LIFEWAY FOODS, INC. |
ILLINOIS
|
000-17363
|
36-3442829
|
||
(State or other jurisdiction of
incorporation)
|
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
||
6431 West Oakton St. Morton Grove, IL
|
60053
|
|||
(Address of principal executive offices)
|
(Zip code)
|
Item 2.02
|
Results of Operations and Financial Condition.
|
Item 9.01
|
Financial Statements and Exhibits.
|
LIFEWAY FOODS, INC.
|
||||
Dated: November 9, 2015
|
By:
|
/s/ Edward Smolyansky
|
||
Edward Smolyansky
|
||||
Chief Financial and Accounting Officer, Secretary and Treasurer
|
Exhibit No.
|
Description
|
99.1
|
Press release dated November 9, 2015.
|
Lifeway Foods, Inc.
|
|
Phone: 877.281.3874
|
|
Email: info@Lifeway.net
|
|
Investor Relations:
|
|
ICR
|
|
Katie Turner
Hunter Wells
|
|
646.277.1228
|
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
5,010,669
|
$
|
3,260,244
|
||||
Investments, at fair value
|
2,512,537
|
2,779,140
|
||||||
Certificates of deposits in financial institutions
|
534,678
|
149,965
|
||||||
Inventories
|
6,931,773
|
5,814,219
|
||||||
Accounts receivable, net of allowance for doubtful accounts and discounts of $1,100,000and $1,050,000 at September 30, 2015 and December 31, 2014, respectively
|
10,753,485
|
10,213,541
|
||||||
Prepaid expenses and other current assets
|
53,966
|
251,922
|
||||||
Other receivables
|
37,850
|
134,338
|
||||||
Deferred income taxes
|
612,159
|
408,340
|
||||||
Refundable income taxes
|
129,426
|
1,140,796
|
||||||
Total current assets
|
26,576,273
|
24,152,505
|
||||||
Property and equipment, net
|
21,602,426
|
21,892,395
|
||||||
Intangible assets
|
||||||||
Goodwill
|
14,068,091
|
14,068,091
|
||||||
Other intangible assets, net
|
2,523,006
|
3,059,764
|
||||||
Total intangible assets
|
16,591,097
|
17,127,855
|
||||||
Other Assets
|
||||||||
Long-term accounts receivable, net of current portion
|
294,767
|
251,683
|
||||||
Total assets
|
$
|
65,064,563
|
$
|
63,424,438
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Current maturities of notes payable
|
$
|
840,000
|
$
|
872,285
|
||||
Accounts payable
|
5,190,593
|
5,586,755
|
||||||
Accrued expenses
|
3,104,452
|
2,066,076
|
||||||
Accrued income taxes
|
448,891
|
—
|
||||||
Total current liabilities
|
9,583,936
|
8,525,116
|
||||||
Notes payable
|
7,329,328
|
8,124,515
|
||||||
Deferred income taxes
|
1,806,539
|
2,075,095
|
||||||
Total liabilities
|
18,719,803
|
18,724,726
|
||||||
Stockholders’ equity
|
||||||||
Common stock, no par value; 40,000,000 shares authorized;
|
||||||||
17,273,776 shares issued; 16,346,017 shares outstanding
|
||||||||
at September 30, 2015 and December 31, 2014
|
6,509,267
|
6,509,267
|
||||||
Paid-in-capital
|
2,032,516
|
2,032,516
|
||||||
Treasury stock, at cost
|
(8,187,682
|
)
|
(8,187,682
|
)
|
||||
Retained earnings
|
46,189,101
|
44,543,618
|
||||||
Accumulated other comprehensive loss, net of taxes
|
(198,442
|
) |
(198,007
|
)
|
||||
Total stockholders’ equity
|
46,344,760
|
44,699,712
|
||||||
Total liabilities and stockholders’ equity
|
$
|
65,064,563
|
$
|
63,424,438
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Gross sales
|
$
|
33,519,071
|
$
|
32,704,435
|
$
|
102,913,996
|
$
|
97,359,630
|
||||||||
Less: discounts and promotional allowances
|
(3,920,406
|
) |
(2,594,213
|
)
|
(13,872,019
|
)
|
(8,552,286
|
)
|
||||||||
Net sales
|
29,598,665
|
30,110,222
|
89,041,977
|
88,807,344
|
||||||||||||
Cost of goods sold
|
19,929,639
|
21,697,954
|
62,778,735
|
64,812,489
|
||||||||||||
Depreciation expense
|
613,830
|
610,966
|
1,808,988
|
2,022,204
|
||||||||||||
Total cost of goods sold
|
20,543,469
|
22,308,920
|
64,587,723
|
66,834,693
|
||||||||||||
Gross profit
|
9,055,196
|
7,801,302
|
24,454,254
|
21,972,651
|
||||||||||||
Selling expenses
|
2,706,375
|
2,804,127
|
9,486,177
|
9,977,636
|
||||||||||||
General and administrative
|
4,117,811
|
2,627,566
|
10,919,862
|
7,115,393
|
||||||||||||
Amortization expense
|
178,919
|
178,919
|
536,758
|
536,758
|
||||||||||||
Total operating expenses
|
7,003,105
|
5,610,612
|
20,942,797
|
17,629,787
|
||||||||||||
Income from operations
|
2,052,091
|
2,190,690
|
3,511,457
|
4,342,864
|
||||||||||||
Other income (expense):
