Note 9 - Capital Lease

9 Months Ended

Feb. 28, 2016

Capital Leases in Financial Statements of Lessee Disclosure [Text Block]

9.	Capital Lease

On September 3, 2015, Lifecore leased a 65,000 square foot building in Chaska, MN, approximately two miles from its current facility. The initial term of the lease is seven years with two five-year renewal options. The lease contains a buyout option at any time after year seven with the purchase price equal to then mortgage balance on the lessor’s loan secured by the building. The lease is a capital lease. Included in property, plant and equipment as of February 28, 2016 is $3.8 million associated with this capital lease. The monthly lease payment is initially $34,000 and increases by 2.4% per year. Lifecore and the lessor made capital improvements prior to occupancy and thus the lease did not become effective until January 1, 2016. Lifecore initially will use the building for warehousing and final packaging.

Future minimum lease payments under this capital lease for each year presented as are follows (in thousands):

FY 2016	$	101
FY 2017		408
FY 2018		418
FY 2019		428
FY 2020		438
FY 2021		449
Thereafter		3,951
Total minimum lease payment		6,193
Less: amounts representing interest		(2,454	)
Total		3,739
Less current portion included in other accrued liabilities		(28)
Long-term capital lease obligation	$	3,711