##### Table of Contents



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 ended December 31, 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 Number 0-4136
 Lifecore Biomedical, Inc.
  Minnesota
    
    41-0948334(State or other jurisdiction of
incorporation or organization)
    
    (IRS Employer Identification No.)
 3515 Lyman BoulevardChaska, Minnesota
    
    55318(Address of principal executive
offices)
    
    (Zip Code)
 952-368-4300
 Not Applicable
  þ o
  o þ o
  o þ




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##### 



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
 FORM 10-Q
 TABLE OF CONTENTS
 PagePart I.
    
    Financial InformationItem 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets at
December 31, 2005 and June 30, 2005
    
    
    2Condensed Consolidated Statements of Operations for Three
Months and Six Months Ended December 31, 2005 and 2004
    
    
    3Condensed Consolidated Statements of Cash Flows for
Six Months Ended December 31, 2005 and 2004
    
    
    4Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    5-11Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    12-20Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4.
    
    Controls and Procedures
    
    
    21Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    22Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 6.
    
    Exhibits
    
    
    24Signatures
    
    
    25Exhibit Index
    
    
    261996 Stock Option PlanCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  1




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
 
 PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS (continued)
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  December 31,
    
    
    June 30,2005
    
    
    2005ASSETSCurrent AssetsCash and cash equivalents
    
    $
    18,323,000
    
    
    $
    18,508,000Accounts receivable, less allowances
    
    
    11,033,000
    
    
    
    10,171,000Inventories
    
    
    11,671,000
    
    
    
    9,456,000Deferred income taxes
    
    
    5,236,000
    
    
    
    4,190,000Prepaid expenses
    
    
    970,000
    
    
    
    780,000Total current assets
    
    
    47,233,000
    
    
    
    43,105,000Property, plant and equipmentLand, building and equipment
    
    
    48,356,000
    
    
    
    47,400,000Less accumulated depreciation
    
    
    (25,100,000
    )
    
    
    (24,211,000
    )23,256,000
    
    
    
    23,189,000Other AssetsIntangibles, net
    
    
    5,265,000
    
    
    
    4,799,000Inventories
    
    
    2,186,000
    
    
    
    2,409,000Deferred income taxes
    
    
    3,766,000
    
    
    
    6,062,000Other
    
    
    357,000
    
    
    
    302,00011,574,000
    
    
    
    13,572,000$
    82,063,000
    
    
    $
    79,866,000LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCurrent maturities of long-term obligations
    
    $
    285,000
    
    
    $
    285,000Accounts payable
    
    
    2,395,000
    
    
    
    3,418,000Accrued compensation
    
    
    1,592,000
    
    
    
    1,920,000Accrued expenses
    
    
    1,141,000
    
    
    
    1,293,000Total current liabilities
    
    
    5,413,000
    
    
    
    6,916,000Long-term obligations
    
    
    4,949,000
    
    
    
    5,089,000Shareholders equity
    
    
    71,701,000
    
    
    
    67,861,000$
    82,063,000
    
    
    $
    79,866,000
  2




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three months ended December 31,
    
    
    Six months ended December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    15,209,000
    
    
    $
    14,218,000
    
    
    $
    28,634,000
    
    
    $
    26,523,000Cost of goods sold
    
    
    6,108,000
    
    
    
    5,455,000
    
    
    
    11,171,000
    
    
    
    10,551,000Gross profit
    
    
    9,101,000
    
    
    
    8,763,000
    
    
    
    17,463,000
    
    
    
    15,972,000Operating expensesResearch and development
    
    
    970,000
    
    
    
    1,171,000
    
    
    
    1,969,000
    
    
    
    2,019,000Marketing and sales
    
    
    4,020,000
    
    
    
    3,837,000
    
    
    
    8,029,000
    
    
    
    7,052,000General and administrative
    
    
    1,923,000
    
    
    
    1,579,000
    
    
    
    3,710,000
    
    
    
    3,046,0006,913,000
    
    
    
    6,587,000
    
    
    
    13,708,000
    
    
    
    12,117,000Operating income
    
    
    2,188,000
    
    
    
