lndc-20210829

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Quarter Ended August 29, 2021, or


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period for _________ to _________.

Commission file number: 000-27446

LANDEC CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			94-3025618
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)


2811 Airpark Drive
Santa Maria,	California	93455
(Address of principal executive offices)		(Zip Code)

(650) 306-1650

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.001 per share	LNDC	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☐

Accelerated Filer

☒

Emerging Growth Company

☐

Non Accelerated Filer

☐

Smaller Reporting Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 4, 2021, there were 29,461,710 shares of common stock outstanding.

Table of Contents

LANDEC CORPORATION

FORM 10-Q

For the Fiscal Quarter Ended August 29, 2021

INDEX


			Page




Part I.	Financial Information

Item 1.	Financial Statements

	a)	Consolidated Balance Sheets as of August 29 , 202 1 and May 3 0 , 20 21	1

	b)	Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended August 29 , 202 1 and August 30 , 2 02 0	2

	c)	Consolidated Statement of Changes in Stockholders' Equity for the Three Months Ended August 29 , 202 1 and August 30 , 20 20	3

	d)	Consolidated Statements of Cash Flows for the Three Months Ended August 29 , 202 1 and August 30 , 2 020	4

	e)	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28

Item 4.	Controls and Procedures		28

Part II.	Other Information		29

Item 1.	Legal Proceedings		29

Item 1A.	Risk Factors		29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		29

Item 3.	Defaults Upon Senior Securities		29

Item 4.	Mine Safety Disclosures		29

Item 5.	Other Information		29

Item 6.	Exhibits		30

	Signatures		31

Table of Contents

LANDEC CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)


	August 29, 2021		May 30, 2021
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,447	$	1,295
Accounts receivable, less allowance for credit losses	61,956		70,013
Inventories	69,415		69,663
Prepaid expenses and other current assets	9,591		7,350
Total Current Assets	142,409		148,321

Investment in non-public company, fair value	—		45,100
Property and equipment, net	180,460		179,559
Operating lease right-of-use assets	14,299		20,827
Goodwill	69,386		69,386
Trademarks/tradenames, net	25,328		25,328
Customer relationships, net	10,295		10,792
Other assets	3,442		3,611
Total Assets	$	445,619	$	502,924

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	46,355	$	47,569
Accrued compensation	9,173		12,304
Other accrued liabilities	10,855		7,996
Current portion of lease liabilities	4,054		3,889
Deferred revenue	1,216		1,130
Line of credit	32,000		29,000


Total Current Liabilities	103,653		101,888

Long-term debt, net	123,833		164,902
Long-term lease liabilities	17,072		23,611
Deferred taxes, net	4,091		6,140
Other non-current liabilities	3,105		3,599
Total Liabilities	251,754		300,140

Stockholders’ Equity:
Common stock, $0.001 par value; 50,000 shares authorized; 29,462 and 29,333 shares issued and outstanding at August 29, 2021 and May 30, 2021, respectively	29		29
Additional paid-in capital	165,725		165,533
Retained earnings	29,103		38,580
Accumulated other comprehensive loss	(992)		(1,358)
Total Stockholders’ Equity	193,865		202,784
Total Liabilities and Stockholders’ Equity	$	445,619	$	502,924

See accompanying notes to the consolidated financial statements.

-1-

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LANDEC CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended
	August 29, 2021		August 30, 2020
Product sales	$	128,788	$	135,643
Cost of product sales	111,269		119,296
Gross profit	17,519		16,347
Operating costs and expenses:
Research and development	2,826		2,508
Selling, general and administrative	15,939		17,903
Restructuring costs	2,562		8,404
Total operating costs and expenses	21,327		28,815
Operating loss	(3,808)		(12,468)

Dividend income	—		281
Interest income	27		8
Interest expense	(7,917)		(3,109)
Other income (expense), net	109		(21)
Net loss before tax	(11,589)		(15,309)
Income tax benefit	2,112		4,309
Net loss	$	(9,477)	$	(11,000)







Net loss per common share:
Basic	$	(0.32)	$	(0.38)

Diluted	$	(0.32)	$	(0.38)






Shares used in per share computation:
Basic	29,424		29,242
Diluted	29,424		29,242

Other comprehensive income (loss), net of tax:
Net unrealized gain (losses) on interest rate swaps (net of tax effect of $(90) and $(121))	$	366	$	304
Other comprehensive income (loss), net of tax	366		304
Total comprehensive loss	$	(9,111)	$	(10,696)

See accompanying notes to the consolidated financial statements.

-2-

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LANDEC CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except per share amounts)


Three Months Ended August 29, 2021
				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
Balance at May 30, 2021	29,333	$	29	$	165,533	$	38,580	$	(1,358)	$	202,784
Issuance of stock under stock plans, net of shares withheld	129	—		—		—		—		—
Taxes paid by Company for employee stock plans	—	—		(428)		—		—		(428)
Stock-based compensation	—	—		620		—		—		620
Net loss	—	—		—		(9,477)		—		(9,477)
Other comprehensive income, net of tax	—	—		—		—		366		366
Balance at August 29, 2021	29,462	$	29	$	165,725	$	29,103	$	(992)	$	193,865


Three Months Ended August 30, 2020
				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
Balance at May 31, 2020	29,224	$	29	$	162,578	$	71,245	$	(2,808)	$	231,044
Issuance of stock under stock plans, net of shares withheld	18	—		—		—		—		—
Taxes paid by Company for employee stock plans	—	—		(82)		—		—		(82)
Stock-based compensation	—	—		892		—		—		892
Net loss	—	—		—		(11,000)		—		(11,000)
Other comprehensive income, net of tax	—	—		—		—		304		304
Balance at August 30, 2020	29,242	$	29	$	163,388	$	60,245	$	(2,504)	$	221,158

See accompanying notes to the consolidated financial statements.

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LANDEC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended
	August 29, 2021		August 30, 2020
Cash flows from operating activities:
Net loss	$	(9,477)	$	(11,000)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization of intangibles, debt costs and right-of-use assets	5,054		5,102
Deferred taxes	(2,138)		(4,349)
Stock-based compensation expense	620		892
Provision for expected credit losses	60		35

Net loss (gain) on disposal of property and equipment held and used	16		(11)

(Gain) loss on disposal of property and equipment related to restructuring, net	(92)		6,005

Other, net	(70)		21
Changes in current assets and current liabilities:
Accounts receivable, net	7,997		11,144
Inventories	248		6,313
Prepaid expenses and other current assets	(2,697)		1,353

SEC Form 10-Q filed by Landec Corporation