Lifecore Biomedical (LCBM) 10-Q 2006 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period endedSeptember 30, 2005

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ___ to ___

Commission File Number0-4136

Lifecore Biomedical, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	41-0948334
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)
3515 Lyman Boulevard
Chaska, Minnesota	55318
(Address of principal executive	(Zip Code)
offices)

Registrant’s telephone number, including area code:952-368-4300

Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)

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.

Yesþ Noo

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yesþ Noo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso Noþ

The number of shares outstanding of the registrant’s Common Stock, $.01 par value, as of November 4, 2005 was 13,156,160 shares.

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

	Page
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2005 and June 30, 2005		2
Condensed Consolidated Statements of Operations for Three Months Ended September 30, 2005 and 2004		3
Condensed Consolidated Statements of Cash Flows for Three Months Ended September 30, 2005 and 2004		4
Notes to Unaudited Condensed Consolidated Financial Statements		5-11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12-18
Item 3. Quantitative and Qualitative Disclosures About Market Risk		19
Item 4. Controls and Procedures		19
Part II. Other Information
Item 1. Legal Proceedings		20
Item 6. Exhibits		21
Signatures		22
Exhibit Index		23
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

1

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			June 30,
	2005			2005
ASSETS
Current Assets
Cash and cash equivalents	$	18,504,000		$	18,508,000
Accounts receivable, less allowances		9,739,000			10,171,000
Inventories		11,234,000			9,456,000
Deferred income taxes		4,560,000			4,190,000
Prepaid expenses		1,026,000			780,000
Total current assets		45,063,000			43,105,000
Property, plant and equipment
Land, building and equipment		47,877,000			47,400,000
Less accumulated depreciation		(24,657,000	)		(24,211,000	)
		23,220,000			23,189,000
Other Assets
Intangibles		5,270,000			4,799,000
Inventories		2,265,000			2,409,000
Deferred income taxes		5,207,000			6,062,000
Other		343,000			302,000
		13,085,000			13,572,000
	$	81,368,000		$	79,866,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current maturities of long-term obligations	$	285,000		$	285,000
Accounts payable		3,443,000			3,418,000
Accrued compensation		1,355,000			1,920,000
Accrued expenses		1,396,000			1,293,000
Total current liabilities		6,479,000			6,916,000
Long-term obligations		5,019,000			5,089,000
Shareholders’ equity		69,870,000			67,861,000
	$	81,368,000		$	79,866,000

See accompanying notes to condensed consolidated financial statements.

2

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended September 30,
	2005			2004
Net sales	$	13,425,000		$	12,305,000
Cost of goods sold		5,063,000			5,096,000
Gross profit		8,362,000			7,209,000
Operating expenses
Research and development		999,000			848,000
Marketing and sales		4,009,000			3,215,000
General and administrative		1,787,000			1,467,000
		6,795,000			5,530,000
Operating income		1,567,000			1,679,000
Other income (expense)
Interest income		135,000			10,000
Interest expense		(56,000	)		(113,000	)
Bond retirement expense		—			(290,000	)
Currency transaction gains (losses)		(24,000	)		85,000
Other		(14,000	)		2,000
		41,000			(306,000	)
Income before income taxes		1,608,000			1,373,000
Income tax expense		563,000			94,000
Net income	$	1,045,000		$	1,279,000
Net income per share
Basic	$	0.08		$	0.10
Diluted	$	0.08		$	0.10
Weighted average shares outstanding
Basic		13,059,567			12,932,606
Diluted		13,460,056			12,965,549

See accompanying notes to condensed consolidated financial statements.

3

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three months ended September 30,
	2005			2004
Cash flows from operating activities:
Net income	$	1,045,000		$	1,279,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		473,000			523,000
Allowance for doubtful accounts		10,000			139,000
Deferred income taxes		485,000			—
Stock compensation		230,000			—
Accumulated currency translation adjustment		28,000			92,000
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		140,000			78,000
Inventories		(1,533,000	)		(354,000	)
Prepaid expenses		(245,000	)		(219,000	)
Accounts payable		13,000			(573,000	)
Accrued liabilities		(474,000	)		(275,000	)
Net cash provided by operating activities		172,000			690,000
Cash flows from investing activities:
Purchases of property, plant and equipment		(445,000	)		(493,000	)
Acquisitions, net of cash acquired		(322,000	)		—
Refunds of security deposits		—			830,000
Increase in other assets		(45,000	)		(81,000	)
Net cash provided by (used in) investing activities		(812,000	)		256,000
Cash flows from financing activities:
Payments on long-term obligations		(70,000	)		(23,000	)
Issuance of industrial revenue bonds		—			5,630,000
Retirement of industrial revenue bonds		—			(5,986,000	)
Proceeds from stock options exercised		706,000			6,000
Net cash provided by (used in) financing activities		636,000			(373,000	)
Net increase (decrease) in cash and cash equivalents		(4,000	)		573,000
Cash and cash equivalents at beginning of period		18,508,000			8,553,000
Cash and cash equivalents at end of period	$	18,504,000		$	9,126,000
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	56,000		$	156,000
Taxes		21,000			68,000

See accompanying notes to condensed consolidated financial statements.

