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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

For the quarterly period ended March 31, 2002

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

For the transition period from  to

Commission File NumberO-4136

Lifecore Biomedical, Inc.

|                                         |  |                                  
|---------------------------------------- |  | ---------------------------------
|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 offices) |  | (Zip Code)                       

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

Indicate by checkmark 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.

Yes X   No

The number of shares outstanding of the registrants Common Stock, $.01 par
value, as of April 30, 2002 was 12,843,187 shares.

1



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TABLE OF CONTENTS



|                               |                                                                                               |                                                                                                                |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                               |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31, 2002 AND JUNE 30, 2001                                        
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2002 AND 2001
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR NINE MONTHS ENDED MARCH 31, 2002 AND 2001                 
|                               |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                          
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II  OTHER INFORMATION   
|                               | ITEM 6.                                                                                      
|                               |                                                                                               | A. EXHIBIT INDEX                                                                                              
|                               |                                                                                               | B. REPORTS ON FORM 8-K                                                                                        
|SIGNATURES                    



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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

|           |  |                                                                                                                |  |      
|---------- |  | -------------------------------------------------------------------------------------------------------------- |  | -----
|           |  |                                                                                                                |  | Page 
|Part I     |  | Financial Information                                                                                          |  |      
|           |  |                                                                                                                |  |      
|Item 1.    |  | Financial Statements                                                                                           |  |      
|           |  |                                                                                                                |  |      
|           |  | Condensed Consolidated Balance Sheets at
March 31, 2002 and June 30, 2001                                      |  | 3    
|           |  |                                                                                                                |  |      
|           |  | Condensed Consolidated Statements of Operations for Three
Months and Nine Months Ended March 31, 2002 and 2001 |  | 4    
|           |  |                                                                                                                |  |      
|           |  | Condensed Consolidated Statements of Cash Flows for
Nine Months Ended March 31, 2002 and 2001                  |  | 5    
|           |  |                                                                                                                |  |      
|           |  | Notes to Condensed Consolidated Financial Statements                                                           |  | 6-10 
|           |  |                                                                                                                |  |      
|Item 2.    |  | Managements Discussion and Analysis of Results of
Operations and Financial Condition                          |  | 11-15
|           |  |                                                                                                                |  |      
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                     |  | 16   
|           |  |                                                                                                                |  |      
|Part II    |  | Other Information                                                                                              |  |      
|           |  |                                                                                                                |  |      
|Item 6.    |  | a. Exhibit Index                                                                                               |  | 17   
|           |  | b. Reports on Form 8-K                                                                                         |  | 17   
|           |  |                                                                                                                |  |      
|Signatures |  |                                                                                                                |  | 18   

2



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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

|                                     |                                             |   |            |             |   |          |            |             |  
|------------------------------------ | ------------------------------------------- | - | ---------- | ----------- | - | -------- | ---------- | ----------- | -
|                                     |                                             |   | March 31,  |             |   | June 30, |           
|                                     |                                             |   | 2002       |             |   | 2001     |           
|                                     |                                             |   |            |             |   |          |           
|ASSETS                               |                                             |   |            |             |   |          |            |            
|Current assets                       |                                             |   |            |             |   |          |            |            
|                                     | Cash and cash equivalents                   |   | $          | 478,000     |   |          | $          | 2,310,000   |  
|                                     | Accounts receivable                         |   |            | 7,133,000   |   |          |            | 6,923,000   |  
|                                     | Inventories                                 |   |            | 12,458,000  |   |          |            | 8,693,000   |  
|                                     | Prepaid expenses                            |   |            | 931,000     |   |          |            | 675,000     |  
|                                     |                                             |   |            |             |   |         
|                                     |                                             |   | 21,000,000 |             |   |          | 18,601,000 |            
|Property, plant and equipment        |                                             |   |            |             |   |          |            |            
|                                     | Land, building and equipment                |   |            | 43,670,000  |   |          |            | 43,027,000  |  
|                                     | Less accumulated depreciation               |   |            | (16,611,000 | ) |          |            | (14,590,000 | )
|                                     |                                             |   |            |             |   |         
|                                     |                                             |   | 27,059,000 |             |   |          | 28,437,000 |            
|Other assets                         |                                             |   |            |             |   |          |            |            
|                                     | Goodwill                                    |   |            | 4,432,000   |   |          |            | 4,213,000   |  
|                                     | Acquired intangible assets                  |   |            | 499,000     |   |          |            | 614,000     |  
|                                     | Security deposits                           |   |            | 834,000     |   |          |            | 854,000     |  
|                                     | Inventories                                 |   |            | 3,687,000   |   |          |            | 9,368,000   |  
|                                     | Other                                       |   |            | 1,102,000   |   |          |            | 609,000     |  
|                                     |                                             |   |            |             |   |         
|                                     |                                             |   | 10,554,000 |             |   |          | 15,658,000 |            
|                                     |                                             |   |            |             |   |         
|                                     |                                             | $ | 58,613,000 |             |   | $        | 62,696,000 |            
|                                     |                                             |   |            |             |   |         
|LIABILITIES AND SHAREHOLDERS EQUITY |                                             |   |            |             |   |          |            |            
|Current liabilities                  |                                             |   |            |             |   |          |            |            
|                                     | Current maturities of long-term obligations |   | $          | 124,000     |   |          | $          | 227,000     |  
|                                     | Accounts payable                            |   |            | 2,504,000   |   |          |            | 3,057,000   |  
|                                     | Accrued compensation                        |   |            | 1,101,000   |   |          |            | 796,000     |  
|                                     | Accrued expenses                            |   |            | 349,000     |   |          |            | 311,000     |  
|                                     |                                             |   |            |             |   |         
|                                     |                                             |   | 4,078,000  |             |   |          | 4,391,000  |            
|                                     |                                            
|Long-term obligations                |                                             |   | 6,159,000  |             |   |          | 6,249,000  |            
|Shareholders equity                 |                                             |   | 48,376,000 |             |   |          | 52,056,000 |            
|                                     |                                             |   |            |             |   |         
|                                     |                                             | $ | 58,613,000 |             |   | $        | 62,696,000 |            
|                                     |                                             |   |            |             |   |         

