Menlo Park, California
March 12, 2002

Landec Corporation (Nasdaq: LNDC), a developer and marketer of technology-based polymer products for food, agricultural and licensed partner applications, today reported results for the first quarter ended January 27, 2002.

Total revenues for the quarter were $40.3 million versus $44.7 million in the first quarter of fiscal year 2001. Landec reported a net loss applicable to common shareholders of $3.6 million, or $0.22 per share, compared with a net loss of $3.9 million, or $0.24 per share, for the same quarter in fiscal year 2001.

The results for the first quarter of fiscal year 2002 include the impact of the change in accounting for the amortization of goodwill and other identified intangible assets. Under the new accounting pronouncement FAS 142, Goodwill and Other Intangible Assets, adopted by the Company at the beginning of fiscal year 2002, goodwill and intangible assets deemed to have an indefinite life are no longer amortized. The implementation of this change reduced the current quarter loss by approximately $600,000, or $0.04 per share.

Results for our first quarter reflect the seasonality of Landec's business and were in line with expectations. The first quarter is, and historically has been, the weakest quarter in the fiscal year due to three primary seasonal factors: (1) significantly higher produce sourcing costs at Apio during the winter months, (2) lower produce volumes in the winter months resulting in lower revenues at Apio, and (3) losses at Landec Ag due to high sales and marketing costs incurred to generate revenues
that will not be realized until the second quarter. 

The first seasonal factor, produce sourcing costs for Apio in the winter months, consists of two major components:

First are the potential losses from investment in farming activities in the desert areas of Southern California and Arizona. During 2001, the Company decreased its risk of losses by significantly reducing investments in farming activities during the winter months, while still maintaining acreage for approximately the same volume of produce. As a result, the Company reduced its farming investment losses during the first fiscal quarter by 85% and is expecting to realize a small farming profit by the time the winter season is completed in March 2002.

The second major component of Apio's increased costs for produce sourcing in the winter months is related to the impact of adverse weather conditions on the primary winter growing areas of Southern California and Arizona. During the Company's first fiscal quarter, the produce industry in California was impacted by cold, harsh weather in both December and January. Because of this very unusual cold weather, there were severe shortages of produce, which forced Apio to purchase produce on the open market at high prices in order to meet demand for its value-added products.

The second seasonal factor, lower produce volumes in the winter months, resulted from severe shortages of produce and caused significantly reduced volumes and revenues in Apio's "fee-for-service" whole produce business. Revenues for Apio's "fee-for-service" whole produce business were further reduced by the restructuring of that business, which was initiated during the second half of fiscal year 2001. The restructuring focused primarily on exiting the cash, labor and equipment-intensive field harvesting and packing operations portion of that business, in order to improve the margins in the balance of the "fee-for-service" business. The combination of the produce shortages and the short-term effects of the restructuring resulted in a significant decrease in Apio's "fee-for-service" revenues to $6.9 million in the first quarter of fiscal year 2002 from $12.9 million in the first quarter of fiscal year 2001.

Notably, due to the Company's initiatives, and despite the $6.0 million decrease in "fee-for-service" revenue, gross profits for the "fee-for-service" business were consistent with gross profits in the first quarter of last fiscal year and gross margins as a percentage of revenues for the "fee-for-service" business doubled to 22% in the first quarter of fiscal 2002 compared to 11% in the first quarter of fiscal 2001.

To mitigate the impact in the future of the volume and cost issues associated with the winter produce sourcing problems, Landec is working with growers and processors in new geographic regions to develop alternate sources of produce, primarily for the winter months, but also throughout the year.

The third seasonal factor contributing to first quarter losses results from the fact that Landec Ag incurs high sales and marketing costs in the first fiscal quarter to generate revenues generally not realized until the second quarter. The losses from Landec Ag during the first fiscal quarter will continue in future first quarters, given the nature of the seed business and the fact that virtually all of Landec Ag's revenues and profits are recognized in the second fiscal quarter upon product shipment. 

"We are pleased that we have started realizing benefits from the initiatives we put in place last fiscal year. These benefits have, and will continue to improve our cost structure at the same time that we are experiencing increased demand for our technology-based products," commented Gary Steele, President and CEO of Landec. "During the first fiscal quarter of fiscal year 2002, our value-added specialty packaging products grew nearly 30% compared to the prior quarter, and despite not being able to meet demand due to produce shortages, remained flat with the first quarter of fiscal year 2001. Our goal is to continue to grow Apio's value-added technology-based products, which have historically been less affected by commodity market fluctuations, while working to expand and grow our "fee-for-service" produce marketing and sales business with higher margins and lower costs."

