10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended December 31, 2005

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

For the transition period from                      to                     

Commission File Number 0-4136

Lifecore Biomedical, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	41-0948334
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

3515 Lyman Boulevard
Chaska, Minnesota	55318
(Address of principal executive offices)	(Zip Code)

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

Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer o       Accelerated filer þ      Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The number of shares outstanding of the registrant’s Common Stock, $.01 par value, as of February 2, 2006 was 13,176,471 shares.

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets at December 31, 2005 and June 30, 2005		2
	Condensed Consolidated Statements of Operations for Three Months and Six Months Ended December 31, 2005 and 2004		3
	Condensed Consolidated Statements of Cash Flows for Six Months Ended December 31, 2005 and 2004		4
	Notes to Unaudited Condensed Consolidated Financial Statements		5-11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12-20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21
Item 4.	Controls and Procedures		21
Part II.	Other Information
Item 1.	Legal Proceedings		22
Item 4.	Submission of Matters to a Vote of Security Holders		23
Item 6.	Exhibits		24
Signatures			25
Exhibit Index			26
1996 Stock Option Plan
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

1

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	December 31,			June 30,
	2005			2005
ASSETS
Current Assets
Cash and cash equivalents	$	18,323,000		$	18,508,000
Accounts receivable, less allowances		11,033,000			10,171,000
Inventories		11,671,000			9,456,000
Deferred income taxes		5,236,000			4,190,000
Prepaid expenses		970,000			780,000
Total current assets		47,233,000			43,105,000
Property, plant and equipment
Land, building and equipment		48,356,000			47,400,000
Less accumulated depreciation		(25,100,000	)		(24,211,000	)
		23,256,000			23,189,000
Other Assets
Intangibles, net		5,265,000			4,799,000
Inventories		2,186,000			2,409,000
Deferred income taxes		3,766,000			6,062,000
Other		357,000			302,000
		11,574,000			13,572,000
	$	82,063,000		$	79,866,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current maturities of long-term obligations	$	285,000		$	285,000
Accounts payable		2,395,000			3,418,000
Accrued compensation		1,592,000			1,920,000
Accrued expenses		1,141,000			1,293,000
Total current liabilities		5,413,000			6,916,000
Long-term obligations		4,949,000			5,089,000
Shareholders’ equity		71,701,000			67,861,000
	$	82,063,000		$	79,866,000

See accompanying notes to condensed consolidated financial statements.

2

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended December 31,						Six months ended December 31,
	2005			2004			2005			2004
Net sales	$	15,209,000		$	14,218,000		$	28,634,000		$	26,523,000
Cost of goods sold		6,108,000			5,455,000			11,171,000			10,551,000
Gross profit		9,101,000			8,763,000			17,463,000			15,972,000
Operating expenses
Research and development		970,000			1,171,000			1,969,000			2,019,000
Marketing and sales		4,020,000			3,837,000			8,029,000			7,052,000
General and administrative		1,923,000			1,579,000			3,710,000			3,046,000
		6,913,000			6,587,000			13,708,000			12,117,000
Operating income		2,188,000			2,176,000			3,755,000			3,855,000
Other income (expense)
Interest income		157,000			32,000			292,000			42,000
Interest expense		(60,000	)		(55,000	)		(116,000	)		(168,000	)
Bond retirement expense		—			—			—			(290,000	)
Currency transaction gains (losses)		(49,000	)		113,000			(73,000	)		198,000
Other		(5,000	)		250,000			(19,000	)		252,000
		43,000			340,000			84,000			34,000
Income before income tax expense		2,231,000			2,516,000			3,839,000			3,889,000
Income tax expense		840,000			136,000			1,403,000			230,000
Net income	$	1,391,000		$	2,380,000		$	2,436,000		$	3,659,000
Net income per share
Basic	$	0.11		$	0.18		$	0.19		$	0.28
Diluted	$	0.10		$	0.18		$	0.18		$	0.28
Weighted average shares outstanding
Basic		13,163,429			12,945,903			13,111,498			12,939,254
Diluted		13,685,687			13,270,519			13,571,202			13,115,195

See accompanying notes to condensed consolidated financial statements.

3

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended December 31,
	2005			2004
Cash flows from operating activities:
Net income	$	2,436,000		$	3,659,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		942,000			1,038,000
Allowance for doubtful accounts		36,000			279,000
Deferred income taxes		1,250,000			—
Stock compensation		483,000			21,000
Accumulated currency translation adjustment		37,000			243,000
Changes in operating assets and liabilities, net of effects of acquisition:
Accounts receivable		(1,181,000	)		(676,000	)
Inventories		(1,889,000	)		17,000
Prepaid expenses		(189,000	)		(308,000	)
Accounts payable		(1,035,000	)		(817,000	)
Accrued liabilities		(492,000	)		(19,000	)
Net cash provided by operating activities		398,000			3,437,000
Cash flows from investing activities:
Purchases of property, plant and equipment		(924,000	)		(792,000	)
Acquisition, net of cash acquired		(341,000	)		—
Refunds of security deposits		—			830,000
Increase in other assets		(62,000	)		(102,000	)
Net cash used in investing activities		(1,327,000	)		(64,000	)
Cash flows from financing activities:
Payments on long-term obligations		(140,000	)		(117,000	)
Issuance of industrial revenue bonds		—			5,630,000
Retirement of industrial revenue bonds		—			(5,986,000	)
Proceeds from stock options exercised		884,000			104,000
Net cash provided by (used in) financing activities		744,000			(369,000	)
Net increase (decrease) in cash and cash equivalents		(185,000	)		3,004,000
Cash and cash equivalents at beginning of period		18,508,000			8,553,000
Cash and cash equivalents at end of period	$	18,323,000		$	11,557,000
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	116,000		$	210,000
Taxes		154,000			262,000

See accompanying notes to condensed consolidated financial statements.

4

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

December 31, 2005

NOTE A – FINANCIAL INFORMATION

Lifecore Biomedical, Inc. (referred to in this report as “Lifecore” or the “Company”) manufactures biomaterials and surgical devices for use in various surgical markets and provides specialized contract aseptic manufacturing services through its two divisions, the Hyaluronan Division and the Oral Restorative Division. The Company’s manufacturing facility is located in Chaska, Minnesota. The Hyaluronan Division markets its products through original equipment manufacturers and contract manufacturing alliances in ophthalmologic, orthopedic surgery, veterinary medicine and gynecologic fields. The Oral Restorative Division markets its products through direct sales in the United States, Italy, Germany, Sweden and France and through distributors in other foreign countries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of December 31, 2005, the results of operations for the three month and six month periods ended December 31, 2005 and 2004, and cash flows for the six month periods ended December 31, 2005 and 2004. The results of operations and cash flows for the six months ended December 31, 2005 are not necessarily indicative of the results for the full year or of the results for any future periods. The unaudited condensed consolidated balance sheet as of June 30, 2005 has been derived from audited financial statements as of that date.

In preparation of the Company’s consolidated financial statements, management is required to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses during the reporting periods. Actual results could differ from the estimates used by management.

NOTE B – INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or market. Inventories consist mainly of finished hyaluronan powder, aseptic units and oral restorative products and related raw materials. The Company’s inventory has been reduced to the lower of cost or market for obsolete, excess or unmarketable inventory. The lower of cost or market adjustment is based on management’s review of inventories on hand compared to estimated future usage and sales. The portion of finished hyaluronan powder inventory not expected to be consumed within the next 12 months is classified as a long-term asset. The finished hyaluronan inventory is maintained in a frozen state and has a shelf life of ten years. Inventories consist of the following:

	December 31,		June 30,
	2005		2005
Raw materials	$	4,412,000	$	3,102,000
Work-in-process		1,036,000		426,000
Finished goods-current		6,223,000		5,928,000
		11,671,000		9,456,000
Finished goods-long term		2,186,000		2,409,000
	$	13,857,000	$	11,865,000

5

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (continued)

December 31, 2005

NOTE C – INTANGIBLE ASSETS

Intangibles consist primarily of the cost of goodwill related to acquisitions, patents and distribution rights and licenses. All intangibles relate to the Oral Restorative Division.

Also included within intangibles are costs incurred to register patents and trademarks, which are capitalized as incurred. Amortization of these costs commences when the related patent or trademark is granted. The costs are amortized over the estimated useful life of the patent or trademark, not to exceed 17 years.

Goodwill is tested for impairment on a quarterly basis, or when there is an indication that an impairment has occurred, and is written down when impaired by applying a fair value based test. Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. There was no impairment recorded for the six month period ended December 31, 2005.

     Intangibles consisted of the following at:

	December 31,			June 30,
	2005			2005
Goodwill	$	4,866,000		$	4,352,000
Patents		387,000			387,000
Distribution rights and licenses		350,000			350,000
Accumulated amortization		(338,000	)		(290,000	)
	$	5,265,000		$	4,799,000

NOTE D – LINE OF CREDIT

The Company has a $5,000,000 credit facility with a bank which has a maturity date of December 31, 2006. The agreement allows for advances against eligible accounts receivable, subject to a borrowing base certificate and compliance with covenants. Under the credit facility, interest will accrue at the prime rate minus .5% or LIBOR plus 2.25%, at the Company’s option. At December 31, 2005 and June 30, 2005, there were no balances outstanding under the line of credit.

NOTE E – STOCK BASED COMPENSATION

Commencing July 1, 2005, the Company adopted Statement of Financial Accounting Standard No. 123R, “Share Based Payment” (“SFAS 123R”), which requires all share-based payments, including grants of stock options, to be recognized in the income statement as an operating expense, based on their fair values over the requisite service period. The Company recorded $181,000 and $371,000 of related compensation expense, included in general and administrative expense, for the three month and six month periods ended December 31, 2005, respectively. The compensation expense reduced both basic and diluted earnings per share by $0.01 for the three month period ended December 31, 2005 and reduced basic earnings per share by $0.02 and diluted earnings per share by $0.03 for the six month period ended December 31, 2005.

