MORTON GROVE, Ill.,
Nov. 14, 2012 /PRNewswire/
-- Lifeway Foods, Inc., (Nasdaq: LWAY), a leading
supplier of cultured dairy products known as kefir and organic
kefir, today announced results for the third quarter ended
September 30, 2012.
(Logo:
http://photos.prnewswire.com/prnh/20120119/AQ36947LOGO-b)
"We are excited to announce another quarter of record growth
with our quarterly earnings increasing at more than double the
corresponding increase in our rate of sales," said Julie Smolyansky, CEO of Lifeway Foods,
Inc. "In the third quarter, we were also able to strengthen
our balance sheet and increase our cash flows, while returning
value to our shareholders through a dividend. Going forward,
we believe that our growth strategies combined with improved
operating efficiencies will enable us to report the strongest
results in our Company's history."
Third Quarter Results
Third quarter of 2012 gross sales increased 16% to $22.5 million compared to $19.4 million for the third quarter of
2011. This increase is primarily attributable to increased
sales and awareness of the Company's flagship line, Kefir, as well
as ProBugs® Organic Kefir for kids and BioKefir™. Lifeway's
Frozen Kefir line contributed approximately $0.7 million to sales during the third quarter of
2012.
Total consolidated net sales increased 16% or $2.9 million to $20.6
million during the three-month period ended September 30, 2012 from $17.7 million during the same three-month period
in 2011. Net sales are recorded as gross sales less
promotional activities such as slotting fees paid, couponing,
spoilage and promotional allowances as well as early payment terms
given to customers.
Gross profit for the third quarter of 2012 increased 18% to
$7.5 million, compared to
$6.3 million in the third quarter of
the prior year. The Company's gross profit margin was 33% in the
third quarter, which was approximately the same in the third
quarter of 2011. This was primarily attributable to a 20% decrease
in the cost of conventional milk, the Company's largest raw
material, partially offset by a 10% increase in the cost of organic
milk.
Total operating expenses increased 13% or $0.6 million to $5.4
million during the third quarter of 2012, from $4.8 million during the same period in 2011. This
increase was primarily attributable to increased general and
administrative expenses.
Total operating income increased $0.5
million to $2.1 million during
the third quarter of 2012, from $1.6
million during the same period in 2011. The increase
in operating income is related to the increase in gross profit.
The Company's third quarter 2012 effective tax rate was 32%
compared to 30% in the same period last year.
Total net income was $1.4 million
or $0.09 per diluted share for the
three-month period ended September 30,
2012 compared to $1.0 million
or $0.06 per diluted share in the
same period in 2011.
Balance Sheet/Cash Flow Highlights
The Company had $2.4 million in
cash and cash equivalents as of September
30, 2012 compared to a $0.86
million at September 30,
2011. Total stockholder's equity was $38.4 million as of September 30, 2012, which is an increase of
$2.6 million when compared to
September 30, 2011.
Net cash provided by operating activities increased $3.5 million to $6.1
million for the first nine months of 2012. This increase
reflects the Company's improvement in operating
efficiencies.
Net cash used in investing activities was $1.2 million during the nine-months ended
September 30, 2012 compared to net
cash used in operating activities of $2.1 during the same period in 2011. This
decrease is primarily attributable to the decrease in purchases of
investments of $0.7 million.
Conference Call
The Company will host a conference call to discuss these results
with additional comments and details on Thursday, November 15, 2012 at 9:00 a.m. ET. The call will be broadcast live
over the Internet hosted at the Investor Relations section of
Lifeway Foods' website at www.lifeway.net, and will be archived
online through November 29,
2012. In addition, listeners may dial 877-407-3982 in
North America, and international
listeners may dial 201-493-6780. Participants from the Company will
be Julie Smolyansky, President and
Chief Executive Officer, and Edward
Smolyansky, Chief Financial Officer.
About Lifeway Foods
Lifeway Foods, Inc. (LWAY), recently named one of Fortune Small
Business' Fastest Growing Companies for the fifth consecutive year,
is America's leading supplier of the cultured dairy products known
as kefir and organic kefir. Lifeway Kefir is a dairy beverage that
contains 10 exclusive live and active probiotic cultures plus
ProBoost™. In addition to its line of Kefir products, the company
produces a variety of Frozen Kefir and probiotic cheese products.
Lifeway also sells frozen kefir, kefir smoothies and kefir parfaits
through its Starfruit™ retail stores. Find Lifeway Foods, Inc. on
Facebook: www.facebook.com/lifewaykefir Follow Lifeway Foods on
Twitter: http://twitter.com/lifeway_kefir YouTube:
http://www.youtube.com/user/lifewaykefir.
