Good day, ladies and gentlemen, and welcome to the Landec Third Quarter Fiscal Year 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this program is being recorded. I would now like to introduce your host for today's program, Mr. Gary Steele, Chairman and CEO of Landec Corporation.

Good morning and thank you for joining Landec's third quarter fiscal year 2012 earnings call. I have with me today Greg Skinner, our Chief Financial Officer. This call is being webcast by Thomson Reuters and can be accessed at Landec's website at www.landec.com on our Investor Relations page. The webcast will be available for 30 days through April 25, 2012. A replay of the teleconference will be available for one week until midnight Eastern Time, Tuesday, April 03, 2012 by calling 888-266-2081 or 703-925-2533. The access code for the replay is 1571046. During today's call, we may make forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially. These risks are outlined in our filings with the Securities and Exchange Commission, including the Company's Form 10-K for fiscal year 2011. Yesterday in our earnings release we reported another good quarter with revenues up 9% to $80.1 million a net income of 107% to $4.8 million. Earnings per share for the quarter was $0.18 per share compared to $0.09 per share for the last years third quarter. The actual net income results for the third quarter are higher than we had anticipated due to a timing shift for the recognition of the increase in the fair market value of our investment in Windset Farms. Recall, that we own 20% of Windset. Based on a recent annual appraisal of Windset’s fair market value we will require to record much of the remaining full year increase in our share of the fair market value change in the third quarter instead of the fourth quarter. The timing shift does not alter or affect our outlook which remains strong for this fiscal year. We are increasing our fiscal year 2012 guidance for revenue growth to 9 to 10% increase…

Thank you, Gary, and good morning everyone. In yesterday’s news release, Landec reported that for the third quarter of fiscal year 2012, revenues increased 9% to 80.1 million versus revenues of 73.5 million for the third quarter of last year. The increase in total revenues during this year’s third quarter compared to last year’s third quarter was primarily due to an $8.7 million increase in revenues in Apio’s value-added business, which includes the fresh-cut specialty packaged vegetable business, Apio Cooling, and Apio Packaging. The growth in Apio’s value added vegetable business, resulted from a year-over-year 24% increase in unit volume sales, which were facilitated by new distribution gains and normal weather patterns, during this year’s third quarter, compared to very poor weather conditions during the third quarter of last year, which resulted in significant produced sourcing issues last year. These increases in revenue were partially offset by $1.1 million decrease in revenues of Lifecore due to the timing of shipments compared to the third quarter of last year. And $1.3 million decrease in revenues in our technology licensing business, primarily due to the termination of the Monsanto agreement at the end of the second quarter of fiscal year 2012. For the third quarter of fiscal year 2012, Landec’s net income increased to 107% to 4.8 million or $0.18 per share compared to 2.3 million or $0.09 per share for the third quarter of last year. The increase in net income during the third quarter of fiscal year 2012, compared to the third quarter of last year was due to $1.7 million increase in pre-tax income from Apio’s value-added business and a $3.8 million increase in pre-tax income from our investment in Windset Farms. These increases were partially offset by $1.3 million reduction and license fee from the termination of the…

Thanks, Greg. So what are our growth drivers going forward? Our focus is on growing and building our two core business, the Apio food business and the Lifecore Biomedical materials business. In addition, we are very selectively and I repeat very selectively looking at licensing opportunities which include either out-licensing or in-licensing of technology. We plan to grow our food business by introducing numerous new products starting this spring by adding new customers. We are also interested in finding synergistic opportunities that build on our excellent access to retail and club-store produce buyers in North America. Anything that we can do to broaden, our specialty packaged food product line, field trucks, add new customers and expand the use of our packaging technology is of great interest to us. Regarding our BreatheWay packaging technology, we want to capitalize on Chiquita’s expanding interest in transporting and packaging bananas in or BreatheWay technology and we want to find new applications in general for our BreatheWay packaging. Regarding Windset, as part of our food business, we are working on developing new ways to work with Windset and become a bigger part of their rapid growth. Going forward, we will be discussing with them how we can work together to expand the Santa Maria hydroponic greenhouse operations, as well as identifying new targets for hydroponic greenhouse growing. For Lifecore biomedical materials business, our primary goal is to increase the volume of our Hyaluronic acid materials that we make up there in Chaska, Minnesota and essentially we want to increase the capacity utilization of our fermentation and filling operations. Most of our facility is at roughly a 50% utilization rate right now, so there is plenty of opportunity for adding highly profitable business as we demonstrated last year. Our shareholders need to remember that in almost every case our injectable biomaterials programs would go through an FDA review and it is very difficult to predict especially in today’s environment how long the FDA review process will take. Once approved, our products are then spec’d into our customer’s final product formulations, thus providing a significant barrier to competition. Somewhat further down the road, we are investigating how our Lifecore materials can be used as adjuvant and human therapeutics as well as static materials as well as veterinary medicines and as coating for medical devices. In summary, through our first three quarters, we are tracking well with our plans and guidance and we look forward to continued growth in revenues and income. We are now available for your questions.

