Note 11 - Business Segment Reporting

6 Months Ended

Nov. 27, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

11. 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 Packaged Fresh Vegetables segment, the Food Export segment, and the Biomaterials segment.

 

The Packaged Fresh Vegetables segment markets and packs specialty packaged whole and fresh - cut vegetables, the majority of which incorporate the BreatheWay specialty packaging for the retail grocery, club store, and food services industries. In addition, the Packaged Fresh Vegetables segment sells BreatheWay packaging to partners for fruit and vegetable products. The Food Export segment consists of revenues generated from the purchase and sale of primarily whole commodity fruit and vegetable products primarily to Asia. The 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, and non - HA products for medical use primarily in the Ophthalmic, Orthopedic, and other markets. Corporate licenses Landec’s Intelimer polymers for agricultural products, personal care products, and other industrial products. The Corporate segment also includes general and administrative expenses, non - Packaged Fresh Vegetables and non - Biomaterials interest income and income tax expenses. 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 27, 2016		November 29, 2015		November 27, 2016		November 29, 2015
Canada	$	16.3	$	20.0	$	34.0	$	40.4
Taiwan	$	11.1	$	12.4	$	24.9	$	25.4
China	$	6.3	$	3.3	$	11.4	$	7.3
Indonesia	$	3.6	$	2.5	$	5.1	$	3.9
Japan	$	2.9	$	1.6	$	4.9	$	3.6
Belgium	$	1.6	$	0.2	$	6.9	$	1.0
Philippines	$	0.7	$	0.6	$	1.3	$	1.5
All Other Countries	$	3.5	$	3.4	$	5.7	$	7.1

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

Three Months Ended November 27, 2016	Packaged Fresh Vegetables			Food Export		Biomaterials			Corporate			Total
Net sales	$	97,978		$	25,701	$	11,931		$	255		$	135,865
International sales	$	16,422		$	25,701	$	3,831		$	—		$	45,954
Gross profit	$	12,001		$	1,850	$	4,938		$	164		$	18,953
Net income (loss)	$	(250	)	$	733	$	1,312		$	(469	)	$	1,326
Depreciation and amortization	$	1,792		$	2	$	719		$	37		$	2,560
Dividend income	$	413		$	—	$	—		$	—		$	413
Interest income	$	3		$	—	$	—		$	—		$	3
Interest expense	$	122		$	—	$	(90	)	$	348		$	380
Income tax expense (benefit)	$	(142	)	$	207	$	388		$	240		$	693
Three Months Ended November 29, 2015
Net sales	$	107,164		$	22,140	$	10,249		$	888		$	140,441
International sales	$	19,800		$	22,140	$	2,032		$	—		$	43,972
Gross profit	$	9,979		$	1,676	$	4,881		$	729		$	17,265
Net income (loss)	$	(658	)	$	1,176	$	1,393		$	(43	)	$	1,868
Depreciation and amortization	$	1,448		$	—	$	641		$	39		$	2,128
Dividend income	$	413		$	—	$	—		$	—		$	413
Interest income	$	16		$	—	$	—		$	—		$	16
Interest expense	$	410		$	—	$	29		$	—		$	439
Income tax expense (benefit)	$	(16	)	$	161	$	393		$	531		$	1,069
Six Months Ended November 27, 2016
Net sales	$	193,923		$	49,040	$	24,263		$	1,033		$	268,259
International sales	$	34,266		$	49,040	$	10,873		$	—		$	94,179
Gross profit	$	26,407		$	2,878	$	10,060		$	752		$	40,097
Net income (loss)	$	2,073		$	928	$	2,555		$	(918	)	$	4,638
Depreciation and amortization	$	3,612		$	3	$	1,431		$	64		$	5,110
Dividend income	$	825		$	—	$	—		$	—		$	825
Interest income	$	7		$	—	$	—		$	—		$	7
Interest expense	$	671		$	—	$	13		$	348		$	1,032
Income tax expense	$	513		$	262	$	738		$	1,069		$	2,582
Six Months Ended November 29, 2015
Net sales	$	210,870		$	44,484	$	19,047		$	1,395		$	275,796
International sales	$	40,605		$	44,484	$	5,159		$	—		$	90,248
Gross profit	$	23,231		$	2,679	$	8,096		$	1,236		$	35,242
Net income (loss)	$	2,602		$	1,277	$	1,461		$	(520	)	$	4,820
Depreciation and amortization	$	3,015		$	1	$	1,246		$	77		$	4,339
Dividend income	$	825		$	—	$	—		$	—		$	825
Interest income	$	22		$	—	$	25		$	—		$	47
Interest expense	$	877		$	—	$	64		$	—		$	941
Income tax expense	$	905		$	189	$	412		$	1,254		$	2,760

During the

six

months ended

November

27,

2016

and

November

29,

2015,

sales to the Company

’s top

five

customers accounted for

44%

and

45%,

respectively, of sales. The Company’s top

two

customers, Costco Wholesale Corporation and Wal - Mart Stores, Inc., from the Packaged Fresh Vegetables segment accounted for

17%

and

13%

of revenues, respectively, for the

six

months ended

November

27,

2016,

and

19%

and

11%

respectively, for the

six

months ended

November

29,

2015.

The Company expects that, for the foreseeable future, a limited number of customers

may

continue to account for a significant portion of its net sales.