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Menlo Park, California
January 10, 2001
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 29, 2000.
Results for the fourth quarter and all of fiscal 2000 reflect the impact of Landec's acquisition of Apio,
Inc., which occurred on December 2, 1999. The fiscal 2000 results represent the first time the
company has reported positive fiscal year EBITDA-earnings before interest, taxes, depreciation and
amortization-as it recorded $5.3 million in EBITDA for the year, a $6.0 million improvement over fiscal
1999.
Total revenues for the fourth quarter of fiscal 2000 were $53.6 million versus revenues of $5.5 million for
the same period a year ago. The company reported a net loss of $1.5 million, or $0.09 per share,
compared with a net loss of $2.6 million, or $0.19 per share, in the same period a year ago. Included
in the fourth quarter fiscal 2000 loss is a one time charge of $525,000, or $0.03 per share, related to
the company's decision to exit the fruit processing business of Apio, Inc., its wholly owned food
technology subsidiary. The company said that EBITDA for the fourth quarter of fiscal 2000 was
$621,000 versus a negative EBITDA of $2.0 million in the same period a year ago.
Revenues for all of fiscal 2000 were $209.6 million versus $35.4 million in fiscal 1999. The company
reported a net loss of $2.1 million, or $0.13 per share, for fiscal 2000, before a one-time, non-cash
charge of $1.9 million, or $0.12 per share, related to the cumulative effect of a change in accounting
principle. This compares with a net loss of $2.8 million, or $0.21 per share, for fiscal 1999. EBITDA for
fiscal 2000 was $5.3 million versus a negative EBITDA of $765,000 in fiscal 1999.
The cumulative effect of the change in accounting principle results from the company's adoption of a
new accounting pronouncement, SAB 101, which impacts how the company accounts for previously
recorded up front licensing revenues related to agreements that involve ongoing R&D and/or supply
commitments. Landec received up front license fee revenues from Hitachi Chemical in 1995 and from
Alcon Laboratories in 1997 and 1998. As a result of the company adopting this new accounting
pronouncement, Landec will recognize these up front license revenues prorated through July 2002 for
Hitachi Chemical and through December 2012 for Alcon Laboratories. The adoption of SAB 101 is
treated as if it occurred at the beginning of fiscal 2000. Including the $1.9 million effect of SAB 101,
Landec reported a net loss of $4.0 million, or $0.25 per share, for fiscal 2000.
"We continue to make significant improvements in cash flow, while realizing key milestones in both
our food packaging and seed coating business during the quarter," said Gary T. Steele, president and
chief executive officer of Landec. "For all of fiscal 2000, if you exclude the charge for exiting the fruit
processing business and the start-up costs associated with Apio's new
value-added and Intellipac(TM) breathable membrane production facilities, the company would have been close to breakeven on a net
income basis, before the charge for the accounting change," he added.
"Apio, which has become one of the fastest-growing U.S. value-added produce companies, announced
the introduction of iceless broccoli crowns utilizing Landec's Intellipac proprietary specialty packaging,
the first whole produce offering being sold under the Eat Smart(TM) brand. Annual total domestic
supermarket broccoli sales alone, excluding foodservice and export sales, are approximately $800
million. We are optimistic about the potential of this product because, by eliminating ice, we can
reduce retailer costs, safety concerns and contamination risk. Eat Smart products are now found in
nearly 7,500 supermarkets and club stores, up from 4000 one year ago, which gives us a strong
foothold for this and other new products," Steele noted.
Last month, Landec Ag, the company's seed technology subsidiary, announced successful field trials
for its soybean/wheat Intellicoat Relay Crop(TM) System that enables farmers to plant and harvest
both wheat and soybeans on the same acreage in one year.
"These trials demonstrated that our patented polymer seed coating technology could increase farmer
per acre profitably by up to one third or more versus planting of a single crop of soybeans or wheat,"
Steele commented.
"This product could represent a significant financial benefit for farmers who currently face substantial
economic pressures. We will be expanding the program for this product, as well as our Early
Plant(TM) hybrid corn which also demonstrated excellent results in its first year of trials," he added.
Early Plant hybrid corn is designed to allow corn farmers to safely and reliably plant hybrid corn 2-4
weeks earlier than normally possible due to cold soil temperatures. The field trial program for this
product will be expanded to 10,000 acres next spring.
"Fiscal 2000 was an important year for Landec as we increased cash flow from operations and put a
number of key initiatives in place to achieve profitability in fiscal year 2001," Steele commented.
"In the past year, we have almost doubled the number of supermarkets and club stores carrying Eat
Smart products and have greatly expanded our product offerings. In addition to the iceless broccoli
product, we are conducting expanded shipping field trials using Intellipac technology with bananas, a
$4 billion annual market worldwide and the nation's leading produce item.
"Our seed coating technology," he continued, "is demonstrating its viability and our Landec Ag direct
marketing and seed coating business is now among the ten largest seed companies in the U.S. In
addition, we have continued to make progress on our licensing programs in the healthcare and
industrial areas," he added.
"At the same time, we have invested for future growth with our new value added packaging, produce
processing, and seed coating pilot manufacturing facilities while enhancing the management teams at
Apio and Landec Ag," Steele 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(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.
Company news release
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