    2,176,000
    
    
    
    3,755,000
    
    
    
    3,855,000Other income (expense)Interest income
    
    
    157,000
    
    
    
    32,000
    
    
    
    292,000
    
    
    
    42,000Interest expense
    
    
    (60,000
    )
    
    
    (55,000
    )
    
    
    (116,000
    )
    
    
    (168,000
    )Bond retirement expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (290,000
    )Currency transaction gains (losses)
    
    
    (49,000
    )
    
    
    113,000
    
    
    
    (73,000
    )
    
    
    198,000Other
    
    
    (5,000
    )
    
    
    250,000
    
    
    
    (19,000
    )
    
    
    252,00043,000
    
    
    
    340,000
    
    
    
    84,000
    
    
    
    34,000Income before income tax expense
    
    
    2,231,000
    
    
    
    2,516,000
    
    
    
    3,839,000
    
    
    
    3,889,000Income tax expense
    
    
    840,000
    
    
    
    136,000
    
    
    
    1,403,000
    
    
    
    230,000Net income
    
    $
    1,391,000
    
    
    $
    2,380,000
    
    
    $
    2,436,000
    
    
    $
    3,659,000Net income per shareBasic
    
    $
    0.11
    
    
    $
    0.18
    
    
    $
    0.19
    
    
    $
    0.28Diluted
    
    $
    0.10
    
    
    $
    0.18
    
    
    $
    0.18
    
    
    $
    0.28Weighted average shares outstandingBasic
    
    
    13,163,429
    
    
    
    12,945,903
    
    
    
    13,111,498
    
    
    
    12,939,254Diluted
    
    
    13,685,687
    
    
    
    13,270,519
    
    
    
    13,571,202
    
    
    
    13,115,195
  3




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six months ended December 31,2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    2,436,000
    
    
    $
    3,659,000Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    942,000
    
    
    
    1,038,000Allowance for doubtful accounts
    
    
    36,000
    
    
    
    279,000Deferred income taxes
    
    
    1,250,000
    
    
    
    Stock compensation
    
    
    483,000
    
    
    
    21,000Accumulated currency translation adjustment
    
    
    37,000
    
    
    
    243,000Changes in operating assets and liabilities, net of effects of acquisition:Accounts receivable
    
    
    (1,181,000
    )
    
    
    (676,000
    )Inventories
    
    
    (1,889,000
    )
    
    
    17,000Prepaid expenses
    
    
    (189,000
    )
    
    
    (308,000
    )Accounts payable
    
    
    (1,035,000
    )
    
    
    (817,000
    )Accrued liabilities
    
    
    (492,000
    )
    
    
    (19,000
    )Net cash provided by operating activities
    
    
    398,000
    
    
    
    3,437,000Cash flows from investing activities:Purchases of property, plant and equipment
    
    
    (924,000
    )
    
    
    (792,000
    )Acquisition, net of cash acquired
    
    
    (341,000
    )
    
    
    Refunds of security deposits
    
    
    
    
    
    
    830,000Increase in other assets
    
    
    (62,000
    )
    
    
    (102,000
    )Net cash used in investing activities
    
    
    (1,327,000
    )
    
    
    (64,000
    )Cash flows from financing activities:Payments on long-term obligations
    
    
    (140,000
    )
    
    
    (117,000
    )Issuance of industrial revenue bonds
    
    
    
    
    
    
    5,630,000Retirement of industrial revenue bonds
    
    
    
    
    
    
    (5,986,000
    )Proceeds from stock options exercised
    
    
    884,000
    
    
    
    104,000Net cash provided by (used in) financing activities
    
    
    744,000
    
    
    
    (369,000
    )Net increase (decrease) in cash and cash equivalents
    
    
    (185,000
    )
    
    
    3,004,000Cash and cash equivalents at beginning of period
    
    
    18,508,000
    
    
    
    8,553,000Cash and cash equivalents at end of period
    
    $
    18,323,000
    
    
    $
    11,557,000Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    116,000
    
    
    $
    210,000Taxes
    
    
    154,000
    
    
    
