Document And Entity Information - USD ($) $ in Thousands	12 Months Ended
Document And Entity Information - USD ($) $ in Thousands	May 29, 2016	Jul. 18, 2016	Nov. 29, 2015
Document Information [Line Items]
Entity Registrant Name	LANDEC CORP \CA\
Entity Central Index Key	0001005286
Trading Symbol	lndc
Current Fiscal Year End Date	--05-29
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		27,226,429
Entity Public Float			$ 332,039
Document Type	10-K
Document Period End Date	May 29, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Amendment Flag	false

Consolidated Balance Sheets - USD ($) $ in Thousands	May 29, 2016	May 31, 2015
Current assets:
Cash and cash equivalents	$ 9,894	$ 14,127
Accounts receivable, less allowance for doubtful accounts	46,406	46,479
Inventories	25,535	25,027
Deferred taxes		2,111
Prepaid expenses and other current assets	4,643	5,458
Total current assets	86,478	93,202
Investment in non-public company, fair value	62,700	61,500
Property and equipment, net	120,880	84,465
Goodwill, net	49,620	49,620
Trade names, net	14,428	48,428
Customer relationships, net	6,968	7,835
Other assets	2,396	1,415
Total Assets	343,470	346,465
Current liabilities:
Accounts payable	30,904	35,009
Accrued compensation	5,460	6,742
Other accrued liabilities	7,772	5,212
Deferred revenue	832	843
Line of credit	3,500
Current portion of long-term debt	8,048	8,353
Total current liabilities	56,516	56,159
Long-term debt	46,614	34,166
Capital lease obligation, less current portion	3,804
Deferred taxes	22,442	34,340
Other non-current liabilities	1,744	1,691
Total liabilities	131,120	126,356
Stockholders’ equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 27,148,096 and 26,990,490 shares issued and outstanding at May 29, 2016 and May 31, 2015, respectively	27	27
Additional paid-in capital	137,244	133,307
Retained earnings	73,457	85,098
Total stockholders’ equity	210,728	218,432
Non-controlling interest	1,622	1,677
Total equity	212,350	220,109
Total Liabilities and Stockholders’ Equity	$ 343,470	$ 346,465

Consolidated Balance Sheets (Parentheticals) - $ / shares	May 29, 2016	May 31, 2015
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	27,148,096	26,990,490
Common stock, shares outstanding (in shares)	27,148,096	26,990,490

Consolidated Statements of Comprehensive (Loss) Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	May 29, 2016	May 31, 2015	May 25, 2014
Product sales	$ 541,099	$ 539,257	$ 476,813
Cost of product sales	470,142	473,850	414,249
Gross profit	70,957	65,407	62,564
Operating costs and expenses:
Research and development	7,228	6,988	7,204
Selling, general and administrative	49,515	39,958	35,170
Impairment of GreenLine tradename	34,000
Total operating costs and expenses	90,743	46,946	42,374
Operating (loss) income	(19,786)	18,461	20,190
Dividend income	1,650	1,417	1,125
Interest income	71	315	260
Interest expense	(1,987)	(1,829)	(1,650)
Other income	1,200	3,107	10,000
Net (loss) income before taxes	(18,852)	21,471	29,925
Income tax benefit (expense)	7,404	(7,746)	(10,583)
Consolidated net (loss) income	(11,448)	13,725	19,342
Non-controlling interest	(193)	(181)	(197)
Net (loss) income and comprehensive (loss) income applicable to common stockholders	$ (11,641)	$ 13,544	$ 19,145
Basic net (loss) income per share (in dollars per share)	$ (0.43)	$ 0.50	$ 0.72
Diluted net (loss) income per share (in dollars per share)	$ (0.43)	$ 0.50	$ 0.71
Shares used in per share computation:
Basic (in shares)	27,044	26,884	26,628
Diluted (in shares)	27,044	27,336	27,120

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance (in shares) at May. 26, 2013	26,402,247
Balance at May. 26, 2013	$ 26	$ 126,258	$ 52,409	$ 178,693	$ 1,721
Issuance of common stock at $5.63 to $13.32 per share, net of taxes paid by Landec on behalf of employees (in shares)	372,852
Issuance of common stock at $5.63 to $13.32 per share, net of taxes paid by Landec on behalf of employees	$ 1	2,297		2,298
Issuance of common stock for vested restricted stock units (in shares)	40,154
Taxes paid by Company for stock swaps and RSUs		(345)		(345)
Stock-based compensation		1,356		1,356
Tax benefit from stock-based compensation expense		1,922		1,922
Non-controlling interest					197
Payments to non-controlling interest					(226)
Net and comprehensive income			19,145	19,145
Balance (in shares) at May. 25, 2014	26,815,253
Balance at May. 25, 2014	$ 27	131,488	71,554	203,069	1,692
Issuance of common stock at $5.63 to $13.32 per share, net of taxes paid by Landec on behalf of employees (in shares)	102,745
Issuance of common stock at $5.63 to $13.32 per share, net of taxes paid by Landec on behalf of employees		122		122
Issuance of common stock for vested restricted stock units (in shares)	72,492
Taxes paid by Company for stock swaps and RSUs		(343)		(343)
Stock-based compensation		1,577		1,577
Tax benefit from stock-based compensation expense		463		463
Non-controlling interest					181
Payments to non-controlling interest					(196)
Net and comprehensive income			13,544	13,544
Balance (in shares) at May. 31, 2015	26,990,490
Balance at May. 31, 2015	$ 27	133,307	85,098	218,432	1,677	$ 220,109
Issuance of common stock at $5.63 to $13.32 per share, net of taxes paid by Landec on behalf of employees (in shares)	125,167
Issuance of common stock at $5.63 to $13.32 per share, net of taxes paid by Landec on behalf of employees		322		322
Issuance of common stock for vested restricted stock units (in shares)	32,439
Stock-based compensation		3,465		3,465
Tax benefit from stock-based compensation expense		150		150
Non-controlling interest					193
Payments to non-controlling interest					(248)
Net and comprehensive income			(11,641)	(11,641)
Balance (in shares) at May. 29, 2016	27,148,096
Balance at May. 29, 2016	$ 27	$ 137,244	$ 73,457	$ 210,728	$ 1,622	$ 212,350