Forward Looking Statements
Investors and readers are cautioned that certain statements
contained in this news release, as well as some statements in
periodic press releases and some oral statements of Lifeway
officials during presentations about Lifeway, along with Lifeway's
filings with the Securities and Exchange Commission, including
Lifeway's registration statements, quarterly reports on Form 10-Q
and annual report on Form 10-K, are "forward-looking'' statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Act''). Forward-looking statements include statements
that are predictive in nature, which depend upon or refer to future
events or conditions, which include words such as "expects,"
"anticipates,'' "intends,'' "plans,'' "could," "might,"
"believes,'' "seeks," "estimates'' or similar expressions. In
addition, any statements concerning future financial performance
(including future revenues, earnings or growth rates), ongoing
business strategies or prospects, and possible future actions,
which may be provided by Lifeway's management, are also
forward-looking statements within the meaning of the Act.
Forward-looking statements are based on current expectations and
projections about future events and are subject to various risks,
uncertainties and assumptions including, but not limited to,
competitive pressures and other important factors detailed in the
Company's reports filed with the Securities and Exchange
Commission. Investors are cautioned that actual results may differ
materially from such forward-looking statements. These statements
are not guarantees of future performance and Lifeway undertakes no
specific obligation or intention to update these statements after
the date of this release.
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Contact:
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Lifeway
Foods, Inc.
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Phone:
877.281.3874
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Email:
info@Lifeway.net
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Investor Relations:
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ICR
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Katie
Turner
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John Mills
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646.277.1228
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LIFEWAY
FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
September 30, 2012 and 2011 (Unaudited) and December 31,
2011
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(Unaudited)
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September 30,
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December 31,
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2012
|
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2011
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2011
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ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
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Cash and
cash equivalents
|
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$
2,379,565
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|
$
860,683
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$
1,115,150
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Investments
|
|
2,032,598
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|
1,814,344
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1,695,044
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Certificates of deposits in financial
institutions
|
|
450,000
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|
300,000
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|
300,000
|
|
Inventories
|
|
5,569,887
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|
5,779,926
|
|
4,954,475
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Accounts
receivable, net of allowance for doubtful
|
|
|
|
|
|
|
|
accounts
and discounts
|
|
10,002,065
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|
9,362,672
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|
7,950,276
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Prepaid
expenses and other current assets
|
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45,350
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86,402
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79,630
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|
Other
receivables
|
|
3,946
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|
14,833
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|
224,204
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|
Deferred
income taxes
|
|
315,887
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|
458,001
|
|
338,690
|
|
Refundable
income taxes
|
|
84,828
|
|
---
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|
41,316
|
|
Total
current assets
|
|
20,884,126
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|
18,676,861
|
|
16,698,785
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|
|
|
|
|
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|
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Property and equipment, net
|
|
14,754,312
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15,380,717
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15,198,822
|
|
|
|
|
|
|
|
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Intangible assets
|
|
|
|
|
|
|
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Goodwill
and other non amortizable brand assets
|
|
14,068,091
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|
14,068,091
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|