As of December 31, 2005, $1,094,000 of unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of approximately 2.9 years.

6

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (continued)

December 31, 2005

NOTE E – STOCK BASED COMPENSATION – (continued)

Prior to adopting SFAS 123R, the Company accounted for stock-based compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” The Company has applied the modified prospective method in adopting SFAS 123R. Accordingly, periods prior to adoption have not been restated. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to the comparable periods in the prior fiscal year.

	Three months ended			Six months ended
	December 31, 2004			December 31, 2004
Reported net income	$	2,380,000		$	3,659,000
Stock-based employee compensation determined under the fair value based method, net of related tax effects		(208,000	)		(415,000	)
Pro forma net income	$	2,172,000		$	3,244,000
Income per common equivalent share:
Basic — as reported	$	0.18		$	0.28
Diluted — as reported	$	0.18		$	0.28
Basic — pro forma	$	0.17		$	0.25
Diluted — pro forma	$	0.16		$	0.25

The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options. The weighted average fair value of options granted during the three month periods ended December 31, 2005 and 2004 were $6.04 and $4.32, respectively, and were $5.36 and $4.05 during the six month periods ended December 31, 2005 and 2004, respectively. The fair value of options at date of grant and the assumptions utilized to determine such values are indicated in the following table:

	Three Months Ended						Three Months Ended
	December 31,						September 30,
	2005			2004			2005			2004
Risk-free interest rate		4.33	%		3.9	%		4.27	%		3.9	%
Expected volatility		60.8	%		69.6	%		69.5	%		69.6	%
Expected life (in years)		5.7			5.4			5.6			5.4
Dividend yield		—			—			—			—

7

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (continued)

December 31, 2005

NOTE E – STOCK BASED COMPENSATION – (continued)

The Company’s stock options generally vest ratably over four years of service and have a contractual life of 10 years. The Company has authorized 5,000,000 shares for grant under the 1990, 1996 and 2003 Stock Option Plans. Option transactions under the 1990 and 1996 Stock Option Plans during the six month period ended December 31, 2005 are summarized as follows (no stock options have been granted under the 2003 Plan):

	Number of			Weighted Average
	Shares			Exercise Price
Outstanding at June 30, 2005		1,720,706		$	10.19
Granted		41,300			10.86
Exercised		(101,100	)		7.00
Canceled		(12,750	)		9.35
Outstanding at September 30, 2005		1,648,156			10.41
Granted		56,000			14.06
Exercised		(18,233	)		9.71
Canceled		(11,400	)		8.28
Outstanding at December 31, 2005		1,674,523		$	10.52

	Number of		Weighted Average
	Shares		Exercise Price
Options exercisable at December 31, 2005		1,362,723	$	10.72

     The following tables summarize information concerning currently outstanding and exercisable stock options.

Options Outstanding
Range of			Number			Weighted Average Remaining		Weighted Average
Exercise Price			Outstanding			Contractual Life		Exercise Price
$3.55	-	5.82		79,000	6.56 years		$	5.21
5.83	-	8.75		701,855	6.55 years			7.28
8.76	-	13.12		402,125	6.57 years			10.15
13.13	-	19.68		460,543	2.71 years			15.94
19.69	-	23.38		31,000	2.01 years			21.55
				1,674,523			$	10.52

8

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (continued)

December 31, 2005

NOTE E – STOCK BASED COMPENSATION – (continued)

Options Exercisable
Range of				Number		Weighted Average
Exercise Price				Exercisable		Exercise Price
$	3.55	—	5.82		56,625	$		5.34
	5.83	—	8.75		598,480		7.26
	8.76	—	13.12		259,575		10.06
	13.13	—	19.68		422,043		16.09
	19.69	—	23.38		26,000		21.58
					1,362,723	$		10.72

Restricted Stock Awards

During fiscal 2005, the Company granted 60,000 restricted common stock awards to its officers; 50,000 of the shares were awarded at a price of $9.30 and 6,667 of those shares were forfeited during the year ended June 30, 2005 and 10,000 of the shares were awarded at a price of $10.79. The restricted shares will vest at the earlier of four years from the date of issuance or upon achievement of financial performance criteria for fiscal years 2005, 2006 and 2007. The Company achieved the financial performance criteria in fiscal 2005, and as a result, 20,000 shares vested. The employee forfeits unvested shares upon the termination of employment prior to the end of the vesting period. Stock compensation expense recognized related to these grants totaled $40,000 and $21,000 during the three month periods ended December 31, 2005 and 2004, respectively, and $80,000 and $21,000 during the six month periods ended December 31, 2005 and 2004, respectively.

NOTE F – ACCUMULATED OTHER COMPREHENSIVE INCOME

The Company has $619,000 of accumulated currency translation adjustment which reduces shareholders’ equity at December 31, 2005. Total comprehensive income was $1,400,000 and $2,532,000 for the three month periods ended December 31, 2005 and 2004, respectively, and total comprehensive income was $2,473,000 and $3,902,000 for the six month periods ended December 31, 2005 and 2004, respectively.

NOTE G – NET INCOME PER SHARE

The Company’s basic net income per share amounts have been computed by dividing net income by the weighted average number of outstanding common shares. The Company’s diluted net income per share is computed by dividing net income by the weighted average number of outstanding common shares and common share equivalents relating to stock options and restricted stock, when dilutive. For the three and six month periods ended December 31, 2005, 522,258 and 459,704 common share equivalents, respectively, were included in the computation of diluted net income per share. For the three and six month periods ended December 31, 2004, 324,616 and 175,941 common share equivalents, respectively, were included in the computation of diluted net income per share.

Options to purchase 333,543 and 490,543 shares of common stock with a weighted average exercise price of $17.41 and $16.30 for the three month and six month periods ended December 31, 2005, respectively, and options to purchase 626,668 and 1,018,918 shares of common stock with a weighted average exercise price of $14.75 and $12.41 for the three month and six month periods ended December 31, 2004, respectively, were outstanding but were not included in the calculation of diluted net income per share because the options’ exercise prices were greater than the average market price of the Company’s common stock during those periods. Although these options were antidilutive for the periods presented, they may be dilutive in future period calculations.

9

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (continued)

December 31, 2005

NOTE H – INCOME TAXES

Provision for income taxes was $840,000 and $136,000 for the three month periods ended December 31, 2005 and 2004, respectively, and the provision for income taxes was $1,403,000 and $230,000 for the six month periods ended December 31, 2005 and 2004, respectively. The effective rate for the prior year periods were significantly lower than the comparable 2005 periods due to reversing the full valuation allowance related to domestic net operating losses which was recorded in the fourth quarter of fiscal 2005. As a result, the Company’s statement of earnings will reflect more normal tax charges throughout fiscal 2006 and beyond. However, with the exception of the Alternative Minimum Tax and certain state taxes, the Company will not use cash for domestic income taxes until its net operating losses are fully realized on its tax returns.

NOTE I – SEGMENT INFORMATION

The Company operates in two business segments. The Hyaluronan Division manufactures, markets and sells products containing hyaluronan and provides contract aseptic packaging services. The Oral Restorative Division produces and markets various oral restorative products to the area of implant dentistry. Currently, products containing hyaluronan are sold primarily to customers pursuant to ongoing supply agreements. The Company’s Oral Restorative Division markets products directly to clinicians and dental laboratories in the United States, Germany, Italy, Sweden and France and primarily through distributorship arrangements in other foreign locations.

Segment assets and the basis of segmentation are consistent with that reported at June 30, 2005. Segment information for sales and income from operations are as follows:

	Three months ended December 31,				Six months ended December 31,
	2005		2004		2005		2004
Net sales
Hyaluronan products	$	4,631,000	$	4,527,000	$	9,292,000	$	9,171,000
Oral restorative products		10,578,000		9,691,000		19,342,000		17,352,000
	$	15,209,000	$	14,218,000	$	28,634,000	$	26,523,000
Income from operations
Hyaluronan products	$	896,000	$	853,000	$	2,012,000	$	2,172,000
Oral restorative products		1,292,000		1,323,000		1,743,000		1,683,000
	$	2,188,000	$	2,176,000	$	3,755,000	$	3,855,000

NOTE J – ACQUISITION OF BARDO-BIOTECH SAS

Effective August 12, 2005, the Company acquired 100% of the stock of Bardo-Biotech SAS, a privately-owned distributor of the Company’s Oral Restorative products located in Beauzelle, France. The Company included the operating results of Bardo-Biotech SAS in the financial statements from August 1, 2005.

In conjunction with this acquisition, the consideration paid was $401,000 in cash and $362,000 in debt forgiveness. The acquisition resulted in estimated goodwill of $514,000 pending completion of the final determination of intangible asset allocation, a portion of which is deductible for tax purposes. Approximately $43,000 of the purchase price was placed in a bank guarantee account in the event there are any loss claims or asset valuation adjustments that arise.

10

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED (continued)

December 31, 2005

NOTE K – AGREEMENTS

On September 20, 2004, the Company secured worldwide marketing rights to its ferric hyaluronan adhesion prevention product from Ethicon, Inc. The Company’s product, which was previously marketed by Gynecare, a division of Ethicon, Inc. (“Gynecare”), under the trademark GYNECARE INTERGEL Adhesion Prevention Solution, was voluntarily withdrawn from the market by Gynecare on March 27, 2003 to assess information obtained from its usage in the treatment of patients. Under the agreement, Gynecare will have no responsibility for any aspect of the future manufacture, marketing, sale or distribution of the product nor will it derive any financial benefit therefrom. A payment of $250,000, included in other income, was received during the second quarter of fiscal 2005 from Ethicon, Inc. in conjunction with the above mentioned agreement.