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	May 29, 2016	May 31, 2015	May 25, 2014
Cash flows from operating activities:
Consolidated net (loss) income	$ (11,448,000)	$ 13,725,000	$ 19,342,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,395,000	7,090,000	7,114,000
Stock-based compensation expense	3,465,000	1,577,000	1,356,000
Deferred taxes	(9,787,000)	4,152,000	5,585,000
Change in investment in non-public company , fair value	(1,200,000)	(3,900,000)	(10,000,000)
Tax benefit from stock based compensation	(150,000)	(463,000)	(1,922,000)
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net		793,000
Net loss (gain) on disposal of property and equipment	46,000	(90,000)	329,000
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)	34,000,000
Changes in assets and liabilities:
Accounts receivable, net	73,000	(1,754,000)	(7,982,000)
Inventories, net	(508,000)	(292,000)	(622,000)
Prepaid expenses and other current assets	965,000	177,000	4,711,000
Accounts payable	(4,105,000)	2,894,000	(141,000)
Accrued compensation	(1,282,000)	2,646,000	38,000
Other accrued liabilities	2,556,000	11,000	3,211,000
Restricted cash collateral	(225,000)
Deferred revenue	(11,000)	(411,000)	6,000
Net cash provided by operating activities	21,784,000	26,155,000	21,045,000
Cash flows from investing activities:
Purchases of property and equipment	(40,867,000)	(17,511,000)	(14,886,000)
Deposit on capital lease	(850,000)
Investment in non-public company, fair value		(18,000,000)
Proceeds from sales of fixed assets	127,000	1,071,000
Purchases of marketable securities			(1,417,000)
Proceeds from maturities of marketable securities			2,962,000
Net cash used in investing activities	(41,590,000)	(34,440,000)	(13,341,000)
Cash flows from financing activities:
Proceeds from sale of common stock	322,000	122,000	2,298,000
Taxes paid by Company for stock swaps and RSUs	0	(343,000)	(1,271,000)
Tax benefit from stock-based compensation expense	150,000	463,000	1,922,000
Net change in other assets/liabilities	(247,000)	(24,000)	31,000
Proceeds from long term debt	26,748,000	15,014,000
Payments on long term debt	(14,652,000)	(6,867,000)	(5,933,000)
Proceeds from lines of credit	26,100,000	30,417,000	9,500,000
Payments on lines of credit	(22,600,000)	(30,417,000)	(13,500,000)
Payments to non-controlling interest.	(248,000)	(196,000)	(226,000)
Net cash provided by (used in) financing activities	15,573,000	8,169,000	(7,179,000)
Net (decrease) increase in cash and cash equivalents	(4,233,000)	(116,000)	525,000
Cash and cash equivalents at beginning of year	14,127,000	14,243,000	13,718,000
Cash and cash equivalents at end of year	9,894,000	14,127,000	14,243,000
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	2,017,000	1,994,000	1,504,000
Cash paid during the period for income taxes, net of refunds received	2,625,000	150,000	50,000
Supplemental disclosure of non-cash investing and financing activities:
Facility and equipment acquired under a capital lease	$ 3,908,000

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

12 Months Ended

May 29, 2016

Notes to Financial Statements

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 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 and non-HA biomaterials through its Lifecore Biomedical, Inc. (“Lifecore”) subsidiary. The Company’s HA biopolymers and non-HA materials are proprietary in that they are specially formulated for specific customers to meet strict regulatory requirements.

The Company’s technologies, along with its customer relationships and tradenames, are the foundation, and a key differentiating advantage upon which Landec has built its business.

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 the non-public company by the Company are not VIEs.

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; self-insurance liabilities;

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 the Company uses to manufacture its products are currently purchased from a single source, including some monomers used to synthesize Intelimer polymers, substrate materials for its breathable membrane products and raw materials for its HA products.

The operations of Windset, in which the Company holds a 26.9% minority investment, are predominantly located in British Columbia, Canada 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 29, 2016, sales to the Company’s top five customers accounted for approximately 45% of total revenue with the top two customers from the Packaged Fresh Vegetables segment, Costco Wholesale Corporation (“Costco”) and Wal-mart, Inc. (“Wal-mart”) accounting for approximately 20% and 12%, respectively, of total revenues. In addition, approximately 31% 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 29, 2016, the top two customers, Costco and Wal-mart represented approximately 13% and 15%, respectively, of total accounts receivable.

During the fiscal year ended May 31, 2015, sales to the Company’s top five customers accounted for approximately 46% of total revenue with the top two customers from the Packaged Fresh Vegetables segment, Costco and Wal-mart, accounting for approximately 21% and 11%, 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 31, 2015, the top two customers, Costco and Wal-mart represented approximately 15% and 13%, respectively, 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 29, 2016 and May 31, 2015.

Accounts Receivable and Sales Returns and Allowance for Doubtful Accounts

The Company carries its accounts receivable at their face amounts less an allowance for estimated sales returns and doubtful accounts. Sales return allowances are estimated based on historical sales return amounts. Further, 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 sales returns and doubtful accounts are summarized in the following table (in thousands).

	Balance at beginning of period		Adjustments charged to revenue and expenses		Write offs, net of recoveries			Balance at end of period
Year ended May 25, 2014	$	583	$	143	$	(210	)	$	516
Year ended May 31, 2015	$	516	$	—	$	(134	)	$	382
Year ended May 29, 2016	$	382	$	63	$	(110	)	$	335

Revenue Recognition

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

Apio’s Packaged Fresh Vegetables revenues generally consist of revenues generated from the sale of specialty packaged fresh-cut and whole value-added processed vegetable products that are generally washed and packaged in our proprietary packaging and sold under Apio’s Eat Smart and GreenLine brands and various private labels. Revenue is generally recognized upon shipment of these products to customers. 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 (Loss) Income.

In addition, Packaged Fresh Vegetables value-added revenues include the revenues generated from Apio Cooling, LP, a vegetable cooling operation in which Apio is the general partner with a 60% ownership position and from the sale of BreatheWay® packaging to license partners. Revenue is recognized on the vegetable cooling operations as cooling and storage services are provided to our customers. Sales of BreatheWay packaging are recognized when shipped to our customers.

Apio’s Food Export revenues consist of revenues generated from the purchase and sale of primarily whole commodity fruit and vegetable products to Asia by Cal-Ex. As most Cal-Ex customers are in countries outside of the U.S., title transfers and revenue is generally recognized upon arrival of the shipment in the foreign port. Apio records revenue equal to the sale price to third parties because it takes title to the product while in transit.

