Document And Entity Information (USD $)	12 Months Ended
Document And Entity Information (USD $)	May 26, 2013	Jul. 19, 2013	Nov. 25, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	LANDEC CORP \CA\
Document Type	10-K
Current Fiscal Year End Date	--05-26
Entity Common Stock, Shares Outstanding		26,464,518
Entity Public Float			$ 233,854,000
Amendment Flag	false
Entity Central Index Key	0001005286
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	May 26, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY

Consolidated Balance Sheets (USD $)	May 26, 2013	May 27, 2012
Current assets:
Cash and cash equivalents	$ 13,718,000	$ 22,177,000
Marketable securities	1,545,000
Accounts receivable, less allowance for doubtful accounts of $583 and $512 at May 26, 2013 and May 27, 2012, respectively	36,072,000	31,951,000
Accounts receivable, related party	671,000	323,000
Income taxes receivable	5,103,000	47,000
Inventories, net	24,113,000	22,011,000
Deferred taxes	1,582,000	2,076,000
Prepaid expenses and other current assets	2,856,000	2,578,000
Total current assets	85,660,000	81,163,000
Investment in non-public company, non-fair value	793,000	793,000
Investment in non-public company, fair value	29,600,000	21,500,000
Property and equipment, net	65,811,000	63,495,000
Goodwill, net	49,620,000	49,620,000
Trademarks/ trade names, net	48,428,000	48,428,000
Customer relationships, net	9,606,000	10,557,000
Other assets	1,424,000	2,136,000
Total Assets	290,942,000	277,692,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	31,470,000	22,644,000
Related party payables	786,000	776,000
Accrued compensation	4,984,000	5,782,000
Other accrued liabilities	2,332,000	18,642,000
Deferred revenue	1,248,000	162,000
Lines of credit	4,000,000	11,666,000
Current portion of long-term debt	5,933,000	7,012,000
Total current liabilities	50,753,000	66,684,000
Long-term debt	34,372,000	40,305,000
Deferred taxes	24,054,000	18,037,000
Other non-current liabilities	1,349,000	1,108,000
Total liabilities	110,528,000	126,134,000
Commitments and contingencies (Note 12)
Common stock, $0.001 par value; 50,000,000 shares authorized; 26,402,247 and 25,644,580 shares issued and outstanding at May 26, 2013 and May 27, 2012, respectively	26,000	26,000
Additional paid-in capital	126,258,000	119,894,000
Retained earnings	52,409,000	29,822,000
Total stockholders’ equity	178,693,000	149,742,000
Non-controlling interest	1,721,000	1,816,000
Total Equity	180,414,000	151,558,000
Total Liabilities and Stockholders’ Equity	$ 290,942,000	$ 277,692,000

Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	May 26, 2013	May 27, 2012
Allowance for doubtful accounts (in Dollars)	$ 583	$ 512
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	26,402,247	25,644,580
Common stock, shares outstanding	26,402,247	25,644,580

Number of shares of common stock outstanding. Common stock represent the ownership interest in a corporation.

+ References+ Details

Consolidated Statements of Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	May 26, 2013	May 27, 2012	May 29, 2011
Revenues:
Product sales	$ 439,574	$ 314,414	$ 273,338
Services revenue, related party	2,134	3,138	3,391
Total revenues	441,708	317,552	276,729
Cost of revenue:
Cost of product sales	377,078	262,859	227,167
Cost of services revenue	1,870	2,555	2,867
Total cost of revenue	378,948	265,414	230,034
Gross profit	62,760	52,138	46,695
Operating costs and expenses:
Research and development	9,294	9,625	9,275
Selling, general and administrative	32,531	26,515	24,608
Other operating expenses	(3,933)	1,421	4,780
Total operating costs and expenses	37,892	37,561	38,663
Operating income	24,868	14,577	8,032
Dividend income	1,125	1,125	328
Interest income	179	180	430
Interest expense	(2,008)	(929)	(820)
Other income	8,100	5,331	472
Net income before taxes	32,264	20,284	8,442
Income tax expense	(9,452)	(7,185)	(4,181)
Consolidated net income	22,812	13,099	4,261
Non-controlling interest	(225)	(403)	(341)
Net income and comprehensive income applicable to common stockholders	$ 22,587	$ 12,696	$ 3,920
Basic net income per share (in Dollars per share)	$ 0.87	$ 0.49	$ 0.15
Diluted net income per share (in Dollars per share)	$ 0.85	$ 0.49	$ 0.15
Shares used in per share computation:
Basic (in Shares)	25,830	25,849	26,397
Diluted (in Shares)	26,626	26,126	26,626

Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	May 26, 2013	May 27, 2012	May 29, 2011
Balance	$ 151,558
Payments to non-controlling interest	(320)	(258)	(361)
Balance	180,414	151,558
Common Stock [Member]
Balance	26	27	27
Balance, shares (in Shares)	25,644,580	26,405,799	26,490,259
Issuance of common stock , net of taxes paid by Landec on behalf of employees, shares (in Shares)	597,537	72,572	91,091
Issuance of common stock for vested restricted stock units (in Shares)	160,130	83,453	40,133
Common stock repurchased on the open market		(1)
Common stock repurchased on the open market, shares (in Shares)		(917,244)	(215,684)
Balance	26	26	27
Balance, shares (in Shares)	26,402,247	25,644,580	26,405,799
Additional Paid-in Capital [Member]
Balance	119,894	119,169	117,730
Issuance of common stock, net of taxes paid by Landec on behalf of employees	3,416	61	126
Common stock repurchased on the open market		(5,005)	(1,184)
Taxes paid by Company for stock swaps and RSUs	(49)	(260)	(218)
Stock-based compensation	1,695	1,872	1,951
Tax benefit from stock-based compensation expense	1,302	4,057	764
Balance	126,258	119,894	119,169
Retained Earnings [Member]
Balance	29,822	17,126	13,206
Net income and comprehensive loss	22,587	12,696	3,920
Balance	52,409	29,822	17,126
Accumulated Other Comprehensive Income (Loss) [Member]
Balance		(267)	(179)
Net income and comprehensive loss		267	(88)
Balance			(267)
Parent [Member]
Balance	149,742	136,055	130,784
Issuance of common stock, net of taxes paid by Landec on behalf of employees	3,416	61	126
Common stock repurchased on the open market		(5,006)	(1,184)
Taxes paid by Company for stock swaps and RSUs	(49)	(260)	(218)
Stock-based compensation	1,695	1,872	1,951
Tax benefit from stock-based compensation expense	1,302	4,057	764
Net income and comprehensive loss	22,587	12,963	3,832
Balance	178,693	149,742	136,055
Noncontrolling Interest [Member]
Balance	1,816	1,671	1,691
Non-controlling interest	225	403	341
Payments to non-controlling interest	(320)	(258)	(361)
Balance	$ 1,721	$ 1,816	$ 1,671

