9 .	Business Segment Reporting

The Company manages its business operations through

three

strategic business units

and an Other segment. Based upon the information reported to the chief operating decision maker, who is the Chief Executive Officer, the Company has the following reportable segments: the Packaged Fresh Vegetables segment, the Food Export segment and the Biomaterials segment.

The Packaged Fresh Vegetables segment markets and packs specialty packaged whole and fresh-cut fruit and vegetables, the majority of which incorporate the BreatheWay specialty packaging for the retail grocery, club store and food services industry. In

addition, the Packaged Fresh Vegetables segment sells BreatheWay packaging to partners for fruit and vegetable products. The Food Export segment consists of revenues generated from the purchase and sale of primarily whole commodity fruit and vegetable products predominantly to Asia. The Biomaterials segment sells products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellular matrix of connective tissues in both animals and humans, and non-HA products for medical use primarily in the Ophthalmic, Orthopedic and other markets. Other includes licensing and R&D activities from Landec’s Intelimer polymers for agricultural products, personal care products and other industrial products and from the operations of the O Olive business which was acquired on

March 1, 2017.

The Other segment also includes corporate general and administrative expenses, non-Packaged Fresh Vegetables and non-Biomaterials interest income and income tax expenses. All of the assets of the Company are located within the United States of America.

The Company

’s international sales by geography are based on the billing address of the customer and were as follows (in millions):

	Three Months Ended				Six Months Ended
	November 26, 2017		November 27 , 2016		November 26, 2017		November 27 , 2016
Canada	$	17.5	$	16.3	$	35.7	$	34.0
Taiwan	$	7.5	$	11.1	$	11.3	$	24.9
Belgium	$	0.5	$	1.6	$	2.7	$	6.9
Ch ina	$	1.1	$	6.3	$	1.3	$	11.4
Indonesia	$	2.6	$	3.6	$	3.8	$	5.1
Japan	$	1.6	$	2.9	$	3.2	$	4.9
Philippines	$	0.4	$	0.7	$	1.0	$	1.3
Al l Other Countries	$	3.2	$	3.5	$	4.7	$	5.7

Operations by business segment consisted of the following (in thousands):

Three Months Ended November 26, 2017	Packaged Fresh Vegetables			Food Export			Biomaterials			Other			Total
Net sales	$	107,152		$	13,992		$	14,113		$	1,200		$	136,457
International sales	$	17,708		$	13,992		$	2,675		$	41		$	34,416
Gross profit	$	9,445		$	826		$	5,217		$	264		$	15,752
Net income (loss)	$	(270	)	$	110		$	1,260		$	(613	)	$	487
Depreciation and amortization	$	1,958		$	—		$	910		$	112		$	2,980
Dividend income	$	412		$	—		$	—		$	—		$	412
Interest income	$	18		$	—		$	—		$	24		$	42
Interest expense , net	$	—		$	—		$	—		$	480		$	480
Income tax expense (benefit)	$	(95	)	$	31		$	374		$	(103	)	$	207

Three Mont hs Ended November 27, 2016
Net sales	$	97,978		$	25,701		$	11,931		$	255		$	135,865
International sales	$	16,422		$	25,701		$	3,831		$	—		$	45,954
Gross profit	$	12,001		$	1,850		$	4,938		$	164		$	18,953
Net income (loss)	$	(250	)	$	733		$	1,312		$	(469	)	$	1,326
Depreciation and amortization	$	1,792		$	2		$	719		$	37		$	2,550
Dividend income	$	412		$	—		$	—		$	—		$	412
Interest income	$	4		$	—		$	—		$	—		$	4
Interest expense (benefit) , net	$	122		$	—		$	(90	)	$	348		$	380
Income tax expense (benefit)	$	(142	)	$	207		$	388		$	240		$	693

Six Months Ended November 26, 2017
Net sales	$	209,720		$	21,568		$	26,277		$	2,249		$	259,814
International sales	$	35,850		$	21,568		$	6,174		$	73		$	63,665
Gross profit	$	24,460		$	1,310		$	8,739		$	529		$	35,038
Net income (loss)	$	3,513		$	(48	)	$	1,105		$	(1,937	)	$	2,633
Depreciation and amortization	$	3,930		$	—		$	1,775		$	229		$	5,934
Dividend income	$	825		$	—		$	—		$	—		$	825
Interest income	$	29		$	—		$	—		$	45		$	74
Interest expense , net	$	—		$	—		$	—		$	884		$	884
Income tax expense (benefit)	$	1,002		$	(14	)	$	347		$	123		$	1,458

Six Months Ended November 27, 2016
Net sales	$	193,923		$	49,040		$	24,263		$	1,033		$	268,259
International sales	$	34,266		$	49,040		$	10,873		$	—		$	94,179
Gross profit	$	26,407		$	2,878		$	10,060		$	752		$	40,097
Net income (loss)	$	2,073		$	928		$	2,555		$	(918	)	$	4,638
Depreciation and amortization	$	3,612		$	3		$	1,431		$	64		$	5,110
Dividend income	$	825		$	—		$	—		$	—		$	825
Interest income	$	7		$	—		$	—		$	—		$	7
Interest expense , net	$	671		$	—		$	13		$	348		$	1,032
Income tax expense	$	513		$	262		$	738		$	1,069		$	2,582

During

the

six

months ended

November 26, 2017

and

November 27, 2016,

sales to the Company’s top

five

customers accounted for

45%

and

44%,

respectively, of sales. The Company’s top

two

customers, Costco Wholesale Corporation and Wal-Mart Stores, Inc., from the Packaged Fresh Vegetables segment, accounted for

18%

and

17%

of revenues, respectively, for the

six

months ended

November 26, 2017

, and

17%

and

13%

respectively, for the

six

months ended

November 27, 2016.

The Company expects that, for the foreseeable future, a limited number of customers

may

continue to account for a significant portion of its revenues