4

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

NOTE A – FINANCIAL INFORMATION

Lifecore Biomedical, Inc. (referred to in this report as “Lifecore” or the “Company”) manufactures biomaterials and surgical devices for use in various surgical markets and provides specialized contract aseptic manufacturing services through its two divisions, the Hyaluronan Division and the Oral Restorative Division. The Company’s manufacturing facility is located in Chaska, Minnesota. The Hyaluronan Division markets its products through original equipment manufacturers and contract manufacturing alliances in ophthalmologic, orthopedic surgery, veterinary medicine and gynecologic fields. The Oral Restorative Division markets its products through direct sales in the United States, Italy, Germany, Sweden and France and through distributors in other foreign countries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 2005, the results of operations for the three month periods ended September 30, 2005 and 2004; and cash flows for the three month periods ended September 30, 2005 and 2004. The results of operations for the three months ended September 30, 2005 are not necessarily indicative of the results for the full year or of the results for any future periods. The unaudited condensed consolidated balance sheet as of June 30, 2005 has been derived from audited financial statements as of that date.

In preparation of the Company’s consolidated financial statements, management is required to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses during the reporting periods. Actual results could differ from the estimates used by management.

NOTE B – INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or market. Inventories consist mainly of finished hyaluronan powder, aseptic units and oral restorative products and related raw materials. The Company’s inventory has been reduced to lower of cost or market for obsolete, excess or unmarketable inventory. The lower of cost or market adjustment is based on management’s review of inventories on hand compared to estimated future usage and sales. The portion of finished hyaluronan powder inventory not expected to be consumed within the next 12 months is classified as a long-term asset. The finished hyaluronan inventory is maintained in a frozen state and has a shelf life of ten years. Inventories consist of the following:

	September 30,		June 30,
	2005		2005
Raw materials	$	4,351,000	$	3,102,000
Work-in-process		554,000		426,000
Finished goods-current		6,329,000		5,928,000
		11,234,000		9,456,000
Finished goods-long term		2,265,000		2,409,000
	$	13,499,000	$	11,865,000

5

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

September 30, 2005

NOTE C – INTANGIBLE ASSETS

Intangibles consist primarily of the cost of goodwill related to acquisitions, patents and distribution rights and licenses. All intangibles relate to the Oral Restorative Division.

Also included within intangibles are costs incurred to register patents and trademarks, which are capitalized as incurred. Amortization of these costs commences when the related patent or trademark is granted. The costs are amortized over the estimated useful life of the patent or trademark, not to exceed 17 years.

Goodwill is tested for impairment on a quarterly basis and written down when impaired by applying a fair-value based test. Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. There was no impairment recorded for the three month period ended September 30, 2005.

Intangibles consisted of the following at:

	September 30,				June 30,
	2005				2005
Goodwill		$	4,847,000		$	4,352,000
Patents			387,000			387,000
Distribution rights and licenses			350,000			350,000
Accumulated amortization			(314,000	)		(290,000	)
		$	5,270,000		$	4,799,000

NOTE D – LINE OF CREDIT

The Company has a $5,000,000 credit facility with a bank which has a maturity date of December 31, 2006. The agreement allows for advances against eligible accounts receivable, subject to a borrowing base certificate. Under the credit facility, interest will accrue at the prime rate (6.75% at September 30, 2005) minus .5% or LIBOR (3.86% at September 30, 2005) plus 2.25%, at the Company’s option. At September 30, 2005 and June 30, 2005, there were no balances outstanding under the line of credit. The terms of the agreement require the Company to comply with various financial covenants, including minimum tangible net worth, liabilities to tangible net worth ratio and profitability. At September 30, 2005 and June 30, 2005, the Company was in compliance with all covenants.

NOTE E – STOCK BASED COMPENSATION

Commencing July 1, 2005, the Company adopted Statement of Financial Accounting Standard No. 123R, “Share Based Payment” (“SFAS 123R”), which requires all share-based payments, including grants of stock options, to be recognized in the income statement as an operating expense, based on their fair values over the requisite service period. The Company recorded $190,000 of related compensation expense, included in general and administrative expense, for the three-months ended September 30, 2005. There was no tax benefit from recording this non-cash expense. The compensation expense reduced both basic and diluted earnings per share by $0.01.

As of September 30, 2005, $939,000 of total unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of approximately 2.5 years.

6

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

September 30, 2005

NOTE E – STOCK BASED COMPENSATION – (continued)

Prior to adopting SFAS 123R, the Company accounted for stock-based compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” The Company has applied the modified prospective method in adopting SFAS 123R. Accordingly, periods prior to adoption have not been restated. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to the prior period.