Consolidated Statements of Cash Flows (USD $)	12 Months Ended
Consolidated Statements of Cash Flows (USD $)	May 26, 2013	May 27, 2012	May 29, 2011
Cash flows from operating activities:
Consolidated net income	$ 22,812,000	$ 13,099,000	$ 4,261,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,295,000	5,621,000	5,313,000
Stock-based compensation expense	1,695,000	1,872,000	1,951,000
Deferred taxes	6,511,000	3,283,000	3,257,000
Change in investment in non-public company (fair market value)	(8,100,000)	(5,838,000)	(662,000)
Increase in long-term receivable			(800,000)
Tax benefit from stock based compensation	(1,302,000)	(4,057,000)	(764,000)
Net loss on disposal of property and equipment	217,000	12,000	26,000
Long-term receivable from Monsanto			800,000
Impairment charges			4,780,000
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable, net	(4,121,000)	(3,246,000)	(3,016,000)
Accounts receivable, related party	(348,000)	130,000	276,000
Income taxes receivable	(3,754,000)	4,581,000	878,000
Inventories, net	(2,102,000)	(441,000)	(4,054,000)
Issuance of notes and advances receivable	(4,173,000)	(3,699,000)	(3,073,000)
Collection of notes and advances receivable	4,173,000	3,704,000	3,314,000
Prepaid expenses and other current assets	(278,000)	3,588,000	602,000
Accounts payable	8,826,000	(544,000)	2,393,000
Related party accounts payable	10,000	476,000	(49,000)
Accrued compensation	(798,000)	2,701,000	1,038,000
Other accrued liabilities	(2,486,000)	3,434,000	532,000
Deferred revenue	1,086,000	(2,495,000)	(1,734,000)
Net cash provided by operating activities	21,230,000	22,181,000	14,469,000
Cash flows from investing activities:
Purchases of property and equipment	(8,877,000)	(5,371,000)	(6,684,000)
Acquisition of GreenLine (Note 2)		(66,826,000)
Purchase of marketable securities	(4,959,000)	(30,723,000)	(59,833,000)
Proceeds from maturities and sale of marketable securities	0	27,700,000
Investment in non-public company (fair market value)			(15,000,000)
Net cash used in investing activities	(10,422,000)	(44,073,000)	(29,387,000)
Cash flows from financing activities:
Repurchase of outstanding common stock		(5,006,000)	(1,184,000)
Proceeds from sale of common stock	3,416,000	61,000	126,000
Taxes paid by Company for stock swaps and RSUs	(49,000)	(260,000)	(218,000)
Tax benefit from stock-based compensation expense	1,302,000	4,057,000	764,000
Earn out payment from Lifecore acquisition	(9,650,000)
Net change in other assets/liabilities	712,000	(1,813,000)	49,000
Proceeds from long term debt		31,816,000
Proceeds from lines of credit		12,766,000
Payments on long term debt	(7,012,000)	(4,329,000)	(3,940,000)
Payments on lines of credit	(7,666,000)	(1,100,000)
Payments to non-controlling interest.	(320,000)	(258,000)	(361,000)
Net cash provided by (used in) financing activities	(19,267,000)	35,934,000	(4,764,000)
Net increase (decrease) in cash and cash equivalents	(8,459,000)	14,042,000	(19,682,000)
Cash and cash equivalents at beginning of year	22,177,000	8,135,000	27,817,000
Cash and cash equivalents at end of year	13,718,000	22,177,000	8,135,000
Supplemental disclosure of cash flows information:
Cash paid during the period for interest	1,728,000	952,000	761,000
Cash paid during the period for income taxes	5,605,000	246,000	146,000
Earnout [Member]
Adjustments to reconcile net income to net cash provided by operating activities:
Earn out liability	(3,933,000)
Marketable Maturities [Member]
Cash flows from investing activities:
Proceeds from maturities and sale of marketable securities	3,414,000	31,104,000	24,843,000
Marketable Sales [Member]
Cash flows from investing activities:
Proceeds from maturities and sale of marketable securities		$ 27,743,000	$ 27,287,000

Note 1 - Organization, Basis of Presentation and Summary of Significant Accounting Policies

12 Months Ended

May 26, 2013

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

1. Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Organization

Landec Corporation and its subsidiaries (“Landec” or the “Company”) design, develop, manufacture and sell differentiated products for food and biomaterials markets and license technology applications to partners. The Company has two proprietary polymer technology platforms: 1) Intelimer® polymers, and 2) hyaluronan (“HA”) biopolymers. The Company’s HA biopolymers are proprietary in that they are specially formulated for specific customers to meet strict regulatory requirements. The Company’s polymer technologies, along with its customer relationships and trade names, are the foundation, and a key differentiating advantage upon which Landec has built its business. The Company sells specialty packaged branded Eat Smart and GreenLine and private label fresh-cut vegetables and whole produce to retailers, club stores and foodservice operators, primarily in the United States, Canada and Asia through its Apio, Inc. (“Apio”) subsidiary and sells HA-based biomaterials through its Lifecore Biomedical, Inc. (“Lifecore”) subsidiary.

Basis of Presentation

Basis of Consolidation

The consolidated financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles and include the accounts of Landec Corporation and its subsidiaries, Apio and Lifecore. All material inter-company transactions and balances have been eliminated.