(Operator Instructions) Our first question comes from the line of Tony Brenner from Roth Capital Partners, your question please.

Good morning, Tony.

Good morning. I have two questions. First of all, regarding your guidance for revenues for the year and for the quarter, your range of 9% to 10% implies possibly lower year-over-year revenues in the fourth quarter that up may be 1% or 1.5%. If you breakout by division to do your 5% increase for the year Lifecore would have to have a little better than 20% revenue increase in the fourth quarter. Apio value added, it sounds like a pretty good increase against a depressed result a year ago because of weather. So I am wondering what the offset to those gains are?

Remember, we don’t have Monsanto this year. So it is a $1.4 million in fourth quarter. Next quarter, it’s always – it’s a source-based revenue business and if the source is there and so it’s always hard to predict it. Your numbers are in the ballpark. And we thought we would be higher in the fourth quarter this year than we were last year, slightly higher. I think if you do the math based on where we were through the first three quarters we are in that 9% to 10% range for the year.

It should do the math. 9% implies a downslide quarter, your export business would pretty much have to support to get that number.

No, no. Obviously, you don’t want to give the high-end of every range. We are factoring in. Things still happen in the produce industry. So we are comfortable that we are going to fall in that 9% to 10% range for the year.

I see.

Maybe offline, Tony we could go into more detail?

Okay. Secondly, regarding the fair market value of Windset farms, were you valued at again at the end of the year or not?

No. Because their projections are based on the period, June 2012 through May 2017, there is nothing going to happen in the next few months. So, it’s going to change your five-year projections. The entire value, that 5.8 million increase is based on that five-year projection, just counting back to the present day. Just kind of back to Q1 2012.

Sure then, it recording fair market value changes in fiscal 2013 quarter-by-quarter, basically on flat with a 5.8?

What we will end up doing and this is – let’s just say in agreement with (inaudible) this is our first year obviously after we are going through this, is we are going to estimate what we think the fair market value is based on either the current five-year projections from Windset or a revised one and then pretend we are a year from now doing the same analysis, so it’s kind of like (inaudible) and discounted back to May of 2013 and then that number which would be whatever the difference is between 21.5 and that calculation will then record on a quarterly basis next year. So, we will be in full agreement at the beginning of the year what we will be recording absent any significant changes in their operations.

So that implies a higher number, does it?

Well, we haven’t run the numbers yet, but in theory, yes, because you are discounting it back less years.

Right. Okay, that’s all I had. Thank you.

Thanks, Tony.

Thank you. Our next question comes from the line of Nelson Opus [ph] from Onefield [ph], your question please. Nelson Opus [ph]: Hi.

Good morning, Nelson. Nelson Opus [ph]: Just a couple of things from your press release. I can’t say I had been focusing to a great degree on Pollinator Plus, but I am a little bit astounded that this is a product that corn will be used on approximate 25% of the seed coating production acres in the US and we only get $1 million of revenues?

It’s a very small niche market, Nelson. This is not commercial corn, this is just the inbred corn and it’s 640,000 acres in total. So this is the acreage that the Pioneer’s and the Monsanto’s and the Dow’s and the (inaudible) plant in terms of imparting the new genetics. So, it’s not a big market it’s only 640,000 acres. Nelson Opus [ph]: What do you think the value of that market is? I mean, this is the seed corn?

Maximum $10 million a year. Nelson Opus [ph]: Okay. Just a little update on why the BreatheWay packaging in the avocado program has had operations, struggles and adaptation. I thought it was going pretty well and it’s a little bit of a disappointment when we have some positive expectations in one quarter and then we do 180 in the next.