Our Biomaterials business principally generates revenue through the sale of products containing HA. Lifecore primarily sells products to customers in three medical areas: (1) Ophthalmic, which represented approximately 55% of Lifecore’s revenues in fiscal year 2016, (2) Orthopedic, which represented approximately 20% of Lifecore’s revenues in fiscal year 2016 and (3) Other/Non-HA products represented approximately 25% of Lifecore’s revenues in fiscal year 2016. The vast majority of revenues from our Biomaterials business are recognized upon shipment.

Lifecore’s business development revenues, a portion of which are included in all three medical areas, are related to contract research and development (R&D) services and multiple element arrangement services with customers where the Company provides products and/or services in a bundled arrangement.

Contract R&D revenue 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 payment is received or collection is assured.

For sales arrangements that contain multiple elements, the Company splits the arrangement into separate units of accounting if the individually delivered elements have value to the customer on a standalone basis. The Company also evaluates whether multiple transactions with the same customer or related party should be considered part of a multiple element arrangement, whereby the Company assesses, among other factors, whether the contracts or agreements are negotiated or executed within a short time frame of each other or if there are indicators that the contracts are negotiated in contemplation of each other. The Company then 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 the estimated selling price to allocate revenue between the elements of an 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 it represents a separate unit 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 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.

For licensing revenue, the 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.

From time to time, the Company offers customers sales incentives, which include volume rebates and discounts. These amounts are estimated on a quarterly basis and recorded as a reduction of revenue.

A summary of revenues by type of revenue arrangement as described above is as follows (in thousands):

	Year ended May 29 , 201 6		Year ended May 31 , 201 5		Year ended May 25 , 201 4
Recorded upon shipment	$	458,985	$	465,484	$	398,938
Recorded upon acceptance in foreign port		64,181		67,714		69,710
Revenue from multiple element arrangements		13,400		4,253		6,811
Revenue from license fees, R&D contracts and royalties		4,533		1,806		1,354
Total	$	541,099	$	539,257	$	476,813

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 money market funds. The market value of cash equivalents approximates their historical cost given their short-term nature.

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or net realizable value. As of May 29, 2016 and May 31, 2015 inventories consisted of (in thousands):

	May 29, 2016		May 31, 2015
Finished goods	$	12,165	$	13,271
Raw materials		9,855		9,879
Work in progress		3,515		1,877
Total inventories	$	25,535	$	25,027

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 based on the estimate of demand for its products.

Advertising Expense

Advertising expenditures for the Company are expensed as incurred. Advertising expense for the Company for fiscal years 2016, 2015 and 2014 was $2.1 million, $1.3 million and $447,000, 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 and advances receivable 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 29, 2016.

Related Party Transactions

The Company sold products to and earned license fees from Windset Holdings 2010 Ltd., a Canadian corporation (“Windset”) during the last three fiscal years. During fiscal years 2016, 2015 and 2014, the Company recognized revenues of $666,000, $537,000, and $365,000, respectively. These amounts have been included in product sales in the accompanying Consolidated Statements of Comprehensive (Loss) Income, from the sale of products to and license fees from Windset. The related receivable balances of $523,000 and $306,000 from Windset are included in accounts receivable in the accompanying Consolidated Balance Sheets as of May 29, 2016 and May 31, 2015, respectively.

Additionally, unrelated to the revenue transactions above, the Company purchases produce from Windset for sale to third parties. During fiscal years 2016, 2015 and 2014, the Company recognized cost of product sales of $32,000, $1.6 million, and $1.6 million, respectively, in the accompanying Consolidated Statements of Comprehensive (Loss) Income, from the sale of products purchased from Windset. The related accounts payable of zero and $244,000 to Windset are included in accounts payable in the accompanying Consolidated Balance Sheets as of May 29, 2016 and May 31, 2015, 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 forty years for buildings and leasehold improvements and three to twenty 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 2016, 2015 and 2014, the Company capitalized $174,000, $509,000 and $913,000 in software development costs, respectively.

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 the Biomaterials reporting unit and the acquisitions of Apio and GreenLine were allocated to the Packaged Fresh Vegetables reporting unit based

upon the allocation of assets and liabilities acquired and consideration paid for

each reporting unit. As of May 29, 2016, the Biomaterials reporting unit had $13.9 million of goodwill and the Packaged Fresh Vegetables 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 all indefinite-lived assets, including goodwill, the Company performs a qualitative analysis in accordance with ASC 350-30-35. 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, which judgments are inherently uncertain.

During the three months ended February 28, 2016, management made the strategic decision to convert its GreenLine branded products in retail grocery stores to the Eat Smart brand over the following six month period. This decision resulted in an impairment of the GreenLine tradename. Management estimated the value of the remaining GreenLine branded foodservice sales using the relief from royalty valuation method, which resulted in an impairment of $34.0 million. The remaining GreenLine tradename associated with the Company’s foodservice business is valued at $2.0 million. The impairment charge is recorded in the Consolidated Statements of Comprehensive (Loss) Income as “Impairment of GreenLine tradename” as an operating expense under the Packaged Fresh Vegetables reporting unit.

Subsequent to the write down of the GreenLine tradename during the third quarter of fiscal year 2016, the Company tested its indefinite-lived intangible assets for impairment as of February 29, 2016 and determined that no additional adjustments to the carrying values of these assets were necessary as of that date. Subsequent to the 2016 annual impairment test, there have been no significant events or circumstances affecting the valuation of indefinite-lived intangible assets. As of May 29, 2016, there were no events or changes in circumstances that indicated that the carrying amount of intangible assets may not be recoverable. Therefore, there was no impairment to the carrying value of the Company's indefinite-lived intangible assets.

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.

In the annual impairment test, the Company first assesses qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In assessing the qualitative factors, management considers the impact of these key factors: macro-economic conditions, industry and market environment, overall financial performance of the Company, cash flow from operating activities, market capitalization and stock price. If management determines as a result of the qualitative assessment that it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, then the quantitative test is required. Otherwise, no further testing is required.

In a quantitative test, the Company compares the fair value of indefinite-lived intangible assets to its carrying value including goodwill. The Company determines the fair value using both an income approach and a market approach. Under the income approach, fair value is determined based on estimated future cash flows, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company and the rate of return an outside investor would expect to earn. Under the market-based approach, information regarding the Company is utilized as well as publicly available industry information to determine earnings multiples that are used to value the Company. If the carrying value of the Company exceeds its fair value, the Company will determine the amount of impairment loss by comparing the implied fair value of goodwill with the carrying value of goodwill. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value.