Arrangements that are not controlled through voting or similar rights are reviewed under the guidance for variable interest entities (“VIEs”). A company is required to consolidate the assets, liabilities and operations of a VIE if it is determined to be the primary beneficiary of the VIE.

An entity is a VIE and subject to consolidation, if by design: a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including equity holders or b) as a group the holders of the equity investment at risk lack any one of the following three characteristics: (i) the power, through voting rights or similar rights to direct the activities of an entity that most significantly impact the entity’s economic performance, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity. The Company reviewed the consolidation guidance and concluded that the partnership interest and equity investment in non-public companies by the Company are not VIEs.

Reclassifications

Certain reclassifications have been made to prior year financial statements to conform to the current year presentation.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require management’s most significant and subjective judgments include revenue recognition; sales returns and allowances; recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived assets; the valuation of intangible assets and inventory; the valuation of investments; and the valuation and recognition of stock-based compensation.

These estimates involve the consideration of complex factors and require management to make judgments. The analysis of historical and future trends can require extended periods of time to resolve and are subject to change from period to period. The actual results may differ from management’s estimates.

Concentrations of Risk

Cash and cash equivalents, marketable securities, trade accounts receivable, grower advances and notes receivable are financial instruments that potentially subject the Company to concentrations of credit risk. Our Company policy limits, among other things, the amount of credit exposure to any one issuer and to any one type of investment, other than securities issued or guaranteed by the U.S. government. The Company routinely assesses the financial strength of customers and growers and, as a consequence, believes that trade receivables, grower advances and notes receivable credit risk exposure is limited. Credit losses for bad debt are provided for in the consolidated financial statements through a charge to operations. A valuation allowance is provided for known and anticipated credit losses. The recorded amounts for these financial instruments approximate their fair value.

Several of the raw materials we use to manufacture our products are currently purchased from a single source, including some monomers used to synthesize Intelimer polymers, substrate materials for our breathable membrane products and raw materials for our HA products.

The operations of Windset, in which the Company holds a 20.1% minority investment, are predominantly located in British Columbia and Santa Maria, California. Routinely, the Company evaluates the financial strength and ability for Windset to continue as a going concern.

During the fiscal year ended May 26, 2013, sales to the Company’s top five customers accounted for approximately 40% of total revenue with the top two customers from the Food Products Technology segment accounting for approximately 16% and 13%, respectively, of total revenues. In addition, approximately 30% of the Company’s total revenues were derived from product sales to international customers, none of which individually accounted for more than 5% of total revenues. As of May 26, 2013, the top two customers from the Food Products Technology segment both represented approximately 15% of total accounts receivable.

During the fiscal year ended May 27, 2012, sales to the Company’s top five customers accounted for approximately 45% of total revenue with the top two customers from the Food Products Technology segment accounting for approximately 17% and 11%, respectively, of total revenues. In addition, approximately 36% of the Company’s total revenues were derived from product sales to international customers, one of whom individually accounted for more than 5% of total revenues. As of May 27, 2012, the top two customers from the Food Products Technology segment both represented approximately 11% of total accounts receivable.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of assets is measured by comparison of the carrying amount of the asset to the net undiscounted future cash flow expected to be generated from the asset. If the future undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets’ carrying value is adjusted to fair value. The Company regularly evaluates its long-lived assets for indicators of possible impairment.

Financial Instruments

The Company’s financial instruments are primarily composed of marketable securities, commercial-term trade payables, grower advances, notes receivable and debt instruments. For short-term instruments, the historical carrying amount approximates the fair value of the instrument. The fair value of long-term debt and lines of credit approximates their carrying value. Fair values for long-term financial instruments not readily marketable are estimated based upon discounted future cash flows at prevailing market interest rates. Based on these assumptions, management believes the fair market values of the Company’s financial instruments are not significantly different from their recorded amounts as of May 26, 2013 and May 27, 2012.

Accounts Receivable and Allowance for Doubtful Accounts

The Company carries its accounts receivable at their face amounts less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts and estimated losses resulting from the inability of its customers to make required payments. The allowance for doubtful accounts is determined based on review of the overall condition of accounts receivable balances and review of significant past due accounts. The allowance for doubtful accounts is based on specific identification of past due amounts and for accounts over 90-days past due. The changes in the Company’s allowance for doubtful accounts are summarized in the following table (in thousands).

	Balance at beginning of period		Additions from acquisitions and additions from charges to costs and expenses		Write offs net of recoveries			Balance at end of period
Year ended May 29, 2011	$	189	$	209	$	(56	)	$	342

Year ended May 27, 2012	$	342	$	248	$	(78	)	$	512

Year ended May 26, 2013	$	512	$	109	$	(38	)	$	583

Revenue Recognition

Revenue from product sales is recognized when there is persuasive evidence that an arrangement exists, title has transferred, the price is fixed or determinable, and collectability is reasonably assured. Allowances are established for estimated uncollectible amounts, product returns, and discounts based on specific identification and historical losses.

The Company takes title to all produce it trades and/or packages, and therefore, records revenues and cost of sales at gross amounts in the Consolidated Statements of Comprehensive Income. Revenue recognition for product sales generally occurs when the customer receives the product or at the time title passes to the customer. Customers generally do not have the right to return product unless damaged or defective. Net sales is comprised of gross sales reduced by customer returns and consumer promotion allowances.

Licensing revenue is recognized in accordance with accounting guidance. Initial license fees are deferred and amortized to revenue over the period of the agreement when a contract exists, the fee is fixed and determinable, and collectability is reasonably assured. Noncancellable, nonrefundable license fees are recognized over the period of the agreement, including those governing research and development activities and any related supply agreement entered into concurrently with the license when the risk associated with commercialization of a product is non-substantive at the outset of the arrangement.

Contract revenue for research and development (R&D) is recorded as earned, based on the performance requirements of the contract. Non-refundable contract fees for which no further performance obligations exist, and there is no continuing involvement by the Company, are recognized on the earlier of when the payments are received or when collection is assured.

