MORTON GROVE, Ill., Aug. 14 /PRNewswire-FirstCall/ -- Lifeway Foods, Inc., , makers of a nutritious, probiotic dairy beverage called kefir, announced today for the second quarter ended June 30, 2008, sales increased 19% to approximately $11,523,500 from $9,715,000 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).
Second quarter 2008 gross profit virtually unchanged to $3,872,569 from $3,829,076 during the same period a year ago. Gross margins were 34% in the second quarter 2008. Operating income was $1,546,161 for the second quarter 2008. Net Income was $911,718 for the second quarter 2008. Earnings per share were $.05 per share for the second quarter 2008
Edward Smolyansky, CFO commented, "We are extremely proud of our second quarter and first half 2008 results. Our margins continue to improve as the cost of our largest raw material, milk, continues to decrease from its record highs set in the fall of 2007. The price of milk in August was the second lowest month in 2008, and we hope the downward trend will persist throughout the remainder of 2008. Even though we have had some relief in the cost of milk, the prices of most of our other production and packaging supplies that are derived from oil continue to rise, as does the cost to deliver our products."
Smolyansky added, "We intend on using the extra savings derived from these lower raw material prices to increase our marketing and promotional activities and to continue to educate the public as to the benefits of our Kefir. Selling related expenses in the second quarter 2008 increased 26% compared to the same period a year ago and we expect to continue to spend a higher percentage of sales on marketing in the second half of 2008."
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
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) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 Sales $11,523,393 $9,715,262 $22,645,631 $18,737,506 Cost of goods sold 7,455,696 5,699,883 14,897,79 10,984,414 Depreciation expense 195,128 186,303 384,552 351,597 Total cost of goods sold 7,650,824 5,886,186 15,282,311 11,336,011 Gross profit 3,872,569 3,829,076 7,363,300 7,401,495 Selling Expenses 1,154,126 912,262 2,213,292 1,682,343 General and Administrative 1,092,420 1,074,530 2,077,466 1,995,103 Amortization expense 79,862 80,997 159,723 161,272 Total Operating Expenses 2,326,408 2,067,789 4,450,481 3,838,718 Income from operations 1,546,161 1,761,287 2,912,819 3,562,777 Other income (expense): Interest and dividend income 62,862 98,365 165,995 164,164 Rental Income 11,647 9,581 23,294 18,181 Interest expense (68,969) (109,283) (154,924) (218,812) Gain (loss) on sale of marketable securities, net (87,174) 439,586 (36,145) 454,331 Total other income (Expense) (81,634) 438,249 (1,780) 417,864 Income before provision for income taxes 1,464,527 2,199,536 2,911,039 3,980,641 Provision for income 552,809 803,510 1,110,715 1,449,284 Net income $911,718 $1,396,026 $1,800,324 $2,531,357 Basic and diluted earnings per common share 0.05 0.08 0.11 0.15 Weighted average number of shares outstanding 16,765,094 16,875,905 16,789,727 16,885,586 (Unaudited) Six Months Ended June 30, December 31, 2008 2007 2007 Cash flows from operating activities: Net income $1,800,324 $2,531,357 $3,152,660 Adjustments to reconcile net income to net cash flows from operating activities, net of acquisition: Depreciation and amortization 544,275 512,869 1,049,913 (Gain)Loss on sale of marketable securities, net 36,145 (454,331) (539,739) Deferred income taxes (78,035) (5,303) (223,717) Treasury stock issued for compensation 34,650 6,930 48,509 Increase (decrease) in allowance for doubtful accounts (4,449) (40,540) (40,540) (Increase) decrease in operating assets: Accounts receivable (412,176) (619,056) (226,405) Other receivables (6,460) 30,755 27,939 Inventories (345,171) (988,401) (984,358) Refundable income taxes 240,880 267,771 26,891 Prepaid expenses and other current assets 8,950 (1,224) (9,270) Increase (decrease) in operating liabilities: Accounts payable 279,314 64,150 131,316 Accrued expenses 134,667 (93,352) (66,062) Accrued income taxes 395,093 31,802 Net cash provided by operating activities 2,628,007 1,243,427 2,347,137 Cash flows from investing activities: Investment in cost method securities --- --- (500,000) Purchases of marketable securities (3,490,650) (3,274,563) (5,744,697) Sale of marketable securities 3,299,791 3,750,770 7,168,246 Increase in margin 407,479 Purchases of property and equipment (1,475,280) (590,096) (1,824,879) Purchases of organizational costs --- (5,858) Net cash used in investing activities (1,258,660) (119,747) (901,330) Cash flows from financing activities: Proceeds of note payable --- --- 300,000 Purchases of treasury stock, net (1,038,723) (752,603) (752,603) Repayment of notes payable (584,470) (904,456) (1,945,131) Net cash used in financing activities (1,623,193) (1,657,059) (2,397,734) Net decrease in cash and cash equivalents (253,846) (533,379) (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 $342,039 $1,014,433 $595,885
