Landec Corporation, a developer and marketer of specialty polymer products for food, agricultural and licensed partner applications, today reported results for the second quarter and six months ended April 30, 2000.

Total revenues for the second quarter of fiscal 2000 were $60.8 million versus $19.1 million in the second quarter of fiscal 1999. Landec reported net income of $2.8 million, or $0.18 per basic share, versus net income of $3.5 million, or $0.26 per basic share, a year ago. Revenues for the first six months of fiscal 2000 were $94.6 million versus revenues of $24.4 million a year ago. The company reported net income of $81,000, or $0.01 per basic share during the first six months of fiscal 2000, versus net income of $1.8 million, or $0.14 per basic share, in the first six months of fiscal 1999.

Results for the first six months of fiscal 2000 included the impact of Landec's acquisition of Apio, Inc., which occurred on December 2, 1999. The results for the first six months of fiscal 1999 included licensing revenues of $750,000 received from Alcon Laboratories for Landec's PORT(TM) device which were recorded in the first quarter of fiscal 1999.

Commenting on the results, Gary T. Steele, chairman and chief executive officer of Landec, noted, "Our increased revenues were driven primarily by sales from the recently acquired Apio and solid growth from our Intellicoat® seed business, which records virtually all of its revenues in the second quarter. Sales and operating income at Intellicoat which includes Fielder's Choice Direct, its direct marketing and sales company, increased more than 12 percent versus the second quarter of last year despite a very difficult market environment for agricultural seed companies. At the same time, the second quarter has traditionally been the weakest quarter
for Apio. In addition, Apio's profitability was impacted by seasonal costs associated with sourcing produce and non-recurring costs related to the company's new value added food processing plant and Intellipac(TM) membrane and packaging manufacturing facility. Both of these facilities are now operating at full production levels. We continue to have as our goal being profitable for the fiscal year.''

Steele said that Landec's Intellipac breathable membranes continue to grow market share with the number of specialty packages sold more than doubling in the first six months of fiscal 2000 versus the first six months of last year.

"Our 'Eat Smart' line of fresh-cut produce that incorporates the Intellipac technology continues to increase its market presence. For example, the 12-ounce specialty packages of fresh-cut produce have achieved significant market presence since their launch last June. 'Eat Smart' products are now being sold in more than 3,300 retail grocery and club stores, and our club store volume in particular continues to experience solid growth,'' he noted.

Steele said that the company has realized several key milestones with its Intellicoat seed coating products which delay the germination of inbred corn seed to enhance quality and control of hybrid corn seed production. This included recording initial revenues from the commercialization of its inbred corn seed coating products.

Customers for Landec's initial sales of its Intellicoat inbred corn seed coatings included major hybrid corn seed producers. Steele said that preliminary field results from these coatings have been very favorable, meeting expectations in nearly all of the seed growing regions in the Midwest.

"We have also completed field trial planting for the relay cropping of wheat/soybeans at more than 50 commercial farms and research sites covering more than 900 acres in nine states. We expect to have the results of these trials this fall,'' he added. Landec's wheat/soybean relay cropping system involves coating soybean seeds with Landec's proprietary Intelimer® polymers which are designed to regulate the water uptake of the seed and thus control the timing of seed germination. This unique relay cropping approach entails the planting of winter wheat in the late fall, with coated soybeans planted into the wheat the following May. The wheat is harvested while the soybeans are not tall enough to be damaged during the harvest. The soybeans continue to grow and are harvested later in the year, enabling the farmer to harvest two crops in the same growing season off the same field.

"In addition, we are encouraged by early observations of our initial field testing for a hybrid corn seed coating which allows farmers to plant 3-4 weeks earlier than normal. This creates a broader planting window and more flexibility for the farmer, enabling enhanced management of equipment and manpower and reducing risk during the critical planting period,'' Steele noted.

"To support the development of our seed coating business, the company closed new bank financings comprised of a $3 million revolving line of credit and a $1 million capital purchase line of credit,'' he added.

"These bank lines will enhance our already solid financial condition. We ended the quarter with $6.5 million in cash versus $3.2 million at October 31, 1999, and shareholders' equity increased to $55.9 million versus $31.8 million at October 31, 1999,'' he concluded.

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 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.

Company news release
N2734