14,068,091
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Other
intangible assets, net of accumulated amortization of
|
|
|
|
|
|
|
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$3,662,477
and $2,891,981 at September 30, 2012 and 2011
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|
|
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|
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and
3,087,940 at December 31, 2011, respectively
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4,643,523
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|
5,414,019
|
|
5,218,060
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Total
intangible assets
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|
18,711,614
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|
19,482,110
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19,286,151
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|
|
|
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|
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Other
Assets
|
|
|
|
|
|
|
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Long-term
accounts receivable net of current portion
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|
162,522
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---
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289,550
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Total
assets
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|
$54,512,574
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|
$53,539,688
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$
51,473,308
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|
|
|
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|
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|
|
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|
|
|
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LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Current
liabilities
|
|
|
|
|
|
|
|
Checks
written in excess of bank balances
|
|
$
---
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|
$
870,987
|
|
$
592,040
|
|
Current
maturities of notes payable
|
|
580,781
|
|
1,923,436
|
|
1,540,716
|
|
Accounts
payable
|
|
5,118,902
|
|
4,529,757
|
|
4,386,239
|
|
Accrued
expenses
|
|
894,092
|
|
857,862
|
|
553,725
|
|
Accrued
income taxes
|
|
1,341,652
|
|
351,107
|
|
---
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Total
current liabilities
|
|
7,935,427
|
|
8,533,149
|
|
7,072,720
|
|
|
|
|
|
|
|
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Notes
payable
|
|
5,096,675
|
|
5,882,691
|
|
5,539,836
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
3,112,529
|
|
3,313,092
|
|
3,503,595
|
|
Total
liabilities
|
|
16,144,631
|
|
17,728,932
|
|
16,116,151
|
|
|
|
|
|
|
|
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Stockholders' equity
|
|
|
|
|
|
|
|
Common
stock, no par value; 20,000,000 shares authorized;
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|
|
|
|
|
|
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17,273,776
shares issued; 16,359,017 shares
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|
|
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|
|
|
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outstanding at September 30, 2012; 17,273,776
shares
|
|
|
|
|
|
|
|
issued;
16,425,809 shares outstanding at September 30,
|
|
|
|
|
|
|
|
2011;
17,273,776 shares issued; 16,409,317 shares
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|
|
|
|
|
|
|
outstanding at December 31, 2011
|
|
6,509,267
|
|
6,509,267
|
|
6,509,267
|
|
Paid-in-capital
|
|
2,032,516
|
|
2,032,516
|
|
2,032,516
|
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Treasury
stock, at cost
|
|
(8,077,239)
|
|
(7,447,975)
|
|
(7,606,974)
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Retained
earnings
|
|
37,831,275
|
|
34,797,229
|
|
34,431,296
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|
Accumulated other comprehensive income (loss), net of
taxes
|
72,124
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|
(80,281)
|
|
(8,948)
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Total
stockholders' equity
|
|
38,367,943
|
|
35,810,756
|
|
35,357,157
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$54,512,574
|
|
$53,539,688
|
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$
51,473,308
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|
|
|
|
|
|
|
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LIFEWAY
FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income
For the Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
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(Unaudited)
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(Unaudited)
|
|
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Three
Months Ended
|
|
Nine
Months Ended
|
|
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September 30,
|
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September 30,
|
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2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Sales
|
|
$
22,617,132
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|
|
|
$
19,423,533
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|
|
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$
66,876,986
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|
|
|
$
58,383,802
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|
|
|
Less:
discounts and allowances
|
|
(1,997,399)
|
|
|
|
(1,721,929)
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|
|
|
(6,306,675)
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|