See accompanying notes to condensed consolidated financial statements.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (continued)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

|                       |                            |   |                              |            |   |                             |           |            |      |   |            |            |   |   |            |            |  
|---------------------- | -------------------------- | - | ---------------------------- | ---------- | - | --------------------------- | --------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                       |                            |   | Three months ended March 31, |            |   | Nine months ended March 31, |          
|                       |                            |   |                              |            |   |                             |          
|                       |                            |   | 2002                         |            |   | 2001                        |           |            | 2002 |   |            | 2001       |  
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |            |  
|Net sales              |                            | $ | 10,254,000                   |            |   | $                           | 8,627,000 |            |      | $ | 27,072,000 |            |   | $ | 25,240,000 |           
|Cost of goods sold     |                            |   | 5,653,000                    |            |   |                             | 4,432,000 |            |      |   | 15,911,000 |            |   |   | 13,308,000 |           
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|Gross profit           |                            |   | 4,601,000                    |            |   |                             | 4,195,000 |            |      |   | 11,161,000 |            |   |   | 11,932,000 |           
|                       |                           
|Operating expenses     |                            |   |                              |            |   |                             |           |            |      |   |            |            |   |   |            |           
|                       | Research and development   |   |                              | 1,057,000  |   |                             |           | 1,211,000  |      |   |            | 3,820,000  |   |   |            | 3,105,000  |  
|                       | Marketing and sales        |   |                              | 2,778,000  |   |                             |           | 2,327,000  |      |   |            | 7,913,000  |   |   |            | 6,689,000  |  
|                       | General and administrative |   |                              | 1,217,000  |   |                             |           | 1,129,000  |      |   |            | 3,566,000  |   |   |            | 3,375,000  |  
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|                       |                            |   | 5,052,000                    |            |   |                             | 4,667,000 |            |      |   | 15,299,000 |            |   |   | 13,169,000 |           
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|Operating loss         |                            |   | (451,000                     | )          |   |                             | (472,000  | )          |      |   | (4,138,000 | )          |   |   | (1,237,000 | )         
|                       |                           
|Other income (expense) |                            |   |                              |            |   |                             |           |            |      |   |            |            |   |   |            |           
|                       | Interest income            |   |                              | (26,000    | ) |                             |           | 49,000     |      |   |            | 52,000     |   |   |            | 177,000    |  
|                       | Interest expense           |   |                              | (178,000   | ) |                             |           | (178,000   | )    |   |            | (571,000   | ) |   |            | (628,000   | )
|                       | Other                      |   |                              | (2,000     | ) |                             |           | (20,000    | )    |   |            | (12,000    | ) |   |            | (100,000   | )
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|                       |                            |   | (206,000                     | )          |   |                             | (149,000  | )          |      |   | (531,000   | )          |   |   | (551,000   | )         
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|Net loss               |                            | $ | (657,000                     | )          |   | $                           | (621,000  | )          |      | $ | (4,669,000 | )          |   | $ | (1,788,000 | )         
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|Net loss per share     |                            |   |                              |            |   |                             |           |            |      |   |            |            |   |   |            |           
|                       | Basic                      |   | $                            | (.05       | ) |                             | $         | (.05       | )    |   | $          | (.37       | ) |   | $          | (.14       | )
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|                       | Diluted                    |   | $                            | (.05       | ) |                             | $         | (.05       | )    |   | $          | (.37       | ) |   | $          | (.14       | )
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|Weighted average       |                            |   |                              |            |   |                             |           |            |      |   |            |            |   |   |            |           
|                       | Shares outstanding         |   |                              |            |   |                             |           |            |      |   |            |            |   |   |            |            |  
|                       | Basic                      |   |                              | 12,806,177 |   |                             |           | 12,626,257 |      |   |            | 12,785,059 |   |   |            | 12,622,034 |  
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           
|                       | Diluted                    |   |                              | 12,806,177 |   |                             |           | 12,626,257 |      |   |            | 12,785,059 |   |   |            | 12,622,034 |  
|                       |                            |   |                              |            |   |                             |           |            |      |   |            |           

See accompanying notes to condensed consolidated financial statements.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