As of February 29, 2016, the Company tested its goodwill for impairment and determined that no indication of impairment existed as of that date. As a result, it was not necessary to perform the two-step quantitative goodwill impairment test at that time. Subsequent to the 2016 annual impairment test, there have been no significant events or circumstances affecting the valuation of goodwill that indicate a need for goodwill to be further tested for impairment. There were no impairment losses for goodwill during fiscal years 2016, 2015 and 2014.

Investment in Non-Public Company

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 29, 2016 and May 31, 2015. The Company has elected to account for its investment in Windset under the fair value option (see Note 2).

Partial Self-I

nsurance on Employee Health and Workers Compensation Plans

The Company provides health insurance benefits to eligible employees under a self-insured plans whereby the Company pays actual medical claims subject to certain stop loss limits and self-insures its workers compensation claims. The Company records self-insurance liabilities based on actual claims filed and an estimate of those claims incurred but not reported. Any projection of losses concerning the Company's liability is subject to a high degree of variability. Among the causes of this variability are unpredictable external factors such as inflation rates, changes in severity, benefit level changes, medical costs, and claims settlement patterns. This self-insurance liability is included in accrued liabilities and represents management's best estimate of the amounts that have not been paid as of May 29, 2016. It is reasonably possible that the expense the Company ultimately incurs could differ and adjustments to future reserves may be necessary.

Deferred Revenue

Cash received in advance of services performed are recorded as deferred revenue. At May 29, 2016, $832,000 was recognized as advances from customers. At May 31, 2015, $843,000 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 (Loss) Income, following the consolidated net income (loss) 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 balances of $1.6 million at May 29, 2016 and $1.7 million at May 31, 2015 was 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 29, 2016, the Company had a $1.2 million valuation allowance against its 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.

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 (loss) income per share (in thousands, except per share amounts):

	Fiscal Year Ended May 29, 2016			Fiscal Year Ended May 31, 2015		Fiscal Year Ended May 25, 2014
Numerator:
Net (loss) income applicable to Common Stockholders	$	(11,641	)	$	13,544	$	19,145

Denominator:
Weighted average shares for basic net (loss) income per share		27,044			26,884		26,628
Effect of dilutive securities:
Stock options and restricted stock units		—			452		492
Weighted average shares for diluted net (loss) income per share		27,044			27,336		27,120

Diluted net (loss) income per share	$	(0.43	)	$	0.50	$	0.71

Due to the Company’s net loss for fiscal year 2016, the net loss per share includes only weighted average shares outstanding and thus excludes 1.6 million of outstanding options and RSUs as such impacts would be antidilutive for fiscal year 2016.

Options to purchase 371,115 and 333,993 shares of Common Stock at a weighted average exercise price of $14.02 and $14.15 per share were outstanding during fiscal years ended May 31, 2015 and May 25, 2014, 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. These costs include the following: raw materials (including produce, 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 (generally the vesting period). For nonstatutory options, 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 within the statement of cash flows. The Company’s stock-based awards include stock option grants and restricted stock unit awards (“RSUs”).

The following table summarizes the stock-based compensation for options and RSUs (in thousands):

	Fiscal Year Ended May 29, 2016		Fiscal Year Ended May 31, 2015		Fiscal Year Ended May 25, 2014
Options	$	1,352	$	561	$	558
RSUs		2,113		1,016		798
Total stock-based compensation expense	$	3,465	$	1,577	$	1,356

The following table summarizes the stock-based compensation by income statement line item (in thousands):

	Fiscal Year Ended May 29, 2016		Fiscal Year Ended May 31, 2015		Fiscal Year Ended May 25, 2014
Research and development	$	241	$	38	$	39
Sales, general and administrative		3,224		1,539		1,317
Total stock-based compensation expense	$	3,465	$	1,577	$	1,356

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. RSUs are valued at the closing market price of the Company’s common stock on the date of grant. 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 and expected life of option awards, which have a significant impact on the fair value estimates. As of May 29, 2016, May 31, 2015 and May 25, 2014, the fair value of stock option grants was estimated using the following weighted average assumptions:

	Fiscal Year Ended May 29, 2016			Fiscal Year Ended May 31, 2015			Fiscal Year Ended May 25, 2014
Expected life (in years)		3.38			3.25			3.50
Risk-free interest rate		1.09	%		1.00	%		0.71	%
Volatility		31	%		32	%		41	%
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 29, 2016, May 31, 2015 and May 25, 2014 was $2.85, $3.42 and $4.41 per share, respectively. No stock options were granted above or below grant date market prices during the fiscal years ended May 29, 2016, May 31, 2015 and May 25, 2014.

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 2 to the Consolidated Financial Statements). 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 29, 2016 and May 31, 2015, the only asset of the Company that was measured at fair value on a recurring basis was its minority interest investment in Windset.

The Company has elected the fair value option of accounting for its investment in Windset. The calculation of fair value utilizes significant unobservable inputs, 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 29, 2016 and May 31, 2015 was due to the Company’s 26.9% 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 29, 2016			At May 31, 2015
Annual consolidated revenue growth rates		4	%			4	%
Annual consolidated expense growth rates		4	%			4	%
Consolidated income tax rates		15	%			15	%
Consolidated discount rates		12.5	%	15%	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 marketability 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 29, 2016
10% increase in revenue growth rates	$	600
10% increase in expense growth rates	$	(600	)
10% increase in income tax rates	$	-
10% increase in discount rates	$	(300	)

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 fair value of the Company’s Windset investment as of May 29, 2016 and May 31, 2015 was $62.7 million and $61.5 million, respectively.

Recent Accounting Pronouncements

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements intended to provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a company’s contracts with customers. ASU 2014-09 will be effective beginning the first quarter of the Company's fiscal year 2019 with early application permitted in the first quarter of the Company’s fiscal year 2018. The standard allows for either “full retrospective” adoption, meaning the standard is applied to all of the periods presented, or “modified retrospective” adoption, meaning the standard is applied only to the most current period presented in the financial statements. Management is currently evaluating the effect ASU 2014-09 will have on the Company's Consolidated Financial Statements and disclosures.

Debt Issuance Costs

In April 2015, the FASB issued ASU No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2017, with early adoption permitted. Management does not expect that adoption of ASU 2015-03 will have a significant impact on its Consolidated Financial Statements and disclosures.

Balance Sheet Classification of

Deferred Taxes

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires all deferred tax assets and liabilities to be presented on the consolidated balance sheets as noncurrent. Deferred Taxes were previously required to be classified as current or non-current on the

consolidated balance sheets. The Company early adopted ASU 2015-17 effective February 28, 2016 on a prospective basis. Adoption of this ASU resulted in a reclassification of the Company’s net current deferred tax asset to the net non-current deferred tax liability in its consolidated balance sheet as of February 28, 2016. No prior periods were retrospectively adjusted.

