Note 14 - Business Segment Reporting

6 Months Ended

Nov. 25, 2012

Segment Reporting Disclosure [Text Block]

14.          Business Segment Reporting

The Company manages its business operations through three strategic business units.  Based upon the information reported to the chief operating decision maker, who is the Chief Executive Officer, the Company has the following reportable segments: the Food Products Technology segment, the Food Export segment and the Hyaluronan-based Biomaterials segment.

The Food Products Technology segment markets and packs specialty packaged whole and fresh-cut vegetables that incorporate the BreatheWay specialty packaging for the retail grocery, club store and food services industry.  In addition, the Food Products Technology segment sells BreatheWay packaging to partners for non-vegetable products.  The Food Export segment consists of revenues generated from the purchase and sale of primarily whole commodity fruit and vegetable products to Asia and domestically.  The HA-based Biomaterials segment sells products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellular matrix of connective tissues in both animals and humans, for medical use primarily in the Ophthalmic, Orthopedic and Veterinary markets.  As a result of the sale of Landec Ag to INCOTEC and the termination of the Monsanto Agreement in fiscal year 2012, the Company has eliminated the Technology Licensing segment and combined the remainder of that business into the Corporate segment.  As a result of this change, the segment information for the three and six months ended November 27, 2011 has been reclassified to conform with the current year classification.  Corporate licenses Landec’s patented Intellicoat seed coatings to the farming industry and licenses the Company’s Intelimer polymers for personal care products and other industrial products.  Corporate also includes general and administrative expenses, non Food Products Technology and non HA-based Biomaterials interest income and Company-wide income tax expenses.  Beginning in fiscal year 2013, the Food Products Technology, the Food Export and the Hyaluronan-based Biomaterials segments include charges for corporate services and tax sharing allocated from the Corporate segment.  All of the assets of the Company are located within the United States of America.  The Company’s international sales were as follows (in millions):

	Three Months Ended				Six Months Ended
	November 25, 2012		November 27, 2011		November 25, 2012		November 27, 2011
Taiwan	$	12.9	$	9.6	$	25.8	$	19.0
Indonesia	$	7.4	$	6.4	$	13.5	$	13.9
Canada	$	6.1	$	4.9	$	12.3	$	9.9
Japan	$	2.8	$	3.8	$	5.9	$	6.2
Belgium	$	1.6	$	6.3	$	4.6	$	8.1
All Other Countries	$	7.4	$	5.7	$	12.5	$	9.7

Operations by segment consisted of the following (in thousands):

Three Months Ended Nov. 25, 2012	Food Products Technology		Food Export		HA-based Biomaterials		Corporate			TOTAL
Net sales	$	78,593	$	28,115	$	7,739	$	207		$	114,654
International sales	$	5,959	$	28,055	$	4,222	$	—		$	38,236
Gross profit	$	13,102	$	2,034	$	3,116	$	207		$	18,459
Net income (loss)	$	9,212	$	866	$	338	$	(1,503	)	$	8,913
Depreciation and amortization	$	1,174	$	1	$	592	$	38		$	1,805
Dividend Income	$	281	$	—	$	—		—		$	281
Interest income	$	7	$	—	$	26	$	—		$	33
Interest expense	$	427	$	—	$	71	$	—		$	498
Income tax expense	$	1,761	$	288	$	113	$	758		$	2,920
Three Months Ended Nov. 27, 2011
Net sales	$	46,693	$	24,229	$	9,235	$	1,413		$	81,570
International sales	$	4,640	$	24,150	$	7,884	$	—		$	36,674
Gross profit	$	4,531	$	1,802	$	5,264	$	1,413		$	13,010
Net income (loss)	$	2,637	$	1,093	$	2,838	$	(3,228	)	$	3,340
Depreciation and amortization	$	771	$	2	$	555	$	46		$	1,374
Dividend Income	$	281	$	—	$	—	$	—		$	281
Interest income	$	22	$	—	$	58	$	1		$	81
Interest expense	$	—	$	—	$	163	$	—		$	163
Income tax expense	$	—	$	—	$	—	$	2,049		$	2,049
Six Months Ended Nov. 25, 2012
Net sales	$	147,224	$	53,473	$	15,712	$	319		$	216,728
International sales	$	12,182	$	53,366	$	9,024	$	—		$	74,572
Gross profit	$	23,044	$	3,377	$	5,482	$	319		$	32,222
Net income (loss)	$	15,128	$	1,175	$	26	$	(3,050	)	$	13,279
Depreciation and amortization	$	2,410	$	2	$	1,175	$	74		$	3,661
Dividend Income	$	563	$	—	$	—		—		$	563
Interest income	$	8	$	—	$	50	$	—		$	58
Interest expense	$	882	$	—	$	157	$	—		$	1,039
Income tax expense	$	3,733	$	391	$	9	$	1,351		$	5,484
Six Months Ended Nov. 27, 2011
Net sales	$	90,056	$	45,584	$	16,356	$	2,875		$	154,871
International sales	$	9,711	$	45,460	$	11,650	$	—		$	66,821
Gross profit	$	10,590	$	2,816	$	7,979	$	2,875		$	24,260
Net income (loss)	$	5,995	$	1,390	$	3,300	$	(5,533	)	$	5,152
Depreciation and amortization	$	1,551	$	4	$	1,083	$	91		$	2,729
Dividend Income	$	563	$	—	$	—	$	—		$	563
Interest income	$	30	$	—	$	105	$	22		$	157
Interest expense	$	—	$	—	$	340	$	—		$	340
Income tax expense	$	—	$	—	$	―	$	3,159		$	3,159

During the six months ended November 25, 2012 and November 27, 2011, sales to the Company’s top five customers accounted for 36% and 42%, respectively, of revenues.  The Company’s top customer from the Food Products Technology segment accounting for 13% and 16% for the six months ended November 25, 2012 and November 27, 2011, respectively.  The Company expects that, for the foreseeable future, a limited number of customers may continue to account for a significant portion of its net revenues.