Lifecore grew revenues 60% in fiscal year 2011 compared to the twelve months prior to the acquisition due to adding new customers and new product introductions that were already in advanced development at the time of our acquisition. The plan for this year was to grow Lifecore revenues approximately 10%. Revenues are slightly below our plan due to delays in obtaining FDA approvals for new U.S. products using Lifecore’s HA biomaterials. We expect that these delays will result in Lifecore growing revenues only 5% in fiscal year 2012, however, pre-tax income is expected to grow over 10% as planned. We expect Lifecore to return to double digit revenue growth in fiscal year 2013 and will give more specifics concerning our fiscal year 2013 projections in our fourth quarter results release.
5) How are the Chiquita programs progressing?
The Chiquita-to-Go® banana program continues to grow and it is a higher margin program for Chiquita. In connection with renewing the agreement for an additional five years, the companies agreed to add the use of our BreatheWay® technology for creating an optimal atmosphere within shipping containers in the field of global transport of bananas. Chiquita has a sizable shipping container technology business that fits well with Landec’s long-term interest in using modified atmosphere technology for preserving produce during global transport. Chiquita purchased a sizable quantity of BreatheWay membranes for containers during the third quarter of fiscal year 2012 which resulted in increased revenues and gross profit for Apio Packaging compared to the third quarter last year. However, it should be noted that the container program is still in its early commercial testing phase. While Landec’s BreatheWay packaging is performing as designed, the Fresh and Ready® avocado program has struggled operationally and with adoption of the product by customers and consumers. Chiquita’s purchase of membranes for avocado applications this fiscal year remains low as Chiquita evaluates next steps for the program.
6) What are the future plans for your seed business now that the Monsanto agreement has terminated?
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