|                                                                                            |  |   |            |                                            |          |                   |            |   |          |   |           |  
|------------------------------------------------------------------------------------------- |  | - | ---------- | ------------------------------------------ | -------- | ----------------- | ---------- | - | -------- | - | --------- | -
|                                                                                            |  |   |            |                                            |          | Nine months ended |           
|                                                                                            |  |   |            |                                            |          | March 31,         |           
|                                                                                            |  |   |            |                                            |          |                   |           
|                                                                                            |  |   |            |                                            |          | 2002              |            |   | 2001     |  
|                                                                                            |  |   |            |                                            |          |                   |            |   |          |  
|Cash flows from operating activities:                                                       |  |   |            |                                            |          |                   |            |  
|Net loss                                                                                    |  | $ | (4,669,000 | )                                          |          | $                 | (1,788,000 | )
|Adjustments to reconcile net loss to net cash provided
from (used in) operating activities: |  |   |            |                                            |          |                   |            |  
|Depreciation and amortization                                                               |  |   | 2,274,000  |                                            |          |                   | 2,509,000  |  
|Allowance for doubtful accounts                                                             |  |   | 126,000    |                                            |          |                   | (13,000    | )
|Changes in operating assets and liabilities                                                 |  |   |            |                                            |          |                   |            |  
|                                                                                            |  |   |            | Accounts receivable                        | (336,000 | )                 |            |   | (827,000 | )
|                                                                                            |  |   |            | Inventories                                |          |                   | 1,916,000  |   |          |   | 2,851,000 |  
|                                                                                            |  |   |            | Prepaid expenses                           |          |                   | (257,000   | ) |          |   | (30,000   | )
|                                                                                            |  |   |            | Accounts payable                           |          |                   | (553,000   | ) |          |   | (807,000  | )
|                                                                                            |  |   |            | Accrued liabilities                        |          |                   | 343,000    |   |          |   | 157,000   |  
|                                                                                            |  |   |            | Customers deposits                        |          |                   |           |   |          |   | (302,000  | )
|                                                                                            |  |   |            |                                            |          |                  
|Net cash (used in) provided from operating activities                                       |  |   | (1,156,000 | )                                          |          |                   | 1,750,000  |  
|                                                                                            | 
|Cash flows from investing activities:                                                       |  |   |            |                                            |          |                   |            |  
|                                                                                            |  |   |            | Purchases of property, plant and equipment |          |                   | (643,000   | ) |          |   | (508,000  | )
|                                                                                            |  |   |            | Purchases of intangibles                   |          |                   | (60,000    | ) |          |   | (21,000   | )
|                                                                                            |  |   |            | Other                                      |          |                   | (223,000   | ) |          |   | 28,000    |  
|                                                                                            |  |   |            |                                            |          |                  
|Net cash used in investing activities                                                       |  |   | (926,000   | )                                          |          |                   | (501,000   | )
|                                                                                            | 
|Cash flows from financing activities:                                                       |  |   |            |                                            |          |                   |            |  
|                                                                                            |  |   |            | Payment of long-term obligations           |          |                   | (193,000   | ) |          |   | (210,000  | )
|                                                                                            |  |   |            | Proceeds from stock issuance               |          |                   | 443,000    |   |          |   | 100,000   |  
|                                                                                            |  |   |            |                                            |          |                  
|Net cash provided from (used in) financing activities                                       |  |   | 250,000    |                                            |          |                   | (110,000   | )
|                                                                                            |  |   |            |                                            |          |                  
|Net (decrease) increase in cash and cash equivalents                                        |  |   | (1,832,000 | )                                          |          |                   | 1,139,000  |  
|Cash and cash equivalents at beginning of period                                            |  |   | 2,310,000  |                                            |          |                   | 1,101,000  |  
|                                                                                            |  |   |            |                                            |          |                  
|Cash and cash equivalents at end of period                                                  |  | $ | 478,000    |                                            |          | $                 | 2,240,000  |  
|                                                                                            |  |   |            |                                            |          |                  
|Supplemental disclosure of cash flow information:                                           |  |   |            |                                            |          |                   |            |  
|                                                                                            |  |   |            | Cash paid during the period:               |          |                   |            |   |          |   |           |  
|                                                                                            |  |   |            | Interest                                   |          | $                 | 582,000    |   |          | $ | 625,000   |  

See accompanying notes to condensed consolidated financial statements.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I  FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
March 31, 2002

NOTE A  FINANCIAL INFORMATION

Lifecore Biomedical, Inc. (the Company) develops, manufactures and markets
biomaterials and medical devices for use in various surgical markets through
two divisions, the Hyaluronan Division and the Oral Restorative Division. The
Companys manufacturing facility is located in Chaska, Minnesota. The
Hyaluronan Division conducts its business through OEM and contract
manufacturing alliances in the gynecologic and ophthalmologic surgery,
veterinary, and wound management fields. The Oral Restorative Division conducts
its business through direct sales and marketing in the United States, Germany,
Italy and Sweden and through 22 distributors in 35 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
of America 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 as of March 31,
2002, and the results of operations for the three and nine month periods ended
March 31, 2002 and 2001 and cash flows for the nine month periods ended March
31, 2002 and 2001. The results of operations for the nine months ended March
31, 2002 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, 2001 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. 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 not expected to be consumed within one year are classified
as a long-term asset. Finished good inventories include hyaluronan, packaged
aseptic and oral restorative products. Inventories consist of the following:

|                 |  |             |            |  |          |   |            | 
|---------------- |  | ----------- | ---------- |  | -------- | - | ---------- | 
|                 |  | March 31,   |            |  | June 30, |  
|                 |  | 2002        |            |  | 2001     |  
|                 |  |             |            |  |          |  
|                 |  | (Unaudited) |           
|Raw materials    |  | $           | 3,480,000  |  |          | $ | 3,150,000  | 
|Work in progress |  |             | 308,000    |  |          |   | 358,000    | 
|Finished goods   |  |             | 12,357,000 |  |          |   | 14,553,000 | 
|                 |  |             |            |  |          |  
|                 |  | $           | 16,145,000 |  |          | $ | 18,061,000 | 
|                 |  |             |            |  |          |  

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

March 31, 2002

NOTE C  GOODWILL AND INTANGIBLE ASSETS

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 142, Goodwill and Other Intangible
Assets. The Company adopted the provisions of SFAS 142 as of July 1, 2001 and
accordingly, effective July 1, 2001, all of the Companys previously recognized
goodwill and intangible assets with indefinite lives are no longer amortized.
In addition:



| |  | effective July 1, 2001, goodwill and intangible assets with indefinite
lives will be tested for impairment annually and whenever there is an
impairment indicated, an impairment loss will be recognized;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | all acquired goodwill must be assigned to reporting units for purposes
of impairment testing and segment reporting.                                                                                      