    262,000
  4




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED
         December 31,
    
    
    June 30,2005
    
    
    2005Raw materials
    
    $
    4,412,000
    
    
    $
    3,102,000Work-in-process
    
    
    1,036,000
    
    
    
    426,000Finished goods-current
    
    
    6,223,000
    
    
    
    5,928,00011,671,000
    
    
    
    9,456,000Finished goods-long term
    
    
    2,186,000
    
    
    
    2,409,000$
    13,857,000
    
    
    $
    11,865,000
 5




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED (continued)
       December 31,
    
    
    June 30,2005
    
    
    2005Goodwill
    
    $
    4,866,000
    
    
    $
    4,352,000Patents
    
    
    387,000
    
    
    
    387,000Distribution rights and licenses
    
    
    350,000
    
    
    
    350,000Accumulated amortization
    
    
    (338,000
    )
    
    
    (290,000
    )$
    5,265,000
    
    
    $
    4,799,000
      6




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED (continued)
    Three months ended
    
    
    Six months endedDecember 31, 2004
    
    
    December 31, 2004Reported net income
    
    $
    2,380,000
    
    
    $
    3,659,000Stock-based employee compensation
determined under the fair value
based method, net of related tax
effects
    
    
    (208,000
    )
    
    
    (415,000
    )Pro forma net income
    
    $
    2,172,000
    
    
    $
    3,244,000Income per common equivalent share:Basic  as reported
    
    $
    0.18
    
    
    $
    0.28Diluted  as reported
    
    $
    0.18
    
    
    $
    0.28Basic  pro forma
    
    $
    0.17
    
    
    $
    0.25Diluted  pro forma
    
    $
    0.16
    
    
    $
    0.25
  Three Months Ended
    
    
    Three Months EndedDecember 31,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Risk-free interest rate
    
    
    4.33
    %
    
    
    3.9
    %
    
    
    4.27
    %
    
    
    3.9
    %Expected volatility
    
    
    60.8
    %
    
    
    69.6
    %
    
    
    69.5
    %
    
    
    69.6
    %Expected life (in
years)
    
    
    5.7
    
    
    
    5.4
    
    
    
    5.6
    
    
    
    5.4Dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 7




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED (continued)
    Number of
    
    
    Weighted AverageShares
    
    
    Exercise PriceOutstanding at June 30, 2005
    
    
    1,720,706
    
    
    $
    10.19Granted
    
    
    41,300
    
    
    
    10.86Exercised
    
    
    (101,100
    )
    
    
    7.00Canceled
    
    
    (12,750
    )
    
    
    9.35Outstanding at September 30, 2005
    
    
    1,648,156
    
    
    
    10.41Granted
    
    
    56,000
    
    
    
    14.06Exercised
    
    
    (18,233
    )
    
    
    9.71Canceled
    
    
    (11,400
    )
    
    
    8.28Outstanding at December 31, 2005
    
    
    1,674,523
    
    
    $
    10.52
 Number of
    
    
    Weighted AverageShares
    
    
    Exercise PriceOptions exercisable at December 31, 2005
    
    
    1,362,723
    
    
    $
    10.72
  Options OutstandingRange of
    
    
    Number
    
    
    Weighted Average Remaining
    
    
    Weighted AverageExercise Price
    
    
    Outstanding
    
    
    Contractual Life
    
    
    Exercise Price$3.55
    -
    
    5.82
    
    
        
    79,000
    

    6.56 years
    
    $
    5.215.83
    -
    
    8.75
    
    
        
    701,855
    
    6.55 years
    
    
    7.288.76
    -
    
    13.12
    
    
        
    402,125

    
    6.57 years
    
    
    10.1513.13
    -
    
    19.68
        
    
    
    460,543
    
    2.71 years
    
    
    15.9419.69
    -
    
    23.38
    
    
        
    31,000

    
    2.01 years
    
    
    21.551,674,523
    

    
    
    
    
    $
    10.52
 8




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED (continued)
   Options
ExercisableRange of
    
