Exhibit 99.1
LANDEC CORPORATION
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
As of April 27, 2003
(In thousands)
|
| Historical |
| Pro Forma |
| Pro Forma |
| |||
Assets |
|
|
|
|
|
|
| |||
Current Assets: |
|
|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 3,562 |
| $ | — |
| $ | 3,562 |
|
Restricted cash |
| 2,382 |
| — |
| 2,382 |
| |||
Accounts receivable, net |
| 16,224 |
| — |
| 16,224 |
| |||
Inventory |
| 13,186 |
| (250) | (b) | 12,936 |
| |||
Investment in farming activities |
| 411 |
| — |
| 411 |
| |||
Notes and advances receivable |
| 2,217 |
| 408 | (a) | 2,625 |
| |||
Prepaid expenses and other current assets |
| 1,179 |
| — |
| 1,179 |
| |||
Total Current Assets |
| 39,161 |
| 158 |
| 39,319 |
| |||
|
|
|
|
|
|
|
| |||
Property and equipment, net |
| 18,689 |
| (160 | )(b) | 18,529 |
| |||
Goodwill |
| 26,155 |
| — |
| 26,155 |
| |||
Other intangible assets, net |
| 11,683 |
| — |
| 11,683 |
| |||
Notes receivable |
| 1,183 |
| 237 | (a) | 1,420 |
| |||
Other assets |
| 302 |
| — |
| 302 |
| |||
|
| $ | 97,173 |
| $ | 235 |
| $ | 97,408 |
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|
|
| |||
Liabilities and Shareholders’ Equity |
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| |||
Current Liabilities: |
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|
|
| |||
Accounts payable |
| $ | 13,280 |
| $ | — |
| $ | 13,280 |
|
Grower payables |
| 2,852 |
| — |
| 2,852 |
| |||
Related party payables |
| 849 |
| — |
| 849 |
| |||
Accrued compensation |
| 1,101 |
| — |
| 1,101 |
| |||
Other accrued liabilities |
| 3,955 |
| — |
| 3,955 |
| |||
Deferred revenue |
| 641 |
| 78 | (c) | 719 |
| |||
Lines of credit |
| 7,790 |
| — |
| 7,790 |
| |||
Current maturities of long term debt |
| 2,515 |
| — |
| 2,515 |
| |||
Total Current Liabilities |
| 32,983 |
| 78 |
| 33,061 |
| |||
|
|
|
|
|
|
|
| |||
Long term debt, less current maturities |
| 3,818 |
| — |
| 3,818 |
| |||
Other liabilities |
| 768 |
| 157 | (c) | 925 |
| |||
Minority interest |
| 844 |
| — |
| 844 |
| |||
Total Liabilities |
| 38,413 |
| 235 |
| 38,648 |
| |||
|
|
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|
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|
|
| |||
Shareholders’ Equity: |
|
|
|
|
|
|
| |||
Preferred stock |
| 5,531 |
| — |
| 5,531 |
| |||
Common stock |
| 110,110 |
| — |
| 110,110 |
| |||
Accumulated deficit |
| (56,881 | ) | — |
| (56,881 | ) | |||
Total Shareholders’ Equity |
| 58,760 |
| — |
| 58,760 |
| |||
|
| $ | 97,173 |
| $ | 235 |
| $ | 97,408 |
|
See accompanying notes.
1
LANDEC CORPORATION
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended April 27, 2003
(In thousands, except per share amounts)
|
| Historical |
| Pro Form |
| Pro Forma |
| |||
Revenues: |
|
|
|
|
|
|
| |||
Product sales |
| $ | 85,969 |
| $ | (2,844 | )(d) | $ | 83,125 |
|
Services revenue |
| 10,180 |
| (8,351 | )(e) | 1,829 |
| |||
Services revenue, related party |
| 1,099 |
| (1,099 | )(e) | — |
| |||
License fees |
| 349 |
| — |
| 349 |
| |||
Research, development, and royalty revenues |
| 372 |
| 133 | (f) | 505 |
| |||
Total revenues |
| 97,969 |
| (12,161 | ) | 85,808 |
| |||
|
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|
|
| |||
Cost of revenue: |
|
|
|
|
|
|
| |||
Cost of product sales |
| 70,766 |
| (5,061 | )(d) | 65,705 |
| |||
Cost of product sales, related party |
| 528 |
| — |
| 528 |
| |||
Cost of services revenue |
| 8,215 |
| (6,152 | )(e) | 2,063 |
| |||
Total cost of revenue |
| 79,509 |
| (11,213 | ) | 68,296 |
| |||
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|
|
| |||
Gross profit |
| 18,460 |
| (948 | ) | 17,512 |
| |||
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|
|
| |||
Operating costs and expenses: |
|
|
|
|
|
|
| |||
Research and development |
| 2,062 |
| — |
| 2,062 |
| |||
Selling, general and administrative |
| 13,382 |
| (2,024 | )(g) | 11,358 |
| |||
Total operating costs and expenses |
| 15,444 |
| (2,024 | ) | 13,420 |
| |||
Operating profit |
| 3,016 |
| 1,076 |
| 4,092 |
| |||
|
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|
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|
|
| |||
Interest income |
| 129 |
| — |
| 129 |
| |||
Interest expense |
| (538 | ) | — |
| (538 | ) | |||
Other income, net |
| 31 |
| 10 | (h) | 41 |
| |||
Net Income |
| 2,638 |
| 1,086 |
| 3,724 |
| |||
|
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|
| |||
Net income per share: |
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|
|
|
| |||
Basic |
| $ | 0.12 |
|
|
| $ | 0.17 |
| |
Diluted |
| $ | 0.10 |
|
|
| $ | 0.15 |
| |
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| |||
Shares used in per share computation: |
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|
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|
|
| |||
Basic |
| 20,868 |
|
|
| 20,868 |
| |||
Diluted |
| 22,572 |
|
|
| 22,572 |
| |||
See accompanying notes.