	Three months ended
	September 30, 2004
Reported net income	$	1,279,000
Stock-based employee compensation determined under the fair value based method, net of related tax effects		(207,000	)
Pro forma net income	$	1,072,000
Income per common equivalent share:
Basic — as reported	$	0.10
Diluted — as reported	$	0.10
Basic — pro forma	$	0.08
Diluted — pro forma	$	0.08

The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options. The weighted average fair value of options granted during the three month periods ended September 30, 2005 and 2004 were $4.44 and $2.48, respectively. The fair value of options at date of grant and the assumptions utilized to determine such values are indicated in the following table:

	Three Months Ended
	September 30,
	2005			2004
Risk-free interest rate		4.27	%		3.9	%
Expected volatility		69.5	%		69.6	%
Expected life (in years)		5.6			5.4
Dividend yield		—			—

7

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

September 30, 2005

NOTE E – STOCK BASED COMPENSATION – (continued)

The Company’s stock options generally vest ratably over four years of service and have a contractual life of 10 years. The Company has authorized 5,000,000 shares for grant under the 1990, 1996 and 2003 Stock Option Plans. Option transactions under the 1990 and 1996 Stock Option Plans during the first quarter ended September 30, 2005 are summarized as follows (no stock options have been granted under the 2003 Plan):

	Number of			Weighted Average
	Shares			Exercise Price
Outstanding at June 30, 2005		1,720,706		$	10.19
Granted		41,300			10.86
Exercised		(101,100	)		7.00
Canceled		(12,750	)		9.35
Outstanding at September 30, 2005		1,648,156		$	10.41

	Number of		Weighted Average
	Shares		Exercise Price
Options exercisable at September 30, 2005		1,309,856		$10.83

The following tables summarize information concerning currently outstanding and exercisable stock options.

Options Outstanding
Range of				Number		Weighted Average Remaining	Weighted Average
Exercise Price				Outstanding		Contractual Life	Exercise Price
$	3.55	—	5.82		87,750	6.27 years	$	5.23
	5.83	—	8.75		708,563	6.79 years		7.29
	8.76	—	13.12		394,800	6.48 years		10.15
	13.13	—	19.68		426,043	2.34 years		16.09
	19.69	—	23.38		31,000	2.26 years		21.55
					1,648,156		$	10.41

8

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

September 30, 2005

NOTE E – STOCK BASED COMPENSATION – (continued)

Options Exercisable
Range of				Number		Weighted Average
Exercise Price				Exercisable		Exercise Price
$	3.55	—	5.82		65,125	$		5.35
	5.83	—	8.75		551,938		7.23
	8.76	—	13.12		242,750		10.13
	13.13	—	19.68		424,043		16.10
	19.69	—	23.38		26,000		21.58
					1,309,856	$		10.83

Issuance of Restricted Stock

During fiscal 2005, the Company granted 60,000 restricted common stock awards to its officers. 50,000 of the shares were awarded at a price of $9.30 and 6,667 of those shares were forfeited during the year ended June 30, 2005. 10,000 of the shares were awarded at a price of $10.79. The restricted shares will vest at the earlier of four years from the date of issuance or upon achievement of financial performance criteria for fiscal years 2005, 2006 and 2007. The Company achieved the financial performance criteria in fiscal 2005, and as a result, 20,000 shares vested. The employee forfeits unvested shares upon the termination of employment prior to the end of the vesting period. Stock compensation expense recognized related to these grants totaled $40,000 and $0 during the three month periods ended September 30, 2005 and 2004, respectively.

NOTE F – ACCUMULATED OTHER COMPREHENSIVE INCOME

The Company has $628,000 of accumulated currency translation adjustment which reduces shareholders’ equity at September 30, 2005. Total comprehensive income was $1,073,000 and $1,370,000 for the three month periods ended September 30, 2005 and 2004, respectively.

NOTE G – NET INCOME PER SHARE

The Company’s basic net income per share amounts have been computed by dividing net income by the weighted average number of outstanding common shares. The Company’s diluted net income per share is computed by dividing net income by the weighted average number of outstanding common shares and common share equivalents relating to stock options and restricted stock, when dilutive. For the three month periods ended September 30, 2005 and 2004, 400,489 and 32,943 shares of common stock equivalents, respectively, were included in the computation of diluted net income per share.

Options to purchase 465,543 shares of common stock with a weighted average exercise price of $16.39 for the three-month period ended September 30, 2005 and options to purchase 1,343,978 shares of common stock with a weighted average exercise price of $11.20 for the three-month period ended September 30, 2004 were outstanding but were not included in the calculation of diluted net income per share because the options’ exercise prices were greater than the average market price of the Company’s common stock during those periods. Although these options were antidilutive for the periods presented, they may be dilutive in future period calculations.

9

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

September 30, 2005

NOTE H – INCOME TAXES

Provision for income taxes was $563,000 and $94,000 for the three months ended September 30, 2005 and 2004, respectively. The effective rate for the prior year period was significantly lower than the comparable 2005 period due to recognizing a tax benefit for a partial release in the deferred tax asset valuation allowance for the net operating losses utilized in 2004. The full domestic valuation allowance was fully reversed in the fourth quarter of last fiscal year. As a result the company’s statement of earnings will reflect more normal tax charges though out fiscal 2006 and beyond. However, with the exception of the Alternative Minimum Tax and certain state taxes, the company will not use cash for domestic income taxes until their net operating losses are fully realized on their tax returns.