NOTE L – LEGAL PROCEEDINGS

The Company is named as a defendant in 74 pending lawsuits, all of which allege that the plaintiffs suffered injuries due to the defective nature of INTERGEL Solution manufactured by the Company and marketed by ETHICON. Under the terms of its Conveyance, License, Development and Supply Agreement dated August 8, 1994 with ETHICON, ETHICON is obligated to indemnify and hold the Company harmless from all claims related to the sale and use of INTERGEL Solution, unless it is ultimately determined that a plaintiff’s injuries were caused by a breach of the Company’s limited contractual warranty to ETHICON. The Company believes that ETHICON is obligated to fully indemnify the Company in connection with all of the pending claims relating to INTERGEL Solution. The Company also has product liability insurance that it believes would cover its exposure, if any, related to these claims.

NOTE M – RECLASSIFICATIONS

Certain 2004 amounts have been reclassified to conform to the 2005 presentation.

11

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions in certain circumstances that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the Company’s financial statements. Management bases its estimates and judgments on historical experience, observance of trends in the industry, information provided by customers and other outside sources and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition:

The Company recognizes revenue when the product is shipped or otherwise accepted by unaffiliated customers, pursuant to customers orders, the price is fixed and collection is reasonably assured. The Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition” provides guidance on the application of generally accepted accounting principles to selected revenue recognition issues. The Company has concluded that its revenue recognition policy is appropriate and in accordance with generally accepted accounting principles and SAB No. 101.

Allowance for Uncollectible Accounts Receivable:

Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The Company extends credit to customers in the normal course of business but generally does not require collateral or any other security to support amounts due. Management performs on-going credit evaluations of the Company’s customers and bases the estimated allowance on these evaluations.

Inventories:

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

Goodwill, Intangibles and Other Long-Lived Assets:

Intangibles and certain other long-lived assets with a definite life are amortized over their useful lives. Useful lives are based on management’s estimates of the period that the assets will generate revenue.

The Company reviews goodwill for impairment on a regular basis, at least quarterly, or upon a triggering event.

Management has reviewed goodwill and other intangibles for impairment and has concluded that such assets are appropriately valued at the financial statement dates.

Accounting for Income Taxes:

Income taxes are accounted for under the provisions of Statement of Financial Accounting Standards, or SFAS No. 109, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. The tax consequences of events

12

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

recognized in the current year’s financial statements are included in determining income taxes currently payable. However, because tax laws and financial accounting standards differ in their recognition and measurement of assets, liabilities, equity, revenue, expenses, gains and losses, differences arise between the amount of taxable income and pretax financial income for a year and between the tax bases of assets or liabilities and their reported amounts in the financial statements. Because it is assumed that the reported amounts of assets and liabilities will be recovered and settled, respectively, a difference between the tax basis of an asset or a liability and its reported amount in the balance sheet will result in a taxable or a deductible amount in some future years when the related liabilities are settled or the reported amounts of the assets are recovered, hence giving rise to a deferred tax asset. Management must then assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent that recovery is not likely, a valuation allowance must be established.

In fiscal 2005, management determined that it was appropriate to release a substantial portion of the deferred tax valuation allowance based upon the Company’s then-current and expected level of profitability, and the belief that it is more likely than not that the deferred tax assets will be utilized before they expire. The remaining valuation allowance is provided for foreign net operating losses. As part of the process of preparing the consolidated financial statements, income taxes are required to be estimated. This process involves estimating actual current tax exposure together with assessing temporary differences that may result in deferred tax assets or liabilities. Management judgment is required in determining any valuation allowance recorded against deferred tax assets. Any such valuation allowance would be based on management’s estimates of future taxable income and the period over which deferred tax assets would be recoverable.

Overview

The Company manufactures biomaterials and medical devices for use in various surgical markets and provides related specialized contract aseptic manufacturing services. The Company operates through two business units, the Hyaluronan Division and the Oral Restorative Division.

The Company’s Hyaluronan Division is principally involved in the development and manufacture of products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellular matrix of connective tissues in both animals and humans.

The Hyaluronan Division primarily sells into three medical segments: 1) Ophthalmic, 2) Orthopedic, and 3) Veterinary. In addition, the Company developed and owns the global marketing rights for a product using its patented ferric hyaluronan adhesion prevention technology. The product, FeHA, (formerly labeled as GYNECARE INTERGEL Adhesion Prevention Solution), has been clinically proven to reduce the incidence of post-surgical adhesions following surgical trauma. The product was voluntarily withdrawn from the market in March 2003 in order to assess information obtained from postmarketing experience with the product. The Company is currently evaluating regulatory requirements and opportunities for distribution partners to market the FeHA product.

13

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

The Company also supplies hyaluronan to customers pursuing other medical applications, such as wound care, aesthetic surgery, medical device coatings, tissue engineering, drug delivery and pharmaceuticals. The Company leverages its hyaluronan manufacturing expertise to provide expanded hyaluronan product offerings and specialized aseptic manufacturing of hyaluronan products.

The Company’s Oral Restorative Division develops and markets precision surgical and prosthetic devices for the restoration of damaged or deteriorating dentition and associated support tissues. The Company’s dental implants are permanently implanted in the jaw for tooth replacement therapy as long-term support for crowns, bridges and dentures.

The Oral Restorative Division also offers innovative bone regenerative products for the repair of bone defects resulting from periodontal disease and tooth loss. Additionally, the Oral Restorative Division provides professional support services to its dental surgery clients through comprehensive education curricula provided in the Company’s various Support PlusÔ programs and surgical courses. These professional continuing education programs are designed to train restorative clinicians and their auxiliary teams in the principles of tooth replacement therapy and practice management. The Company’s Increasing Case Acceptance Program (“ICA”) offers clients the marketing and consultative tools and training to foster higher patient acceptance of dental implants.

The Oral Restorative Division’s products are marketed in the United States through the Company’s direct sales force. Internationally, the Division’s products are marketed through direct subsidiaries in Italy, Germany, France and Sweden, and through 25 national distributors covering 37 additional countries.

Acquisition of Bardo-Biotech SAS

Effective August 12, 2005, the Company acquired 100% of the stock of Bardo-Biotech SAS, a privately-owned distributor of the Company’s Oral Restorative products located in Beauzelle, France. The Company included the operating results of Bardo-Biotech SAS in the financial statements from August 1, 2005.

In conjunction with this acquisition, the consideration paid was $401,000 in cash and $362,000 in debt forgiveness. The acquisition resulted in estimated goodwill of $514,000 pending completion of the final determination of intangible asset allocation, a portion of which is deductible for tax purposes. Approximately $43,000 of the purchase price was placed in a bank guarantee account in the event there are any loss claims or asset valuation adjustments that arise.

14

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Results of Operations

Three Months Ended December 31, 2005 Compared to Three Months Ended December 31, 2004:

	Hyaluronan				Oral Restorative
	Division				Division				Consolidated
	2005		2004		2005		2004		2005		2004
Net sales	$	4,631,000	$	4,527,000	$	10,578,000	$	9,691,000	$	15,209,000	$	14,218,000
Cost of goods sold		2,344,000		2,108,000		3,764,000		3,347,000		6,108,000		5,455,000
Gross profit		2,287,000		2,419,000		6,814,000		6,344,000		9,101,000		8,763,000
Operating expenses
Research and development		580,000		895,000		390,000		276,000		970,000		1,171,000
Marketing and sales		95,000		150,000		3,925,000		3,687,000		4,020,000		3,837,000
General and administrative		716,000		521,000		1,207,000		1,058,000		1,923,000		1,579,000
		1,391,000		1,566,000		5,522,000		5,021,000		6,913,000		6,587,000
Operating income	$	896,000	$	853,000	$	1,292,000	$	1,323,000	$	2,188,000	$	2,176,000

Net Sales. Net sales for the quarter ended December 31, 2005 increased $991,000 or 7% as compared to the same quarter of last fiscal year. Hyaluronan Division sales increased $104,000, and Oral Restorative Division sales increased $887,000 or 9%.

Hyaluronan Division sales for the current quarter increased to $4,631,000 from $4,527,000 in the same quarter of last fiscal year due to increased sales to orthopedic customers offset partially by lower sales to ophthalmic customers.

Oral Restorative Division sales for the current quarter increased to $10,578,000 from $9,691,000 in the same quarter of last fiscal year. Domestic sales increased 15% due to the addition of sales representatives, sales of the RENOVA Internal Hex Implant System and sales of the newly launched Prima Implant System. Sales in the international markets increased by 3%.

Gross profit. Consolidated gross profit, as a percentage of net sales, was 60% in the current quarter and 62% in the same quarter of last fiscal year. The gross profit for the Hyaluronan Division decreased to 49% in the current quarter from 53% in the same quarter of last fiscal year; a 2.8 percentage point decrease was due to product mix and a 1.2 percentage point decrease was due to an increase in unused manufacturing capacity charges associated with decreased hyaluronan production.

Gross profit for the Oral Restorative Division decreased to 64% in the current quarter from 65% in the same quarter of last fiscal year primarily due to new product launch promotions and product mix.

15

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Research and development. Consolidated research and development expenses consist of personnel costs, contract services, facility and equipment charges and materials consumed in the development of new products or enhancements to existing products. Research and development activities include: pilot plant operations, development of new formulations, design and testing of new products, regulatory services and clinical evaluation. Research and development expenses decreased $201,000 or 17% in the current quarter as compared to the same quarter last fiscal year. The decrease is due to lower regulatory consulting expenses in the Hyaluronan Division.