|
|
(5,180,377)
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|
|
|
Net
sales
|
|
20,619,733
|
|
20,619,733
|
|
17,701,604
|
|
17,701,604
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|
60,570,311
|
|
60,570,311
|
|
53,203,425
|
|
53,203,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold
|
|
|
|
12,738,310
|
|
|
|
10,958,115
|
|
|
|
37,079,491
|
|
|
|
32,883,760
|
|
Depreciation expense
|
|
|
|
407,567
|
|
|
|
396,732
|
|
|
|
1,219,721
|
|
|
|
1,163,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost
of goods sold
|
|
|
|
13,145,877
|
|
|
|
11,354,847
|
|
|
|
38,299,212
|
|
|
|
34,047,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
7,473,856
|
|
|
|
6,346,757
|
|
|
|
22,271,099
|
|
|
|
19,155,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
|
2,974,294
|
|
|
|
2,661,983
|
|
|
|
8,300,810
|
|
|
|
7,545,239
|
|
General
and administrative
|
|
|
|
2,225,224
|
|
|
|
1,921,111
|
|
|
|
6,319,259
|
|
|
|
5,489,072
|
|
Amortization expense
|
|
|
|
197,129
|
|
|
|
195,958
|
|
|
|
574,538
|
|
|
|
587,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
|
5,396,647
|
|
|
|
4,779,052
|
|
|
|
15,194,607
|
|
|
|
13,622,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
|
|
|
2,077,209
|
|
|
|
1,567,705
|
|
|
|
7,076,492
|
|
|
|
5,533,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income
|
|
|
|
16,270
|
|
|
|
14,465
|
|
|
|
52,321
|
|
|
|
49,152
|
|
Rental
income
|
|
|
|
4,270
|
|
|
|
4,546
|
|
|
|
10,284
|
|
|
|
5,196
|
|
Interest
expense
|
|
|
|
(41,897)
|
|
|
|
(61,074)
|
|
|
|
(136,000)
|
|
|
|
(195,502)
|
|
Gain
(loss) on sale of investments,
|
|
|
|
4,024
|
|
|
|
(33,477)
|
|
|
|
26,415
|
|
|
|
(35,533)
|
|
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on
disposition of assets
|
|
|
|
---
|
|
|
|
(20,135)
|
|
|
|
---
|
|
|
|
(20,135)
|
|
Total
other income (expense)
|
|
|
|
(17,333)
|
|
|
|
(95,675)
|
|
|
|
(46,980)
|
|
|
|
(196,822)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes
|
|
|
|
2,059,876
|
|
|
|
1,472,030
|
|
|
|
7,029,512
|
|
|
|
5,336,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
|
657,697
|
|
|
|
441,989
|
|
|
|
2,483,216
|
|
|
|
2,115,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
$
1,402,179
|
|
|
|
$
1,030,041
|
|
|
|
$
4,546,296
|
|
|
|
$
3,221,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per
common share
|
|
|
|
0.09
|
|
|
|
0.06
|
|
|
|
0.28
|
|
|
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares outstanding
|
|
|
|
16,366,974
|
|
|
|
16,428,005
|
|
|
|
16,380,793
|
|
|
|
16,450,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
$
1,402,179
|
|
|
|
$
1,030,041
|
|
|
|
$
4,546,296
|
|
|
|
$
3,221,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses)
on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investments (net of
tax)
|
|
|
|
62,266
|
|
|
|
(83,118)
|
|
|
|
95,996
|
|
|
|
(57,263)
|
|
Less reclassification
adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for (gains) losses
included in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net income (net of
taxes)
|
|
|
|
(2,274)
|
|
|
|
18,914
|
|
|
|
(14,924)
|
|
|
|
20,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
$
1,462,171
|
|
|
|
$
965,837
|
|
|
|
$
4,627,368
|
|
|
|
$
3,184,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFEWAY
FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2012 and 2011
(Unaudited)
|
|
|
(Unaudited)
|
|
|
September 30
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
Net
income
|
|
$
4,546,296
|
|
$
3,221,354
|
|
Adjustments to reconcile net income to net
|
|
|
|
|
|
cash flows
from operating activities, net of acquisition:
|
|
|
|
|
|
Depreciation and amortization
|
|
1,794,259
|
|
1,751,813
|
|
Loss
(gain) on sale of investments, net
|
|
(26,415)
|
|
35,533
|
|
Loss on
disposition of equipment
|
|
---
|
|
20,135
|
|
Deferred
income taxes
|
|
(458,424)
|
|
(186,677)
|
|
Bad Debt
Expense
|
|
332,301
|
|
80,000
|
|
(Increase)
decrease in operating assets:
|
|
|
|
|
|
Accounts
receivable
|
|
(2,106,020)
|
|
(2,649,396)
|
|
Other
receivables
|
|
220,258
|
|
89,847
|
|
Inventories
|
|
(615,412)
|
|
(1,794,552)
|
|
Refundable
income taxes
|
|
(43,512)
|
|
906,748
|
|
Prepaid
expenses and other current assets
|
|
34,280
|
|
71,913
|
|
Increase
(decrease) in operating liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
732,663
|
|
346,276
|
|
Accrued
expenses
|
|
340,367
|
|
348,403
|
|
Income
taxes payable
|
|
1,341,652
|
|
351,107
|
|
Net
cash provided by operating activities
|
|
6,092,293
|
|
2,592,504
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
Purchases
of investments
|
|
(1,092,976)
|
|
(1,806,564)
|
|
Proceeds
from sale of investments
|
|
802,026
|
|
990,397
|
|
Investments in certificates of deposits
|
|
(150,000)
|
|
(50,000)
|
|
Purchases
of property and equipment
|
|
(775,210)
|
|
(1,241,388)
|
|
Net
cash (used in) provided by investing activities
|
|
(1,216,160)
|
|
(2,107,555)
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
Proceeds
of note payable
|
|
---
|
|
1,000,000
|
|
Checks
written in excess of bank balances
|
|
(592,040)
|
|
(470,223)
|
|
Purchases
of treasury stock
|
|
(470,265)
|
|
(1,022,429)
|
|
Dividends
paid
|
|
(1,146,317)
|
|
---
|
|
Repayment
of notes payable
|
|
(1,403,096)
|
|
(2,361,553)
|
|
Net
cash used in financing activities
|
|
(3,611,718)
|
|
(2,854,205)
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
1,264,415
|
|
(2,369,256)
|
|
|
|
|
|
|
Cash and
cash equivalents at the beginning of the period
|
|
1,115,150
|
|
3,229,939
|
|
|
|
|
|
|
Cash
and cash equivalents at the end of the period
|
|
$
2,379,565
|
|
$
860,683
|
|
|
|
|
|
SOURCE Lifeway Foods, Inc.