NOTE I– SEGMENT INFORMATION

The Company operates in two business segments. The Hyaluronan Division manufactures, markets and sells products containing hyaluronan and provides contract aseptic packaging services. The Oral Restorative Division produces and markets various oral restorative products to the area of implant dentistry. Currently, products containing hyaluronan are sold primarily to customers pursuant to ongoing supply agreements. The Company’s Oral Restorative Division markets products directly to clinicians and dental laboratories in the United States, Germany, Italy, Sweden and France and primarily through distributorship arrangements in other foreign locations.

Segment assets and the basis of segmentation are consistent with that reported at June 30, 2005. Segment information for sales and income from operations are as follows:

	Three months ended September 30,
	2005		2004
Net sales
Hyaluronan products	$	4,661,000	$	4,644,000
Oral restorative products		8,764,000		7,661,000
	$	13,425,000	$	12,305,000
Income from operations
Hyaluronan products	$	1,116,000	$	1,319,000
Oral restorative products		451,000		360,000
	$	1,567,000	$	1,679,000

NOTE J – ACQUISITION OF BARDO-BIOTECH SAS

Effective August 12, 2005, the Company acquired 100% of the stock of Bardo-Biotech SAS, a privately-owned distributor of the Company’s Oral Restorative products located in Beauzelle, France. The transaction was treated for accounting purposes as a purchase and accordingly the Company included the operating results of Bardo-Biotech SAS in the financial statements from August 1, 2005.

In conjunction with this acquisition, the consideration paid was $401,000 in cash and $362,000 in debt forgiveness. The acquisition resulted in goodwill of $495,000, a portion of which is deductible for tax purposes. Approximately $43,000 of the purchase price was placed in a bank guarantee account in the event there are any loss claims or asset valuation adjustments that should arise.

10

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

September 30, 2005

NOTE K – AGREEMENTS

On September 20, 2004, the Company secured worldwide marketing rights to its ferric hyaluronan adhesion prevention product from Ethicon, Inc. Lifecore’s product, which was previously marketed by Gynecare, a division of Ethicon, Inc. (“Gynecare”), under the trademark GYNECARE INTERGEL Adhesion Prevention Solution, was voluntarily withdrawn from the market by Gynecare on March 27, 2003 to assess information obtained from its usage in the treatment of patients. Under the agreement, Gynecare will have no responsibility for any aspect of the future manufacture, marketing, sale or distribution of the product nor will it derive any financial benefit therefrom. A payment of $250,000, included in other income, was received during the second quarter of fiscal 2005 from Ethicon, Inc. in conjunction with the above mentioned agreement.

NOTE L – LEGAL PROCEEDINGS

Lifecore is a party in 75 pending lawsuits, all of which allege that the plaintiffs suffered injuries due to the defective nature of INTERGEL Solution manufactured by Lifecore and marketed by ETHICON. Under the terms of its Conveyance, License, Development and Supply Agreement dated August 8, 1994 with ETHICON, ETHICON is obligated to indemnify and hold Lifecore harmless from all claims related to the sale and use of INTERGEL Solution, unless it is ultimately determined that a plaintiff’s injuries were caused by a breach of Lifecore’s limited contractual warranty to Ethicon. Lifecore believes that ETHICON will be obligated to fully indemnify Lifecore in connection with all of the pending claims relating to INTERGEL Solution. Lifecore also has product liability insurance that it believes would cover its exposure, if any, related to these claims.

NOTE M – RECLASSIFICATIONS

Certain 2004 amounts have been reclassified to conform to the 2005 presentation.

11

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions in certain circumstances that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the Company’s financial statements. Management bases its estimates and judgments on historical experience, observance of trends in the industry, information provided by customers and other outside sources and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition:

The Company recognizes revenue when the product is shipped or otherwise accepted by unaffiliated customers, pursuant to customers orders, the price is fixed and collection is reasonably assured. The Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition” provides guidance on the application of generally accepted accounting principles to selected revenue recognition issues. The Company has concluded that its revenue recognition policy is appropriate and in accordance with generally accepted accounting principles and SAB No. 101.

Allowance for Uncollectible Accounts Receivable:

Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The Company extends credit to customers in the normal course of business but generally does not require collateral or any other security to support amounts due. Management performs on-going credit evaluations of the Company’s customers and bases the estimated allowance on these evaluations.

Inventories:

Inventories are stated at the lower of cost (first-in, first-out method) or market and have been reduced to the lower of cost or market for obsolete, excess or unmarketable inventory. The lower of cost or market adjustment is based on management’s review of inventories on hand compared to estimated future usage and sales.

Goodwill, Intangibles and Other Long-Lived Assets:

Intangibles and certain other long-lived assets with a definite life are amortized over their useful lives. Useful lives are based on management’s estimates of the period that the assets will generate revenue.

The Company reviews goodwill for impairment on a regular basis, at least quarterly or upon a triggering event.

Management has reviewed goodwill and other intangibles for impairment and has concluded that such assets are appropriately valued at the financial statement dates.