The Company has completed a transitional fair value based impairment test of
goodwill as of July 1, 2001 and March 31, 2002. The fair value was estimated
using the expected present value of future cash flows. The changes in the
carrying amount of goodwill (all related to the Oral Restorative Division) for
the quarter and nine-month period ended March 31, 2002, are as follows:

|                                |  |                    |           |   |                   |   |           |  
|------------------------------- |  | ------------------ | --------- | - | ----------------- | - | --------- | -
|                                |  | Three months ended |           |   | Nine months ended |  
|                                |  | March 31,          |           |   | March 31,         |  
|                                |  | 2002               |           |   | 2002              |  
|                                |  |                    |           |   |                   |  
|Balance at beginning of period  |  | $                  | 4,472,000 |   |                   | $ | 4,213,000 |  
|Goodwill acquired during period |  |                    |          |   |                   |   | 339,000   |  
|Impairment loss                 |  |                    | (40,000   | ) |                   |   | (120,000  | )
|                                |  |                    |           |   |                   |  
|Balance at end of period        |  | $                  | 4,432,000 |   |                   | $ | 4,432,000 |  
|                                |  |                    |           |   |                   |  

The acquired goodwill during the period resulted from the acquisition of 100%
of Lifecore AB in Sweden. This acquisition is not considered material to the
financial statements as a whole and does not meet the threshold for
significant subsidiary under Regulation S-X. As a result, no historical or
proforma financial statements for the acquisition are required. The impairment
loss on previously acquired goodwill is not material to the financial
statements as a whole and, accordingly, has been included in the operating loss
for the quarter and nine-month period ended March 31, 2002.

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

March 31, 2002

NOTE C  GOODWILL AND INTANGIBLE ASSETS  continued

The following table presents a reconciliation of net loss and net loss per
share amounts, as reported in the financial statements, to those amounts
adjusted for goodwill amortization determined in accordance with the provisions
of SFAS 142.

|                                     |                       |   |                             |      |   |      |            |      |  
|------------------------------------ | --------------------- | - | --------------------------- | ---- | - | ---- | ---------- | ---- | -
|                                     |                       |   | Nine months ended March 31, |     
|                                     |                       |   |                             |     
|                                     |                       |   | 2002                        |      |   | 2001 |           
|                                     |                       |   |                             |      |   |      |           
|Reported net loss                    |                       | $ | (4,669,000                  | )    |   | $    | (1,788,000 | )   
|Add back: goodwill amortization      |                       |   |                            |      |   |      | 393,000    |     
|                                     |                       |   |                             |      |   |     
|Adjusted net loss                    |                       | $ | (4,669,000                  | )    |   | $    | (1,395,000 | )   
|                                     |                       |   |                             |      |   |     
|Basic and diluted net loss per share |                       |   |                             |      |   |      |            |     
|                                     | Reported net loss     |   | $                           | (.37 | ) |      | $          | (.14 | )
|                                     | Goodwill amortization |   |                             |     |   |      |            | .03  |  
|                                     |                       |   |                             |      |   |     
|                                     | Adjusted net loss     |   | $                           | (.37 | ) |      | $          | (.11 | )
|                                     |                       |   |                             |      |   |     

Acquired intangible assets of the Company that have been determined to have a
definite life and continue to be amortized as of March 31, 2002 are as follows:

|                            |                        |       |   |                |           |  |              |          |          |  
|--------------------------- | ---------------------- | ----- | - | -------------- | --------- |  | ------------ | -------- | -------- | -
|                            |                        |       |   | Gross Carrying |           |  | Accumulated  |         
|                            |                        |       |   | Amount         |           |  | Amortization |         
|                            |                        |       |   |                |           |  |              |         
|Amortized intangible assets |                        |       |   |                |           |  |              |         
|                            | Customer list          |       | $ | 725,000        |           |  | $            | (435,000 | )       
|                            | Patents and trademarks |       |   | 387,000        |           |  |              | (178,000 | )       
|                            |                        |       |   |                |           | 
|                            |                        | Total |   | $              | 1,112,000 |  |              | $        | (613,000 | )
|                            |                        |       |   |                |           | 

The aggregate amortization expense for the nine months ended March 31, 2002 was
$125,000. The estimated amortization expense for the years ended June 30, 2002
through 2006 is as follows:

|     |  |                |         | 
|---- |  | -------------- | ------- | 
|     |  | For the years  |        
|     |  | ended June 30, |        
|     |  |                |        
|2002 |  | $              | 167,000 | 
|2003 |  |                | 167,000 | 
|2004 |  |                | 130,000 | 
|2005 |  |                | 22,000  | 
|2006 |  |                | 22,000  | 

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 (cont.)

March 31, 2002

NOTE D  AGREEMENTS

The Company and ETHICON, INC., a Johnson & Johnson Company (ETHICON), have
entered into a Conveyance, License, Development and Supply Agreement (the
ETHICON Agreement). Under the terms of the ETHICON Agreement, ETHICON
transferred to the Company its ownership in certain technology related to
research and development previously conducted on the Companys sodium
hyaluronan material. The technology transferred to the Company includes written
technical documents related to ETHICONs research and development of a product
based upon technology for the ionic crosslinking of hyaluronan to inhibit the
formation of postsurgical adhesions. These documents include product
specifications, methods and techniques, technology, know-how and certain patent
applications. The Company assumed responsibility for continuing the development
project and conducting human clinical trials on a product based upon the ferric
hyaluronan technology called GYNECARE INTERGEL Adhesion Prevention Solution
(INTERGEL Solution). The Company has granted ETHICON exclusive worldwide
marketing rights through 2008 to the products developed by the Company within
defined fields of use.

