November 14, 2008
Lifeway Foods Reports Record 3rd Quarter 2008 Results
MORTON GROVE, Ill., Nov. 14 /PRNewswire-FirstCall/ -- Lifeway Foods, Inc., , makers of a nutritious, probiotic dairy beverage called kefir, announced today for the third quarter ended September 30, 2008, sales increased 15% to approximately $11,240,000 from $9,817,000 during the same period a year ago. This increase in sales was driven by another strong sales increase of Lifeway's kefir and ProBugs(R).
Third quarter 2008 gross profit increased 30% to $3,537,122 from $2,720,659 during the same period a year ago. Third quarter operating income increased 153% to $1,467,239 from $581,043 during the same period a year ago. Third quarter 2008 net income increased 83% to $854,916 from $468,194 during the same period a year ago.
Edward Smolyansky, CFO commented, "We are extremely proud of our third quarter and nine months 2008 results. Our margins continued to remain strong even as oil and energy prices reached record levels in July and August. All of our oil related production supplies, utilities and transportation costs hit record levels during the third quarter, and we have only just begun to see these costs subside as the price of oil retreats. Additionally, the cost of milk in October declined to the lowest level in 16 months, and we expect them the decline even further. In a very tight credit environment, our cash flows have never been stronger and, combined with these declining costs, should only further benefit us in the fourth quarter 2008 and into 2009"
Julie Smolyansky, CEO commented, "The final months of the year should be a very exciting time for our company as we continue to expand our club store initiative during this difficult economic time for consumers. In the coming weeks, we expect to begin shipments of our 8 oz Kefir variety pack to stores in the northeast region, and a new Probugs(TM) club variety pack to stores in the northern California region. In difficult economic times, when consumers are looking for value at warehouse and club type outlets, it is part of our growing initiative to provide value to these consumers."
About Lifeway Foods
Lifeway, recently named Fortune Small Business' 49th Fastest Growing Small Business, is America's leading supplier of the cultured dairy product known as kefir. Lifeway Kefir is a dairy beverage that contains Lifeway's exclusive 10 Live and Active probiotic cultures. While most regular yogurt only contains two or three of these "friendly" cultures, Lifeway kefir products offer more nutritional benefits. Lifeway offers 12 different flavors of its Kefir beverage, Organic Kefir and SoyTreat (a soy based kefir). Lifeway recently introduced a series of innovative new products such as pomegranate kefir, Greek-style kefir, a children's line of organic kefir products called ProBugs (TM) in a no-spill pouch in kid-friendly flavors like Orange Creamy Crawler and Sublime Slime Lime, and a line of organic whole milk kefir. Lifeway also produces a line of products marketed in US Hispanic communities, called La Fruta, Drinkable Yogurt (yogurt drinks distinct from kefir). In addition to its line of Kefir products, the company produces a variety of cheese products and recently introduced a line of organic pudding called It's Pudding! Live conference calls will now be on an annual basis to discuss fiscal full year results. For more information, contact Lifeway Foods, Inc. at (847) 967-1010 or e-mail at [email protected] and visit http://www.lifeway.net/.
This news release contains forward-looking statements. Investors are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, competitive pressures and other important factors detailed in the Company's reports filed with the Securities and Exchange Commission.
(Unaudited) Three Months Ended September 30, 2008 2007 Sales $11,240,282 $9,817,478 Cost of goods sold 7,505,794 6,901,471 Depreciation expense 197,366 195,348 Total cost of goods sold 7,703,160 7,096,819 Gross profit 3,537,122 2,720,659 Selling Expenses 957,978 1,174,140 General and Administrative 1,032,043 916,893 Amortization expense 79,862 48,583 Total Operating Expenses 2,069,883 2,139,616 Income from operations 1,467,239 581,043 Other income (expense): Interest and dividend income 95,042 84,918 Rental Income 13,647 9,731 Interest expense (71,928) (102,197) Impairment of marketable securities (270,908) Gain (loss) on sale of marketable securities, net (110,259) 209,207 Total other income (Expense) (344,406) 201,659 Income before provision for income taxes 1,122,833 782,702 Provision for income taxes 267,917 314,508 Net income $854,916 $468,194 Basic and diluted earnings per common share 0.05 0.03 Weighted average number of shares outstanding 16,730,650 16,824,911 (Unaudited) Nine Months Ended September 30, December 31, 2008 2007 2007 Cash flows from operating activities: Net income $2,655,240 $2,999,551 $3,152,660 Adjustments to reconcile net income to net cash flows from operating activities, net of acquisition: Depreciation and amortization 821,505 789,215 1,049,913 (Gain)Loss on sale of marketable securities, net 146,404 (663,538) (539,739) Impairment of marketable securities 270,908 Deferred income taxes (125,221) 12,419 (223,717) Treasury stock issued for compensation 65,809 27,720 48,509 Increase (decrease) in allowance for doubtful accounts (4,449) (40,540) (40,540) (Increase) decrease in operating assets: Accounts receivable (947,303) (862,699) (226,405) Other receivables 14,193 25,240 27,939 Inventories (700,540) (1,538,993) (984,358) Refundable income taxes 240,880 142,008 26,891 Prepaid expenses and other current assets 665 (1,068) (9,270) Increase (decrease) in operating liabilities: Accounts payable 766,988 402,027 131,316 Accrued expenses 118,650 (39,033) (66,062) Accrued income taxes 308,260 --- --- Net cash provided by operating activities 3,631,989 1,252,309 2,347,137 Cash flows from investing activities: Investment in cost method securities --- (500,000) (500,000) Purchases of marketable securities (4,864,873) (4,408,170) (5,744,697) Sale of marketable securities 4,659,350 6,652,670 7,168,246 Increase in margin 428,951 --- --- Purchases of property and equipment (1,892,472) (1,142,709) (1,824,879) Purchases of organizational costs --- (5,858) --- Net cash used in investing activities (1,669,044) 595,933 (901,330) Cash flows from financing activities: Proceeds of note payable --- 300,000 300,000 Purchases of treasury stock, net (1,139,987) (752,603) (752,603) Repayment of notes payable (887,977) (1,318,885) (1,945,131) Net cash used in financing activities (2,027,964) (1,771,488) (2,397,734) Net decrease in cash and cash equivalents (65,019) 76,754 (951,927) Cash and cash equivalents at the beginning of the period 595,885 1,547,812 1,547,812 Cash and cash equivalents at the end of the period $530,866 $1,624,566 $595,885
Lifeway Foods, Inc.
CONTACT: Lifeway Foods, Inc., +1-847-967-1010, [email protected]
Web site: http://www.lifeway.net/