The difference in my mind is that in the banana business when we licensed them to technology we are working with the world market leader, they knew the banana business, they knew how the sourcing, they knew the operations, etc. Avocado is brand new for them. All I can tell you is they have been struggling operationally. Our technology works exactly as advertised. We picked a partner that was new to avocados and it’s just been a real struggle operationally for them. So, that’s all I can tell you at this point but it’s been just supporting, they front-end loaded a lot of orders late last year and they just haven’t worked through that inventory. So I agree with you, disappointing. Nelson Opus [ph]: Alright, so the problem is really on Chiquita side?

Well, you hate to put the monkey on somebody else’s back but – our technology works and it works just then. Nelson Opus [ph]: Okay. The same extension of shelf life?

You get the shelf life extension what you do. The biggest value is that it gives you the opportunity to fully ripen your avocados, hold them in the ripe and ready to eat state for 11 days. It works just as we said it would work. And we are dependant. Anytime we do licensing deals and you know this you are dependent on your partner to exploit and perform and it’s been a real struggle for me. Nelson Opus [ph]: This is delicate question, I could be wrong, but I do believe the prior messaging in terms of the whole project was somewhat positive including initial sell-through. Am I wrong about that?

No, you are not wrong about it. The prior messaging was that they were very excited about this, want to make a big run at it. Secondly, they ordered a lot of product from us and third the initial trials were showing very good results in terms of what’s called retail velocity and low shrink. So all that’s fine and handy, but if you are struggling operationally and you are not finding that it’s profitable while you are doing that, it’s got to be a problem for Chiquita. And therefore, we are tied to them, we are joined at the hip. Nelson Opus [ph]: Okay. Fine, thanks.

Thank you.

Thank you. Our next question comes from the line of Chris Krueger from Northland Capital, your question please.

Hi, good morning Chris.

Hi, in your comments you stated that one of the growth drivers for your Apio business was new products. I was wondering if you could give us a few examples of what types of products those are?

Well, since they haven’t been released to the marketplace and not announced, I would prefer not Chris from a competitive point of view, but they use BreatheWay technology and our specialty packaging technology, they are in, they generally include mixtures of vegetables. We also will be using in some cases Windset farm’s tomatoes which are really very premium high value products. So, if you would allow us to not disclose anything more on that I think that would be better for us. But, every quarter we have a rollout and we have products not only for the retail stores but we also have some specialty products for the club stores. So, we are going to start that this spring. We have already been meeting initially with some of the produce buyers and so far the reception is positive. So, we haven’t disclosed the specifics of the exact products.

Okay. And then for the Apio segment, your SG&A expenses have somewhat elevated really throughout this nine-months period versus the last couple of years. Can you remind us what is causing them?

Well, the primary increase Chris is a year ago we obviously had all the produce sourcing issues and because of the weather. And as a result the bonuses that were originally planned at the beginning of the year, they weren’t accrued because they weren’t hitting their numbers. Whereas this year, as you can see they are doing very well, especially year-over-year. They are meeting and exceeding their plan and as a result we are accruing bonuses this year. We want to pay them their bonuses. That is by far the biggest reason for the increase. There is also some consulting, legal, some of these new products that Gary was talking about we have gone out and hired some third party consultants to assists us on so and so forth. So, all the rest of it is a combination of little bit here a little bit there.

Okay. Last question for Windset. I apologize if you had talked about this on the call but have they stated any plans for adding more acres? I know now you have capacity with the water treatment facility to double the acreage at that site?

We haven’t – we are in the process of discussing this possibility with them. Let me just remind you that they have built 3 million square feet on 64 acres, they own 221 acres, so there is room to expand but that is a discussion that we will have with them over the next quarter and as we decide collectively to expand, we will let you know, but right now, we haven’t met with them to do that yet. They were very busy getting up and running, and the phase, the first phase has gone very well for them. They are selling out the plant obviously and so I would say in the next quarter or two we will be making decisions as to where to go next.

Okay thank you that’s all I got.

Yes, thanks Chris.

Thank you. (Operator Instructions). Our next question comes from the line of Warrick Jervis from Trailhead Asset Management, your question please.

Good Morning

Good Morning

Good morning, I wonder if you could give us little more color on what’s going on with the personal care licensing and how those products are doing?