    Number
    
    Weighted AverageExercise Price
    
    Exercisable
    
    Exercise Price$
    3.55
    
    
    
    
    
    
    
    5.82
    
    
    
    56,625
    

    $
    
    5.345.83
    
    
    
    
    
    
    
    8.75
    
    
    
    598,480
    
    
    7.268.76
    
    
    
    
    
    
    
    13.12
    
    
    
    259,575
    
    
    10.0613.13
    
    
    
    
    
    
    
    19.68
    
    
    
    422,043
    
    
    16.0919.69
    
    
    
    
    
    
    
    23.38
    
    
    
    26,000
    
    
    21.581,362,723
    

    $
        10.72
 Restricted Stock Awards
       9




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED (continued)
       Three months ended December 31,
    
    
    Six months ended December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Net salesHyaluronan products
    
    $
    4,631,000
    
    
    $
    4,527,000
    
    
    $
    9,292,000
    
    
    $
    9,171,000Oral restorative products
    
    
    10,578,000
    
    
    
    9,691,000
    
    
    
    19,342,000
    
    
    
    17,352,000$
    15,209,000
    
    
    $
    14,218,000
    
    
    $
    28,634,000
    
    
    $
    26,523,000Income from operationsHyaluronan products
    
    $
    896,000
    
    
    $
    853,000
    
    
    $
    2,012,000
    
    
    $
    2,172,000Oral restorative products
    
    
    1,292,000
    
    
    
    1,323,000
    
    
    
    1,743,000
    
    
    
    1,683,000$
    2,188,000
    
    
    $
    2,176,000
    
    
    $
    3,755,000
    
    
    $
    3,855,000
    10




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  UNAUDITED (continued)
        11




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##### Table of Contents



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
  Revenue Recognition:
  Allowance for Uncollectible Accounts Receivable:
  Inventories:
  Goodwill, Intangibles and Other Long-Lived Assets:
    Accounting for Income Taxes:
  12




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   Overview
    13




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   Ô
  Acquisition of Bardo-Biotech SAS
   14




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##### Table of Contents



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
  Hyaluronan
    
    
    Oral RestorativeDivision
    
    
    Division
    
    
    Consolidated2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    4,631,000
    
    
    $
    4,527,000
    
    
    $
    10,578,000
    
    
    $
    9,691,000
    
    
    $
    15,209,000
    
    
    $
    14,218,000Cost of goods sold
    
    
    2,344,000
    
    
    
    2,108,000
    
    
    
    3,764,000
    
    
    
    3,347,000
    
    
    
    6,108,000
    
    
    
    5,455,000Gross profit
    
    
    2,287,000
    
    
    
    2,419,000
    
    
    
    6,814,000
    
    
    
    6,344,000
    
    
    
    9,101,000
    
    
    
    8,763,000Operating expensesResearch and
development
    
    
    580,000
    
    
    
    895,000
    
    
    
    390,000
    
    
    
    276,000
    
    
    
    970,000
    
    
    
    1,171,000Marketing and sales
    
    
    95,000
    
    
    
    150,000
    
    
    
    3,925,000
    
    
    
    3,687,000
    
    
    
    4,020,000
    
    
    
    3,837,000General and
administrative
    
    
    716,000
    
    
    
    521,000
    
    
    
    1,207,000
    
    
    
    1,058,000
    
    
    
    1,923,000
    
    
    
    1,579,0001,391,000
    
    
    
    1,566,000
    
    
    
    5,522,000
    
    
    
    5,021,000
    
    
    
    6,913,000
    
    
    
    6,587,000Operating income
    
    $
    896,000
    
    
    $
    853,000
    
    
    $
    1,292,000
    
    
    $
    1,323,000
    
    
    $
    2,188,000
    
    
    $
    2,176,000
 Net Sales
   Gross profit
  15




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##### Table of Contents



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
 Marketing and sales
 General and administrative
 Other income (expense)
 Provision for income taxes.
  16