When a sales arrangement contains multiple elements, the Company allocates revenue to each element based on a selling price hierarchy. The relative selling price for a deliverable is based on its vendor-specific objective evidence (VSOE), if available, third-party evidence (TPE), if VSOE is not available, or estimated selling price, if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its policies for product and service revenue recognition. The Company is not typically able to determine VSOE or TPE, and therefore, uses estimated selling prices to allocate revenue between the elements of the arrangement.

The Company limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services or future performance obligations or subject to customer-specific cancellation rights. The Company evaluates each deliverable in an arrangement to determine whether they represent separate units of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value, and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by the Company. The Company considers a deliverable to have stand-alone value if the product or service is sold separately by the Company or another vendor or could be resold by the customer. Further, the revenue arrangements generally do not include a general right of return relative to the delivered products. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. The Company allocates the total arrangement consideration to each separable element of an arrangement based upon the relative selling price of each element. Allocation of the consideration is determined at arrangement inception on the basis of each unit’s relative selling price. In instances where the Company has not established fair value for any undelivered element, revenue for all elements is deferred until delivery of the final element is completed and all recognition criteria are met.

Shipping and Handling Costs

Amounts billed to third-party customers for shipping and handling are included as a component of revenues. Shipping and handling costs incurred are included as a component of cost of products sold and represent costs incurred to ship product from the sourcing locations to the end consumer markets.

Other Accounting Policies and Disclosures

Cash and Cash Equivalents

The Company records all highly liquid securities with three months or less from date of purchase to maturity as cash equivalents. Cash equivalents consist mainly of certificate of deposits (CDs), money market funds and U.S. Treasuries. The market value of cash equivalents approximates their historical cost given their short-term nature.

Marketable Securities

Short-term marketable securities consist of CDs that are FDIC insured and single A or better rated corporate and municipal bonds with original maturities of more than three months at the date of purchase regardless of the maturity date. The Company classifies all debt securities with readily determinable market values as “available for sale” as the Company views the funds within its portfolio as available for use in its current operations. The aggregate amount of CDs included in marketable securities as of May 26, 2013 and May 27, 2012 was $701,000 and zero, respectively. The contractual maturities of the Company's marketable securities that are due in less than one year represent $1.3 million and zero of its marketable securities and those due in one to two years represent the remaining $251,000 and zero of the Company’s marketable securities as of May 26, 2013 and May 27, 2012, respectively. Investments in marketable securities are carried at fair market value with unrealized gains and losses reported as other income. The cost of debt securities is adjusted for amortization of premiums and discounts to maturity. This amortization is recorded to interest income. Realized gains and losses on the sale of available for sale securities are also recorded to interest income and were not significant for the fiscal years ended May 26, 2013 and May 27, 2012. During fiscal years 2013 and 2012, the Company received proceeds of zero and $27.7 million, respectively, from the sale of marketable securities. The cost of securities sold is based on the specific identification method.

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or market. As of May 26, 2013 and May 27, 2012 inventories consisted of (in thousands):

	May 26, 2013		May 27, 2012
Finished goods	$	11,297	$	9,406
Raw materials		9,290		9,876
Work in progress		3,526		2,729
Inventories, net	$	24,113	$	22,011

If the cost of the inventories exceeds their net realizable value, provisions are recorded currently to reduce them to net realizable value. The Company also provides a provision for slow moving and obsolete inventories.

Advertising Expense

Advertising expenditures for the Company are expensed as incurred. Advertising expense for the Company for fiscal years 2013, 2012 and 2011 was $445,000, $406,000 and $458,000, respectively.

Notes and Advances Receivable

Apio issues notes and makes advances to produce growers for their crop and harvesting costs primarily for the purpose of sourcing crops for Apio's business. Notes receivable and advances are generally recovered during the growing season (less than one year) using proceeds from the crops sold to Apio. Notes are interest bearing obligations, evidenced by contracts and notes receivable. These notes and advances receivable are secured by perfected liens on crops, have terms that range from three to nine months, and are reviewed at least quarterly for collectability. A reserve is established for any note or advance deemed to not be fully collectible based upon an estimate of the crop value or the fair value of the security for the note or advance. There were no notes or advances outstanding at May 26, 2013.

Related Party Transactions

The Company provides cooling and distribution services to both a farm and Beachside Produce LLC ("Beachside"), a commodity produce distributor, in which the Chairman of Apio has a farming and ownership interest, respectively. During fiscal years 2013, 2012 and 2011, the Company recognized revenues of $2.5 million, $3.8 million, and $4.1 million, respectively, which have been included in product sales and in service revenues in the accompanying Consolidated Statements of Comprehensive Income, from the sale of products and providing cooling services to these parties. The related receivable balances of $671,000 and $323,000 are included in accounts receivable in the accompanying Consolidated Balance Sheets as of May 26, 2013 and May 27, 2012, respectively.

Additionally, unrelated to the revenue transactions above, the Company purchases produce from Beachside, a farm in which the Chairman of Apio has an ownership interest, and Windset Holding 2010 Ltd., a Canadian corporation (“Windset”) for sale to third parties. During fiscal years 2013, 2012 and 2011, the Company recognized cost of product sales of $6.7 million, $5.6 million and $3.6 million, respectively, in the accompanying Consolidated Statements of Comprehensive Income, from the sale of products purchased from these parties. The related accounts payable of $786,000 and $776,000 are included in related party accounts payable in the accompanying Consolidated Balance Sheets as of May 26, 2013 and May 27, 2012, respectively.

All related party transactions are monitored quarterly by the Company and approved by the Audit Committee of the Board of Directors.

Property and Equipment

Property and equipment are stated at cost. Expenditures for major improvements are capitalized while repairs and maintenance are charged to expense. Depreciation is expensed on a straight-line basis over the estimated useful lives of the respective assets, generally three to thirty years for buildings and leasehold improvements and three to seven years for furniture and fixtures, computers, capitalized software, capitalized leases, machinery, equipment and autos. Leasehold improvements are amortized on a straight-line basis over the lesser of the economic life of the improvement or the life of the lease.

