Mail Stop 03-09
Via Facsimile and U.S. Mail
May 10, 2005
Mr. Dennis J. Allingham
President and Chief Executive Officer
Lifecore Biomedical, Inc.
3515 Lyman Boulevard
Chaska, Minnesota 55318-3051
RE: Lifecore Biomedical, Inc.
Form 10-K for the fiscal year ended June 30, 2004
Filed September 13, 2004
File No. 0-04136
Dear Mr. Allingham:
We have reviewed your filing and have the following
comments. We have limited our review of the above referenced
filing
to only those issues addressed. In our comments, we ask you to
provide us with supplemental information so that we may better
understand your disclosure. Please provide us the supplemental
information requested within 10 business days of the date of this
letter or tell us when you will provide a response prior to the
expiration of the 10-day period. Please furnish a letter with
your
supplemental responses that keys your responses to our comments.
Detailed letters greatly facilitate our review. You should file
the
letter on EDGAR under the form type label CORRESP. Please
understand
that we may have additional comments after reviewing your
responses
to our comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comment or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the fiscal year ended June 30, 2004
Management`s Discussion and Analysis
Results of Operations, pages 20-21
1. Please tell us where in the filing you have provided
quantification or your analysis that supports excluding
quantification of each significant component of the increase in
gross
profit for each period presented. Explain to us the potential
variability of the Company`s earnings and the likelihood that past
performance is indicative of future performance.
Financial Statements
Note A. Significant Accounting Policies, page F-9
Revenue Recognition
2. Please tell us where in the filing you have provided disclosure
or
your analysis that supports excluding disclosure of your
distribution
process. It is unclear whether the "customer" relationship is with
your alliance partner or the end user. If the latter, explain how
you
determine sales and product returns, particularly product returns
or
related adjustments for the INTERGEL market withdrawal, and the
extent to which you consider information from external sources in
determining these amounts (e.g. alliance partner, third-party
market
research data comparing wholesaler inventory levels to end-
customer
demand). Also tell us the terms of your contract manufacturing
alliances, including any pricing and production commitments,
product
returns, chargebacks, incentives and rebates.
Research and Development
3. Please tell us where in the filing you have provided disclosure
or
your analysis that supports excluding disclosure of the accounting
policy for research and development expenses. Tell us the amount
and
nature of costs included in research and development and justify
their inclusion in that caption by referencing the supporting
literature in SFAS 2. In particular, you disclose that research
and
development costs include consulting & professional fees
associated
with market withdrawal of INTERGEL solution. Explain how these
costs
meet the definitions in SFAS 2.
Stock Based Compensation
4. Please tell us where in the filing you have provided disclosure
or
your analysis that supports excluding disclosure of the methods
and
assumptions used in your determination of the risk-free rates of
return. Include the source of information used and demonstrate to
us
that the rates used in each year were determined consistently.
Compensation expense under FAS 123 is very material and your risk-
free rates of return for each year appear to be inconsistent with
market interest rates during the same periods.
Note J. Restructuring Plan, page F-19
5. Please tell us where in the filing you have provided disclosure
or
your analysis that supports excluding disclosure of the facts and
circumstances leading to the 2004 restructuring plan and the
related
charges by business segment. Explain how this restructuring
related
to the INTERGEL market withdrawal.
Note K. Legal Proceedings, page F-19
6. Please tell us where in the filing you have provided the
required
disclosures under SFAS 5 and SAB 92 of your current legal
proceedings, in particular those actions associated with your
market
withdrawal of INTERGEL or your analysis that supports excluding
such
disclosures. SFAS 5 and SAB 92 require certain disclosures
including
a) disclosure of the estimated additional loss, or range of loss,
that is reasonably possible, or b) disclosure that such an
estimate
cannot be made. If you cannot make an estimate, tell us the facts
and
circumstances preventing you from making such an estimate as well
as
a discussion of what is being sought in each proceeding.
* * * * *
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all the
facts relating to a company`s disclosure, they are responsible for
the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comment, please
provide,
in writing, a statement from the company acknowledging that:
* The company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* Staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* The company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Frank Wyman, Staff Accountant at (202) 942-
2851
or Lisa Vanjoske, Assistant Chief Accountant, at (202) 551-3614,
if
you have questions regarding the comment. In this regard, do not
hesitate to contact me at (202) 942-1803.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief Accountant
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Mr. Dennis J. Allingham
Lifecore Biomedical, Inc.
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