Accounting for Income Taxes:

Income taxes are accounted for under the provisions of Statement of Financial Accounting Standards, or SFAS No. 109, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable

12

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

income. The tax consequences of events recognized in the current year’s financial statements are included in determining income taxes currently payable. However, because tax laws and financial accounting standards differ in their recognition and measurement of assets, liabilities, equity, revenue, expenses, gains and losses, differences arise between the amount of taxable income and pretax financial income for a year and between the tax bases of assets or liabilities and their reported amounts in the financial statements. Because it is assumed that the reported amounts of assets and liabilities will be recovered and settled, respectively, a difference between the tax basis of an asset or a liability and its reported amount in the balance sheet will result in a taxable or a deductible amount in some future years when the related liabilities are settled or the reported amounts of the assets are recovered, hence giving rise to a deferred tax asset. Management must then assess the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent that recovery is not likely, a valuation allowance must be established.

In fiscal 2005, management determined that it was appropriate to release a substantial portion of the deferred tax valuation allowance based upon the Company’s then-current and expected level of profitability, and the belief that it is more likely than not that the deferred tax assets will be utilized before they expire. The remaining valuation allowance is provided for foreign net operating losses. As part of the process of preparing the consolidated financial statements, income taxes are required to be estimated. This process involves estimating actual current tax exposure together with assessing temporary differences that may result in deferred tax assets or liabilities. Management judgment is required in determining any valuation allowance recorded against deferred tax assets. Any such valuation allowance would be based on our management’s estimates of taxable income and the period over which deferred tax assets would be recoverable.

Overview

The Company manufactures biomaterials and medical devices for use in various surgical markets and provides related specialized contract aseptic manufacturing services. The Company operates through two business units, the Hyaluronan Division and the Oral Restorative Division.

The Company’s Hyaluronan Division is principally involved in the development and manufacture of products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellar matrix of connective tissues in both animals and humans.

The Hyaluronan Division primarily sells into three medical segments: 1) Ophthalmic, 2) Orthopedic, and 3) Veterinary. In addition, the Company developed and owns the global marketing rights for a product using its patented ferric hyaluronan adhesion prevention technology. The product, FeHA, (formerly labeled as GYNECARE INTERGEL Adhesion Prevention Solution (“INTERGEL Solution”), has been clinically proven to reduce the incidence of post-surgical adhesions following surgical trauma. The product was voluntarily withdrawn from the market in March 2003 in order to assess information obtained from postmarketing experience with the product. The Company is currently evaluating regulatory requirements and opportunities for distribution partners to market the FeHA product.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Lifecore also supplies hyaluronan to customers pursuing other medical applications, such as wound care, aesthetic surgery, medical device coatings, tissue engineering, drug delivery and pharmaceuticals. The Company leverages its hyaluronan manufacturing expertise to provide expanded hyaluronan product offerings and specialized aseptic manufacturing of hyaluronan products.

The Company’s Oral Restorative Division develops and markets precision surgical and prosthetic devices for the restoration of damaged or deteriorating dentition and associated support tissues. The Company’s dental implants are permanently implanted in the jaw for tooth replacement therapy as long-term support for crowns, bridges, and dentures.

The Oral Restorative Division also offers innovative bone regenerative products for the repair of bone defects resulting from periodontal disease and tooth loss. Additionally, the Oral Restorative Division provides professional support services to its dental surgery clients through comprehensive education curricula, as provided in the Company’s various Support PlusÔ programs and surgical courses. These professional continuing education programs are designed to train restorative clinicians and their auxiliary teams in the principles of tooth replacement therapy and practice management. The Company’s Increasing Case Acceptance Program (“ICA”) offers clients the marketing and consultative tools and training to foster higher patient acceptance of dental implants.

The Oral Restorative Division’s products are marketed in the United States through the Company’s direct sales force. Internationally, the Division’s products are marketed through direct subsidiaries in Italy, Germany, France and Sweden, and through 25 national distributors covering 34 additional countries.

Acquisition of Bardo-Biotech SAS

Effective August 12, 2005, the Company acquired 100% of the stock of Bardo-Biotech SAS, a privately-owned distributor of the Company’s Oral Restorative products located in Beauzelle, France. The transaction was treated for accounting purposes as a purchase and accordingly the Company included the operating results of Bardo-Biotech SAS in the financial statements from August 1, 2005.

In conjunction with this acquisition, the consideration paid was $401,000 in cash and $362,000 in debt forgiveness. The acquisition resulted in goodwill of $495,000, a portion of which is deductible for tax purposes. Approximately $43,000 of the purchase price was placed in a bank guarantee account in the event there are any loss claims or asset valuation adjustments that should arise.