|
||||||||||||||||
Interest and dividend income
|
25,259
|
22,739
|
86,477
|
86,664
|
||||||||||||
Rental income
|
1,800
|
1,201
|
5,400
|
2,900
|
||||||||||||
Interest expense
|
(55,698
|
)
|
(62,084
|
)
|
(179,468
|
)
|
(194,377
|
)
|
||||||||
(Loss)/Gain on sale of investments, net
|
||||||||||||||||
reclassified from OCI
|
839
|
(22,940
|
) |
(21,098
|
)
|
39,190
|
||||||||||
Gain on sale of property and equipment
|
200
|
85,077
|
243,283
|
8,592
|
||||||||||||
Other income (expense), net
|
(205,000
|
)
|
—
|
(303,796
|
)
|
1,674
|
||||||||||
Total other income (expense)
|
(232,600
|
)
|
23,993
|
(169,202
|
)
|
(55,357
|
)
|
|||||||||
Income before provision for
|
||||||||||||||||
income taxes
|
1,819,491
|
2,214,683
|
3,342,255
|
4,287,507
|
||||||||||||
Provision for income taxes
|
926,639
|
1,201,005
|
1,696,772
|
2,307,234
|
||||||||||||
Net income
|
$
|
892,852
|
$
|
1,013,678
|
$
|
1,645,483
|
$
|
1,980,273
|
||||||||
Basic and diluted earnings
|
||||||||||||||||
per common share
|
$
|
0.05
|
$
|
0.06
|
$
|
0.10
|
$
|
0.12
|
||||||||
Weighted average number of
|
||||||||||||||||
common shares outstanding
|
16,346,017
|
16,346,017
|
16,346,017
|
16,346,017
|
||||||||||||
COMPREHENSIVE INCOME
|
||||||||||||||||
Net income
|
$
|
892,852
|
$
|
1,013,678
|
$
|
1,645,483
|
$
|
1,980,273
|
||||||||
Other comprehensive income
|
||||||||||||||||
(loss), net of tax:
|
||||||||||||||||
Unrealized gains (losses) on
|
||||||||||||||||
investments (net of tax)
|
(183,170
|
)
|
(93,679
|
)
|
(247,645
|
)
|
(22,524
|
)
|
||||||||
Less reclassification adjustment
|
||||||||||||||||
for (gains) losses and other than
temporary impairments included in
|
||||||||||||||||
net income (net of taxes)
|
124,395
|
13,702
|
247,210
|
(23,408
|
)
|
|||||||||||
Comprehensive income
|
$
|
834,047
|
$
|
933,701
|
$
|
1,645,048
|
$
|
1,934,341
|
September 30,
|
||||||||
Cash flows from operating activities:
|
2015
|
2014
|
||||||
Net income
|
$
|
1,645,483
|
$
|
1,980,273
|
||||
Adjustments to reconcile net income to net
|
||||||||
cash flows from operating activities:
|
||||||||
Depreciation and amortization
|
2,345,746
|
2,558,962
|
||||||
Loss (gain) on sale of investments, net
|
21,098
|
(39,190
|
)
|
|||||
Impairment of investments
|
384,500
|
—
|
||||||
Deferred income taxes
|
(472,375
|
)
|
(783,607
|
)
|
||||
Bad debt expense
|
250
|
76,049
|
||||||
Gain on sale of property and equipment
|
(243,083
|
)
|
(8,592
|
)
|
||||
(Increase) decrease in operating assets:
|
||||||||
Accounts receivable
|
(540,194
|
)
|
(1,548,110
|
)
|
||||
Other receivables
|
53,674
|
76,552
|
||||||
Inventories
|
(1,117,554
|
)
|
(235,849
|
)
|
||||
Refundable income taxes
|
1,011,370
|
972,522
|
||||||
Prepaid expenses and other current assets
|
197,956
|
73,379
|
||||||
Increase (decrease) in operating liabilities:
|
||||||||
Accounts payable
|
(396,162
|
)
|
595,333
|
|||||
Accrued expenses
|
1,038,376
|
(40,184
|
)
|
|||||
Accrued income taxes
|
448,891
|
—
|
||||||
Net cash provided by operating activities
|
4,377,976
|
3,677,538
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of investments
|
(1,369,285
|
)
|
(2,319,742
|
)
|
||||
Proceeds from sale of investments
|
1,229,855
|
1,736,946
|
||||||
Redemption of certificates of deposits
|
249,965
|
15,000
|
||||||
Investments in certificates of deposits
|
(634,678
|
)
|
—
|
|||||
Purchases of property and equipment
|
(1,618,716
|
)
|
(3,052,303
|
)
|
||||
Proceeds from sale of property and equipment
|
342,780
|
89,076
|
||||||
Net cash used in investing activities
|
(1,800,079
|
)
|
(3,531,023
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayment of notes payable
|
(827,472
|
)
|
(657,694
|
)
|
||||
Net cash used in financing activities
|
(827,472
|
)
|
(657,694
|
)
|
||||
Net (decrease) increase in cash and cash equivalents
|
1,750,425
|
(511,179
|
)
|
|||||
Cash and cash equivalents at the beginning of the period
|
3,260,244
|
3,306,608
|
||||||
Cash and cash equivalents at the end of the period
|
$
|
5,010,669
|
$
|
2,795,429
|
||||
Supplemental cash flow information
Cash paid for income taxes
|
$
|
1,120,000
|
$
|
2,131,658
|
||||
Cash paid for interest
|
$
|
177,521
|
$
|
195,275
|