic initiatives at Apio had a negative impact on our fiscal year 2001 results, we believe they have positioned the Company for profitability next year and beyond. These initiatives included
1) outsourcing Apio's carton yard operations to Georgia Pacific, which will free up approximately $4 million in working capital,
2) reducing our winter season farming investments by approximately 80% and,
3) implementing our transition out of the field harvesting and packing of the whole produce portion of our 'fee-for-service' business," Steele continued.

Landec acquired Apio two years ago in order to combine the Company's proprietary Intellipac specialty packaging applications with synergistic operations of a leading, established food company. At the time of the acquisition, the majority of Apio's business was oriented toward traditional commodity produce sales and service. Since the acquisition, Apio has experienced substantial growth in its line of specialty packaged products that utilize Landec's proprietary Intellipac technology. This business has nearly doubled its revenues to over $70 million in less than two years. Apio's restructuring will allow it to continue to grow its technology based value-added business while establishing an infrastructure that will drive operating costs down in the 'fee-for-service' produce business which, in turn, will benefit both Apio and its grower partners. This reduced cost structure will also allow the 'fee-for-service' produce marketing and sales business to grow in tandem with Apio's value-added business. A similar strategy and change in business structure was implemented last year in Apio's fruit business. After exiting the
processing of fruit, Apio continued to market and sell whole fruit. The results from that restructuring have been successful as Apio has decreased its costs and cash needs in its fruit business while increasing gross margins.

The financial statements for the prior year have been restated to reflect the cumulative effect of the change in accounting principle resulting from the Company's adoption of SEC Staff Accounting Bulletin 101, at the end of fiscal year 2000. SAB 101 impacts how the Company accounts for previously recorded up-front licensing revenues related to agreements that involve ongoing R&D and/or supply commitments. The adoption of SAB 101 at fiscal year end 2000 was treated as if it had occurred
at the beginning of fiscal year 2000. As a result of adopting this new pronouncement, Landec will recognize these up-front license revenues prorated over the life of the respective contractual commitment periods.

Commenting on the financial condition of Landec, Steele concluded, "Our priorities are to focus on the operating results from our food and agricultural businesses while strengthening our cash position by selling non-strategic assets, such as Dock Resins and Apio's fruit processing facility, entering into selective license agreements with upfront cash payments, increasing our cash flow from operations and selectively using bank lines for seasonal swings in volume. In addition to allowing Company
management to focus on our core businesses, the sale of Dock Resins and the fruit processing facility will strengthen Landec's balance sheet by allowing us to use the proceeds to pay down debt. We expect these liquidity actions to take the next 12 months to be fully implemented and to result in approximately $15 million in new and previously unavailable cash resources. With the combination of these liquidity actions, our lines of credits and our current cash position, we expect that an additional
equity financing will not be required during the next twelve months."

Operating Highlights and Outlook

Apio Gaining in Store Chains and Export Market

During the fourth quarter, Apio's iceless case liner product line continued to experience accelerating growth. In addition, Apio initiated programs to broaden its product offerings, including the expansion of the export program for the Company's iceless case liner products that utilize Intellipac technology. Apio also introduced twenty new product offerings during fiscal year 2001 and expanded its retail and club store presence to over 7,600 stores from 5,500 a year ago. These efforts have the potential to
generate substantial revenues for Apio over the coming quarters. In addition, the Company is conducting shipping and ripening trials using Intellipac technology for bananas, a $4 to $4.5 billion annual worldwide market for distributors, which in turn, is a $9 to $10 billion annual worldwide market for retailers. Bananas are the nation's leading produce item, contributing approximately nine to ten percent of produce department sales in the United States.

Landec Ag Accelerates Sales and Trials of Technology Products

Landec Ag, the Company's Intellicoat seed coating subsidiary, expanded its field trials during fiscal year 2001 for its new Early Plant hybrid corn and Relay Crop System of wheat and coated soybean. The new products under development join the existing line-up of Fielder's Choice Direct(R) hybrid corn and Intellicoat coated Pollinator Plus seed corn coatings.

Pollinator Plus seed coatings are applied to inbred seed corn to delay seed germination and extend the pollination window thus reducing risks and increasing yields for the seed companies. In 2001, Pollinator Plus was planted on more than 15,000 acres. The Company expects to double the planting of this product line to over 30,000 acres in 2002.

The next generation of Intellicoat products was tested in a significantly expanded number of planted acres this past spring. These Intellicoat products include the Relay Crop System of wheat and coated soybean and Early Plant hybrid corn. Landec Ag's Relay Crop System includes Intellicoat coated soybeans, which enable farmers to plant two crops on the same acreage in the same year, resulting in higher overall yields and income per acre for the farmer. The program for Relay Crop was expanded
to 3,000 acres this last year from 900 acres in 2000. Early Plant hybrid corn is designed to allow corn farmers to safely and reliably plant hybrid corn 2-4 weeks earlier than normal, since Landec's proprietary Intellicoat coating delays germination until the soil reaches the optimal soil germination temperature. Otherwise, planting 2-4 weeks earlier in cold, wet soil could cause poor or no germination to occur. Allowing the farmer to have a wider planting window lowers costs, reduces risks and potentially increases yields. The program for Early Plant hybrid corn was expanded to 3,000 acres this past spring from 20 acres in 2000 and is expected to be planted on 20,000 acres in 2002.

Landec Ag also directly markets and sells seed products using a sophisticated telephonic and electronic call center headquartered in Monticello, Indiana. This last spring the Company introduced a new Harvestar(TM) product line, which offers high performance alfalfa and nutrient enhanced hybrid seed corn. These products will be sold to new and existing customers who have expressed interest in these types of seeds. 

Landec Corporation designs, develops, manufactures and sells temperature-activated and other specialty polymer products for a variety of food, agricultural and licensed partner applications. The Company's temperature-activated polymer products are based on its proprietary Intelimer(R) polymers which differ from other polymers in that they can be customized to abruptly change their physical characteristics when heated or cooled through a pre-set temperature switch.