U.S. sales of INTERGEL Solution commenced in the third quarter of fiscal 2002.
However, there can be no assurance that this product will receive market
acceptance. Failure to achieve significant sales of the product could have a
material adverse effect on future prospects for the Companys operations.

NOTE E  LINE OF CREDIT

The Company has an agreement with a bank for a $5,000,000 line of credit. The
agreement allows for advances against eligible accounts receivable and
inventories, subject to a borrowing base certificate. Interest is accrued at
the prime rate plus 1% at March 31, 2002, which was 5.75% and at the prime rate
at June 30, 2001, which was 6.75%. The agreement, as amended, has a maturity
date of December 31, 2002. At March 31, 2002 and June 30, 2001, there were no
balances outstanding under this line of credit. The terms of the agreement
require the Company to comply with various financial covenants including
minimum tangible net worth, capital expenditure limitations, liabilities to
tangible net worth ratio, minimum EBITDA and minimum working capital targets.
At March 31, 2002 and June 30, 2001, the Company was in compliance with all
covenants.

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 (cont.)

March 31, 2002

NOTE F  NET LOSS PER SHARE

The Companys basic net loss per share amounts have been computed by dividing
net loss by the weighted average number of outstanding common shares. The
Companys diluted net loss per share is computed by dividing net loss by the
weighted average number of outstanding common shares and common share
equivalents relating to stock options, when dilutive. For the three months
ended March 31, 2002 and 2001 and the nine months ended March 31, 2002 and
2001, the Company reported a net loss and as such, no common share equivalents
were included in the computation of diluted net loss per share. However, if
the Company would have reported net income in the three months ended March 31,
2002 and 2001 and the nine months ended March 31, 2002 and 2001, 351,278,
6,874, 279,865, and 29,107 common share equivalents would have been included in
the computation of diluted net income per share, respectively.

Options to purchase 1,411,168 and 1,546,918 shares of common stock with a
weighted average exercise price of $16.07 and $15.47 for the three-month and
nine-month periods ended March 31, 2002 and options to purchase 2,747,741 and
2,689,466 shares of common stock with a weighted average exercise price of
$12.60 and $12.75 for the three-month and nine-month periods ended March 31,
2001, respectively, were outstanding but were not included in the calculation
of diluted net loss 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 periods calculations.

NOTE G  SEGMENT INFORMATION

The Company operates two business segments. The Hyaluronan Division develops,
manufactures, and markets products containing hyaluronan. The Oral Restorative
Division develops, manufactures and/or markets various oral restorative
products to the area of implant dentistry. Currently, products containing
hyaluronan are sold primarily to customers pursuant to supply agreements.
Sales to Alcon, Inc. (formerly Alcon Laboratories) under such agreements were
14% and 19% of total sales in the nine months ended March 31, 2002 and 2001,
respectively. The Companys Oral Restorative Division markets products directly
to clinicians and dental laboratories in the United States, Germany, Italy and
Sweden and primarily through distributorship arrangements in other foreign
locations. The operations of the Companys subsidiaries, Lifecore Biomedical
GmbH, Lifecore Biomedical SpA, and Lifecore Biomedical AB have not been
material to the consolidated financial statements.

Segment assets and the basis of segmentation are consistent with that reported
at June 30, 2001. Segment information for sales and loss from operations are as
follows:

|                              |                           |   |                              |           |   |                             |           |           |      |   |            |            |   |   |            |            |  
|----------------------------- | ------------------------- | - | ---------------------------- | --------- | - | --------------------------- | --------- | --------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                              |                           |   | Three months ended March 31, |           |   | Nine months ended March 31, |          
|                              |                           |   |                              |           |   |                             |          
|                              |                           |   | 2002                         |           |   | 2001                        |           |           | 2002 |   |            | 2001       |  
|                              |                           |   |                              |           |   |                             |           |           |      |   |            |            |  
|Net sales                     |                           |   |                              |           |   |                             |           |           |      |   |            |            |   |   |            |           
|                              | Hyaluronan products       |   | $                            | 4,717,000 |   |                             | $         | 3,343,000 |      |   | $          | 10,270,000 |   |   | $          | 10,558,000 |  
|                              | Oral restorative products |   |                              | 5,537,000 |   |                             |           | 5,284,000 |      |   |            | 16,802,000 |   |   |            | 14,682,000 |  
|                              |                           |   |                              |           |   |                             |           |           |      |   |            |           
|                              |                           | $ | 10,254,000                   |           |   | $                           | 8,627,000 |           |      | $ | 27,072,000 |            |   | $ | 25,240,000 |           
|                              |                           |   |                              |           |   |                             |           |           |      |   |            |            |  
|Income (Loss) from operations |                           |   |                              |           |   |                             |           |           |      |   |            |            |   |   |            |           
|                              | Hyaluronan products       |   | $                            | 93,000    |   |                             | $         | (439,000  | )    |   | $          | (3,239,000 | ) |   | $          | (482,000   | )
|                              | Oral restorative products |   |                              | (544,000  | ) |                             |           | (33,000   | )    |   |            | (899,000   | ) |   |            | (755,000   | )
|                              |                           |   |                              |           |   |                             |           |           |      |   |            |           
|                              |                           | $ | (451,000                     | )         |   | $                           | (472,000  | )         |      | $ | (4,138,000 | )          |   | $ | (1,237,000 | )         
|                              |                           |   |                              |           |   |                             |           |           |      |   |            |            |  

10



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

Critical Accounting Policies

The discussion and analysis of our financial condition and results of
operations are based upon our condensed consolidated financial statements,
which have been prepared in accordance with accounting principals 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 our 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s revenues are recognized when products are
shipped to unaffiliated customers. 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 its
customers and bases the estimated allowance on these evaluations.