You recall we have this agreement with their Air Products, we get 40% of the direct gross profits. We have been working with them for several years, there is about 50 products, I believe that use our materials. We need Air Products to greatly, greatly expand the volume and the customer base. They have been adding people to do that, they recently made an acquisition in Germany and the small one in the cosmetic field that hopefully might give better traction in Europe. There is a major program that we have worked on with them, that is in testing, it was launched, it was announced in Milan last year. It generally takes one to two years when you have a new product platform to get that through the evaluation process of customers, they have to take it to toxicology, they have to get it spaced[ph] etcetera, etcetera, they have to test it. So, we are really in that mode where we are waiting for this new product platform to really get some traction and get some results, but that is probably, I am guessing that is about four quarter away before that new platform is launched. And so, it is real slow as you go kind of a deal with Air Products. We are curious to see how this acquisition of this company in Europe might affect us, because we have been warning to put more feet on the grounds, have more formulators, have more sales people. May be this is the catalyst that will make some changes, but so far it has been pretty slow going and that is all I can tell you at this point.

Thank you, have you got any update for us on the pharmaceutical side?

Our interest in the pharmaceutical side is largely related to what we might be able to do with some of our materials at Lifecore Biomedical, this is called hyaluronic acid and we have, we are investigating one or two program there with that. We have met with medical advisers recently and they have got some positive feedback and results. All I can tell you is, anything that is on the pharmaceutical side is a long process, don’t count on anything in the short term here, but we think that these materials called hyaluronic acid which we use for ophthalmology and orthopedic and things like that, we think that those materials have bigger and broader uses in the human body. Why are they there? Why do find them in epithelial cells? Why do you find them in various parts of the body? Why do they seem to have something to do with the immune system? So, that is where our corporate R&D team is starting to focus, to better understand that and to collaborate with university and research institutions that are leaders in the field of studying these materials. So, we are very deeply interested in it. It is a longer term program for us. Our current core businesses can drive growth for the next few years, but we want to invest in some of these longer term opportunities as well. So, it is still early.

Okay, what has happened with time release on pharmaceuticals nothing?

Nothing.

Okay, thank you.

Thank you.

Thank you, our next question comes from the line of Morris Ajzenman from Griffin Securities, your question please.

Good morning, Morris.

Hi guys, good morning. Just a follow up on the earlier question on the avocado, I clearly took the answer to be understanding that this is just operational difficulty success[ph] here with Chiquita being a new player in this market. But then in the Q&A at back of the release here, you say something on and on about struggling operationally with the adoption of the product by customers and consumers. Customers I presume to be Chiquita and consumers, I want to make sure that –.

Customers would be buyers at grocery stores.

Okay.

Partner is Chiquita, customer and buyers, consumers are the people who buy from the retail stores.

All right, so but I had thought that the issue was again Chiquita getting hands around this being a new player. Are there any push backs by the super markets and the actual buyers of the avocado based on the new packaging, the new increased sell flag that they are resisting, is there anything you are finding at this point?

The issues is as we see it is that, you get to buy the product in one format which is -- it comes in a large 10 pound package, the avocadoes are taken out of our package, they are put on display and so you Morris would have difficulty knowing that it came in our technology and as a result, if you do it that way, there can be struggles in terms of how do you command a premium price because you are trying to represent that it came in technology and it is ripe and ready to eat, but it is difficult to see that as consumer. So that is what we meant in that press release is that, there having to work out some of those issues and we don’t know if they are going to work out those issues. So, it is kind of a big question mark and all we can tell our shareholders is that they are struggling operationally.

I understand, thank you. And on the positive side you talk about Chiquita making a sizeable quantity purchase of BreatheWay membranes for containers in this quarter. Can you talk about that a little more? And then, you go on to note that, so we know early commercial testing phase, but what is it in this quarter that help us at one time in nature, can you just put a little more color on that?

Hard to know, but we are doing shipping trials globally, these containers are travelling all over the world, they are refrigerated containers, they are (inaudible) in terms of what they do today in terms of shipping with CO2 and Oxygen bottles and stuff like that, instead we can put one very sizable, very large membrane or several in the container, change the atmosphere so that it slows down the respiration rate of the produce allowing the shipments to deliver produce globally in good shape and Chiquita owns a company called TransFresh which is a market leader in helping produce, people ship products around the world and we are really stepping up this activity and it is something we are excited about and it could be material down the road for us. Right now, it is just you have to do all the testing and ship things from South Africa to Europe and from South America to the US etcetera, etcetera. So we are in that phase and it is going well. It works.