Marketing and sales. Consolidated marketing and sales expenses increased by $183,000 or 5% in the current quarter as compared to the same quarter of last fiscal year. The increase was due mainly to costs associated with the launch of the new Prima Implant System, the expansion of the oral restorative’s domestic sales force and international operations.

General and administrative. Consolidated general and administrative expenses increased by $344,000 or 22% in the current quarter as compared to the same quarter of last fiscal year. The increase is primarily related to $181,000 of compensation expense associated with the adoption of SFAS 123R and higher insurance costs.

Other income (expense). Net other income, as shown on the Consolidated Statements of Operations, decreased $297,000 for the current quarter as compared to the same quarter of last fiscal year. The decrease is due to the Ethicon, Inc. payment of $250,000 received during the second quarter of fiscal 2005 and decreases in currency transaction gains realized on Euro denominated intercompany transactions of $162,000, offset by an increase in interest income of $125,000 resulting from a higher cash balance.

Provision for income taxes. Provision for income taxes was $840,000 and $136,000 for the three months ended December 31, 2005 and 2004, respectively. The effective rate for the prior year periods were significantly lower than the comparable 2005 periods due to reversing the full valuation allowance related to domestic net operating losses which was recorded in the fourth quarter of fiscal 2005. As a result, the Company’s statement of earnings will reflect more normal tax charges throughout fiscal 2006 and beyond. However, with the exception of the Alternative Minimum Tax and certain state taxes, the Company will not use cash for domestic income taxes until its net operating losses are fully realized on its tax returns. The Company accounts for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes.”

Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. The Company believes that in fiscal 2006 its tax rate will be approximately 37%, even though the actual amount of taxes paid will be reduced significantly by the utilization of the net operating loss carryforward.

16

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Six Months Ended December 31, 2005 Compared to Six Months Ended December 31, 2004:

	Hyaluronan				Oral Restorative
	Division				Division				Consolidated
	2005		2004		2005		2004		2005		2004
Net sales	$	9,292,000	$	9,171,000	$	19,342,000	$	17,352,000	$	28,634,000	$	26,523,000
Cost of goods sold		4,396,000		4,201,000		6,775,000		6,350,000		11,171,000		10,551,000
Gross profit		4,896,000		4,970,000		12,567,000		11,002,000		17,463,000		15,972,000
Operating expenses
Research and development		1,187,000		1,499,000		782,000		520,000		1,969,000		2,019,000
Marketing and sales		271,000		242,000		7,758,000		6,810,000		8,029,000		7,052,000
General and administrative		1,426,000		1,057,000		2,284,000		1,989,000		3,710,000		3,046,000
		2,884,000		2,798,000		10,824,000		9,319,000		13,708,000		12,117,000
Operating income	$	2,012,000	$	2,172,000	$	1,743,000	$	1,683,000	$	3,755,000	$	3,855,000

Net Sales. Net sales for the six months ended December 31, 2005 increased $2,111,000 or 8% as compared to the same period of last fiscal year. Hyaluronan Division sales increased $121,000, and Oral Restorative Division sales increased $1,990,000 or 11%.

Hyaluronan Division sales for the current period increased to $9,292,000 from $9,171,000 in the same period of last fiscal year due to increased sales to orthopedic customers offset partially by lower sales to ophthalmic customers.

Oral Restorative Division sales for the current period increased to $19,342,000 from $17,352,000 in the same period of last fiscal year. Domestic sales increased 18% due to the addition of sales representatives, sales of the RENOVA Internal Hex Implant System and sales of the newly launched Prima Implant System. Sales in the international markets increased by 4%.

Gross profit. Consolidated gross profit, as a percentage of net sales, was 61% in the current period and 60% in the same period of last fiscal year. The gross profit for the Hyaluronan Division decreased to 53% in the current period from 54% in the same period of last fiscal year; a 2.3 percentage point decrease was due to product mix, offset by a 1.3 percentage point increase due to a decrease in unused manufacturing capacity charges associated with increased hyaluronan production.

Gross profit for the Oral Restorative Division increased to 65% in the current period from 63% in the same period of last fiscal year of which 1.3 percentage points were due to a favorable shift in sales mix from lower margin products to higher margin products and 0.3 percentage points were due to fixed costs spread over a larger sales base.

Research and development. Consolidated research and development expenses consist of personnel costs, contract services, facility and equipment charges and materials consumed in the development of new products or enhancements to existing products. Research and development activities include: pilot plant operations, development of new formulations, design and testing of new products, regulatory services and clinical evaluation. Research and development expenses decreased $50,000 or 2% in the current period as compared to the same period last fiscal year. The decrease is due to lower regulatory consulting expenses in the Hyaluronan Division.

17

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Marketing and sales. Consolidated marketing and sales expenses increased by $977,000 or 14% in the current period as compared to the same period of last fiscal year. The increase was due mainly to costs associated with the launch of the new Prima Implant System, the expansion of the oral restorative’s domestic sales force and international operations.

General and administrative. Consolidated general and administrative expenses increased by $664,000 or 22% in the current period as compared to the same period of last fiscal year. The increase is related to $371,000 of compensation expense associated with the adoption of SFAS 123R and higher insurance costs.

Other income (expense). Net other income, as shown on the Consolidated Statements of Operations, increased $50,000 for the current period as compared to the same period of last fiscal year. The increase is due to no bond retirement expense of $290,000 and an increase in interest income of $250,000 resulting from a higher cash balance, offset by decreases in currency transaction gains realized on Euro denominated intercompany transactions of $271,000 and the Ethicon, Inc. payment of $250,000 received during the second quarter of fiscal 2005.

Provision for income taxes. Provision for income taxes was $1,403,000 and $230,000 for the six months ended December 31, 2005 and 2004, respectively. The effective rate for the prior year periods were significantly lower than the comparable 2005 periods due to reversing the full valuation allowance related to domestic net operating losses which was recorded in the fourth quarter of fiscal 2005. As a result, the Company’s statement of earnings will reflect more normal tax charges throughout fiscal 2006 and beyond. However, with the exception of the Alternative Minimum Tax and certain state taxes, the Company will not use cash for domestic income taxes until its net operating losses are fully realized on its tax returns. The Company accounts for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes.”

Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. The Company believes that in fiscal 2006 its tax rate will be approximately 37%, even though the actual amount of taxes paid will be reduced significantly by the utilization of the net operating loss carryforward.

18

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Liquidity and Capital Resources

The Company’s Annual Report on Form 10-K, as amended, for the year ended June 30, 2005 contains a detailed discussion of the Company’s liquidity and capital resources. Investors should read the 2005 Form 10-K, as amended, in conjunction with this Quarterly Report on
Form 10-Q.

For the six month period ended December 31, 2005, the Company had negative cash flow of $185,000 due to an inventory build related to the new product launch and the timing of customer payments. The Company has had positive cash flow in fiscal years 2005, 2004 and 2003. Charges for unused manufacturing capacity associated with the Company’s hyaluronan production have continued to negatively impact operating results in the current fiscal year. Also, marketing and sales expenses for the oral restorative products are expected to continue at a high level due to continued international expansion and increased personnel costs associated with expanding the sales force.

The Company has a $5,000,000 credit facility with a bank which has a maturity date of December 31, 2006. The agreement allows for advances against eligible accounts receivable, subject to a borrowing base certificate and compliance with covenants. Under the credit facility, interest will accrue at the prime rate minus .5% or LIBOR plus 2.25%, at the Company’s option. At December 31, 2005 and June 30, 2005, there were no balances outstanding under the line of credit.

On August 19, 2004, the Company issued variable rate industrial revenue bonds. The proceeds from these bonds were used to retire the existing 10.25% fixed rate industrial revenue bonds on September 1, 2004. The aggregate principal amount of the new bonds was $5,630,000, and the bonds bear interest at a variable rate set weekly by the bond remarketing agent (3.51% as of December 31, 2005). In addition, the Company pays an annual remarketing fee equal to .125% and an annual letter of credit fee of 1.0%. The bonds are collateralized by a bank letter of credit which is secured by a first mortgage on the facility. The Company is required to make monthly principal and interest payments to a sinking fund. The terms of the agreement require the Company to comply with various financial covenants including minimum tangible net worth, liabilities to tangible net worth ratio and net income (loss). As of December 31, 2005 and June 30, 2005, the Company was in compliance with all covenants.

The Company’s ability to generate positive cash flow from operations and achieve ongoing profitability is dependent upon the continued expansion of revenue from its hyaluronan and oral restorative businesses. Growth in the Hyaluronan Division is unpredictable due to the complex governmental regulatory environment for new medical products, the early stage of certain of these markets and the uncertainty associated with the future market status of the Company’s adhesion prevention product. Similarly, expansion of the Company’s Oral Restorative Division sales is also dependent upon increased revenue from new and existing customers, as well as successfully competing in a more mature market. The Company expects its cash generated from anticipated operations and the available funds under the line of credit to satisfy cash flow needs in the near term. No assurance can be given that the Company will maintain positive cash flow from operations. While the Company’s capital resources appear adequate today, the Company may seek additional financing in the future. If additional financing is necessary, no assurance can be given that such financing will be available and, if available, will be on terms favorable to the Company and its shareholders.

The Company does not have any material “off-balance sheet” financing activities.

Seasonality

The Company’s business is seasonal in nature. Historically, sales for the Oral Restorative Division are lower in the first quarter than throughout the rest of the year, as a result of European holidays during the summer months.