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

Goodwill, Intangible and Other Long-Lived
Assets:
Goodwill, intangible and
certain other long-lived assets are amortized over their useful lives. Useful
lives are based on managements estimates of the period that the assets will
generate revenue.

In July 2001, the Financial Accounting Standards Board issued SFAS 142 which
deals with, among other things, amortization of goodwill. The Company adopted
this new standard in the first quarter of fiscal 2002. SFAS 142 requires that
we no longer amortize goodwill but review for impairment on a regular basis.

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 RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (cont.)

Results of Operations

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

|                           |  |   |            |  |  |                  |           |   |              |   |           |      |  |   |           |   |  |      |            |   |  |   |           |   | 
|-------------------------- |  | - | ---------- |  |  | ---------------- | --------- | - | ------------ | - | --------- | ---- |  | - | --------- | - |  | ---- | ---------- | - |  | - | --------- | - | 
|(Unaudited)                |  |   | Hyaluronan |  |  | Oral Restorative |           |   |              |   |           |      |  |   |          
|                           |  |   | Division   |  |  | Division         |           |   | Consolidated |  
|                           |  |   |            |  |  |                  |           |   |             
|                           |  |   | 2002       |  |  | 2001             |           |   | 2002         |   |           | 2001 |  |   | 2002      |   |  | 2001 |           
|                           |  |   |            |  |  |                  |           |   |              |   |           |      |  |   |           |   |  |      |           
|Net sales                  |  | $ | 4,717,000  |  |  | $                | 3,343,000 |   |              | $ | 5,537,000 |      |  | $ | 5,284,000 |   |  | $    | 10,254,000 |   |  | $ | 8,627,000 |  
|Cost of goods sold         |  |   | 3,278,000  |  |  |                  | 2,385,000 |   |              |   | 2,375,000 |      |  |   | 2,047,000 |   |  |      | 5,653,000  |   |  |   | 4,432,000 |  
|                           |  |   |            |  |  |                  |           |   |              |   |           |      |  |   |           |   |  |     
|Gross profit               |  |   | 1,439,000  |  |  |                  | 958,000   |   |              |   | 3,162,000 |      |  |   | 3,237,000 |   |  |      | 4,601,000  |   |  |   | 4,195,000 |  
|                           | 
|Operating expenses         |  |   |            |  |  |                  |           |   |              |   |           |      |  |   |           |   |  |      |            |   |  |   |           |  
|Research and development   |  |   | 815,000    |  |  |                  | 915,000   |   |              |   | 242,000   |      |  |   | 296,000   |   |  |      | 1,057,000  |   |  |   | 1,211,000 |  
|Marketing and sales        |  |   | 54,000     |  |  |                  | 51,000    |   |              |   | 2,724,000 |      |  |   | 2,276,000 |   |  |      | 2,778,000  |   |  |   | 2,327,000 |  
|General and administrative |  |   | 477,000    |  |  |                  | 431,000   |   |              |   | 740,000   |      |  |   | 698,000   |   |  |      | 1,217,000  |   |  |   | 1,129,000 |  
|                           |  |   |            |  |  |                  |           |   |              |   |           |      |  |   |           |   |  |     
|                           |  |   | 1,346,000  |  |  |                  | 1,397,000 |   |              |   | 3,706,000 |      |  |   | 3,270,000 |   |  |      | 5,052,000  |   |  |   | 4,667,000 |  
|                           |  |   |            |  |  |                  |           |   |              |   |           |      |  |   |           |   |  |     
|Operating Income (loss)    |  | $ | 93,000     |  |  | $                | (439,000  | ) |              | $ | (544,000  | )    |  | $ | (33,000   | ) |  | $    | (451,000   | ) |  | $ | (472,000  | )
|                           |  |   |            |  |  |                  |           |   |              |   |           |      |  |   |           |   |  |     

Net sales for the quarter ended March 31, 2002 increased $1,627,000 or 19% as
compared to the same quarter of last fiscal year. Hyaluronan product sales for
the current quarter increased $1,374,000 or 41% as compared to the same quarter
of last fiscal year. The sales increase was due to increased sales of INTERGEL
Solution, partially offset by reduced ophthalmic hyaluronan shipments and the
termination of the Bausch & Lomb shipments that were still occurring in the
prior year quarter. Oral restorative product sales for the current quarter
increased $253,000 or 5% compared to the same quarter of last fiscal year.
International sales of oral restorative products increased $378,000 or 18%,
principally from increased sales in Europe, while Domestic sales of oral
restorative products decreased $124,000 or 4% as compared to the same quarter
of last fiscal year.

Consolidated gross margin decreased to 45% for the current quarter from 49% for
the same quarter of last fiscal year. The gross margin for the Hyaluronan
Division increased to 31% from a gross margin of 29% due to absorption of
excess capacity costs associated with increased hyaluronan production and
higher sales for the quarter as compared with the same period of the prior
year. The gross margin for the Oral Restorative Division decreased to 57% for
the current quarter from 61% for the same quarter of last fiscal year. The
gross margin decrease is attributed to a sales mix more weighted to lower
margin sales and competitive price discounting for the current quarter as
compared to the same quarter of the prior year.

Research and development expenses decreased $154,000 or 13% in the current
quarter as compared to the same quarter of last fiscal year. The decrease is
due to the decline in consulting costs related to the FDA review process of
INTERGEL Solution for U.S. distribution.

Marketing and sales expenses
increased $451,000 or 19% in the current quarter as compared to the same
quarter of last fiscal year due to an increase in marketing expenses and costs
associated with international expansion.

General and administrative expenses increased $88,000 or 8% for the current
quarter as compared to the same quarter of last fiscal year. The increase
resulted from higher legal and personnel expenses.