Lease

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use-assets. ASU 2016-02 also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2020 on a modified retrospective basis, with early adoption permitted. Management is currently evaluating the effect ASU 2016-02 will have on the Company's Consolidated Financial Statements and disclosures.

Stock-Based Compensation

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718),” which changes how companies account for certain aspects of stock-based awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new guidance is effective for the Company beginning in the first quarter of fiscal year 2018, with early adoption permitted. Management is currently evaluating the effect ASU 2016-09 will have on the Company's Consolidated Financial Statements and disclosures.

Note 2 - Investments in Non-public Company

12 Months Ended

May 29, 2016

Notes to Financial Statements

Investment Holdings [Text Block]

2 .	Investment s in non-public companies

Aesthetic Sciences

In December 2005, Landec entered into a licensing agreement with Aesthetic Sciences for the exclusive rights to use Landec's Intelimer® materials technology for the development of dermal fillers worldwide under the agreement. The Company received shares of preferred stock in exchange for the license. Aesthetic Sciences sold the rights to its Smartfil Injector System on July 16, 2010. The royalty period from the sale of the Smartfil Injector System began November 1, 2014 and as a result the Company obtained for the first time during the third quarter of fiscal year 2015 financial information for the products for which a royalty is due Aesthetic Sciences. Based on the review of this historical financial information and discussions with the acquirer, the Company concluded that its investment in Aesthetic Sciences was other than temporarily impaired, and therefore wrote off its remaining $793,000 investment in Aesthetic Sciences as of March 1, 2015. This impairment is included in other income in the Consolidated Statements of Comprehensive (Loss) Income.

Windset

On February 15, 2011, Apio entered into a share purchase agreement (the “Windset Purchase Agreement”) with Windset. Pursuant to the Windset Purchase Agreement, Apio purchased from Windset 150,000 Senior A preferred shares for $15.0 million and 201 common shares for $201. On July 15, 2014, Apio increased its

investment in Windset by purchasing from the Newell Capital Corporation an additional 68 shares of common stock and 51,211 shares of junior preferred stock of Windset for $11.0 million. After this purchase, the Company’s common shares represent a 26.9% ownership interest in Windset. The non-voting Senior A preferred shares yield a cash dividend of 7.5% annually. The dividend is payable within 90 days of each anniversary of the execution of the Windset Purchase Agreement. The non-voting junior preferred stock does not yield a dividend unless declared by the Board of Directors of Windset and no such dividend has been declared.

The Windset Purchase Agreement includes a put and call option, which can be exercised on, or after, the sixth

anniversary of the Windset Purchase Agreement whereby Apio can exercise the put to sell its common, Senior A preferred shares and junior preferred shares to Windset, or Windset can exercise the call to purchase those shares from Apio, in either case, at a price equal to 26.9% of the fair market value of Windset’s common shares from the date of the Company’s investment through the put and call date, plus the liquidation value of the preferred shares of $20.1 million ($15.0 million for the Senior A preferred shares and $5.1 million for the junior preferred shares). Under the terms of the arrangement with Windset, the Company is entitled to designate one of five members on the Board of Directors of Windset.

On October 29, 2014, Apio further increased its investment in Windset by purchasing 70,000 shares of Senior B preferred shares for $7.0 million. The Senior B preferred shares pays an annual dividend of 7.5% on the amount outstanding at each anniversary date of the Windset Purchase Agreement. The Senior B preferred shares purchased by Apio have a put feature whereby Apio can sell back to Windset $1.5 million of shares on the first anniversary, an additional $2.75 million of shares on the second anniversary and the remaining $2.75 million on the third anniversary. After the third anniversary, Apio may at any time put any or all of the shares not previously sold back to Windset. At any time on or after February 15, 2017, Windset has the right to call any or all of the outstanding common shares and at such time must also call the same proportion of Senior A preferred shares, Senior B preferred shares and junior preferred shares owned by Apio. Windset’s partial call provision is restricted such that a partial call cannot result in Apio holding less than 10% of Windset’s common shares outstanding.

The investment in Windset does not qualify for equity method accounting as the investment does not meet the criteria of in-substance common stock due to returns through the annual dividend on

he non-voting senior preferred shares that are not available to the common stock holders. As the put and call options require the Purchased Shares to be put or called in equal proportions, the Company has deemed that the investment, in substance, should be treated as a single security for purposes of accounting. The Company has adopted fair value option in the accounting for its investment in Windset effective on the acquisition date. The fair value of the Company’s investment in Windset utilizes significant unobservable inputs in the discounted cash flow models, including projected cash flows, growth rates and the discount rate, and is therefore considered a Level 3 for fair value measurement purposes (see Note 1).

The Company believes that reporting its investment at fair value provides its investors with useful information on the performance of the Company’s investment and the anticipated appreciation in value as Windset expands its business.

The fair value of the Company’s investment in Windset was determined utilizing the Windset Purchase Agreement’s put/call calculation for value and a discounted cash flow model based on projections developed by Windset, and considers the put and call conversion options. These features impact the duration of the cash flows utilized to derive the estimated fair values of the investment. These two discounted cash flow models’ estimate for

fair value, which generally approximate a similar result, is then weighted. Assumptions included in these discounted cash flow models will be evaluated quarterly based on Windset’s actual and projected operating results to determine the change in fair value.

The Company recorded $1.7 million, $1.4 million and $1.1 million in dividends for fiscal years ended May 29, 2016, May 31, 2015 and May 25, 2014, respectively. In addition, the Company recorded $1.2 million, $3.9 million and $10.0 million of income for fiscal years ended May 29, 2016, May 31, 2015 and May 25, 2014, respectively, which is included in other income in the Consolidated Statements of Comprehensive (Loss) Income, from the increase in the fair market value of the Company’s investment in Windset.

The Company also entered into an exclusive license agreement with Windset, which was executed in June 2010, prior to contemplation of Apio’s investment in Windset.