19

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Cautionary Statement

Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Form 10-Q, in future filings by the Company with the Securities and Exchange Commission and in the Company’s press releases and oral statements made with the approval of authorized executive officers, that are not historical or current facts, should be considered “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may, among other things, relate to market acceptance and demand for the Company’s products, future product development plans and timing, the results of clinical trials, FDA clearances and the related timing of such, the potential size of the markets for the Company’s products, future product introductions, future revenues, expense levels, tax rates and capital needs and the Company’s ability to successfully negotiate acceptable agreements with its corporate partners. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected or in the future could affect the Company’s actual results and could cause its actual financial performance to differ materially from that expressed in any forward-looking statement: (i) obtaining the necessary regulatory approvals for new hyaluronan and oral restorative products; (ii) the Company’s reliance on corporate partners to develop new products on a timely basis and to market the Company’s existing and new hyaluronan products effectively; (iii) intense competition in the markets for the Company’s principal products; and (iv) the uncertainty associated with the future market status of the Company’s adhesion prevention product. Investors are referred to a more detailed discussion of the risks presented in Exhibit 99.1 to the Company’s Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 2005.

20

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company invests its excess cash in money market mutual funds, bank certificates of deposits and highly rated short-term corporate debt securities. All investments are held to maturity. The market risk on such investments is minimal.

Receivables from sales to foreign customers are denominated in U.S. dollars. Transactions at the Company’s foreign subsidiaries are denominated in European Euros at Lifecore Biomedical SpA, Lifecore Biomedical GmbH and Lifecore Biomedical SAS and are denominated in Swedish Krona at Lifecore Biomedical AB. The Company is exposed to foreign currency exchange rate risk arising from transactions in the normal course of business from sales to its foreign subsidiaries. Because the Company’s products are manufactured or sourced primarily from the United States, a stronger U.S. dollar generally has a negative impact on results from operations outside the United States while a weaker dollar generally has a positive effect. The Company does not use derivative financial instruments to manage foreign currency fluctuation risk.

On August 19, 2004, the Company issued variable rate industrial revenue bonds. The proceeds from these bonds were used to retire the existing 10.25% fixed rate industrial revenue bonds on September 1, 2004. The aggregate principal amount of the new bonds was $5,630,000, and the bonds bear interest at a variable rate set weekly by the bond remarketing agent (3.51% as of December 31, 2005). A ten percent change in this variable rate would result in approximately $18,000 of additional interest expense annually.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a – 15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

(b) Changes in internal control over financial reporting.

During the fiscal period covered by this report, there has been no change in the Company’s internal control over financial reporting (as defined in Rule 13a – 15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

21

LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is named as a defendant in 74 pending lawsuits, involving alleged injuries to 77 women. As of January 30, 2006, Lifecore has been served in all but one of the cases, on dates ranging from September 15, 2003 until December 28, 2005. Fifty-eight of the pending cases are proceeding in Florida state court. The balance of the pending lawsuits have been filed in various states including California, Connecticut, Louisiana, Minnesota, New Jersey, Pennsylvania and Wisconsin.

The lawsuits allege that the plaintiffs suffered injuries due to the defective nature of GYNECARE INTERGEL Adhesion Prevention Solution (“INTERGEL Solution”) which was developed and manufactured by the Company. The other defendants in these lawsuits are ETHICON, Inc., which was the Company’s exclusive worldwide marketing partner for INTERGEL Solution through its division, GYNECARE Worldwide, and Johnson & Johnson, the parent company of ETHICON. Most of the lawsuits also name Vital Pharma, Inc. as a defendant; Vital Pharma acted as the contract packager for the INTERGEL solution. The plaintiffs in these actions are individuals who were patients in medical procedures during which INTERGEL Solution was used and who were allegedly injured due to the defective nature of INTERGEL Solution.

The Company anticipates that the lawsuit captioned Renee Contratto v. Ethicon, Inc., d/b/a Gynecare Worldwide, Johnson & Johnson, Lifecore Biomedical, Inc. and Vital Pharma, Inc., which was the first such lawsuit served on the Company, will be the first of these lawsuits to go to trial. The Contratto case was filed in U.S. District Court for the Northern District of California and was served on the Company on September 15, 2003.

ETHICON began marketing INTERGEL Solution outside the United States in June 1998 for reducing the incidence of post-surgical adhesions. INTERGEL Solution was approved by the FDA for the U.S. market in November 2001. INTERGEL Solution was voluntarily withdrawn from the market by ETHICON in March 2003 in order to assess information obtained from postmarketing experience with the product, including allegations of adverse events associated with off-label use in non-conservative surgical procedures (such as hysterectomies).

ETHICON is defending the Company in all of these lawsuits. Under the terms of the Company’s Conveyance, License, Development and Supply Agreement dated August 8, 1994 with ETHICON, ETHICON is obligated to indemnify and hold the Company harmless from all claims related to the sale and use of INTERGEL Solution, unless it is ultimately determined that a plaintiff’s injuries were caused by a breach of the Company’s limited contractual warranty to ETHICON under that agreement. The Company believes that ETHICON will be obligated to fully indemnify the Company in connection with all of the pending claims relating to INTERGEL Solution.

Pursuant to the terms of its agreement with Vital Pharma, the Company’s insurer is covering Vital Pharma’s defense costs. This has been done with a full reservation of rights by the Company. The Company has also asserted that ETHICON is obligated to pay for Vital Pharma’s defense costs, pursuant to the agreement between ETHICON and the Company.

The Company has also received four claim letters alleging claims similar to the lawsuits. ETHICON is responding to the claim letters on behalf of the Company.

22

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On November 17, 2005, the Company held its Annual Meeting of Shareholders. At the meeting, the shareholders elected directors Dennis J. Allingham (with 11,741,021 affirmative votes and 28,259 votes withheld), Joan L. Gardner (with 11,550,501 affirmative votes and 218,779 votes withheld), Thomas H. Garrett (with 11,750,730 affirmative votes and 18,550 votes withheld), and John E. Runnells (with 11,726,100 affirmative votes and 43,180 votes withheld).

The shareholders also approved amendments to the Company’s Amended and Restated Articles of Incorporation and Amended Bylaws to eliminate the classified Board structure (with 11,487,799 affirmative votes, 258,887 negative votes, 22,594 votes abstained and no broker non-votes).

The shareholders also ratified and approved the appointment of Grant Thornton LLP as independent certified public accountants of the Company for the current fiscal year ending June 30, 2006 (with 11,641,284 affirmative votes, 115,319 negative votes, 12,677 votes abstained and no broker non-votes).

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

ITEM 6. EXHIBITS

3.1 Amended and Restated Articles of Incorporation, as adopted on January 18, 2006 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on January 24, 2006)

3.2 Amended Bylaws, as adopted on January 18, 2006 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on January 24, 2006)

4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to 1987 S-2 Registration Statement [File No. 33-12970])

4.2 Form of Rights Agreement, dated as of May 23, 1996, between the Company and Norwest Bank Minnesota, National Association (incorporated by reference to Exhibit 1 to the Company’s Form 8-A Registration Statement dated May 31, 1996)

10.1 1996 Stock Option Plan, as amended to date

10.2 Description of the Company’s program permitting directors to receive monthly retainer fees in the form of the Company’s common stock (incorporated by reference to the program description set forth under Item 1.01 in the Current Report on Form 8-K filed on December 13, 2005)

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LIFECORE BIOMEDICAL, INC.
	By:
Dated: February 9, 2006	/s/ Dennis J. Allingham
	Dennis J. Allingham
	President, Chief Executive Officer, Secretary and Director
	(duly authorized officer)
Dated: February 9, 2006	/s/ David M. Noel
	David M. Noel
	Vice President of Finance and Chief Financial Officer
	(principal financial and accounting officer)

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Exhibit Index

3.1 Amended and Restated Articles of Incorporation, as adopted on January 18, 2006 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on January 24, 2006)

3.2 Amended Bylaws, as adopted on January 18, 2006 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on January 24, 2006)

4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to 1987 S-2 Registration Statement [File No. 33-12970])

4.2 Form of Rights Agreement, dated as of May 23, 1996, between the Company and Norwest Bank Minnesota, National Association (incorporated by reference to Exhibit 1 to the Company’s Form 8-A Registration Statement dated May 31, 1996)

10.1 1996 Stock Option Plan, as amended to date

10.2 Description of the Company’s program permitting directors to receive monthly retainer fees in the form of the Company’s common stock (incorporated by reference to the program description set forth under Item 1.01 in the Current Report on Form 8-K filed on December 13, 2005)

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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EX-10.1

Exhibit 10.1

LIFECORE BIOMEDICAL, INC.

1996 STOCK PLAN, AS AMENDED

TABLE OF CONTENTS

SECTION 1.	GENERAL PURPOSE OF PLAN; DEFINITIONS.	1
SECTION 2.	ADMINISTRATION.	3
SECTION 3.	STOCK SUBJECT TO PLAN.	4
SECTION 4.	ELIGIBILITY.	4
SECTION 5.	STOCK OPTIONS.	5
SECTION 6.	STOCK APPRECIATION RIGHTS.	8
SECTION 7.	RESTRICTED STOCK.	9
SECTION 8.	DEFERRED STOCK AWARDS.	11
SECTION 9.	TRANSFER, LEAVE OF ABSENCE, ETC.	12
SECTION 10.	AMENDMENTS AND TERMINATION.	12
SECTION 11.	UNFUNDED STATUS OF PLAN.	13
SECTION 12.	GENERAL PROVISIONS.	13

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LIFECORE BIOMEDICAL, INC.

1996 STOCK PLAN

          SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

          The name of this plan is the Lifecore Biomedical, Inc. 1996 Stock Plan (the “Plan”). The purpose of the Plan is to enable Lifecore Biomedical, Inc. (the “Company”) to retain and attract executives and other key employees, non-employee directors and consultants who contribute to the Company’s success by their ability, ingenuity and industry, and to enable such individuals to participate in the long-term success and growth of the Company by giving them a proprietary interest in the Company.