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
  Hyaluronan
    
    
    Oral RestorativeDivision
    
    
    Division
    
    
    Consolidated2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    9,292,000
    
    
    $
    9,171,000
    
    
    $
    19,342,000
    
    
    $
    17,352,000
    
    
    $
    28,634,000
    
    
    $
    26,523,000Cost of goods sold
    
    
    4,396,000
    
    
    
    4,201,000
    
    
    
    6,775,000
    
    
    
    6,350,000
    
    
    
    11,171,000
    
    
    
    10,551,000Gross profit
    
    
    4,896,000
    
    
    
    4,970,000
    
    
    
    12,567,000
    
    
    
    11,002,000
    
    
    
    17,463,000
    
    
    
    15,972,000Operating expensesResearch and
development
    
    
    1,187,000
    
    
    
    1,499,000
    
    
    
    782,000
    
    
    
    520,000
    
    
    
    1,969,000
    
    
    
    2,019,000Marketing and sales
    
    
    271,000
    
    
    
    242,000
    
    
    
    7,758,000
    
    
    
    6,810,000
    
    
    
    8,029,000
    
    
    
    7,052,000General and
administrative
    
    
    1,426,000
    
    
    
    1,057,000
    
    
    
    2,284,000
    
    
    
    1,989,000
    
    
    
    3,710,000
    
    
    
    3,046,0002,884,000
    
    
    
    2,798,000
    
    
    
    10,824,000
    
    
    
    9,319,000
    
    
    
    13,708,000
    
    
    
    12,117,000Operating income
    
    $
    2,012,000
    
    
    $
    2,172,000
    
    
    $
    1,743,000
    
    
    $
    1,683,000
    
    
    $
    3,755,000
    
    
    $
    3,855,000
 Net Sales
   Gross profit
  Research and development
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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
 Marketing and sales
 General and administrative
 Other income (expense)
 Provision for income taxes.
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##### Table of Contents



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
 
      Seasonality
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##### Table of Contents



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
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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 ITEM 4. CONTROLS AND PROCEDURES
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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
 
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   Renee Contratto v. Ethicon, Inc., d/b/a Gynecare
Worldwide, Johnson & Johnson, Lifecore Biomedical, Inc. and
Vital Pharma, Inc.
     22




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART II  OTHER INFORMATION
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    23




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##### Table of Contents



LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART II  OTHER INFORMATION
 
 ITEM 6. EXHIBITS
 3.1
    
    Amended and Restated Articles of Incorporation, as adopted on January 18,
2006 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed
on January 24, 2006)
 3.2
    
    Amended Bylaws, as adopted on January 18, 2006 (incorporated by reference to
Exhibit 3.2 to the Current Report on Form 8-K filed on January 24, 2006)
 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)
 10.1
    
    1996 Stock Option Plan, as amended to date
 10.2
    
    Description of the Companys program permitting directors to receive monthly
retainer fees in the form of the Companys common stock (incorporated by reference to
the program description set forth under Item 1.01 in the Current Report on Form 8-K
filed on December 13, 2005)
 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
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##### Table of Contents



SIGNATURES
  LIFECORE BIOMEDICAL, INC.By:Dated: February 9, 2006
    
    /s/ Dennis J. AllinghamDennis J. AllinghamPresident, Chief Executive Officer, Secretary and Director(duly authorized officer)Dated: February 9, 2006
    
    /s/ David M. NoelDavid M. NoelVice President of Finance and Chief Financial Officer(principal financial and accounting officer)
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##### Table of Contents



Exhibit Index
 3.1
    
    Amended and Restated Articles of Incorporation, as adopted on January 18,
2006 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed
on January 24, 2006)
 3.2
    
    Amended Bylaws, as adopted on January 18, 2006 (incorporated by reference to
Exhibit 3.2 to the Current Report on Form 8-K filed on January 24, 2006)
 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)
 10.1
    
    1996 Stock Option Plan, as amended to date
 10.2
    
    Description of the Companys program permitting directors to receive monthly
retainer fees in the form of the Companys common stock (incorporated by reference to
the program description set forth under Item 1.01 in the Current Report on Form 8-K
filed on December 13, 2005)
 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
 26