The Company capitalizes software development costs for internal use in accordance with accounting guidance. Capitalization of software development costs begins in the application development stage and ends when the asset is placed into service. The Company amortizes such costs using the straight-line basis over estimated useful lives of three to seven years. During fiscal years 2013 and 2012, the Company did not capitalize any software development costs.

Long-Lived Assets

The Company’s Long-Lived Assets consist of property, plant and equipment, and intangible assets. Intangible assets are comprised of customer relationships with an estimated useful life of twelve to thirteen years (the “finite-lived intangible assets”) and trademarks/trade names and goodwill with indefinite lives (collectively, “the indefinite-lived intangible assets”), which the Company recognized in accordance with accounting guidance (i) upon the acquisition of GreenLine Holding Company (“GreenLine”) by Apio in April 2012, (ii) upon the acquisition of Lifecore in April 2010 and (iii) upon the acquisition of Apio in December 1999. Accounting guidance defines goodwill as “the excess of the cost of an acquired entity over the net of the estimated fair values of the assets acquired and the liabilities assumed at date of acquisition.” All intangible assets, including goodwill, associated with the acquisition of Lifecore was allocated to our HA-based Biomaterials reporting unit and the acquisitions of Apio and GreenLine were allocated to our Food Products Technology reporting unit pursuant to accounting guidance based upon the allocation of assets and liabilities acquired and consideration paid for each reporting unit. As of May 26, 2013, the HA-based Biomaterials reporting unit had $13.9 million of goodwill and the Food Products Technology reporting unit had $35.7 million of goodwill.

Property, plant and equipment and finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset (or asset group) may not be recoverable. The Company’s impairment review requires significant management judgment including estimating the future success of product lines, future sales volumes, revenue and expense growth rates, alternative uses for the assets and estimated proceeds from the disposal of the assets. The Company conducts quarterly reviews of idle and underutilized equipment, and reviews business plans for possible impairment indicators. Impairment is indicated when the carrying amount of the asset (or asset group) exceeds its estimated future undiscounted cash flows and the impairment is viewed as other than temporary. When impairment is indicated, an impairment charge is recorded for the difference between the asset’s book value and its estimated fair value. Depending on the asset, estimated fair value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in similar condition. The use of different assumptions would increase or decrease the estimated fair value of assets and would increase or decrease any impairment measurement.

The Company tests its indefinite-lived intangible assets for impairment at least annually, in accordance with accounting guidance. For non-goodwill indefinite-lived intangible assets, the Company performs a qualitative analysis in accordance with ASC 350-30-35. For goodwill, the Company performs a quantitative analysis in accordance with ASC 350-20-35.

Application of the impairment tests for indefinite-lived intangible assets requires significant judgment by management, including identification of reporting units, assignment of assets and liabilities to reporting units, assignment of intangible assets to reporting units, and the determination of the fair value of each indefinite-lived intangible asset and reporting unit based upon projections of future net cash flows, discount rates and market multiples, which judgments and projections are inherently uncertain.

The Company tested its indefinite-lived intangible assets for impairment as of July 21, 2013 and determined that no adjustments to the carrying values of these assets were necessary as of that date. On a quarterly basis, the Company considers the need to update its most recent annual tests for possible impairment of its indefinite-lived intangible assets, based on management’s assessment of changes in its business and other economic factors since the most recent annual evaluation. Such changes, if significant or material, could indicate a need to update the most recent annual tests for impairment of the indefinite-lived intangible assets during the current period. The results of these tests could lead to write-downs of the carrying values of these assets in the current period.

The Company uses the discounted cash flow (“DCF”) approach to develop an estimate of fair value for goodwill. The DCF approach recognizes that current value is premised on the expected receipt of future economic benefits. Indications of value are developed by discounting projected future net cash flows to their present value at a rate that reflects both the current return requirements of the market and the risks inherent in the specific investment. The market approach is not used to value the Company’s reporting units (the “reporting units”) because insufficient market comparables exist to enable the Company to develop a reasonable fair value of its intangible assets due to the unique nature of each of the Company’s reporting units.

The DCF approach requires the Company to exercise judgment in determining future business and financial forecasts and the related estimates of future net cash flows. Future net cash flows depend primarily on future product sales, which are inherently difficult to predict. These net cash flows are discounted at a rate that reflects both the current return requirements of the market and the risks inherent in the specific investment.

The DCF associated with the annual goodwill impairment analysis for the Food Products Technology reporting unit is based on management’s five-year projection of revenues, gross profits and operating profits by fiscal year and assumes a 37% effective tax rate for each year. Management takes into account the historical trends of the Food Products Technology reporting unit and the industry categories in which it operates along with inflationary factors, current economic conditions, new product introductions, cost of sales, operating expenses, capital requirements and other relevant data when developing its projection. The estimated fair value of the Food Products Technology reporting unit as of July 21, 2013 was 111% of its book value at that date, therefore, no goodwill impairment was deemed to exist. For the test performed as of July 22, 2012, the projected cash flow from operations for determining the DCF for fiscal year 2013 was $10.2 million for the Food Products Technology reporting unit. The actual cash flow from operations for fiscal year 2013 was $13.6 million. The difference of $3.4 million was primarily due to the timing of working capital changes.

The DCF associated with the annual goodwill impairment analysis for the HA-based Biomaterials reporting unit is based on management’s five-year projections of revenues, gross profits and operating profits by fiscal year and assumes a 37% effective tax rate for each year. Management takes into account the historical trends of HA-based Biomaterials reporting unit and the industry categories in which it operates along with inflationary factors, current economic conditions, new product introductions, cost of sales, operating expenses, capital requirements and other relevant data when developing its projection. The trade name intangible asset was valued using the relief from royalty valuation method and the customer relationship intangible asset was valued using the multi-period excess earnings method. The fair value of goodwill was calculated as the excess of consideration paid, including the fair value of contingent consideration under the terms of the purchase agreement, over the fair value of the tangible and intangible assets acquired less liabilities assumed. The Company updated its analysis of the fair value of the indefinite-lived intangible assets as of its annual impairment analysis date, concluding that the fair value of the HA-based Biomaterials reporting unit, as determined by the DCF approach, was 117% of its book value at that date, therefore, no goodwill impairment was deemed to exist. For the test performed as of July 22, 2012, the projected cash flow from operations for determining the DCF for fiscal year 2013 was a $8.4 million for the HA-based Biomaterials reporting unit. The actual cash flow from operations for fiscal year 2013 was $13.2 million. The difference of $4.8 million is primarily due to timing of working capital changes.