          For purposes of the Plan, the following terms shall be defined as set forth below:

          a. “BOARD” means the Board of Directors of the Company as it may be comprised from time to time.

          b. “CAUSE” means a felony conviction of a participant or the failure of a participant to contest prosecution for a felony, willful misconduct, dishonesty or intentional violation of a statute, rule or regulation, any of which, in the judgment of the Company, is harmful to the business or reputation of the Company.

          c. “CODE” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.

          d. “COMMITTEE” means the Committee referred to in Section 2 of the Plan. If at any time no Committee shall be in office, then the functions of the Committee specified in the Plan shall be exercised by the Board, unless the Plan specifically states otherwise.

          e. “CONSULTANT” means any person, including an advisor, engaged by the Company or a Parent of the Subsidiary of the Company to render services and who is compensated for such services and who is not an employee of the Company or any Parent Corporation or Subsidiary of the Company. A Non-Employee Director may serve as a Consultant.

          f. “COMPANY” means Lifecore Biomedical, Inc., a corporation organized under the laws of the State of Minnesota (or any successor corporation).

          g. “DEFERRED STOCK” means an award made pursuant to Section 8 below of the right to receive stock at the end of a specified deferral period.

          h. “DISABILITY” means permanent and total disability as determined by the Committee.

          i. “EARLY RETIREMENT” means retirement, with consent of the Committee at the time of retirement, from active employment with the Company and any Subsidiary or Parent Corporation of the Company.

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          j. “FAIR MARKET VALUE” of Stock on any given date shall be determined by the Committee as follows: (a) if the Stock is listed for trading on one of more national securities exchanges, or is traded on the NASDAQ Stock Market, the last reported sales price on the principal such exchange or the NASDAQ Stock Market on the date in question, or if such Stock shall not have been traded on such principal exchange on such date, the last reported sales price on such principal exchange or the NASDAQ Stock Market on the first day prior thereto on which such Stock was so traded; or (b) if the Stock is not listed for trading on a national securities exchange or the NASDAQ Stock Market, but is traded in the over-the-counter market, including the NASDAQ Small Cap Market, the closing bid price for such Stock on the date in question, or if there is no such bid price for such Stock on such date, the closing bid price on the first day prior thereto on which such price existed; or (c) if neither (a) or (b) is applicable, by any means fair and reasonable by the Committee, which determination shall be final and binding on all parties.

          k. “INCENTIVE STOCK OPTION” means any Stock Option intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.

          l. “NON-EMPLOYEE DIRECTOR” means a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934.

          m. “NON-QUALIFIED STOCK OPTION” means any Stock Option that is not an Incentive Stock Option, and is intended to be and is designated as a “Non-Qualified Stock Option.”

          n. “NORMAL RETIREMENT” means retirement from active employment with the Company and any Subsidiary or Parent Corporation of the Company on or after age 65.

          o. “OUTSIDE DIRECTOR” means a Director who: (a) is not a current employee of the Company or any member of an affiliated group which includes the Company; (b) is not a former employee of the Company who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year; (c) has not been an officer of the Company; (d) does not receive remuneration from the Company, either directly or indirectly, in any capacity other than as a director, except as otherwise permitted under Code Section 162(m) and regulations thereunder. For this purpose, remuneration includes any payment in exchange for good or services. This definition shall be further governed by the provisions of Code Section 162(m) and regulations promulgated thereunder.

          p. “PARENT CORPORATION” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of the corporations (other than the Company) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

          q. “RESTRICTED STOCK” means an award of shares of Stock that are subject to restrictions under Section 7 below.

          r. “RETIREMENT” means Normal Retirement or Early Retirement.

          s. “STOCK” means the Common Stock of the Company.

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          t. “STOCK APPRECIATION RIGHT” means the right pursuant to an award granted under Section 6 below to surrender to the Company all or a portion of a Stock Option in exchange for an amount equal to the difference between (i) Fair Market Value, as of the date such Stock Option or such portion thereof is surrendered, of the shares of Stock covered by such Stock Option or such portion thereof, and (ii) the aggregate exercise price of such Stock Option or such portion thereof.

          u. “STOCK OPTION” means any option to purchase shares of Stock granted pursuant to Section 5 below.

          v. “SUBSIDIARY” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

          SECTION 2. ADMINISTRATION.

          The Plan shall be administered by the Board of Directors or by a Committee appointed by the Board of Directors of the Company consisting of at least two Directors, all of whom shall be Outside Directors and Non-Employee Directors, who shall serve at the pleasure of the Board.

          The Committee shall have the power and authority to grant to eligible employees or Consultants, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, or (iv) Deferred Stock awards.

          In particular, the Committee shall have the authority:

          (i) to select the officers and other key employees of the Company and its Subsidiaries and other eligible persons to whom Stock Options, Stock Appreciation Rights, Restricted Stock and Deferred Stock awards may from time to time be granted hereunder;

          (ii) to determine whether and to what extent Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock and Deferred Stock awards, or a combination of the foregoing, are to be granted hereunder;

          (iii) to determine the number of shares to be covered by each such award granted hereunder;

          (iv) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder (including, but not limited to, any restriction on any Stock Option or other award and/or the shares of Stock relating thereto), which authority shall be exclusively vested in the Committee (and not the Board) for purposes of establishing performance criteria used with Restricted Stock and Deferred Stock awards; provided, however, that in the event of a merger or asset sale, the applicable provisions of Sections 5(c) and 7(c) of the Plan shall govern the acceleration of the vesting of any Stock Option or awards;

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          (v) to determine whether, to what extent and under what circumstances Stock and other amounts payable with respect to an award under this Plan shall be deferred either automatically or at the election of the participant.

          The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; to interpret the terms and provisions of the Plan and any award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may delegate to executive officers of the Company the authority to exercise the powers specified in (i), (ii), (iii), (iv) and (v) above with respect to persons who are not either the chief executive officer of the Company or the four highest paid officers of the Company other than the chief executive officer.

          All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Plan participants.

          SECTION 3. STOCK SUBJECT TO PLAN.

          The total number of shares of Stock reserved and available for distribution under the Plan shall be 3,000,000. Such shares may consist, in whole or in part, of authorized and unissued shares.

          Subject to paragraph (b)(iv) of Section 6 below, if any shares that have been optioned cease to be subject to Stock Options, or if any shares subject to any Restricted Stock or Deferred Stock award granted hereunder are forfeited or such award otherwise terminates without a payment being made to the participant, such shares shall again be available for distribution in connection with future awards under the Plan.

          In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, other change in corporate structure affecting the Stock, or spin-off or other distribution of assets to shareholders, such substitution or adjustment shall be made in the aggregate number of shares reserved for issuance under the Plan, in the number and option price of shares subject to outstanding options granted under the Plan, and in the number of shares subject to Restricted Stock or Deferred Stock awards granted under the Plan as may be determined to be appropriate by the Committee, in its sole discretion, provided that the number of shares subject to any award shall always be a whole number. Such adjusted option price shall also be used to determine the amount payable by the Company upon the exercise of any Stock Appreciation Right associated with any Option.

          SECTION 4. ELIGIBILITY.

          Officers, other key employees of the Company and Subsidiaries, members of the Board of Directors, and Consultants who are responsible for or contribute to the management, growth and profitability of the business of the Company and its Subsidiaries are eligible to be granted Stock Options, Stock Appreciation Rights, Restricted Stock or Deferred Stock awards under the Plan. The optionees and participants under the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible, and the Committee shall determine, in its sole discretion, the number of shares covered by each award.

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          Notwithstanding the foregoing, no person shall receive grants of Stock Options and Stock Appreciation Rights under this Plan which exceed 600,000 shares during any fiscal year of the Company.

          SECTION 5. STOCK OPTIONS.

          Any Stock Option granted under the Plan shall be in such form as the Committee may from time to time approve.

          The Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock Options shall be granted under the Plan after September 19, 2006.

          The Committee shall have the authority to grant any optionee Incentive Stock Options, Non-Qualified Stock Options, or both types of options (in each case with or without Stock Appreciation Rights). To the extent that any option does not qualify as an Incentive Stock Option, it shall constitute a separate Non-Qualified Stock Option.

          Anything in the Plan to the contrary notwithstanding, no term of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify either the Plan or any Incentive Stock Option under Section 422 of the Code. The preceding sentence shall not preclude any modification or amendment to an outstanding Incentive Stock Option, whether or not such modification or amendment results in disqualification of such Stock Option as an Incentive Stock Option, provided the optionee consents in writing to the modification or amendment.

          Options granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable.

          (a) OPTION PRICE. The option price per share of Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant. In no event shall the option price per share of Stock purchasable under an Incentive Stock Option be less than 100% of Fair Market Value on the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is granted to such employee, the option price shall be no less than 110% of the Fair Market Value of the Stock on the date the option is granted.

          (b) OPTION TERM. The term of each Stock Option shall be fixed by the Committee, but no Incentive Stock Option shall be exercisable more than ten years after the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is granted to such employee, the term of such option shall be no more than five years from the date of grant.

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          (c) EXERCISABILITY. Stock Options shall be exercisable at such time or times as determined by the Committee at or after grant, subject to the restrictions stated in Section 5(b) above. If the Committee provides, in its discretion, that any option is exercisable only in installments, the Committee may waive such installment exercise provisions at any time. Notwithstanding anything contained in the Plan to the contrary, the Committee may, in its discretion, extend or vary the term of any Stock Option or any installment thereof, whether or not the optionee is then employed by the Company, if such action is deemed to be in the best interests of the Company; provided, however, that in the event of a merger or sale of assets, the provisions of this Section 5(c) shall govern vesting acceleration. Notwithstanding the foregoing, unless the Stock Option provides otherwise, any Stock Option granted under this Plan shall be exercisable in full, without regard to any installment exercise provisions, for a period specified by the Committee, but not to exceed sixty (60) days, prior to the occurrence of any of the following events: (i) dissolution or liquidation of the Company other than in conjunction with a bankruptcy of the Company or any similar occurrence, (ii) any merger, consolidation, acquisition, separation, reorganization, or similar occurrence, where the Company will not be the surviving entity or (iii) the transfer of substantially all of the assets of the Company or 75% or more of the outstanding Stock of the Company.