14

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Results of Operations

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004:

	Hyaluronan				Oral Restorative
	Division				Division				Consolidated
	2005		2004		2005		2004		2005		2004
Net sales	$	4,661,000	$	4,644,000	$	8,764,000	$	7,661,000	$	13,425,000	$	12,305,000
Cost of goods sold		2,052,000		2,093,000		3,011,000		3,003,000		5,063,000		5,096,000
Gross profit		2,609,000		2,551,000		5,753,000		4,658,000		8,362,000		7,209,000
Operating expenses
Research and development		607,000		604,000		392,000		244,000		999,000		848,000
Marketing and sales		176,000		92,000		3,833,000		3,123,000		4,009,000		3,215,000
General and administrative		710,000		536,000		1,077,000		931,000		1,787,000		1,467,000
		1,493,000		1,232,000		5,302,000		4,298,000		6,795,000		5,530,000
Operating income	$	1,116,000	$	1,319,000	$	451,000	$	360,000	$	1,567,000	$	1,679,000

Net Sales. Net sales for the quarter ended September 30, 2005 increased $1,120,000 or 9% as compared to the same quarter of last fiscal year. Hyaluronan Division sales increased $17,000, and Oral Restorative Division sales increased $1,103,000 or 14%.

Hyaluronan Division sales for the current quarter increased to $4,661,000 from $4,644,000 in the same quarter of last fiscal year due to increased sales to veterinary customers offset partially by lower sales to ophthalmic customers.

Oral Restorative Division sales for the current quarter increased to $8,764,000 from $7,661,000 in the same quarter of last fiscal year. Domestic sales increased 22% due to the continued expansion of our sales representatives, sales of the RENOVA Internal Hex Implant System and continued sales growth of the STAGE-1 Single Stage Implant System. Sales in the international markets increased by 6%.

Gross profit. Consolidated gross profit, as a percentage of net sales, was 62% in the current quarter and 59% in the same quarter of last fiscal year. The gross profit for the Hyaluronan Division increased to 56% in the current quarter from 55% in the same quarter of last fiscal year; 3.3 percentage point change due to a decrease in unused manufacturing capacity charges associated with increased hyaluronan production, offset by a 2.1 percentage point change due to product mix.

Gross profit for the Oral Restorative Division increased to 66% in the current quarter from 61% in the same quarter of last fiscal year of which 3.6 percentage points were due to a favorable shift in sales mix from lower margin products to higher margin products and 1.3 percentage points were due to fixed costs spread over a larger sales base.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Research and development. Consolidated research and development expenses consist of personnel costs, contract services, facility and equipment charges and materials consumed in the development of new products or enhancements to existing products. Research and development activities include: pilot plant operations, development of new formulations, design and testing of new products, regulatory services and clinical evaluation. Research and development expenses increased $151,000 or 18% in the current quarter as compared to the same quarter last fiscal year. The increase is due to additional expenses associated with new product development in the Oral Restorative Division.

Marketing and sales. Consolidated marketing and sales expenses increased by $794,000 or 25% in the current quarter as compared to the same quarter of last fiscal year. The increase was due mainly to costs associated with the timing of tradeshows, the expansion of the oral restorative’s domestic sales force, and international operations.

General and administrative. Consolidated general and administrative expenses increased by $320,000 or 22% in the current quarter as compared to the same quarter of last fiscal year. The increase is related to $190,000 of compensation expense associated with the adoption of SFAS 123R and higher insurance costs.

On June 16, 2005 the Company accelerated of the vesting of 74,375 stock options which had an exercise price greater than the closing price on that date. The accelerated vesting enabled the Company to avoid recognizing in its income statement compensation expense associated with these options in future periods upon the adoption by the Company of FASB Statement No. 123(R) “Share-Based Payment” in July 2005.

Other income (expense). Net other income, as shown on the Consolidated Statements of Operations, increased $347,000 for the current quarter as compared to the same quarter of last fiscal year. The increase is due to no bond retirement expense of $290,000 and an increase in interest income of $125,000 resulting from a higher cash balance, offset by decreases in currency transaction gains realized on Euro denominated intercompany transactions of $110,000.

Provision for income taxes.Provision for income taxes was $563,000 and $94,000 for the three months ended September 30, 2005 and 2004, respectively. The effective rate for the prior year period was significantly lower than the comparable 2005 period due to recognizing a tax benefit for a partial release in the deferred tax asset valuation allowance for the net operating losses utilized in 2004. The full domestic valuation allowance was fully reversed in the fourth quarter of last fiscal year. As a result the company’s statement of earnings will reflect more normal tax charges though out fiscal 2006 and beyond. However, with the exception of the Alternative Minimum Tax and certain state taxes, the company will not use cash for domestic income taxes until their net operating losses are fully realized on their tax returns. We account for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes.”

Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. We believe that in fiscal 2006 our tax rate will be approximately 35%, even though the actual amount of taxes paid will be reduced by the utilization of the net operating loss carryforward.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Liquidity and Capital Resources

The Company’s Annual Report on Form 10-K, as amended, for the year ended June 30, 2005 contains a detailed discussion of Lifecore’s liquidity and capital resources. Investors should read the 2005 Form 10-K, as amended, in conjunction with this Quarterly Report on Form 10-Q.