Note 3 - Property and Equipment

12 Months Ended

May 29, 2016

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

3.	Property and Equipment

Property and equipment consists of the following (in thousands):

	Years of
	Useful Life			May 29, 2016			May 31, 2015
Land and buildings	15	-	40	$	67,192		$	57,426
Leasehold improvements	3	-	20		1,620			1,360
Computers, capitalized software, machinery, equipment and autos	3	-	20		87,464			68,260
Furniture and fixtures	3	-	7		901			804
Construction in process					17,677			6,837
Gross property and equipment					174,854			134,687
Less accumulated depreciation and amortization					(53,974	)		(50,222	)
Net property and equipment				$	120,880		$	84,465

Depreciation and amortization expense for property and equipment for the fiscal years ended May 29, 2016, May 31, 2015 and May 25, 2014 was $8.2 million, $6.2 million and $6.2 million, respectively. Amortization related to capitalized leases, which is included in depreciation expense, was $49,000 for fiscal year ended May 29, 2016 and zero for the fiscal years ended May 31, 2015 and May 25, 2014. Amortization related to capitalized software was $269,000, $158,000 and $189,000 for fiscal years ended May 29, 2016, May 31, 2015 and May 25, 2014, respectively. The unamortized computer software costs as of May 29, 2016 and May 31, 2015 was $865,000 and $1.1 million, respectively.

Note 4 - Intangible Assets

12 Months Ended

May 29, 2016

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

4.	Intangible Assets

The carrying amount of goodwill as of May 29, 2016, May 31, 2015 and May 25, 2014 was $35.7 million for the Packaged Fresh Vegetables segment and $13.9 million for the Biomaterials segment.

Information regarding Landec’s other intangible assets is as follows (in thousands):

	Trademarks & Trade names			Customer Relationships			Total
Balance as of May 26, 2013	$	48,428		$	9,606		$	58,034
Amortization expense		—			(886	)		(886	)
Balance as of May 25, 2014		48,428			8,720			57,148
Amortization expense		—			(885	)		(885	)
Balance as of May 31, 2015		48,428			7,835			56,263
Impaired during the period		(34,000	)		—			(34,000	)
Amortization expense		—			(867	)		(867	)
Balance as of May 29, 2016	$	14,428		$	6,968		$	21,396

Accumulated amortization of Trademarks and Trade names was $872,000 as of May 29, 2016 and May 31, 2015. Accumulated amortization of Customer Relationships as of May 29, 2016 and May 31, 2015 was $4.2 million and $3.4 million, respectively. Accumulated impairment losses as of May 29, 2016 and May 31, 2015 were $38.8 million and $4.8 million, respectively. Lifecore’s Customer Relationships amount of $3.7 million is being amortized over 12 years and Apio’s Customer Relationships amount of $7.5 million is being amortized over 13 years. The amortization expense for the next five fiscal years is estimated to be $885,000 per year.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Note 5 - Stockholders' Equity

12 Months Ended

May 29, 2016

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

5.	Stockholders’ Equity

Holders of Common Stock are entitled to one vote per share.

Convertible Preferred Stock

The Company has authorized two million shares of preferred stock, and as of May 29, 2016 has no outstanding preferred stock.

Common Stock and Stock Option Plans

At May 29, 2016, the Company had 2.7 million

common shares reserved for future issuance under Landec equity incentive plans.

On October 10, 2013, following stockholder approval at the Annual Meeting of Stockholders of the

Company, the 2013 Stock Incentive Plan (the “Plan”) became effective and replaced the Company’s 2009 Stock Incentive Plan. Employees (including officers), consultants and directors of the Company and its subsidiaries and affiliates are eligible to participate in the Plan.

The Plan provides for the grant of stock options (both nonstatutory and incentive stock options), stock grants, stock units and stock appreciation rights. Awards under the Plan will be evidenced by an agreement with the Plan

participants and 2.0 million shares of the Company’s Common Stock (“Shares”) were initially available for award under the Plan. Under the Plan, no recipient may receive awards during any fiscal year that exceeds the following amounts: (i) stock options covering in excess of 500,000 Shares; (ii) stock grants and stock units covering in excess of 250,000 Shares in the aggregate; or (iii) stock appreciation rights covering more than 500,000 Shares. In addition, awards to non-employee directors are discretionary. However, a non-employee director may not be granted awards in excess of 30,000 Shares in the aggregate during any fiscal year. The exercise price of the options is the fair market value of the Company’s Common Stock on the date the options are granted. As of May 29, 2016, 1,474,507 options to purchase shares and restricted stock units (RSUs) were outstanding.

On October 15, 2009, following stockholder approval at the Annual Meeting of Stockholders of the Company, the 2009 Stock Incentive Plan (the “2009 Plan”) became effective and replaced the Company’s 2005 Stock Incentive Plan. Employees (including officers), consultants and directors of the Company and its subsidiaries and affiliates were eligible to participate in the 2009 Plan. The 2009 Plan provided for the grant of stock options (both nonstatutory and incentive stock options), stock grants, stock units and stock appreciation rights. Under the 2009 Plan, 1.9 million Shares were initially available for awards and as of May 29, 2016, 783,808 options to purchase shares and restricted stock units (RSUs) were outstanding.

Stock-Based Compensation Activity

Activity under all Landec equity incentive plans is as follows:

				Restricted Stock Outstanding					Stock Options Outstanding
	RSUs and Options Available for Grant			Number of Restricted Shares			Weighted Average Grant Date Fair Value		Number of Stock Options			Weighted Average Exercise Price
Balance at May 26, 2013		422,977			95,330		$	6.52		1,339,892		$	6.58
Additional shares reserved		2,000,000			—			—		—			—
Granted		(420,131	)		128,631		$	14.30		291,500		$	14.30
Awarded/Exercised		—			(62,499	)	$	6.18		(398,080	)	$	6.45
Forfeited		—			(12,162	)	$	8.86		(12,452	)	$	6.66
Plan shares expired		(2,846	)		—			—		(5,000	)	$	13.32
Balance at May 25, 2014		2,000,000			149,300		$	13.17		1,215,860		$	8.45
Granted		(1,118,857	)		324,357		$	13.97		794,500		$	14.20
Awarded/Exercised		—			(79,219	)	$	11.57		(205,419	)	$	6.55
Forfeited		—			(1,667	)	$	14.30		(2,223	)	$	14.30
Plan shares expired		—			—			—		(66,000	)	$	11.32
Balance at May 31, 2015		881,143			392,771		$	14.15		1,736,718		$	11.19
Granted		(443,175	)		177,675		$	12.10		265,500		$	12.04
Awarded/Exercised		—			(32,439	)	$	13.28		(220,717	)	$	6.44
Forfeited		28,000			(11,166	)	$	14.36		(24,473	)	$	14.38
Plan shares expired		—			—			—		(25,554	)	$	9.86
Balance at May 29, 2016		465,968			526,841		$	13.51		1,731,474		$	11.90