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 RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (cont.)

This increase was partially offset by lower amortization as a result of an
accounting change for SFAS 142  Goodwill and Other Intangible Assets as
goodwill is no longer amortized. The result of this accounting change for the
period was a decrease of $131,000 in amortization expense.

Net other expense increased $57,000 or 38% for the current quarter as compared
to the same quarter of last fiscal year. Interest income decreased $75,000 due
to the correction of a bank error in the bond sinking fund interest
calculation, coupled with a lower average amount of cash to invest than in the
same quarter of last fiscal year combined with a lower rate of return.

Nine Months Ended March 31, 2002 Compared to Nine Months Ended March 31, 2001

|                   |                            |            |            |           |                  |          |            |           |              |   |            |           |  |   |            |           |  |      |            |           |  |   |            |           | 
|------------------ | -------------------------- | ---------- | ---------- | --------- | ---------------- | -------- | ---------- | --------- | ------------ | - | ---------- | --------- |  | - | ---------- | --------- |  | ---- | ---------- | --------- |  | - | ---------- | --------- | 
|(Unaudited)        |                            | Hyaluronan |            |           | Oral Restorative |          |            |           |              |   |            |           |  |  
|                   |                            |            | Division   |           |                  | Division |            |           | Consolidated |  
|                   |                            |            |            |           |                  |          |            |           |             
|                   |                            |            | 2002       |           |                  | 2001     |            |           | 2002         |   |            | 2001      |  |   | 2002       |           |  | 2001 |           
|                   |                            |            |            |           |                  |          |            |           |              |   |            |           |  |   |            |           |  |      |           
|Net sales          |                            | $          | 10,270,000 |           |                  | $        | 10,558,000 |           |              | $ | 16,802,000 |           |  | $ | 14,682,000 |           |  | $    | 27,072,000 |           |  | $ | 25,240,000 |          
|Cost of goods sold |                            |            | 8,901,000  |           |                  |          | 7,319,000  |           |              |   | 7,010,000  |           |  |   | 5,989,000  |           |  |      | 15,911,000 |           |  |   | 13,308,000 |          
|                   |                            |            |            |           |                  |          |            |           |              |   |            |           |  |   |            |           |  |     
|Gross profit       |                            |            | 1,369,000  |           |                  |          | 3,239,000  |           |              |   | 9,792,000  |           |  |   | 8,693,000  |           |  |      | 11,161,000 |           |  |   | 11,932,000 |          
|                   |                           
|Operating expenses |                            |            |            |           |                  |          |            |           |              |   |            |           |  |   |            |           |  |      |            |           |  |   |            |          
|                   | Research and development   |            |            | 3,132,000 |                  |          |            | 2,310,000 |              |   |            | 688,000   |  |   |            | 795,000   |  |      |            | 3,820,000 |  |   |            | 3,105,000 | 
|                   | Marketing and sales        |            |            | 183,000   |                  |          |            | 147,000   |              |   |            | 7,730,000 |  |   |            | 6,542,000 |  |      |            | 7,913,000 |  |   |            | 6,689,000 | 
|                   | General and administrative |            |            | 1,293,000 |                  |          |            | 1,264,000 |              |   |            | 2,273,000 |  |   |            | 2,111,000 |  |      |            | 3,566,000 |  |   |            | 3,375,000 | 
|                   |                            |            |            |           |                  |          |            |           |              |   |            |           |  |   |            |           |  |     
|                   |                            |            | 4,608,000  |           |                  |          | 3,721,000  |           |              |   | 10,691,000 |           |  |   | 9,448,000  |           |  |      | 15,299,000 |           |  |   | 13,169,000 |          
|                   |                            |            |            |           |                  |          |            |           |              |   |            |           |  |   |            |           |  |     
|Operating loss     |                            | $          | (3,239,000 | )         |                  | $        | (482,000   | )         |              | $ | (899,000   | )         |  | $ | (755,000   | )         |  | $    | (4,138,000 | )         |  | $ | (1,237,000 | )        
|                   |                            |            |            |           |                  |          |            |           |              |   |            |           |  |   |            |           |  |     

Net sales for the nine months ended March 31, 2002 increased $1,832,000 or 7%
as compared to the same period of last fiscal year. Hyaluronan product sales
for the period decreased $288,000 or 3% as compared to the same period of last
fiscal year. The sales decrease was due to reduced ophthalmic hyaluronan
shipments and the termination of the Bausch & Lomb shipments that were still
occurring in the prior year period, partially offset by increased sales of
INTERGEL Solution. Oral restorative product sales for the current period
increased $2,120,000 or 14% as compared to the same period of last fiscal year.
International sales of oral restorative products increased $1,444,000 or 25%
with strong growth coming in European markets. Domestic oral restorative sales
increased $677,000 or 8% in the current period as compared to the prior year.
Consolidated gross margin decreased to 41% for the current period from 47% for
the same period of last fiscal year. The gross margin for the Hyaluronan
Division decreased to 13% from 31% due to higher unabsorbed excess capacity
costs associated with decreased hyaluronan production and sales mix.
Production has been slowed due to unexpected delays in the FDA review process
of INTERGEL Solution for U.S. distribution. The gross margin for the Oral
Restorative Division was 58% for the current period as compared to 59% for the
same period of last fiscal year. The decrease is mainly the result of sales
mix.

Research and development expenses increased $715,000 or 23% for the current
period as compared to the same period of last fiscal year. The increase
resulted from additional costs associated with the FDA review process for
INTERGEL Solution. Expenses associated with the FDA review process are
expected to decrease in the coming quarters.

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 RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (cont.)

Marketing and sales expenses increased $1,224,000 or 18% for the current period
as compared to the same period of last fiscal year due to an increase in
marketing expenses and costs associated with international expansion.

