Lifeway Foods' Q1 earnings increase 14% year-over-year to US$1.77M as sales grew 16% to US$16M primarily on increased sales, awareness of its flagship line Kefir

MORTON GROVE, Illinois , May 17, 2010 (press release) –
-- Revenues Up 16%
-- Gross Profit Increases 26%; Q1 2010 Gross Margins up to 44% from 40% in Q1 2009
-- Q1 2010 Net income up 14% to $1,768,689 or $.11 EPS vs. $1,547,466 or $.09 EPS in Q1 2009

Lifeway Foods, Inc., (Nasdaq:LWAY - News), makers of the nutritious, probiotic dairy beverage called kefir, announced today for the first quarter ended March 31, 2010, total group sales increased by $2,228,079, (approximately 16%) to $15,964,159 during the three month period ended March 31, 2010 from $13,736,080 during the same three month period in 2009. This increase is primarily attributable to increased sales and awareness of Lifeway's flagship line, Kefir.

Cost of goods sold as a percentage of sales excluding depreciation expense was approximately 54% during the first quarter 2010, compared to about 58% during the same period in 2009. The decrease was primarily attributable to the fluctuating cost of conventional milk, our largest raw material. Gross profit increased approximately 26% during the first quarter 2010, when compared with the same period in 2009.

Operating expenses as a percentage of sales was approximately 26% during the first quarter 2010, compared to about 22% during the same period in 2009. This increase is primarily attributable to the increase in selling and marketing related expenses as the company increased its budget for advertising and marketing promotions.

Total net income was $1,768,689 or $.11 per share for the first quarter ended March 31, 2010, compared with $1,547,466 or $.09 per share in the same period in 2009. This represents a 14% increase in net income for the first quarter 2010 when compared to the same period in 2009.

The Company had a net increase in cash and cash equivalents of $45,079 during the first quarter of 2010 when compared to the same period in 2009. The Company had cash and cash equivalents of $652,177 as of March 31, 2010, compared with cash and cash equivalents of $607,098 as of March 31, 2009.

Total assets were $52,935,588 as of March 31, 2010, which is an increase of $4,108,377 when compared to March 31, 2009. This is primarily due to the increase in the value of the Company's property, plant and equipment was $14,481,822 as of March 31, 2010, which is an increase of $757,899 from March 31, 2009.

Total current liabilities were $9,020,702 as of March 31, 2010, which is a decrease of $1,239,781 when compared to March 31, 2009. This is primarily due the Company's repayment of current notes payables of $2,248,647.

Long term notes payables decreased by $1,874,167 as of March 31, 2010, when compared to March 31, 2009. The balance of the long term notes payable as of March 31, 2010 was $6,502,222.

Total stockholder's equity was $34,094,391 as of March31, 2010, which is an increase of $5,667,111 when compared to March 31, 2009. This is primarily due the increase in retained earnings by $5,790,925 as of March 31, 2010, when compared to March 31, 2009.

The Company also recently announced a new share repurchase program of up to 200,000 additional shares.

About Lifeway Foods

Lifeway Food is America's leading supplier of the cultured dairy product known as kefir, and now America's leading supplier of Organic 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 Probugs, a children's line of organic kefir products 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.

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