Investment in Non-Public Company

The Company’s investment in Aesthetic Science is carried at cost and adjusted for impairment losses. Since there is no readily available market value information, the Company periodically reviews this investment to determine if an other than temporary decline in value has occurred based on the financial stability and viability of Aesthetic Science.

Aesthetic Science sold the rights to its Smartfil™ Injector System on July 16, 2010. As a result, Landec evaluated its cost method investment for impairment, utilizing a discounted cash flow analysis. Based on the terms of the agreement, the Company determined that its investment was other than temporarily impaired and therefore, recorded an impairment loss of $1.0 million in fiscal year 2010. The Company’s carrying value of its investment in Aesthetic Sciences, net of the impairment loss, is $793,000 at May 26, 2013 and May 27, 2012.

On February 15, 2011, the Company made an investment in Windset which is reported as an investment in non-public company, fair value, in the accompanying Consolidated Balance Sheets as of May 26, 2013 and May 27, 2012. The Company has elected to account for its investment in Windset under the fair value option (see Note 4).

Deferred Revenue

Cash received in advance of services performed (principally related to upfront license fees) are recorded as deferred revenue. At May 26, 2013, $1.2 million was recognized as advances from customers. At May 27, 2012, $162,000 was recognized as advances from customers.

Non-Controlling Interest

The Company reports all non-controlling interests as a separate component of stockholders’ equity. The non-controlling interest’s share of the income or loss of the consolidated subsidiary is reported as a separate line item in our Consolidated Statements of Comprehensive Income, following the consolidated net income caption.

In connection with the acquisition of Apio, Landec acquired Apio’s 60% general partner interest in Apio Cooling, a California limited partnership. Apio Cooling is included in the consolidated financial statements of Landec for all periods presented. The non-controlling interest balance of $1.7 million at May 26, 2013 and $1.8 million at May 27, 2012 is comprised of the non-controlling limited partners’ interest in Apio Cooling.

Income Taxes

The Company accounts for income taxes in accordance with accounting guidance which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. The Company maintains valuation allowances when it is likely that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change. In determining whether a valuation allowance is warranted, the Company takes into account such factors as prior earnings history, expected future earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of a deferred tax asset, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. At May 26, 2013, the Company had $783,000 valuation allowance against deferred tax assets.

In addition to valuation allowances, the Company establishes accruals for uncertain tax positions. The tax-contingency accruals are adjusted in light of changing facts and circumstances, such as the progress of tax audits, case law and emerging legislation. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. The Company’s effective tax rate includes the impact of tax-contingency accruals as considered appropriate by management.

1. Organization, Basis of Presentation, and Summary of Significant Accounting Policies (continued)

A number of years may elapse before a particular matter, for which the Company has accrued, is audited and finally resolved. The number of years with open tax audits varies by jurisdiction. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes its tax-contingency accruals are adequate to address known tax contingencies. Favorable resolution of such matters could be recognized as a reduction to the Company’s effective tax rate in the year of resolution. Unfavorable settlement of any particular issue could increase the effective tax rate. Any resolution of a tax issue may require the use of cash in the year of resolution. The Company’s tax-contingency accruals are recorded in other accrued liabilities in the accompanying Consolidated Balance Sheets.

Per Share Information

Accounting guidance requires the presentation of basic and diluted earnings per share. Basic earnings per share excludes any dilutive effects of options, warrants and convertible securities and is computed using the weighted average number of common shares outstanding. Diluted earnings per share reflect the potential dilution as if securities or other contracts to issue common stock were exercised or converted into common stock. Diluted common equivalent shares consist of stock options and restricted stock units, calculated using the treasury stock method.

The following table sets forth the computation of diluted net income per share (in thousands, except per share amounts):

	Fiscal Year Ended May 26, 2013		Fiscal Year Ended May 27, 2012		Fiscal Year Ended May 29, 2011
Numerator:
Net income applicable to Common Stockholders	$	22,587	$	12,696	$	3,920
Denominator:
Weighted average shares for basic net income per share		25,830		25,849		26,397
Effect of dilutive securities:
Stock options and restricted stock units		796		277		229
Weighted average shares for diluted net income per share		26,626		26,126		26,626

Diluted net income per share	$	0.85	$	0.49	$	0.15

Options to purchase 88,022, 1,855,167 and 2,032,867 shares of Common Stock at a weighted average exercise price of $12.80, $6.72 and $6.67 per share were outstanding during fiscal years ended May 26, 2013, May 27, 2012 and May 29, 2011, respectively, but were not included in the computation of diluted net income per share because the options’ exercise price were greater than the average market price of the Common Stock and, therefore, their inclusion would be antidilutive.

Cost of Sales

The Company includes in cost of sales all the costs related to the sale of products in accordance with generally accepted accounting principles. These costs include the following: raw materials (including produce, seeds, packaging, syringes and fermentation and purification supplies), direct labor, overhead (including indirect labor, depreciation, and facility related costs) and shipping and shipping related costs.

Research and Development Expenses

Costs related to both research and development contracts and Company-funded research is included in research and development expenses. Research and development costs are primarily comprised of salaries and related benefits, supplies, travel expenses, consulting expenses and corporate allocations.

Accounting for Stock-Based Compensation

The Company records compensation expense for stock-based awards issued to employees and directors in exchange for services provided based on the estimated fair value of the awards on their grant dates and is recognized over the required service periods. The cash flows resulting from the tax benefit due to tax deductions in excess of the compensation expense recognized for those options (excess tax benefit) are classified as financing activities with the statement of cash flows. The Company’s stock-based awards include stock option grants and restricted stock unit awards (RSUs).

