Landec Corporation reported unaudited consolidated earnings results for the second quarter and six months ended November 30, 2015. For the quarter, the company reported product sales of $140,441,000 against $132,665,000 a year ago. Operating income was $2,807,000 against $3,892,000 a year ago. Net income before taxes was $2,997,000 against $5,032,000 a year ago. Consolidated net income was $1,928,000 against $3,247,000 a year ago. Net income available to common stockholders was $1,868,000 or $0.07 diluted per share against $3,223,000 or $0.12 diluted per share a year ago. The increase in Revenue was primarily due to a 23% increase in revenues at Lifecore and a 5% increase in Apio's packaged fresh vegetable business revenues. Net income was significantly impacted by the $4.7 million of excess costs related to the severe produce shortages at Apio, which were partially offset by a $3.5 million increase in Apio's gross profit in the packaged fresh vegetable business due to increased revenues and a favorable product mix change to a higher percentage of revenues derived from salad kit sales. The decrease in net income was also due to a $1.8 million increase in operating expenses at Apio to ramp up the introduction, launch, advertising and promotion of existing and new salad kit products to drive current and future sales, and from additional headcount hired over the past year, and a $1.0 million decrease in the change in the fair market value of the Company's Windset investment to a $200,000 increase in the second quarter of fiscal 2016 compared to a $1.2 million increase in the year-ago quarter. The decreases in net income in the second quarter were further partially offset by a $1.9 million increase in pre-tax income at Lifecore due to increased revenues and an increase in its gross margin to 48% from 34% due to a favorable product mix change compared to the second quarter of fiscal 2015, and from a $716,000 decrease in income taxes.

For the six months, the company reported product sales of $275,796,000 against $266,279,000 a year ago. Operating income was $6,745,000 against $7,426,000 a year ago. Net income before taxes was $7,676,000 against $8,757,000 a year ago. Consolidated net income was $4,916,000 against $5,671,000 a year ago. Net income available to common stockholders was $4,820,000 or $0.18 diluted per share against $5,576,000 or $0.20 diluted per share a year ago. The 4% increase in revenue was primarily due to a 26% increase in revenues at Lifecore and a 4% increase in Apio's packaged fresh vegetable business revenues. These increases were partially offset by a 9%, or $4.2 million, decrease in Apio's export business revenues and from the extra week during the first six months of fiscal 2015. Net income was significantly impacted by the $6.0 million of excess costs related to the severe produce shortages at Apio, which were more than offset by a $6.2 million increase in Apio's gross profit in the packaged fresh vegetable business due to increased revenues and a favorable product mix change to a higher percentage of revenues derived from salad kit sales. The decrease in net income was also due to a $3.9 million increase in operating expenses at Apio to drive the growth of existing and new salad kit products, and from additional headcount hired over the past year, and a $400,000 decrease in the change in the fair market value of the company's Windset investment to a $1.0 million increase in the first six months of fiscal 2016 compared to a $1.4 million increase for the same period last year.

For fiscal 2016, the company expects revenues will increase 3-6%, operating income 25-35% and net income 10-20% compared to fiscal 2015. The revised guidance for fiscal 2016 includes a significant reduction in the projected increase in Windset investment from original guidance and a significant contingency for sourcing issues.