For the three month period ended September 30, 2005, the Company had negative cash flow of $4,000. The Company has had positive cash flow in fiscal years 2005, 2004 and 2003. Charges for unused manufacturing capacity associated with the Company’s hyaluronan production have continued to negatively impact operating results in the current fiscal year. Also, marketing and sales expenses for the oral restorative products are expected to continue at a high level due to continued international expansion and increased personnel costs associated with expanding the sales force.

The Company has a $5,000,000 credit facility with a bank which has a maturity date of December 31, 2006. The agreement allows for advances against eligible accounts receivable, subject to a borrowing base certificate. Under the credit facility, interest will accrue at the prime rate (6.75% at September 30, 2005) minus .5% or LIBOR (3.86% at September 30, 2005) plus 2.25%, at the Company’s option. At September 30, 2005 and June 30, 2005, there were no balances outstanding under the line of credit. The terms of the agreement require the Company to comply with various financial covenants, including minimum tangible net worth, liabilities to tangible net worth ratio and profitability. At September 30, 2005 and June 30, 2005, the Company was in compliance with all covenants.

On August 19, 2004, the Company issued variable rate industrial revenue bonds. The proceeds from these bonds were used to retire the existing 10.25% fixed rate industrial revenue bonds on September 1, 2004. The aggregate principal amount of the new bonds is $5,630,000, and the bonds bear interest at a variable rate set weekly by the bond remarketing agent (2.75% as of September 30, 2005). In addition, the Company pays an annual remarketing fee equal to .125% and an annual letter of credit fee of 1.0%. The bonds are collateralized by a bank letter of credit which is secured by a first mortgage on the facility. The Company is required to make monthly principal and interest payments to a sinking fund. The terms of the agreement require the Company to comply with various financial covenants including minimum tangible net worth, liabilities to tangible net worth ratio and net income (loss). As of September 30, 2005 and June 30, 2005, the Company was in compliance with all covenants.

The Company’s ability to generate positive cash flow from operations and achieve ongoing profitability is dependent upon the continued expansion of revenue from its hyaluronan and oral restorative businesses. Growth in the Hyaluronan Division is unpredictable due to the complex governmental regulatory environment for new medical products, the early stage of certain of these markets and the uncertainty associated with the future market status of the Company’s adhesion prevention product. Similarly, expansion of the Company’s Oral Restorative Division sales is also dependent upon increased revenue from new and existing customers, as well as successfully competing in a more mature market. The Company expects its cash generated from anticipated operations and the available funds under the line of credit to satisfy cash flow needs in the near term. No assurance can be given that the Company will maintain positive cash flow from operations. While the Company’s capital resources appear adequate today, the Company may seek additional financing in the future. If additional financing is necessary, no assurance can be given that such financing will be available and, if available, will be on terms favorable to the Company and its shareholders.

The Company does not have any material “off-balance sheet” financing activities.

Seasonality

The Company’s business is seasonal in nature. Historically, sales on the Oral Restorative Division are lower in the first quarter than throughout the rest of the year, as a result of European holidays during the summer months.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Cautionary Statement

Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Form 10-Q, in future filings by the Company with the Securities and Exchange Commission and in the Company’s press releases and oral statements made with the approval of authorized executive officers, that are not historical or current facts, should be considered “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may, among other things, relate to market acceptance and demand for the Company’s products, future product development plans and timing, the results of clinical trials, FDA clearances and the related timing of such, the potential size of the markets for the Company’s products, future product introductions, future revenues, expense levels, tax rates and capital needs and the Company’s ability to successfully negotiate acceptable agreements with its corporate partners. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected or in the future could affect the Company’s actual results and could cause its actual financial performance to differ materially from that expressed in any forward-looking statement: (i) obtaining the necessary regulatory approvals for new hyaluronan and oral restorative products; (ii) the Company’s reliance on corporate partners to develop new products on a timely basis and to market the Company’s existing and new hyaluronan products effectively; (iii) intense competition in the markets for the Company’s principal products; and (iv) the uncertainty associated with the future market status of the Company’s adhesion prevention product. Investors are referred to a more detailed discussion of the risks presented in Exhibit 99.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company invests its excess cash in money market mutual funds and highly rated short-term corporate debt securities. All investments are held to maturity. The market risk on such investments is minimal.

Receivables from sales to foreign customers are denominated in U.S. dollars. Transactions at the Company’s foreign subsidiaries are denominated in European Euros at Lifecore Biomedical SpA, Lifecore Biomedical GmbH and Lifecore Biomedical SAS and are denominated in Swedish Krona at Lifecore Biomedical AB. The Company is exposed to foreign currency exchange rate risk arising from transactions in the normal course of business from sales to its foreign subsidiaries. Because the Company’s products are manufactured or sourced primarily from the United States, a stronger U.S. dollar generally has a negative impact on results from operations outside the United States while a weaker dollar generally has a positive effect. The Company does not use derivative financial instruments to manage foreign currency fluctuation risk.

On August 19, 2004, the Company issued variable rate industrial revenue bonds. The proceeds from these bonds were used to retire the existing 10.25% fixed rate industrial revenue bonds on September 1, 2004. The aggregate principal amount of the new bonds was $5,630,000, and the bonds bear interest at a variable rate set weekly by the bond remarketing agent (2.75% as of September 30, 2005). A ten percent change in this variable rate would result in approximately $15,000 of additional interest expense annually.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a – 15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

(b) Changes in internal control over financial reporting.