During the fiscal year ended May 26, 2013, the Company recognized stock-based compensation expense of $1,695,000 which included $907,000 for restricted stock unit awards and $788,000 for stock option grants. During the fiscal year ended May 27, 2012, the Company recognized stock-based compensation expense of $1,872,000 which included $826,000 for restricted stock unit awards and $1,046,000 for stock option grants. During the fiscal year ended May 29, 2011, the Company recognized stock-based compensation expense of $1,951,000 which included $857,000 for restricted stock unit awards and $1,094,000 for stock option grants.

The following table summarizes the stock-based compensation by income statement line item:

	Fiscal Year Ended May 26, 2013		Fiscal Year Ended May 27, 2012		Fiscal Year Ended May 29, 2011
Research and development	$	718,000	$	530,000	$	565,000
Sales, general and administrative		977,000		1,342,000		1,386,000
Total stock-based compensation expense	$	1,695,000	$	1,872,000	$	1,951,000

The estimated fair value for stock options, which determines the Company’s calculation of compensation expense, is based on the Black-Scholes option pricing model. The Company uses the straight line single option method to calculate and recognize the fair value of stock-based compensation arrangements. In addition, the Company uses historical data to estimate pre-vesting forfeitures and records stock-based compensation expense only for those awards that are expected to vest and revises those estimates in subsequent periods if the actual forfeitures differ from the prior estimates.

The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility. As of May 26, 2013, May 27, 2012 and May 29, 2011, the fair value of stock option grants was estimated using the following weighted average assumptions:

	Fiscal Year Ended May 26, 2013		Fiscal Year Ended May 27, 2012		Fiscal Year Ended May 29, 2011
Expected life (in years)		3.76		3.76		3.76
Risk-free interest rate		0.48%		0.59%		1.16%
Volatility		0.53		0.53		0.52
Dividend yield		0%		0%		0%

The weighted average estimated fair value of Landec employee stock options granted at grant date market prices during the fiscal years ended May 26, 2013, May 27, 2012 and May 29, 2011 was $3.57, $2.65 and $2.42 per share, respectively. No stock options were granted above or below grant date market prices during the fiscal years ended May 26, 2013, May 27, 2012 and May 29, 2011.

Fair Value Measurements

The Company uses fair value measurement accounting for financial assets and liabilities and for financial instruments and certain other items measured at fair value. The Company has elected the fair value option for its investment in a non-public company (see Note 4). The Company has not elected the fair value option for any of its other eligible financial assets or liabilities.

The accounting guidance established a three-tier hierarchy for fair value measurements, which prioritizes the inputs used in measuring fair value as follows:

Level 1 – observable inputs such as quoted prices for identical instruments in active markets.

Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data.

Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

As of May 26, 2013, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis, including marketable securities, interest rate swap and its minority interest investment in Windset.

The fair value of the Company’s marketable securities is determined based on observable inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized its marketable securities as a Level 1 measurement.

The fair value of the Company’s interest rate swap is determined based on model inputs that can be observed in a liquid market, including yield curves, and is categorized as a Level 2 measurement.

The fair value of the Company’s liability for contingent consideration as of May 27, 2012 was based on significant inputs not observed in the market and thus represented a Level 3 measurement. The Company determined the fair value of the liability for the contingent consideration as of May 27, 2012, based on a probability-weighted discounted cash flow analysis.

The Company has elected the fair value option of accounting for its investment in Windset. The calculation of fair value utilizes significant unobservable inputs in the discounted cash flow models, including projected cash flows, growth rates and discount rates. As a result, the Company’s investment in Windset is considered to be a Level 3 measurement investment. The change in the fair market value of the Company’s investment in Windset for the fiscal years ended May 26, 2013 and May 27, 2012 was due to the Company’s 20.1% minority interest in the change in the fair market value of Windset during those periods. In determining the fair value of the investment in Windset, the Company utilizes the following significant unobservable inputs in the discounted cash flow models:

	At May 26, 2013			At May 27, 2012
Revenue growth rates	3%	to	9%	3%	to	24%
Expense growth rates	3%	to	8%	3%	to	18%
Income tax rates		15%			25%
Discount rates	18%	to	28%	14%	to	21%

The revenue growth, expense growth and income tax rate assumptions, consider the Company's best estimate of the trends in those items over the discount period. The discount rate assumption takes into account the risk-free rate of return, the market equity risk premium and the company’s specific risk premium and then applies an additional discount for lack of liquidity of the underlying securities. The discounted cash flow valuation model used by the Company has the following sensitivity to changes in inputs and assumptions (in thousands):

	Impact on value of Windset investment as of May 26, 2013
10% increase in revenue growth rates	$1,700
10% increase in expense growth rates	($1,400)
10% increase in income tax rates	($100)
10% increase in discount rates	($900)

Imprecision in estimating unobservable market inputs can affect the amount of gain or loss recorded for a particular position. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The following table summarizes the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring basis, as of May 26, 2013 and May 27, 2012 (in thousands):

	Fair Value at May 26, 2013						Fair Value at May 27, 2012
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	1,545	$	-	$	-	$	-	$	-	$	-
Investment in private company		-		-		29,600		-		-		21,500
Total	$	1,545	$	-	$	29,600	$	-	$	-	$	21,500

Liabilities:
Contingent consideration	$	-	$	-	$	-	$	-	$	-	$	3,933
Interest rate swap		-		163		-		-		347		-
Total	$	-	$	163	$	-	$	-	$	347	$	3,933

Recent Accounting Pronouncements

Intangibles-Goodwill and Other

In September 2011, the FASB issued new guidance that will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill and intangibles impairment test. Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendment includes a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The guidance is effective for fiscal years beginning after December 15, 2011 with early adoption permitted. The Company adopted this standard beginning in fiscal year 2013 and the adoption did not have a material impact on the Company’s consolidated financial statements.

