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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

For the quarterly period ended December 31, 2003

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 O-4136

Lifecore Biomedical, Inc.
(Exact name of Registrant as specified in its charter)

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

Indicate by checkmark 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  X  No

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  X  No

The number of shares outstanding of the registrant’s Common Stock, $.01 par value, as of January 30, 2004 was 12,891,417 shares.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (continued)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (continued)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

December 31, 2003

NOTE A — FINANCIAL INFORMATION

Lifecore Biomedical, Inc. (the “Company”) develops, manufactures and markets biomaterials and medical devices for use in various surgical markets through two divisions, the Hyaluronan Division and the Oral Restorative Division. The Company’s manufacturing facility is located in Chaska, Minnesota. The Hyaluronan Division conducts its business through OEM and contract manufacturing alliances in the gynecologic, ophthalmic, orthopedic and veterinary surgery fields. The Oral Restorative Division conducts its dental surgery business through direct sales and marketing in the United States, Germany, Italy and Sweden and through 23 distributors in 35 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 of America 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 as of December 31, 2003, and the results of operations for the three and six month periods ended December 31, 2003 and 2002 and cash flows for the six month periods ended December 31, 2003 and 2002. The results of operations for the six months ended December 31, 2003 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, 2003 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. The portion of finished hyaluronan powder inventory not expected to be consumed within the next twelve months is classified as a long-term asset. Finished good inventories include hyaluronan, packaged aseptic, and oral restorative products. Inventories consist of the following:

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(cont.)

December 31, 2003

NOTE C — INTANGIBLE ASSETS

The Company does not amortize goodwill and technology and regulatory rights. The customer list is amortized on the straight-line method over 5 years. On an ongoing basis the Company reviews the valuation of intangibles to determine possible impairment by comparing the carrying value to projected undiscounted future cash flows of the related assets. As a result of such review, there was no impairment recorded for the six month period ended December 31, 2003.

Intangibles consisted of the following at:

NOTE D — AGREEMENTS

Lifecore and ETHICON have entered into a Conveyance, License, Development and Supply Agreement (the “ETHICON Agreement”) whereby ETHICON transferred to Lifecore its ownership in certain technology related to research and development previously conducted on the Company’s sodium hyaluronan material. The technology transferred to Lifecore includes written technical documents related to ETHICON’s research and development of a product to inhibit the formation of postsurgical adhesions. These documents include product specifications, methods and techniques, technology, know-how and certain patents. Lifecore assumed responsibility for continuing the anti-adhesion development project including conducting a human gynecology clinical trial on GYNECARE INTERGEL * Adhesion Prevention Solution (“INTERGEL Solution”), a second-generation ferric hyaluronan-based product. Lifecore has granted ETHICON exclusive worldwide marketing rights through 2008 to the products developed by Lifecore within defined fields of use. On March 27, 2003, the Company announced that ETHICON voluntarily suspended global marketing and sales of INTERGEL Solution and has voluntarily withdrawn the product from the market in order to assess information obtained from postmarketing experience with the device. The assessment will include a review of technical issues, surgical techniques and circumstances associated with the postmarketing events, including reports from off-label use. Since the launch of the product in August of 1998 to February 2003, the worldwide complaint rate has been 0.29 percent of units sold. The contribution of the device to these events is unknown. Management does not believe there has been an impairment of hyaluronan assets as of December 31, 2003.

*Trademark of ETHICON, INC.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(cont.)

December 31, 2003

NOTE E — LINE OF CREDIT

The Company has a $5,000,000 credit facility with a bank which has a maturity date of December 31, 2005. The agreement allows for advances against eligible accounts receivable, subject to a borrowing base certificate. Interest is accrued at the prime rate which was 4.00% at December 31, 2003. At December 31, 2003 and June 30, 2003, there were no balances outstanding under the line of credit. 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 profitability. At December 31, 2003 and June 30, 2003, the Company was in compliance with all covenants.

NOTE F — STOCK PLAN INFORMATION

The Company has various stock option plans that provide for the granting of stock options to officers, employees and directors. The Company accounts for stock-based compensation using the intrinsic value method whereby the options are granted at market price, and therefore no compensation costs are recognized. If compensation expense for the Company’s various stock option plans had been determined based upon the projected fair values at the grant dates for awards under those plans, the Company’s pro-forma net loss, and basic and diluted loss per common share would have been as follows:

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(cont.)