During the fiscal period covered by this report, there has been no change in the Company’s internal control over financial reporting (as defined in Rule 13a – 15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Lifecore has been named as a defendant in 75 product liability lawsuits alleging that the plaintiffs suffered injuries due to the defective nature of GYNECARE INTERGEL Adhesion Prevention Solution (“INTERGEL Solution”) which was developed, manufactured and marketed by Lifecore. The other defendants in these lawsuits are ETHICON, Inc., which was Lifecore’s exclusive worldwide marketing partner for INTERGEL Solution through its division GYNECARE Worldwide; and Johnson & Johnson, the parent company of ETHICON. Many of the lawsuits also name Vital Pharma, Inc. as a defendant; Vital Pharma acted as the contract packager for the INTERGEL solution. The plaintiffs in these actions are individuals who were patients in medical procedures during which INTERGEL Solution was used and who were allegedly injured due to the defective nature of INTERGEL Solution.

Lifecore anticipates that the lawsuit captionedRenee Contratto v. Ethicon, Inc., d/b/a Gynecare Worldwide, Johnson & Johnson, Lifecore Biomedical, Inc. and Vital Pharma, Inc., which was the first such lawsuit served on Lifecore, will be the first of these lawsuits to go to trial. TheContratto case was filed in U.S. District Court for the Northern District of California and was served on Lifecore on September 15, 2003. As of October 15, 2005, Lifecore had been served in 72 of the 75 lawsuits on dates ranging from September 15, 2003 to October 3, 2005. Fifty-eight of these lawsuits were filed in Florida state court. The balance of the lawsuits served on Lifecore have been filed in various states including Connecticut, Kansas, Louisiana, Minnesota, New Jersey, Pennsylvania and Wisconsin.

ETHICON began marketing INTERGEL Solution outside the United States in June 1998 for reducing the incidence of post-surgical adhesions. INTERGEL Solution was approved by the FDA for the U.S. market in November 2001. INTERGEL Solution was voluntarily withdrawn from the market by ETHICON in March 2003 in order to assess information obtained from postmarketing experience with the product, including allegations of adverse events associated with off-label use in non-conservative surgical procedures (such as hysterectomies).

ETHICON is defending Lifecore in all of these lawsuits. Under the terms of Lifecore’s Conveyance, License, Development and Supply Agreement dated August 8, 1994 with ETHICON, ETHICON is obligated to indemnify and hold Lifecore harmless from all claims related to the sale and use of INTERGEL Solution, unless it is ultimately determined that a plaintiff’s injuries were caused by a breach of Lifecore’s limited contractual warranty to ETHICON under that agreement. Lifecore believes that ETHICON will be obligated to fully indemnify Lifecore in connection with all of the pending claims relating to INTERGEL Solution.

Lifecore has also received four claim letters alleging claims similar to the lawsuits. ETHICON is responding to the claim letters on behalf of Lifecore.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART II – OTHER INFORMATION

ITEM 6. EXHIBITS

3.1	Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 19(a) to Amendment No. 1 on Form 8, dated July 13, 1988, to Form 10-Q for the quarter ended December 31, 1987), as amended by Amendment No. 2 (incorporated by reference to Exhibit 3.1 to Form 10-K for the year ended June 30, 1997)
3.2	Amended Bylaws (incorporated by reference to Exhibit 3.2 to Form 10-K/A for the year ended June 30, 1995)
4.1	Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to 1987 S-2 Registration Statement [File No. 33-12970])
4.2	Form of Rights Agreement, dated as of May 23, 1996, between the Company and Norwest Bank Minnesota, National Association (incorporated by reference to Exhibit 1 to the Company’s Form 8-A Registration Statement dated May 31, 1996)
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

21

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LIFECORE BIOMEDICAL, INC.
	By:
Dated: November 9, 2005	/s/ Dennis J. Allingham
	Dennis J. Allingham
	President, Chief Executive Officer, Secretary and Director
	(duly authorized officer)
Dated: November 9, 2005	/s/ David M. Noel
	David M. Noel
	Vice President of Finance and Chief Financial Officer
	(principal financial and accounting officer)

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Exhibit Index

3.1	Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 19(a) to Amendment No. 1 on Form 8, dated July 13, 1988, to Form 10-Q for the quarter ended December 31, 1987), as amended by Amendment No. 2 (incorporated by reference to Exhibit 3.1 to Form 10-K for the year ended June 30, 1997)
3.2	Amended Bylaws (incorporated by reference to Exhibit 3.2 to Form 10-K/A for the year ended June 30, 1995)
4.1	Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to 1987 S-2 Registration Statement [File No. 33-12970])
4.2	Form of Rights Agreement, dated as of May 23, 1996, between the Company and Norwest Bank Minnesota, National Association (incorporated by reference to Exhibit 1 to the Company’s Form 8-A Registration Statement dated May 31, 1996)
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

23