Upon vesting of certain RSUs and the exercise of certain options during fiscal years 2016, 2015 and 2014, certain RSUs and exercised options were net share-settled to cover the required exercise price and withholding tax and the remaining amounts were converted into an equivalent number of shares of Common Stock. The Company withheld shares with value equivalent to the exercise price for options and the employees' minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total

shares withheld for fiscal years 2016, 2015 and 2014 were 95,550, 112,443 and 47,573 RSUs and options, respectively,

which was based on the value of the option and/or RSUs on their exercise or vesting date as determined by the Company's closing stock price. Total payments for the employees' tax obligations to the taxing authorities during fiscal years 2016, 2015 and 2014 were approximately zero, $343,000 and $1.3 million, respectively. These net-share settlements had the effect of share repurchases by the Company as they reduced and retired the number of shares that would have otherwise have been issued as a result of the vesting and did not represent an expense to the Company.

The following table summarizes information concerning stock options outstanding and exercisable at May 29, 2016

			Options Outstanding								Options Exercisable
Range of Exercise Prices			Number of Shares Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Aggregate Intrinsic Value		Number of Shares Exercisable		Weighted Average Exercise Price		Aggregate Intrinsic Value
$5.00	-	$9.00		401,807		1.23	$	5.86	$	2,249,268		401,807	$	5.86	$	2,249,268
$9.01	-	$13.50		312,167		6.35	$	11.86	$	54,784		36,617	$	10.56	$	40,834
$13.51	-	$14.30		364,000		4.41	$	14.13	$	—		308,722	$	14.20	$	—
$14.31	-	$14.39		653,500		6.00	$	14.39	$	—		216,687	$	14.39	$	—
$5.00	-	$14.39		1,731,474		4.62	$	11.90	$	2,304,052		963,833	$	10.63	$	2,290,102

At May 29, 2016 and May 31, 2015 options to purchase 963,833 and 849,464 shares of Landec’s Common Stock were vested, respectively, and 767,641 and 887,254 were unvested, respectively. No options have been exercised prior to being vested. The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company’s closing stock price of $11.46 on May 27, 2016, which would have been received by holders of stock options had all holders of stock options exercised their stock options that were in-the-money as of that date. The total number of in-the-money stock options exercisable as of May 29, 2016, was 418,474 shares. The aggregate intrinsic value of stock options exercised during the fiscal year 2016 was $1.1 million.

Option Awards

	Outstanding Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term (in years)		Aggregate Intrinsic Value
Vested		963,833	$	10.63		3.38	$	2,290,102
Expected to vest		750,704	$	13.51		6.17		13,517
Total		1,714,537	$	11.89		4.60	$	2,303,619

As of May 29, 2016, there was $6.8 million of total unrecognized compensation expense related to unvested equity compensation awards granted under the Company’s incentive stock plans. Total expense is expected to be recognized over the weighted-average period of 2.1 years for both stock options and restricted stock awards.

Stock Repurchase Plan

On July 14, 2010, the Board of Directors of the Company approved the establishment of a stock repurchase plan which allows for the repurchase of up to $10.0 million of the Company’s Common Stock. The Company may repurchase its Common Stock from time to time in open market purchases or in privately negotiated transactions. The timing and actual number of shares repurchased is at the discretion of management of the Company and will depend on a variety of factors, including stock price, corporate and regulatory requirements, market conditions, the relative attractiveness of other capital deployment opportunities and other corporate priorities. The stock repurchase program does not obligate Landec to acquire any amount of its Common Stock and the program may be modified, suspended or terminated at any time at the Company's discretion without prior notice. During fiscal years 2016, 2015 and 2014, the Company did not purchase any shares on the open market.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

Note 6 - Debt

12 Months Ended

May 29, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

Debt

Long-term debt consists of the following (in thousands):

	May 29, 2016			May 31, 2015
Real property loan agreement with General Electric Capital Corporation (“GE Capital”); due in monthly principal and interest payments of $133,060 through May 1, 2022 with interest based on a fixed rate of 4.02% per annum	$	14,167		$	15,172
Capital equipment loan with GE Capital; due in monthly principal and interest payments of $175,356 through May 1, 2019 with interest based on a fixed rate of 4.39% per annum		5,904			7,705
Capital equipment loan with GE Capital; due in monthly principal and interest payments of $95,120 through July 17, 2019 with interest based on a fixed rate of 3.68% per annum		5,558			6,476
Capital equipment loan with GE Capital; due in monthly principal and interest payments of $55,828 through December 1, 2019 with interest based on a fixed rate of 3.74% per annum		3,375			3,907
Capital equipment loan with Bank of America (“BofA”); due in monthly principal and interest payments of $68,274 through June 28, 2020 with interest based on a fixed rate of 2.79% per annum		3,158			3,819
Real property loan agreement with GE Capital ; due in monthly principal payments of $46,000 through March 1, 2026, plus interest payable monthly at LIBOR plus 2.25% per annum		7,622			—
Capital equipment loan with GE Capital; due in monthly principal payments of $122,000 through March 1, 2021, plus interest payable monthly at LIBOR plus 2.25% per annum		8,873			—
Capital equipment loan with BofA; due in monthly principal and interest payments of $75,000 through November 27, 2020 with interest based on a fixed rate of 2.92% per annum		3,940			—
Term note with BMO Harris Bank N.A. (“BMO Harris”); due in monthly principal payments of $250,000 through May 23, 2016, plus interest payable monthly at LIBOR plus 2% per annum		—			3,000
Industrial revenue bonds (“IRBs”) issued by Lifecore; due in annual payments through 2020 with interest at a variable rate set weekly by the bond remarketing agent (0.59% and 0.31% at May 29, 2016 and May 31, 2015, respectively)		2,065			2,440
Total		54,662			42,519
Less current portion		(8,048	)		(8,353	)
Long-term portion	$	46,614		$	34,166

The future minimum principal payments of the Company’s debt for each year presented are as follows (in thousands):

			GE
	GE RE Loans		M&E Loans		BofA Loans		IRB		Total
FY 2017		1,431		4,686		1,541		390		8,048
FY 2018		1,474		4,829		1,585		400		8,288
FY 2019		1,518		4,975		1,631		410		8,534
FY 2020		1,564		5,541		1,678		425		9,208
FY 2021		1,613		3,679		663		440		6,395
Thereafter		14,189		—		—		—		14,189
Total	$	21,789	$	23,710	$	7,098	$	2,065	$	54,662

On July 17, 2014, Apio entered into an amendment with GE Capital, which amended the revolving line of credit dated April 23, 2012 among the parties. Under the amendment, the revolving line of credit increased from $25.0 million to $40.0 million, the interest rate was reduced from LIBOR plus 2.0% to LIBOR plus 1.75%, and the term was extended to July 17, 2019, among other changes. The availability under the revolving line of credit is based on the combination of the eligible accounts receivable and eligible inventory (availability was $22.6 million at May 29, 2016). Apio’s revolving line of credit has a fee of 0.375% per annum on the unused amount. At May 29, 2016, Apio had $3.5 million outstanding under its revolving line of credit. As of May 31, 2015, there was no outstanding balance under Apio’s revolving line of credit.

