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Landec Corporation Reports Fiscal Year 2012 And Fourth Quarter Results

Revenues are projected to have some variation between quarters with the second and third quarters being close to the same and the first and fourth quarters being lower by approximately 20% and 10%, respectively, than the second and third quarters.

Net income by quarter is projected to vary significantly between quarters. We are projecting that net income per quarter as a percent of the projected net income for all of fiscal year 2013 will be approximately 12%, 40%, 18% and 30%, respectively.

Capital expenditures are projected to be approximately $7.5 million to $8.0 million. The increase from the $5.4 million of capital expenditures during fiscal year 2012 is primarily due to capital expenditure requirements at GreenLine. The depreciation and amortization expense is projected to be approximately $8.0 million in fiscal year 2013, compared to $5.6 million in fiscal year 2012.

3) What comprises the $2.0 million of non-recurring acquisition related expenses and why does this amount differ from the $1.4 million reported as other operating expenses?

The $2.0 million of non-recurring acquisition related expenses are comprised of (in thousands):
Accounting and tax fees (recorded at Corporate) $ 550
Expense associated with extinguishing of debt (a) 500
Write off of the step up in inventory at close (b) 100
Legal fees(c) 450
Investment banking fees(c) 300
Miscellaneous other fees(c)   100
Total non-recurring acquisition related expenses $ 2,000

(a) Of this $500,000, $350,000 is included as an offset to other income and $150,000 is included in interest expense. These amounts were recorded at Lifecore.

(b) The $100,000 write off of inventory is included in cost of sales at Apio.

(c) Recorded in other operating expenses at Apio.

The amounts explained in notes (a) and (b) above total $600,000 and together they explain the difference between the $2.0 million in aggregate acquisition related expenses and the $1.4 million of acquisition costs shown on the income statement as other operating expenses for the fourth quarter and fiscal year 2012.

4) How is the integration of GreenLine progressing and what are the estimated cost savings from operational synergies during fiscal year 2013? Is the drought in the Midwest going to negatively impact results during fiscal year 2013?

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