General and administrative expenses increased $191,000 or 6% in the current
period as compared to the same period of last fiscal year. The increase
resulted from a higher reserve for bad debts in response to the economic
situation in Argentina and higher legal and personnel expenses. This increase
was partially offset by lower amortization as a result of an accounting change
for SFAS 142  Goodwill and Other Intangible Assets as goodwill is no longer
amortized. The result of this accounting change for the period was a decrease
of $393,000 in amortization expense.

Interest income decreased $125,000 or 71% as a result of a lower average amount
of cash to invest than in the same period of last fiscal year combined with a
lower rate of return. Interest expense decreased $57,000 or 9% for the current
period principally due to lower average debt outstanding as compared to the
same period of last fiscal year. Other expense decreased $88,000 for the
current period as compared to the same period of last fiscal year, due to a
decrease in the provision for income taxes.

Liquidity and Capital Resources

The Companys Annual Report on Form 10-K for the year ended June 30, 2001
contains a detailed discussion of Lifecores liquidity and capital resources.
In conjunction with this Quarterly Report on Form 10-Q, investors should read
the 2001 Form 10-K.

For the nine month period ended March 31, 2002, the Company had negative cash
flow from operations of $1,156,000, while cash flow from operations was
positive in fiscal 2001 and 2000. Charges for unused capacity associated with
the Companys hyaluronan production and additional costs associated with the
FDA review process for INTERGEL Solution have negatively impacted operating
results in the current fiscal year, as well as in fiscal 2001 and 2000.
Charges for unused capacity are a result of an unanticipated delay in receiving
INTERGEL Solution marketing approval in the U.S. from the FDA. As the
Hyaluronan Divisions production levels increase, its related production
efficiencies will increase and charges for unused capacity will decrease. Also,
marketing and sales expenses for the oral restorative products are expected to
continue at a high level with continued international expansion and increased
personnel costs.

The loan agreement between the Company and the holder of the industrial
development revenue bonds issued to finance the Companys Chaska, Minnesota
facility was amended in May 2001 to waive the fixed charge coverage ratio and
the cash flow coverage ratio through June 30, 2002. With respect to certain of
these covenants, the Company may be required to obtain further waivers for
fiscal 2003. There can be no assurance that future waivers will be granted to
the Company.

The Company has an agreement with a bank for a $5,000,000 line of credit. The
agreement allows for advances against eligible accounts receivable and
inventories, subject to a borrowing base certificate. Interest is accrued at
the prime rate plus 1% at March 31, 2002, which was 5.75% and at the prime rate
at June 30, 2001, which was 6.75%. At March 31, 2002 and June 30, 2001, there
were no balances outstanding under this line of credit. The terms of the
agreement require the Company to comply with various financial covenants
including minimum tangible net worth, capital expenditure limitations,
liabilities to tangible net worth ratio, minimum EBITDA and minimum working
capital targets. At March 31, 2002 and June 30, 2001, the Company was in
compliance with all covenants. The agreement has a maturity date of December
31, 2002. It is the intention of the Company to either renew the existing line
of credit agreement or seek a comparable line of credit agreement with a
different bank. There is no assurance that the Company will be able to renew
the existing line of credit agreement or be able to secure a line of credit
agreement with a new bank when the current agreement expires on December 31,
2002.

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

The Company expects to finance its future business operations with cash
generated from anticipated operations and the availability of the line of
credit. No assurance can be given that the Company will achieve positive cash
flow from operations The Companys ability to generate positive cash flow from
operations and achieve 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 and to the uncertainty of product
acceptance within the medical community. 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. 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.

Cautionary Statement

Certain statements in this Form 10-Q are forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements, which include statements relating to anticipated regulatory
outcomes, continued financial improvement, adequate cash flow, the successful
market acceptance of INTERGEL Solution in the U.S., the reduction of research
and development expenses related to the INTERGEL Solution FDA review process,
and the negative impact on Hyaluronan Division margins from the unused
capacity, are subject to change. These statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical results and those presently anticipated or projected, such as,
unforeseen difficulties or delays in interactions with the FDA, and lack of
cooperation or marketing success from marketing partners for the hyaluronan
products. Investors are referred to a more detailed discussion of those risks
presented in Managements Discussion and Analysis of Financial Condition and
Results of Operations section in the Companys Annual Report on Form 10-K for
the year ended June 30, 2001.

GYNECARE INTERGEL Adhesion Prevention Solution, GYNECARE, and ETHICON, INC. are
registered trademarks of ETHICON, INC.

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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 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 and Lifecore Biomedical GmbH and are
denominated in Swedish Krona at Lifecore Biomedical AB. The Company has
historically had minimal exposure to changes in foreign currency exchange
rates, and as such, has not used derivative financial instruments to manage
foreign currency fluctuation risk.

The Companys outstanding long-term debt carries interest at a fixed rate.
There is no material market risk relating to the Companys long-term debt.<
/FONT>


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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART II  OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-Ka.
        
        Exhibits and 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)                                                                                                                                                                                                                  
|   
|3.3 |  | 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)                                                                                       
|   
|4.1 |  | Form of Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to 1987 S-2 Registration Statement [File
No. 33-12970])                                                                                                                                                                                          



| | b. |  | Reports on Form 8-K
| | -- |  | -------------------
|
| |    |  | None               

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




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.                                                                                                  
|      
|Dated: |  | May 6, 2002 |  | /s/ James W. BrackeJames W. Bracke
President & Chief Executive Officer                                                     
|      
|Dated: |  | May 6, 2002 |  | /s/ Dennis J. AllinghamDennis J. Allingham
Executive Vice President
& Chief Financial Officer
(Principal Financial Officer)

18