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TheStreet Open House

Landec Corporation's CEO Discusses F3Q 2012 Results - Earnings Call Transcript

In our food business, we are also benefitting from our strategic relationship with Windset Farms a leading grower of hydroponic greenhouse fruits and vegetables. Windset Farms is a partner and customer of our BreatheWay fresh-cut food packaging technology. We have hydroponic growing facilities and they have hydroponic growing facilities in Canada, Nevada and Santa Maria, California very near our Apio food operations. The Windset, Santa Maria facility is a newly constructed 3 million square feet state-of-the-art greenhouse facility, which is fully up and running now and is currently exceeding plan for producing and selling high-end premium priced tomatoes which includes Camparis, grapes, and cherry tomatoes.

Based on Windset’s operating performance the recent annual fair market value appraisal of Windset results in the value of our investment increasing by $5.8 million for all of fiscal year 2012. Of that 5.8 million increase, 1.2 million was recognized in the first half of our fiscal year, $3.5 million was recognized in the third quarter and the remaining 1.1 million is to be recognized in our fourth quarter. Windset’s hydroponic growing operations represents important departures from and key advantages versus traditional growing methods. First, there is no soil we used it all and with it 64 acres of hydroponic greenhouses. Windset produces the same amount of tomatoes that otherwise would require 5000 acres of soil growing tomatoes. And secondly, Windset’s hydroponic growing operations uses only 128 of the water for soil grown tomatoes. We are pleased with this investment. In addition to the change in fair market value of our investment on a quarterly basis we also recognize a 7.5% annual preferred dividend on our original $15 million preferred stock investment and that dividend amounts to $1.125 million per year which is accrued at roughly $281,000 per quarter.

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