Thank you.

Thank you.

Thank you, our next question comes from the line of Rick Fetterman from Fetterman Investments, your question please.

Good morning Rick

Hi Rick.

Good morning everyone, could you – it sounds like with Lifecore that there was may be an unusually large amount of the lower margin, the syringes shipped this quarter, is that something that is a trend or just happened to be unique to this quarter? So, I think normally you said, you have said the first and fourth quarters were the lower margin product and second and third were the higher margin product?

Yeah, it is just, it is about our timing for this year. We expect the fourth quarter of this year to be better than the fourth quarter of last year and consequently the third quarter was slightly less than the third quarter a year ago from a bottom line stand point. We are playing to make that up and then some in the fourth quarter, goes on a year’s day basis they are down about 400 and something thousand, we expect them to be up for this year, with all said and done. It with Lifecore, you know on a quarter-to-quarter basis it is really difficult to estimate what those quarters are going to be because it is all based on customer orders, PO’s that we fill and so we are dependent on those orders. On an annual basis Lifecore is very (inaudible) for a decade and we expect to be slightly under revenues from our original plan, but over in pre tax income.

Okay, regarding the operating margin of the company, is it likely to be in the 5% range, pending another or an acquisition that has considerably higher margin such as Lifecore?

You mean this year or you talking about long term?

This year and looking into next year, it has been around 5% for last year and half or so. I mean –

Are you including our investment in – are you just working at operating margin, you are not including the investment in Windset?

That’s correct. Sorry I wasn’t clear.

Well for this year, I would say it is going to be in that 5% range, going forward we are just in the process of putting our plans together, obviously one of our goals is to move to higher margin product. We are hoping that we will improve that going forward. We could report on that a lot better when we get to the fourth quarter and we are done with our FY13 plan and our revised five year plan.

So, I mean, it can be higher without acquisitions.

Yes. I mean I kind of referenced that in the, when I said that Lifecore is at 50% capacity utilization in certain parts of that facilities and so if we can add, if we get more volume to that facility that’s very high incremental margin.

My last question is just balance sheet, can you remind me what the growth in accrued liabilities of about $9 million this fiscal year has been?

Yes, we acquired Lifecore part of the acquisition was an earn out, that earn out was based on financial results for calendar 2011. We had from that date, I won’t go into the details, let us just say that, they earned their earn out and we will paying it either late April or early May and that’s what it is.

All right, thank you very much, that’s all I have got.

Yes. Thanks Rick.

Let me ask one more quick and is there anything new on the clearly fresh bags in terms of timing, when the test will be complete?

No, nothing new to report.

All right, thanks a lot.

Thanks Rick.

Thank you, our next question is a follow up question from Warrick Jervis from Trailhead Asset Management

Yeah Morris.

Yes, I wonder if you could follow up, do you have any point of sale displaced for those bags would be usable at a place like whole foods?

Warrick are you telling about the clearly fresh bags?

Yes.

We do and but they are not in the whole foods. Part of our challenge here with clearly fresh is that produce buyers are not used to putting that packaging on display in their produce aisles so they say go over to the centre aisle where baggies and zip locks and things like that are sold, that is not the market we know, we don’t call on those buyers. We are encouraging so to speak, enticing, encouraging produce buyers to put these things on display, their little stands, put them near banana display etcetera, etcetera. So, we are not only testing the product but we are learning how to sell this product, which has not been a trivial because of this little centre aisle versus produce aisle dilemma. We are also working it through the internet. So, yes we do have those displays.

Can you give us any idea, what stores they would be in?

It is a group, it is stores down in the South West and Morris, I would have to get back to you with some of the details of that, but it is a limited trial down in the Texas area.

Terrific, we look forward to seeing those.

Thank you.

Thank you. (Operator Instructions). It does occur that this does conclude the question-and-answer of today’s program.

In summary, we want to thank everybody for being with us on the call today. I really appreciate your being with us and we look forward to keeping you apprised of our plans and progress. Many thanks.

Thank you ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.