December 31, 2003

NOTE G — NET INCOME (LOSS) PER SHARE

The Company’s basic net income (loss) per share amounts have been computed by dividing net income (loss) by the weighted average number of outstanding common shares. The Company’s diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of outstanding common shares and common share equivalents relating to stock options, when dilutive. For the three month periods ended December 31, 2003 and 2002 the Company reported net income and as a result, 47,269 and 67,591 common share equivalents, respectively, were included in the computation of diluted net income per share. For the six month periods ended December 31, 2003 and 2002 the Company reported a net loss and as such, no common share equivalents were included in the computation of diluted net loss per share. However, if the Company would have reported net income in the six month periods ended December 31, 2003 and 2002, 38,720 and 93,956 common share equivalents, respectfully, would have been included in the computation of diluted net income per share.

Options to purchase 2,435,416 and 2,437,791 shares of common stock with a weighted average exercise price of $12.29 and $12.29 for the three-month and six-month periods ended December 31, 2003 and options to purchase 2,499,970 and 1,949,418 shares of common stock with a weighted average exercise price of $12.71 and $14.11 for the three-month and six-month periods ended December 31, 2002, respectively, were outstanding but were not included in the calculation of diluted net loss 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.

NOTE H — SEGMENT INFORMATION

The Company operates two business segments. The Hyaluronan Division develops, manufactures, and markets products containing hyaluronan. The Oral Restorative Division develops, manufactures and/or 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 and Sweden and primarily through distributorship arrangements in other foreign locations. The operations of the Company’s subsidiaries, Lifecore Biomedical GmbH, Lifecore Biomedical SpA, and Lifecore Biomedical AB have not been material to the consolidated financial statements.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (continued)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(cont.)

December 31, 2003

     NOTE H — SEGMENT INFORMATION (CONT)

     Segment assets and the basis of segmentation are consistent with that reported at June 30, 2003. Segment information for sales and income (loss) from operations are as follows:

NOTE I — NEW ACCOUNTING PRONOUNCEMENTS

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of Accounting Principles Board (“APB”) Opinion No. 28, Interim Financial Reporting, to require pro-forma disclosure in interim financial statements by companies that elect to account for stock-based compensation using the intrinsic value method prescribed in APB Opinion No. 25. The Company continues to use the intrinsic value method of accounting for stock-based compensation. As a result, the transition provisions will not have an effect on the Company’s consolidated financial statements.

NOTE J — SUBSEQUENT EVENT

On February 10, 2004, James W. Bracke, Ph.D. resigned his position as President, Chief Executive Officer and a director of the Company. In accordance with the separation agreement with Dr. Bracke, the Company is obligated to pay a severance equal to 100% of his base salary or approximately $300,000.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

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’s revenues are recognized when products are shipped to or otherwise accepted by unaffiliated customers. 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 its 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 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, Intangible and Other Long-Lived Assets:

Intangible 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 annually.

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

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (cont.)

Recently Issued Accounting Pronouncements:

The notes to the consolidated financial statements included in this Form 10-Q include a discussion regarding recently issued accounting pronouncements. The effects on the Company’s financial statements from these pronouncements are not expected to be material.

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 performance continues to be positively effected by growth in the Oral Restorative Division and the related financial leverage on operating results. Continued unused manufacturing capacity charges resulting from reduced hyaluronan production levels and ongoing expenses associated with the market withdrawal of INTERGEL Solution are negatively impacting the Hyaluronan Division operating results. The above factors are applicable to both the three month and six month periods ended December 31, 2003.

Results of Operations

Three Months Ended December 31, 2003 Compared to Three Months Ended December 31, 2002:

Net sales for the quarter ended December 31, 2003 increased $1,296,000 or 13% as compared to the same quarter of last fiscal year. Hyaluronan product sales for the current quarter increased $134,000 or 4% as compared to the same quarter of last fiscal year, due to increased veterinary sales. Oral restorative product sales for the current quarter increased $1,162,000 or 17% compared to the same quarter of last fiscal year. Domestic sales increased 5% and international sales increased 30% as compared to the same quarter of last fiscal year. Favorable foreign currency comparisons increased international sales by $365,000 over the same quarter of last fiscal year.

Consolidated gross margin decreased to 58% for the current quarter from 59% for the same quarter of last fiscal year. The gross margin for the Hyaluronan Division decreased to 46% from a gross margin of 62% due to product mix and increased unused manufacturing capacity charges associated with reduced hyaluronan production. The

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (cont.)

gross margin for the Oral Restorative Division increased to 63% for the current quarter from 58% for the same quarter of last fiscal year. The gross margin increase is due to sales mix and reduced material costs.

Research and development expenses increased $234,000 or 23% in the current quarter as compared to the same quarter of last fiscal year. The increase is due to consulting and professional fees associated with the market withdrawal of INTERGEL Solution.

Marketing and sales expenses increased $244,000 or 8% in the current quarter as compared to the same quarter of last fiscal year due to increased costs associated with expansion of oral restorative’s domestic sales force and international operations.