          The grant of an option pursuant to the Plan shall not limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, exchange or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

          (d) METHOD OF EXERCISE. Stock Options may be exercised in whole or in part at any time during the option period by giving written notice of exercise to the Company specifying the number of shares to be purchased. Such notice shall be accompanied by payment in full of the purchase price, either by check, or by any other form of legal consideration deemed sufficient by the Committee and consistent with the Plan’s purpose and applicable law, including promissory notes or a properly executed exercise notice together with irrevocable instructions to a broker acceptable to the Company to promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise price. As determined by the Committee at the time of grant or exercise, in its sole discretion, payment in full or in part may also be made in the form of Stock already owned by the optionee (which in the case of Stock acquired upon exercise of an option have been owned for more than six months on the date of surrender) or, in the case of the exercise of a Non-Qualified Stock Option, Restricted Stock or Deferred Stock subject to an award hereunder (based, in each case, on the Fair Market Value of the Stock on the date the option is exercised, as determined by the Committee), provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of already owned shares may be authorized only at the time the option is granted, and provided further that in the event payment is made in the form of shares of Restricted Stock or a Deferred Stock award, the optionee will receive a portion of the option shares in the form of, and in an amount equal to, the Restricted Stock or Deferred Stock award tendered as payment by the optionee. If the terms of an option so permit, an optionee may elect to pay all or part of the option exercise price by having the Company withhold from the shares of Stock that would otherwise be issued upon exercise that number of shares of Stock having a Fair Market Value equal to the aggregate option exercise price for the shares with respect to which such election is made. No shares of Stock shall be issued until full payment therefor has been made. An optionee shall generally have the rights to

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dividends and other rights of a shareholder with respect to shares subject to the option when the optionee has given written notice of exercise, has paid in full for such shares, and, if requested, has given the representation described in paragraph (a) of Section 12.

          (e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the optionee’s lifetime, only by the optionee.

          (f) TERMINATION BY DEATH. If an optionee’s employment by the Company and any Subsidiary or Parent Corporation terminates by reason of death, any Incentive Stock Option may thereafter be immediately exercised, to the extent then exercisable, by the legal representative of the estate or by the legatee of the optionee under the will of the optionee, for a period of twelve months from the date of such death or until the expiration of the stated term of the option, whichever period is shorter. In the event of termination of employment by reason of death, if any Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option.

          (g) TERMINATION BY REASON OF DISABILITY. If an optionee’s employment by the Company and any Subsidiary or Parent Corporation terminates by reason of Disability, any Incentive Stock Option held by such optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability, but may not be exercised after twelve months from the date of such termination of employment or the expiration of the stated term of the option, whichever period is the shorter. In the event of termination of employment by reason of Disability, if any Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option.

          (h) TERMINATION BY REASON OF RETIREMENT. If an optionee’s employment by the Company and any Subsidiary or Parent Corporation terminates by reason of Retirement and the terms of the Stock Option so provide, any Incentive Stock Option held by such optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement, but may not be exercised after twelve months from the date of such termination of employment or the expiration of the stated term of the option, whichever period is the shorter. In the event of termination of employment by reason of Retirement, if any Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option.

          (i) OTHER TERMINATION. If an optionee’s continuous status as an employee or Consultant terminates (other than upon the optionee’s death, Disability or Retirement), any Incentive Stock Option held by such optionee may thereafter be exercised to the extent it was exercisable at the time of such termination, but may not be exercised after 90 days after such termination, or the expiration of the stated term of the option, whichever period is the shorter. In the event of termination of employment by reason other than death, Disability or Retirement and if pursuant to its terms any Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, the option will thereafter be treated as a Non-

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Qualified Stock Option. In the event an Optionee’s employment with the Company is terminated for Cause, all unexercised Options granted to such Optionee shall immediately terminate.

          (j) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. The aggregate Fair Market Value (determined as of the time the Stock Option is granted) of the Common Stock with respect to which an Incentive Stock Option under this Plan or any other plan of the Company and any Subsidiary or Parent Corporation is exercisable for the first time by an optionee during any calendar year shall not exceed $100,000.

          (k) DIRECTORS WHO ARE NOT EMPLOYEES. Each person who (i) is not an employee of the Company, any Parent Corporation or any Subsidiary and (ii) is elected or re-elected as a Director by the Board or the shareholders on or subsequent to November 17, 2005, shall automatically be granted an Option to purchase 10,000 shares of Stock as of the date of such election or re-election, at an option price per share equal to 100% of the Fair Market Value of a share of Stock on the date of such election or re-election; provided that any such person who received an option grant pursuant to this Section 5(k) prior to November 17, 2005 shall not be eligible to receive an additional grant under this section until the third calendar year following the calendar year in which the most recent prior grant under this Section to such person was made. All such Options shall be designated as Non-Qualified Stock Options and shall be subject to the same terms and provisions as are then in effect with respect to the grant of Non-Qualified Stock Options to officers and key employees of the Company, except that (1) the term of each such Option shall be equal to ten years, which term shall not expire upon the termination of service as a Director and (2) the Option shall become exercisable as to one half of the shares eight months after the date the Option is granted and as to the balance 20 months after the date the Option is granted. Upon termination of such Director’s service as a Director of the Company, any unvested Option held by such Director shall not become exercisable. Subject to the foregoing, all provisions of this Plan not inconsistent with the foregoing shall apply to Options granted pursuant to this Section 5(k).

          SECTION 6. STOCK APPRECIATION RIGHTS.

          (a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option granted under the Plan. In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of the grant of such Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of the grant of the option.

          A Stock Appreciation Right or applicable portion thereof granted with respect to a given Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option, except that a Stock Appreciation Right granted with respect to less than the full number of shares covered by a related Stock Option shall not be reduced until the exercise or termination of the related Stock Option exceeds the number of shares not covered by the Stock Appreciation Right.

          A Stock Appreciation Right may be exercised by an optionee, in accordance with paragraph (b) of this Section 6, by surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender, the optionee shall be entitled to receive an amount

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determined in the manner prescribed in paragraph (b) of this Section 6. Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the related Stock Appreciation Rights have been exercised.

          (b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following:

(i) Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Stock Options to which they relate shall be exercisable in accordance with the provisions of Section 5 and this Section 6 of the Plan.

(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be entitled to receive up to, but not more than, an amount in cash or shares of Stock equal in value to the excess of the Fair Market Value of one share of Stock over the option price per share specified in the related option multiplied by the number of shares in respect of which the Stock Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment.

(iii) Stock Appreciation Rights shall be transferable only when and to the extent that the underlying Stock Option would be transferable under Section 5 of the Plan.

(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Sections 3 and 4 of the Plan on the total number of shares of Stock to be issued under the Plan and the maximum number of shares to be awarded to any one person in a fiscal year, but only to the extent of the number of shares issued or issuable under the Stock Appreciation Right at the time of exercise based on the value of the Stock Appreciation Right at such time.

(v) A Stock Appreciation Right granted in connection with an Incentive Stock Option may be exercised only if and when the market price of the Stock subject to the Incentive Stock Option exceeds the exercise price of such Option.

          SECTION 7. RESTRICTED STOCK.

          (a) ADMINISTRATION. Shares of Restricted Stock may be issued either alone or in addition to other awards granted under the Plan. The Committee shall determine the officers, key employees and Consultants of the Company and Subsidiaries to whom, and the time or times at which, grants of Restricted Stock will be made, the number of shares to be awarded, the time or times within which such awards may be subject to forfeiture, and all other conditions of the awards. The Committee may also condition the grant of Restricted Stock upon the attainment of specified performance goals. The provisions of Restricted Stock awards need not be the same with respect to each recipient.

          (b) AWARDS AND CERTIFICATES. The prospective recipient of an award of shares of Restricted Stock shall not have any rights with respect to such award, unless and until such recipient has executed an agreement evidencing the award and has delivered a fully

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executed copy thereof to the Company, and has otherwise complied with the then applicable terms and conditions.

(i) Each participant shall be issued a stock certificate in respect of shares of Restricted Stock awarded under the Plan. Such certificate shall be registered in the name of the participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such award, substantially in the following form:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Lifecore Biomedical, Inc. 1996 Stock Plan and an Agreement entered into between the registered owner and Lifecore Biomedical, Inc. Copies of such Plan and Agreement are on file in the offices of Lifecore Biomedical, Inc., 3515 Lyman Boulevard, Chaska, MN 55318.”

(ii) The Committee shall require that the stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any Restricted Stock award, the participant shall have delivered a stock power, endorsed in blank, relating to the Stock covered by such award.

          (c) RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions:

(i) Subject to the provisions of this Plan and the award agreement, during a period set by the Committee commencing with the date of such award (the “Restriction Period”), the participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock awarded under the Plan. Within these limits, the Committee may provide for the lapse of such restrictions in installments where deemed appropriate.

(ii) Except as provided in paragraph (c)(i) of this Section 7, the participant shall have, with respect to the shares of Restricted Stock, all of the rights of a shareholder of the Company, including the right to vote the shares and the right to receive any cash dividends. The Committee, in its sole discretion, may permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional shares of Restricted Stock (to the extent shares are available under Section 3 and subject to paragraph (f) of Section 12). Certificates for shares of unrestricted Stock shall be delivered to the grantee promptly after, and only after, the period of forfeiture shall have expired without forfeiture in respect of such shares of Restricted Stock.