"Further, the expansion of the iceless packaging product line has the potential to generate substantial revenues for Apio over the coming quarters. In addition, the Company has successfully completed numerous banana shipping and ripening trials using Intellipac technology, and more recently, retail trials. The Company anticipates that increased commercial sales of bananas will begin in the next few weeks. Also in fiscal 2002, Landec Ag will be expanding its field trials and commercial sales. Landec Ag is already in its new sales year and seed sales are currently on plan and substantially ahead of last year," continued Steele.

"For the remainder of fiscal year 2002, we expect to increase revenues and gross margins, decrease operating expenses, generate positive earnings and significantly strengthen our balance sheet. Our priorities are to focus on the operating results from our food and agricultural businesses while strengthening our cash position by (1) selling non-strategic assets, such as Dock Resins and Apio's fruit processing facility, (2) entering into selective license agreements with upfront cash payments,
(3) increasing our cash flow from operations, (4) selectively using bank lines for seasonal swings in volume, and (5) completing a small private placement to help fund the launch of our banana technology. We expect these liquidity actions to take place over the next 12 months, and to result in approximately $15 to $20 million in new and previously unavailable cash resources," concluded Steele.

Operating Highlights and Outlook

Apio expands iceless products and completes successful banana retail trials

During the first quarter of fiscal year 2002, Apio's iceless packaging product line continued to  experience accelerating growth. Apio now has six iceless products utilizing our Intellipac case liner technology, including bunch and crown broccoli, eighteen pound cartons of loose broccoli florets, Asian cut broccoli crowns, export cut broccoli crowns and green onions. The expansion of the iceless packaging product line has the potential to generate substantial revenues for Apio over the
coming quarters.

In addition, the Company has successfully completed numerous banana shipping and ripening trials using Intellipac technology for bananas, and more recently has successfully completed retail trials. The Company anticipates that increased commercial sales of bananas will begin in the next few weeks. Apio is also in the process of preparing for more retail banana trials with five of the top fifteen retailers in the U.S., starting by the end of the second fiscal quarter of 2002. Bananas are a $4 to $4.5 billion annual worldwide market for distributors, which in turn, is a $9 to $10 billion annual worldwide market for retailers. Bananas are the nation's leading produce item, contributing approximately nine to ten percent of produce department sales in the United States.

Landec Ag accelerates sales and trials of technology products

Landec Ag, the Company's Intellicoat(R) seed coating subsidiary, will be expanding its field trials and commercial sales during fiscal year 2002 for its new Early Plant(TM) hybrid corn and Relay(TM) Intercropping of wheat and coated soybean. The new products join the existing line-up of Fielder's Choice Direct(R) hybrid corn and Intellicoat coated Pollinator Plus(TM) seed corn coatings.

Pollinator Plus seed coatings are applied to inbred seed corn to delay seed germination and extend the pollination window thus reducing risks and increasing yields for the seed companies. Pollinator Plus is already being used by 30 major seed companies in the production of hybrid seed corn. In 2001, Pollinator Plus was planted on more than 20,000 acres. Seed companies are rapidly increasing their use of this technology and the Company expects this product line to be planted on over 50,000 acres in 2002.

Early Plant hybrid corn is designed to allow corn farmers to safely and reliably plant hybrid corn two to three weeks earlier than normal, since Landec's proprietary Intellicoat coating delays germination until the soil reaches the optimal soil germination temperature. Otherwise, planting two to three weeks earlier in cold, wet soil could cause poor or no germination to occur. Allowing the farmer to have a wider planting window lowers costs, reduces risks and potentially increases yields. The program for Early Plant hybrid corn will be expanded to approximately 20,000 acres this spring from 3,000 acres in 2001.

In addition, eight of the top U.S. seed companies will conduct separate evaluations of the Intellicoat Early Plant hybrid corn technology on their own hybrids during 2002. Successful results could lead to licensed partnerships as early as 2003.

Landec Ag also directly markets and sells seed products using a sophisticated telephonic and electronic call center headquartered in Monticello, Indiana. Last spring, Landec Ag introduced a new Harvestar(TM) product line, which offers high performance alfalfa and nutrient enhanced hybrid seed corn. These products will be sold to new and existing customers who have expressed interest in these types of seeds.

Landec Corporation designs, develops, manufactures and sells temperature-activated and other specialty polymer products for a variety of food, agricultural and licensed partner applications. The Company's temperature-activated polymer products are based on its proprietary Intelimer(R) polymers which differ from other polymers in that they can be customized to abruptly change their physical characteristics when heated or cooled through a pre-set temperature switch.