General and administrative expenses increased $145,000 or 9% for the current quarter as compared to the same quarter of last fiscal year. The increase resulted from increased legal expenses, insurance premiums and higher personnel related expenses.

Net other expense, as shown on the Condensed Consolidated Statements of Operations, decreased $310,000 for the current quarter as compared to the same quarter of last fiscal year. The decrease is due to the $232,000 increase in currency transaction gains realized on Euro denominated intercompany transactions and reduced interest expenses.

Six Months Ended December 31, 2003 Compared to Six Months Ended December 31, 2002:

Net sales for the six months ended December 31, 2003 increased $2,271,000 or 12% as compared to the same period of last fiscal year. Hyaluronan product sales were flat as compared to the same period of last fiscal year. Veterinary and ophthalmic sales increased, which offset reduced gynecologic sales. Oral restorative product sales for the current period increased $2,277,000 or 19% compared to the same period of last fiscal year. Domestic sales increased 10% and international sales increased 30% as compared to the same period of last fiscal year. Favorable foreign currency comparisons increased international sales by $552,000 over the same period of last fiscal year.

Consolidated gross margin increased to 55% for the current period from 53% for the same period of last fiscal year. The gross margin for the Hyaluronan Division decreased to 40% from a gross margin of 42% due to increased unused manufacturing capacity charges associated with reduced hyaluronan production, partially offset by a more favorable product mix. The gross margin for the Oral Restorative Division increased to 63% for the current period

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (cont.)

from 59% for the same quarter of last fiscal year. The gross margin increase is due to sales mix and reduced material costs.

Research and development expenses increased $536,000 or 27% in the current period as compared to the same period of last fiscal year. The increase is primarily due to consulting and professional fees associated with the market withdrawal of INTERGEL Solution.

Marketing and sales expenses increased $569,000 or 10% in the current period as compared to the same period of last fiscal year due to increased costs associated with expansion of oral restorative’s domestic sales force and international operations.

General and administrative expenses increased $547,000 or 20% for the current period as compared to the same period of last fiscal year. The increase resulted from higher legal expenses, insurance premiums, international operations and higher personnel related expenses.

Net other expense, as shown on the Condensed Consolidated Statements of Operations, decreased $427,000 for the current period as compared to the same period of last fiscal year. The decrease is due to the $300,000 increase in other income from currency transaction gains realized on Euro denominated intercompany transactions and reduced interest expenses.

Liquidity and Capital Resources

The Company’s Annual Report on Form 10-K for the year ended June 30, 2003 contains a detailed discussion of Lifecore’s liquidity and capital resources. In conjunction with this Quarterly Report on Form 10-Q, investors should read the 2003 Form 10-K.

For the six month period ended December 31, 2003, the Company had positive cash flow from operations of $893,000. Cash flow from operations was positive in fiscal years 2003, 2002 and 2001. Charges for unused manufacturing capacity associated with the Company’s hyaluronan production and additional costs associated with the withdrawal of INTERGEL Solution from the market have negatively impacted operating results in the current fiscal year. Prior to the current fiscal year, charges for unused capacity were due to an unanticipated delay in receiving INTERGEL Solution marketing approval in the U.S. from the FDA. Also, marketing and sales expenses for the oral restorative products are expected to continue at a high level with continued international expansion and increased personnel costs.

The loan agreement between the Company and the holder of the industrial development revenue bonds issued to finance the Company’s Chaska, Minnesota facility was amended in May 2003 to waive the fixed charge coverage ratio and the cash flow coverage ratio through June 30, 2004. With respect to certain of these covenants, the Company may be required to obtain further waivers for fiscal 2005. There can be no assurance that future waivers will be granted to the Company.

The Company has a $5,000,000 credit facility with a bank which has a maturity date of December 31, 2005. The agreement allows for advances against eligible accounts receivable, subject to a borrowing base certificate. Interest is accrued at the prime rate at December 31, 2003, which was 4.00%. At December 31, 2003 and June 30, 2003, there were no balances outstanding under the line of credit. 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 profitability. At December 31, 2003 and June 30, 2003, the Company was in compliance with all covenants.

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LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (cont.)

On February 10, 2004, James W. Bracke, Ph.D. resigned his position as President, Chief Executive Officer and a director of the Company. In accordance with the separation agreement with Dr. Bracke, the Company is obligated to pay a severance equal to 100% of his base salary or approximately $300,000.

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 uncertainty associated with the future market status of INTERGEL Solution, the complex governmental regulatory environment for new medical products and the early stage of certain of these markets. 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 availability 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.