(iii) Subject to the provisions of the award agreement and paragraph (c)(iv) of this Section 7, upon termination of employment for any reason during the Restriction Period, all shares still subject to restriction shall be forfeited by the participant.

(iv) In the event of special hardship circumstances of a participant whose employment is terminated (other than for Cause), including death, Disability or Retirement, or in the event of an unforeseeable emergency of a participant still in service, the Committee may, in its sole discretion, when it finds that a waiver would be in the best interest of the

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Company, waive in whole or in part any or all remaining restrictions with respect to such participant’s shares of Restricted Stock.

(v) Notwithstanding the foregoing, all restrictions with respect to any participant’s shares of Restricted Stock shall lapse, on the date determined by the Committee, prior to, but in no event more than sixty (60) days prior to, the occurrence of any of the following events: (i) dissolution or liquidation of the Company, other than in conjunction with a bankruptcy of the Company or any similar occurrence, (ii) any merger, consolidation, acquisition, separation, reorganization, or similar occurrence, where the Company will not be the surviving entity or (iii) the transfer of substantially all of the assets of the Company or 75% or more of the outstanding Stock of the Company.

          SECTION 8. DEFERRED STOCK AWARDS.

          (a) ADMINISTRATION. Deferred Stock may be awarded either alone or in addition to other awards granted under the Plan. The Committee shall determine the officers, key employees and Consultants of the Company and Subsidiaries to whom and the time or times at which Deferred Stock shall be awarded, the number of Shares of Deferred Stock to be awarded to any participant or group of participants, the duration of the period (the “Deferral Period”) during which, and the conditions under which, receipt of the Stock will be deferred, and the terms and conditions of the award in addition to those contained in paragraph (b) of this Section 8. The Committee may also condition the grant of Deferred Stock upon the attainment of specified performance goals. The provisions of Deferred Stock awards need not be the same with respect to each recipient.

          (b) TERMS AND CONDITIONS.

(i) Subject to the provisions of this Plan and the award agreement, Deferred Stock awards may not be sold, assigned, transferred, pledged or otherwise encumbered during the Deferral Period. At the expiration of the Deferral Period (or Elective Deferral Period, where applicable), share certificates shall be delivered to the participant, or his legal representative, in a number equal to the shares covered by the Deferred Stock award.

(ii) Amounts equal to any dividends declared during the Deferral Period with respect to the number of shares covered by a Deferred Stock award will be paid to the participant currently or deferred and deemed to be reinvested in additional Deferred Stock or otherwise reinvested, all as determined at the time of the award by the Committee, in its sole discretion.

(iii) Subject to the provisions of the award agreement and paragraph (b)(iv) of this Section 8, upon termination of employment for any reason during the Deferral Period for a given award, the Deferred Stock in question shall be forfeited by the participant.

(iv) In the event of special hardship circumstances of a participant whose employment is terminated (other than for Cause) including death, Disability or Retirement, or in the event of an unforeseeable emergency of a participant still in service, the Committee may, in its sole discretion, when it finds that a waiver would be in the best interest of the

11

Company, waive in whole or in part any or all of the remaining deferral limitations imposed hereunder with respect to any or all of the participant’s Deferred Stock.

(v) A participant may elect to further defer receipt of the award for a specified period or until a specified event (the “Elective Deferral Period”), subject in each case to the Committee’s approval and to such terms as are determined by the Committee, all in its sole discretion. Subject to any exceptions adopted by the Committee, such election must generally be made prior to completion of one half of the Deferral Period for a Deferred Stock award (or for an installment of such an award).

(vi) Each award shall be confirmed by, and subject to the terms of, a Deferred Stock agreement executed by the Company and the participant.

          SECTION 9. TRANSFER, LEAVE OF ABSENCE, ETC.

          For purposes of the Plan, the following events shall not be deemed a termination of employment:

          (a) a transfer of an employee from the Company to a Parent Corporation or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or from one Subsidiary to another;

          (b) a leave of absence, approved in writing by the Committee, for military service or sickness, or for any other purpose approved by the Company if the period of such leave does not exceed ninety (90) days (or such longer period as the Committee may approve, in its sole discretion); and

          (c) a leave of absence in excess of ninety (90) days, approved in writing by the Committee, but only if the employee’s right to reemployment is guaranteed either by a statute or by contract, and provided that, in the case of any leave of absence, the employee returns to work within 30 days after the end of such leave.

          SECTION 10. AMENDMENTS AND TERMINATION.

          The Board may amend, alter, or discontinue the Plan, but no amendment, alteration, or discontinuation shall be made (i) which would impair the rights of an optionee or participant under a Stock Option, Restricted Stock or other Stock-based award theretofore granted, without the optionee’s or participant’s consent, or (ii) which without the approval of the stockholders of the Company would cause the Plan to no longer comply with Rule 16b-3 under the Securities Exchange Act of 1934, Section 422 of the Code or any other regulatory requirements.

          The Committee may amend the terms of any award or option theretofore granted, prospectively or retroactively to the extent such amendment is consistent with the terms of this Plan, but no such amendment shall impair the rights of any holder without his or her consent except to the extent authorized under the Plan. The Committee may also substitute new Stock Options for previously granted options, including previously granted options having higher option prices.

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          SECTION 11. UNFUNDED STATUS OF PLAN.

          The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a participant or optionee by the Company, nothing contained herein shall give any such participant or optionee any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Stock or payments in lieu of or with respect to awards hereunder, provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

          SECTION 12. GENERAL PROVISIONS.

          (a) The Committee may require each person purchasing shares pursuant to a Stock Option under the Plan to represent to and agree with the Company in writing that the optionee is acquiring the shares without a view to distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

          All certificates for shares of Stock delivered under the Plan pursuant to any Restricted Stock, Deferred Stock or other Stock-based awards shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is then listed, and any applicable Federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

          (b) Subject to paragraph (d) below, recipients of Restricted Stock, Deferred Stock and other Stock-based awards under the Plan (other than Stock Options) are not required to make any payment or provide consideration other than the rendering of services.

          (c) Nothing contained in this Plan shall prevent the Board of Directors from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the Plan shall not confer upon any employee of the Company or any Subsidiary any right to continued employment with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or a Subsidiary to terminate the employment of any of its employees at any time.

          (d) Each participant shall, no later than the date as of which any part of the value of an award first becomes includible as compensation in the gross income of the participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company and Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant. With respect to any award under the Plan, if the terms of such

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award so permit, a participant may elect by written notice to the Company to satisfy part or all of the withholding tax requirements associated with the award by (i) authorizing the Company to retain from the number of shares of Stock that would otherwise be deliverable to the participant, or (ii) delivering to the Company from shares of Stock already owned by the participant, that number of shares having an aggregate Fair Market Value equal to part or all of the tax payable by the participant under this Section 12(d). Any such election shall be in accordance with, and subject to, applicable tax and securities laws, regulations and rulings.

          (e) At the time of grant, the Committee may provide in connection with any grant made under this Plan that the shares of Stock received as a result of such grant shall be subject to a repurchase right in favor of the Company, pursuant to which the participant shall be required to offer to the Company upon termination of employment for any reason any shares that the participant acquired under the Plan, with the price being the then Fair Market Value of the Stock or, in the case of a termination for Cause, an amount equal to the cash consideration paid for the Stock, subject to such other terms and conditions as the Committee may specify at the time of grant. The Committee may, at the time of the grant of an award under the Plan, provide the Company with the right to repurchase, or require the forfeiture of, shares of Stock acquired pursuant to the Plan by any participant who, at any time within two years after termination of employment with the Company, directly or indirectly competes with, or is employed by a competitor of, the Company.

          (f) The reinvestment of dividends in additional Restricted Stock (or in Deferred Stock or other types of Plan awards) at the time of any dividend payment shall only be permissible if the Committee (or the Company’s chief financial officer) certifies in writing that under Section 3 sufficient shares are available for such reinvestment (taking into account then outstanding Stock Options and other Plan awards).

          (g) The Plan is expressly made subject to the approval by shareholders of the Company. If the Plan is not so approved by the shareholders on or before one year after this Plan’s adoption by the Board of Directors, this Plan shall not come into effect. The offering of the shares hereunder shall be also subject to the effecting by the Company of any registration or qualification of the shares under any federal or state law or the obtaining of the consent or approval of any governmental regulatory body which the Company shall determine, in its sole discretion, is necessary or desirable as a condition to or in connection with, the offering or the issue or purchase of the shares covered thereby. The Company shall make every reasonable effort to effect such registration or qualification or to obtain such consent or approval.

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EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, Dennis J. Allingham, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lifecore Biomedical, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial report and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 9, 2006	/s/ Dennis J. Allingham
	Dennis J. Allingham
	President, Chief Executive Officer, Secretary and Director (principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, David M. Noel, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lifecore Biomedical, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial report and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 9, 2006	/s/ David M. Noel
	David M. Noel
	Vice President of Finance and Chief Financial Officer (principal financial and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lifecore Biomedical, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2005, as filed with the Securities and Exchange Commission (the “Report”), I, Dennis J. Allingham, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Dennis J. Allingham
Dennis J. Allingham
President, Chief Executive Officer, Secretary and Director
(principal executive officer)

February 9, 2006

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lifecore Biomedical, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2005, as filed with the Securities and Exchange Commission (the “Report”), I, David M. Noel, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ David M. Noel
David M. Noel
Vice President of Finance and Chief Financial Officer
(principal financial and accounting officer)

February 9, 2006