Lifeway Foods Reports Record 4th Quarter and Twelve Months Ended December 31 2007...

Lifeway Foods Reports Record 4th Quarter and Twelve Months Ended December 31
2007 Results
-- Q4 Sales Up 29%; 2007 Sales Up 39%

MORTON GROVE, Ill., March 31 /PRNewswire-FirstCall/ -- Lifeway Foods,
Inc., (Nasdaq: LWAY), makers of a nutritious, probiotic dairy beverage called
kefir, announced today for the fourth quarter ended December 31, 2007, total
consolidated sales increased 29% to $10,174,172 from $7,893,644 during the
same period a year ago.
For the twelve months ended December 31, 2007, total consolidated sales
increased 40% to $38,729,156 from $27,720,713 during the same twelve month
period a year ago. This increase in sales was driven by another strong sales
increase of Lifeway's kefir line of 30% and the remainder coming from the
sales of the Helios kefir line and Pride of Main Street's milk line acquired
in August 2006.
Fourth quarter 2007 gross profit decreased 10% to $2,297,374 from
$2,521,239 during the same period a year ago. This decrease is primarily
attributable to the cost of milk, Lifeway's largest cost of goods sold
component, which was approximately 110% higher in the fourth quarter 2007
compared to the same period in 2006. The price of milk in the months of
October and November 2007 were the highest ever recorded. The price of milk in
2008 has been declining since January 2008, and had declined substantially in
March and April to the levels not seen since May 2007 and about 35% from the
fourth quarter 2007 record highs.
Earnings per share decreased to $.01 per share for the fourth quarter
2007, from $.03 per share for the same three-month period in 2007.
For the twelve months ended December 31, 2007 gross profit increased 17%
to $12,419,528 from $10,638,721 during the same period a year ago. The cost
of milk, Lifeway's largest cost of goods sold component, was approximately 60%
higher in 2007 compared to the same period in 2006. Earnings per share
increased to $.19 per share, up from $.17 per share for the same twelve-month
period in 2006.
Edward Smolyansky, CFO commented, "Given the extremely difficult and
challenging cost environment experienced in the second half of 2007, we are
extremely proud of our fourth quarter and 2007 results. 2007 was a tale of
two halves, with the cost of milk and other raw materials hitting record highs
in the second half. Despite these record high milk and transportation costs,
as well as operating in an environment where most of our other production
related costs were increasing, we were able to maintain relatively healthy
margins. The cost of milk has since dropped substantially from February
through April and we hope this trend continues throughout 2008."
Julie Smolyansky, CEO commented, "We have since passed some of these costs
on to the customer in February and March and have not seen any negative effect
of unit sales. In addition, our sales continue to grow at a healthy pace, we
have completed our expansion project, and we have now increased our capacity
to meet this growing demand for the next several years."
About Lifeway Foods
Lifeway, recently named Fortune Small Business' 97th Fastest Growing Small
Business, and one of only 4 companies to ever be named to the list four
straight years in a row, is America's leading supplier of the cultured dairy
product known as kefir, and now America's only 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 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 info@lifeway.net and visit http://www.lifeway.net .

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.

Years Ended
December 31,
2007 2006

Sales $38,729,156 $27,720,713

Cost of goods sold 25,582,981 16,509,516

Depreciation expense 726,647 572,476

Total cost of goods sold 26,309,628 17,081,992

Gross profit 12,419,528 10,638,721

Selling Expenses 3,744,388 3,065,254

General and Administrative 3,914,825 3,157,063

Amortization expense 323,266 186,278

Total Operating Expenses 7,982,479 6,408,595

Income from operations 4,437,049 4,230,126

Other income (expense):
Interest and dividend income 350,286 388,339

Rental Income 48,305 11,401

Interest expense (410,180) (345,525)
Gain (loss) on sale of marketable
securities, net 539,739 356,558

Total other income (Expense) 528,150 410,773

Income before provision for
income taxes 4,965,199 4,640,899

Provision for income taxes 1,812,539 1,745,075

Net income $3,152,660 $2,895,824

Basic and diluted earnings per
common share 0.19 0.17

Weighted average number of
shares outstanding 16,855,611 16,829,601

SOURCE Lifeway Foods, Inc.

Lifeway Foods, Inc., +1-847-967-1010, info@lifeway.net