2
LANDEC CORPORATION
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Fiscal Year Ended October 27, 2002
(In thousands, except per share amounts)
|
| Historical |
| Pro Forma |
| Pro Forma |
| |||
Revenues: |
|
|
|
|
|
|
| |||
Product sales |
| $ | 152,958 |
| $ | (5,822 | )(d) | $ | 147,136 |
|
Services revenue |
| 23,312 |
| (17,219 | )(e) | 6,093 |
| |||
Services revenue, related party |
| 3,515 |
| (3,515 | )(e) | — |
| |||
License fees |
| 2,330 |
| — |
| 2,330 |
| |||
Research, development, and royalty revenues |
| 1,040 |
| 309 | (f) | 1,349 |
| |||
Total revenues |
| 183,155 |
| (26,247 | ) | 156,908 |
| |||
|
|
|
|
|
|
|
| |||
Cost of revenue: |
|
|
|
|
|
|
| |||
Cost of product sales |
| 128,684 |
| (7,240 | )(d) | 121,444 |
| |||
Cost of product sales, related party |
| 2,668 |
| — |
| 2,668 |
| |||
Cost of services revenue |
| 20,463 |
| (14,655 | )(e) | 5,808 |
| |||
Total cost of revenue |
| 151,815 |
| (21,895 | ) | 129,920 |
| |||
|
|
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|
|
|
| |||
Gross profit |
| 31,340 |
| (4,352 | ) | 26,988 |
| |||
|
|
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|
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|
|
| |||
Operating costs and expenses: |
|
|
|
|
|
|
| |||
Research and development |
| 3,664 |
| — |
| 3,664 |
| |||
Selling, general and administrative |
| 26,418 |
| (4,944 | )(g) | 21,474 |
| |||
Total operating costs and expenses |
| 30,082 |
| (4,944 | ) | 25,138 |
| |||
Operating profit |
| 1,258 |
| 592 |
| 1,850 |
| |||
|
|
|
|
|
|
|
| |||
Interest income |
| 247 |
| — |
| 247 |
| |||
Interest expense |
| (1,551 | ) | — |
| (1,551 | ) | |||
Other income, net |
| 247 |
| 10 | (h) | 257 |
| |||
Income from continuing operations |
| $ | 201 |
| $ | 602 |
| $ | 803 |
|
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| |||
Net (loss) income from continuing operations per share: |
|
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|
| |||
Basic |
| $ | (0.01 | ) |
|
| $ | 0.02 |
| |
Diluted |
| $ | (0.01 | ) |
|
| $ | 0.02 |
| |
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| |||
Shares used in per share computation: |
|
|
|
|
|
|
| |||
Basic |
| 18,172 |
|
|
| 18,172 |
| |||
Diluted |
| 18,172 |
|
|
| 21,475 |
| |||
See accompanying notes.
3
LANDEC CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited pro forma consolidated balance sheet of Landec Corporation (“Landec” or the “Company”) at April 27, 2003 presents the consolidated financial position of Landec as though the disposition of its domestic commodity vegetable business occurred on April 27, 2003. The unaudited pro forma consolidated statement of operations of Landec for the six months ended April 27, 2003 presents the results of operations as though the disposition of the domestic commodity vegetable business occurred on October 28, 2002. The unaudited pro forma consolidated statement of operations of Landec for the fiscal year ended October 27, 2002 presents the results of operations as though the disposition of the domestic commodity vegetable business occurred on October 29, 2001. The following pro forma adjustments are based on available information and on assumptions which management believes are reasonable and consistent with SEC rules and regulations.
(a) The pro forma adjustment reflects the recording of three notes receivable due from Apio Fresh, LLC (“Apio Fresh”, the unrelated entity formed by the buyers to acquire the domestic commodity vegetable business). The first note is for two years and is for the sale of equipment at its net book value of $160,000. The second note is a three-year note for $235,000 for transition information technology services to be rendered by the Company to Apio Fresh. The third note is for one year and is for the sale of carton inventory at the carrying value of $250,000.
(b) The pro forma adjustment reflects the carrying value of carton inventory and the net book value of property, plant and equipment sold to Apio Fresh.
(c) The pro forma adjustment reflects the recording of unearned revenue in return for transitional information technology system services to be rendered by the Company to Apio Fresh.
(d) The pro forma adjustment reflects the elimination of product sales and cost of product sales related to the domestic commodity vegetable business for the periods reported.
(e) The pro forma adjustment reflects the elimination of service revenue and cost of service revenue related to the domestic commodity vegetable business for the periods reported.
(f) The pro forma adjustment reflects royalty revenue that would have been earned in the periods presented from Apio Fresh for domestic vegetable commodity sales at the contractual rate of $0.035 per carton sold for the use of Apio’s trademarks.
(g) The pro forma adjustment reflects the estimated reduction of selling, general and administrative expenses related to the domestic vegetable commodity business, including salaries and benefits of sales personnel assumed by Apio Fresh.
(h) The pro forma adjustment reflects estimated other income from Apio Fresh for transitional facilities rent and information services personnel charges.
4