Also on July 17, 2014, Apio entered into a new equipment loan with GE Capital whereby Apio can borrow up to $25.0 million based on eligible equipment purchases between August 1, 2012 and August 31, 2015. Each borrowing under this new equipment loan has a five year term with a seven year amortization period. On August 28, 2014, Apio borrowed $7.1 million under the new equipment loan at a fixed rate of 3.68%. On November 24, 2014, Apio borrowed an additional $4.1 million under the new equipment loan at a fixed rate of 3.74%. This loan was terminated upon entering into the commitment letter with GE Capital on May 15, 2015.

On May 15, 2015, GE Capital and Apio entered into a commitment letter, pursuant to which GE Capital committed to lend Apio up to approximately $14.7 million in equipment financing and approximately $7.7 million in real property financing. The equipment loan and the real property loan will be made pursuant to existing loan agreements dated as of April 23, 2012, as amended May 17, 2013 and July 17, 2014. The equipment loan is available to finance purchases of equipment between May 1, 2015 and June 30, 2017. The real property loan will be used to finance the expansion of Apio’s facility in Hanover, PA. On February 26, 2016, the Company borrowed $9.1 million under the equipment loan at a rate of LIBOR plus 2.25% with a term of five years and $7.7 million under the real property loan also at a rate of LIBOR plus 2.25% with a term of ten years.

The GE real estate, equipment and line of credit agreements (collectively the “GE Debt Agreements”) are secured by liens on all of the property of Apio and its subsidiaries. The GE Debt Agreements contain customary events of default under which obligations could be accelerated or increased. The GE Capital real estate and equipment loans are guaranteed by Landec, and Landec has pledged its equity interest in Apio as collateral under the line of credit agreement. The GE Debt Agreements contain customary covenants, such as limitations on the ability to (1) incur indebtedness or grant liens or negative pledges on Apio’s assets; (2) make loans or other investments; (3) pay dividends, sell stock or repurchase stock or other securities; (4) sell assets; (5) engage in mergers; (6) enter into sale and leaseback transactions; or (7) make changes in Apio’s corporate structure. In addition, Apio must maintain a minimum fixed charge coverage ratio of 1.10 to 1.0 if the availability under its line of credit falls below $12.0 million. Apio was in compliance with all financial covenants as of May 29, 2016 and May 31, 2015.

On May 15, 2015, Apio and BofA entered into a commitment letter and loan agreement, pursuant to which Apio will be permitted to borrow up to $15.0 million to finance equipment purchases made between October 1, 2014 and April 30, 2016 (the “BofA Loan”). Each borrowing under the BofA Loan will have a five-year term and a fixed interest rate based on the 2.5-year swap rate at the time of borrowing. Borrowings will be secured by equipment

financed with proceeds of the BofA Loan. In addition, on May 15, 2015, Landec and BofA entered into a Guaranty, pursuant to which Landec guaranteed Apio’s payment obligations under the BofA Loan. On May 29, 2015, Apio borrowed $3.8 million under this equipment loan at a fixed rate of 2.79%. On November 27, 2015, Apio borrowed $4.2 million under this equipment loan at a fixed rate of 2.92%.

During fiscal year 2016, Apio capitalized $200,000 of loan origination fees from new real property and equipment loans and/or amendments with GE Capital and BofA. During fiscal year 2015, Apio capitalized $397,000 of loan origination fees from new real property and equipment loans and/or amendments with GE Capital and BofA. No loan origination fees were capitalized in fiscal year 2014. Amortization of loan origination fees for Apio recorded to interest expense for fiscal years 2016, 2015 and 2014 were $293,000, $206,000 and $187,000, respectively. Unamortized loan origination fees were $1.1 million and $1.2 million at May 29, 2016 and May 31, 2015, respectively, and are included in other assets in the Consolidated Balance Sheets.

On May 23, 2012, Lifecore entered into two financing agreements with BMO Harris Bank N.A. and/or its affiliates (“BMO Harris”):

(1)	A $12.0 million term loan which matures in four years due in monthly payments of $250,000 with interest payable monthly based on a variable interest rate of LIBOR plus 2% (the “Term Loan”). The Term Loan was paid off on May 2, 2016.

(2)	A Reimbursement Agreement pursuant to which BMO Harris caused its affiliate Bank of Montreal to issue an irrevocable letter of credit in the amount of $3.5 million (the “Letter of Credit”) which is securing the IRBs described above.

On May 22, 2015, Lifecore entered into a Credit and Security Agreement (the “Credit Agreement”) with BMO Harris which includes (a) a two-year, $10.0 million asset-based working capital revolving line of credit, with an interest rate of LIBOR plus 1.85%, with availability based on the combination of Lifecore’s eligible accounts receivable and inventory balances (availability was $9.6 million at May 29, 2016) and with no unused fee and as of May 29, 2016 no amounts were outstanding under the line of credit.

On August 19, 2004, Lifecore issued variable rate industrial revenue bonds (“IRBs”). These IRBs were assumed by Landec in the acquisition of Lifecore. The IRBs are collateralized by a bank letter of credit which is secured by a first mortgage on the Company’s facility in Chaska, Minnesota.

In addition, the Company pays an

annual remarketing fee equal to 0.125% and an annual letter of credit fee of 0.75%.

The maturities on the IRBs are held in a sinking fund account, recorded in Other Current Assets in the accompanying Consolidated Balance Sheets, and are paid out each year on September 1

Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) - $ / shares	May 29, 2016	May 31, 2015	May 25, 2014
Minimum [Member] \| Parent [Member]
Share Price	$ 5.63	$ 5.63	$ 5.63
Maximum [Member] \| Parent [Member]
Share Price	$ 9.01	$ 8.19	$ 13.32