Cautionary Statement

Certain statements in this Form 10-Q are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which refer to the likelihood of return of INTERGEL Solution to the market and the timing of such return; the extent of the impact on Hyaluronan Division margins from increased unused manufacturing capacity charges; the level of expenditures related to the process associated with the assessment of information obtained from postmarketing experience with the device; the likelihood of adequate cash flow and access to financial markets; expected production levels; and the future marketing and sales success of Oral Restorative Division products, are subject to change. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected, such as, unforeseen difficulties or delays in assessing information obtained from postmarketing experience with INTERGEL Solution, unforeseen difficulties or delays in interactions with the FDA, and lack of cooperation or marketing success from marketing partners for the hyaluronan products. Investors are referred to a more detailed discussion of those risks presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations section in the Company’s Annual Report on Form 10-K for the year ended June 30, 2003 as well as Exhibit 99.1 to such Form 10-K.

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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 and highly rated 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 and Lifecore Biomedical GmbH 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 our 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.

The Company’s outstanding long-term debt carries interest at a fixed rate. There is no material market risk relating to the Company’s long-term debt.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including the Company’s Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a — 15(e) under the Exchange Act) as of the end of the period covered by this report. 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, our disclosure controls and procedures are adequately designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms.

(b) Changes in internal controls.

During the fiscal period covered by this report, there have not been any significant changes in the Company’s internal control over financial reporting (as defined in Rule 13a — 15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

Item 1. Legal Proceedings

Lifecore is a party in three pending lawsuits, all of which allege that the plaintiffs suffered injuries due to the defective nature of the Intergel product manufactured by Lifecore and marketed by ETHICON. Lifecore believes ETHICON is obligated to defend and indemnify Lifecore for all of these lawsuits. Lifecore also has products liability insurance that it believes will cover these claims.

1.

Contratto v. ETHICON, Inc., Johnson & Johnson, Lifecore Biomedical, Inc., and Vital Pharma, Inc. (N.D. California). This case was originally filed on August 14, 2003, and an amended complaint was filed on September 8, 2003. The complaint alleges claims of negligence, strict products liability, products liability: defect in design; products liability: failure to warn; breach of warranty; breach of implied warranty of merchantability; breach of implied warranty of fitness for a particular use; intentional misrepresentation; negligent misrepresentation; and violation of California Code Section 17200.

2.

Powers v. Gynecare through ETHICON, Inc., Johnson & Johnson, Lifecore Biomedical, Inc., and PSS World Medical, Inc. (Orleans Parish, Louisiana). This case was filed on November 5, 2003. Powers’ Complaint alleges generally claims of negligence, failure to warn, and defective design.

3.

Manning v. Lifecore Biomedical, Inc., Johnson & Johnson, ETHICON, Inc., and Gynecare Worldwide (Carver County, Minnesota). Lifecore was served with this action on December 29, 2003. Manning alleges claims of failure to warn, design defect, breach of implied warranty, and unjust enrichment.

Item 4. Submission of Matters to a Vote of Security Holders

On November 13, 2003, the Company held its Annual Meeting of Shareholders. At the meeting, the shareholders elected director Orwin L. Carter, Ph.D. (with 11,945,715 affirmative votes and 304,297 votes withheld).

The shareholders also ratified and approved (i) the Company’s 2003 Stock Incentive Plan (with 3,981,143 affirmative votes, 3,086,053 negative votes, 30,264 votes abstained and 5,152,552 broker non-votes) and (ii) the appointment of Grant Thornton LLP as independent certified public accountants of the Company for the current fiscal year ending June 30, 2004 (with 12,076,801 affirmative votes, 156,658 negative votes, 16,553 votes abstained and no broker non-votes).

Item 6. Exhibits and Reports on Form 8-K

     a. Exhibits and Exhibit Index

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LIFECORE BIOMEDICAL INC. AND SUBSIDIARIES
PART II — OTHER INFORMATION

b. Reports on Form 8-K

A report on Form 8-K was filed on October 31, 2003 (dated October 29, 2003) to report under item 9 that the Company had signed an exclusive distribution agreement with Bardo-Biotech SAS (“BBS”) of Toulouse, France, to distribute Lifecore’s oral restorative products in France.

A report on Form 8-K was filed on January 15, 2004 (dated January 13, 2004) to report under Item 12 the Company’s Fiscal 2004 second quarter financial results.

A report on Form 8-K was filed on January 21, 2004 (dated January 20, 2004) to report under Item 9 that the Company signed an exclusive agreement with HEXAL AG, a pharmaceutical company based in Holzkirchen, Germany, to supply Lifecore’s generic hyaluronan knee-injection therapeutic product in Europe.

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

SIGNATURES

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

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