Presentation of Comprehensive Income

In December 2011, the FASB issued new guidance that improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this standard require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under either method, adjustments must be displayed for items that are reclassified from other comprehensive income ("OCI") to net income, in both net income and OCI. The standard does not change the current option for presenting components of OCI gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which OCI is presented or disclosed in the notes to the financial statements. Additionally, the standard does not affect the calculation or reporting of earnings per share. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and are to be applied retrospectively, with early adoption permitted. The Company retrospectively adopted this standard beginning in fiscal year 2013.

Fair Value Measurement

In May 2011, the FASB issued new guidance effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. The Company adopted this standard beginning in fiscal year 2013.

Disclosures about Offsetting Assets and Liabilities

In November 2011, the FASB issued new guidance effective for annual reporting periods beginning January 1, 2013. This guidance amends the disclosure requirements around offsetting to enable users of the financial statements to understand the effect of those arrangements on its financial position. Entities are required to disclose both gross and net information about the instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

- Definition

The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References+ Details

Note 2 - Acquisitions

12 Months Ended

May 26, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

2. Acquisitions

GreenLine Holding Company

On April 23, 2012 (the “GreenLine Acquisition Date”), Apio acquired all of the outstanding equity of GreenLine under a Stock Purchase Agreement (the “GreenLine Purchase Agreement”) in order to expand its product offerings and enter into new markets such as foodservice. GreenLine, headquartered in Bowling Green, Ohio, was a privately-held company and is the leading processor and marketer of value-added, fresh-cut green beans in North America. GreenLine has four processing and distribution plants one each in Ohio, Pennsylvania, Florida and California and distribution centers in New York and South Carolina.

Under the GreenLine Purchase Agreement, the aggregate consideration paid at closing consisted of $62.9 million in cash, including $4.7 million that is held in an escrow account to secure Landec’s indemnification rights with respect to certain matters, including breaches of representations, warranties and covenants. In addition, the GreenLine Purchase Agreement included a potential earn out payment up to $7.0 million in the event that GreenLine achieved certain revenue targets during calendar year 2012. The earn out was comprised of $4.0 million for achieving a certain revenue target during calendar year 2012, and up to an additional $3.0 million for exceeding the revenue target by $3.0 million or more. In April 2012, the Company performed an analysis of projected revenues for GreenLine and concluded at that time that it was probable that GreenLine would meet, but not exceed, the initial revenue target and therefore, the Company recorded a $3.9 million liability as of May 27, 2012, representing the present value of the expected earn out payment. As a result of the severe drought in the Midwest during 2012, lower than expected results from new product launches and new planned business not being realized, during the second quarter of fiscal year 2013, the Company determined that GreenLine did not achieve the earn out revenue target. As a result, the Company reversed the $3.9 million liability recorded for the earn out and recorded a corresponding credit to other operating expenses in its Consolidated Statements of Comprehensive Income for fiscal year 2013.

The operating results of GreenLine are included in the Company’s financial statements beginning April 23, 2012, in the Food Products Technology operating segment. Included in the Company’s results for the fiscal year 2012 was $9.1 million of GreenLine’s net sales.

The acquisition date fair value of the total consideration transferred was $66.8 million, which consisted of the following (in thousands):

Cash	$	62,900
Contingent consideration		3,933
Total	$	66,833

The assets and liabilities of GreenLine were recorded at their respective estimated fair values as of the date of the acquisition using generally accepted accounting principles for business combinations. The excess of the purchase price over the fair value of the net identifiable assets acquired has been allocated to goodwill. Goodwill represents a substantial portion of the acquisition proceeds because of the workforce in-place at acquisition and because of GreenLine’s long history and future prospects. Management believes that there is further growth potential by extending GreenLine’s product lines into new channels, such as club stores.

The following table summarizes the estimated fair values of GreenLine’s assets acquired and liabilities assumed and related deferred income taxes, effective April 23, 2012, the date the Company obtained control of GreenLine (in thousands).

Accounts receivable, net	$	7,057
Inventories, net		1,409
Property and equipment		11,669
Other tangible assets		306
Intangible assets		43,500
Total identifiable assets acquired		63,941
Accounts payable and other liabilities		(8,391	)
Deferred taxes		(1,875	)
Total liabilities assumed		(10,266	)
Net identifiable assets acquired		53,675
Goodwill		13,158
Net assets acquired	$	66,833

The Company used a combination of the market and cost approaches to estimate the fair values of the GreenLine assets acquired and liabilities assumed. During the measurement period (which is not to exceed one year from the acquisition date), the Company is required to retrospectively adjust the provisional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. No adjustments were made to the fair values of GreenLine assets acquired or liabilities assumed during fiscal year 2013. The Company has finalized the fair values of the acquired assets and assumed liabilities and closed the measurement period.

Intangible Assets

The fair value of indefinite and finite-lived intangible assets was determined using a DCF model, under an income valuation methodology, based on management’s five-year projections of revenues, gross profits and operating profits by fiscal year and assumed a 40% effective tax rate for each year. Management took into account the historical trends of GreenLine and the industry categories in which GreenLine operates along with inflationary factors, current economic conditions, new product introductions, cost of sales, operating expenses, capital requirements and other relevant data when developing its projection. The Company believes that the level and timing of cash flows appropriately reflect market participant assumptions. The projected cash flows from these intangibles were based on key assumptions such as estimates of revenues and operating profits related to the intangibles over their respective forecast periods. The resultant cash flows were then discounted using a rate the Company believes is appropriate given the inherent risks associated with each intangible asset and reflect market participant assumptions.

The Company identified two intangible assets in connection with the GreenLine acquisition: trade names and trademarks valued at $36.0 million, which are considered to be indefinite life assets and therefore, will not be amortized; and customer base valued at $7.5 million with a thirteen year useful life. The trade name/trademark intangible asset was valued using the relief from royalty valuation method and the customer relationship intangible asset was valued using the distributor method.

Goodwill

The excess of the consideration transferred over the fair values assigned to the assets acquired and liabilities assumed was $13.2 million on the closing date, which represents the goodwill amount resulting from the acquisition which can be attributable to GreenLine’s long history, future prospects and the expected operating synergies from combining GreenLine with Apio’s fresh-cut, value-added vegetable business. None of the goodwill is expected to be