SEC FORM 5

SEC Form 5

FORM 5

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

ANNUAL STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

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Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

Form 3 Holdings Reported.

Form 4 Transactions Reported.

1. Name and Address of Reporting Person^*

SMOLYANSKY JULIE

(Last)

(First)

(Middle)

LIFEWAY FOODS INC.

6431 OAKTON ST.

(Street)

MORTON GROVE

60053

(City)

(State)

(Zip)

2. Issuer Name and Ticker or Trading Symbol
LIFEWAY FOODS INC [ LWAY ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

X	Director	10% Owner
X	Officer (give title below)	Other (specify below)
	President & CEO

3. Statement for Issuer's Fiscal Year Ended (Month/Day/Year)
12/31/2003

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)	4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned at end of Issuer's Fiscal Year (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)	Amount	(A) or (D)	Price		6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
Common stock, no par value	06/10/2002		W⁽¹⁾5	712,712⁽²⁾	A	$5.1⁽³⁾	697,046⁽⁴⁾⁽⁵⁾	I⁽⁶⁾	Inheritance⁽¹⁾
Common stock, no par value	12/10/2002		S4⁽⁴⁾	15,667⁽⁷⁾	D	$7.2⁽⁴⁾	697,046⁽⁴⁾⁽⁵⁾	I⁽⁶⁾	Inheritance⁽¹⁾
Common stock, no par value	12/18/2003		G⁽⁸⁾	1,500	A	$14.07	81,500⁽⁵⁾	D

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)	5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	8. Price of Derivative Security (Instr. 5)		10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)

Explanation of Responses:

1. Michael Smolyansky, founder and former President and CEO of the Issuer, died on 6/9/2002. Pursuant to Michael Smolyansky's Last Will and Testament (attached as Exhibit 20.1 to the Schedule 13D filed by Julie Smolyansky on 4/30/2003), Julie Smolyansky was entitled to one-third of the shares of common stock of the Issuer owned by Michael Smolyansky and currently held in the Estate of Michael Smolyansky (the "Estate Shares"). Ludmila Smolyansky, Julie's mother, is the executor of the Estate.

2. Under the Will, Julie was entitled to one-third of the Estate Shares. On 6/10/2002, the total amount of the Estate Shares was 2,138,138. Accordingly, on June 10, 2002, Julie acquired an indirect pecuniary interest in 712,712 of the Estate Shares.

3. On 6/10/2002, the closing stock price for publicly traded common stock of the Issuer was $5.10 per share.

4. On 12/10/2002, as disclosed on that certain Schedule 13D/A filed by Julie on 4/30/2003, the Issuer redeemed 47,000 Estate Shares at $7.20 per share (the "Estate Redemption") under a stock redemption program authorized by a resolution of its Board. The total amount of Estate Shares was reduced from 2,138,138 to 2,091,138 by the Estate Redemption. Accordingly, Julie's indirect pecuniary interest in one-third of the Estate Shares also was proportionately reduced from 712,712 shares to 697,046 shares. The funds received by the Estate as a result of the Estate Redemption were used entirely to defray the Estate's administrative and legal costs.

5. Julie's total share ownership for the fiscal year of the Issuer ended 12/31/2003 was 778,546, comprised of 697,046 shares indirectly owned and 81,500 shares directly owned.

6. As described more fully elsewhere in this report, Julie disclaims the indirect pecuniary interest in the Estate Shares attributable to her under Section 16 of the Securities Exchange Act of 1934.

7. Pursuant to the Estate Redemption, Julie's indirect pecuniary interest was reduced by one-third of 47,000 or approximately 15,667 shares of the common stock of the Issuer.

8. This transaction previously was reported in the Form 4 filed by Julie Smolyansky on 12/18/2003.

Remarks:

Michael Smolyansky, founder and former CEO of the Issuer ("Michael") died on 6/9/2002. Ludmila Smolyansky, Julie Smolyansky's mother, is the executor of the Estate of Michael Smolyansky. After Michael's death, Julie had an indirect pecuniary interest (as defined in Rule 16a-1(a)(2)(ii) under the Securities Exchange Act of 1934) in a certain amount of shares of the common stock of the Issuer pursuant to the terms of that certain Last Will and Testament of Michael, dated 2/2/1990(the "Will") and attached as Exhibit 20.1 to the Schedule 13D filed by Julie on 4/30/2003. Under the Will, Julie was entitled to receive one-third of the common stock of the Issuer owned by her father, Michael (the "Estate Shares"). On 3/5/2003, pursuant to the Illinois Probate Act and the Internal Revenue Code of the United States, Julie executed a Disclaimer (the "Disclaimer") wherein she disclaimed his interest in one-third of the Estate Shares. The Disclaimer was filed with the Probate Division of the Circuit Court of Cook County, Illinois on 3/10/2003. Pursuant to the Disclaimer, no Estate Shares have been distributed to Julie. Accordingly, Julie no longer has an indirect pecuniary interest in one-third of the Estate Shares and disclaims the indirect pecuniary interest in the Estate Shares attributable to her under Section 16 of the Securities Exchange Act of 1934.

	Julie Smolyansky	03/22/2004
	** Signature of Reporting Person	Date
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