YoCream International Announces Record Third Quarter Results With Sales Up 16% and Earnings Up 25%

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Sep 09, 2010, 06:00 ET

PORTLAND, Ore., Sept. 9 /PRNewswire-FirstCall/ -- YoCream International, Inc. (Pink Sheets: YOCM), a manufacturer and wholesaler of frozen desserts and beverages, today reported the financial results for the third quarter ended July 31, 2010.

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Sales for the three months ended July 31, 2010 increased 15.6% to $18,445,000. Sales for the nine months increased 12.1% to $41,721,000. Net income increased 25% to $2,141,000 for the quarter and increased 6% to $4,778,000 for the nine month period.

Sales of the Company's core frozen yogurt business grew 50.2% in the third quarter following 52.1% and 30.9% in the second and first quarters, respectively.

"Our conviction remains that the notable growth of our core frozen yogurt products will continue as evidenced by performance," stated Tyler Bargas, YoCream Director of Sales. "We ardently pursue business with independent shops, regional chains and other foodservice establishments through education and solution-based consulting."

Matt Hanna, YoCream Senior Director, commented that, while the Company is enjoying greater earnings from increased sales, gross profit margins have decreased. The margin decrease is mainly due to higher ingredient costs. "The Company is currently experiencing a softening of certain ingredient costs," stated Hanna. "Management is monitoring this decrease in costs, with the intention of delaying any price increases until absolutely necessary. We believe this to be a responsible position in recognition of the general state of the economy and the thousands of businesses we support through core product supply."

"Consumers are more interested than ever in the quality and health benefits of the foods they are consuming," stated Suzanne Gardner, YoCream Director of Marketing. "They are making better-for-you choices like real nonfat frozen yogurt with high live and active probiotic yogurt cultures. This demand is the basis for the sustainable success of the frozen yogurt establishments that are opening around the country and the world."

YoCream International, Inc. is a world leader in the frozen yogurt industry. Since 1977, YoCream has pioneered the innovation, production and marketing of frozen yogurt and fruit-based frozen desserts and beverages. The Company operates a state-of-the-art production facility in Portland, Oregon, to manufacture its "true" frozen yogurt, which contains the real yogurt that is fermented and cultured on site daily. The Company offers over 110 flavors of frozen yogurt, ice cream, frozen custard, sorbet, smoothies, frozen carbonated beverages, slushes and frozen drink mixes. In addition to the YoCream brand, the Company also provides other branded flavors such as Hershey's™ (e.g. Hershey's™ Kisses™, Reese's™, York™, Jolly Rancher™, Twizzlers™, Bubble Yum™) and Rockstar™ under exclusive licenses. YoCream's end-user customers number in the thousands and include marquee convenience stores, quality quick service restaurants, warehouse stores, prestigious eating establishments, large grocery chains, frozen yogurt shops, colleges, military and government foodservice locations, international restaurants and neighborhood stores involving over 250 specialty and full line distributors in the supply chain. YoCream is currently selling its frozen yogurt products in 17 foreign countries.

This release may contain certain forward-looking statements, which are based on management's current expectations. Factors that could cause future results to vary materially from these expectations include, but are not limited to, change in distribution abilities, level of customer acceptance of new products, change in strategic alliances and other economic, competitive, governmental, and regulatory factors affecting the Company's operations, pricing, products and service.

YOCREAM INTERNATIONAL, INC. STATEMENTS OF INCOME (Unaudited)
	Three Months Ended		Nine Months Ended
	July 31,		July 31,

	2010	2009	2010	2009

Sales	$ 18,444,986	$ 15,955,206	$ 41,721,058	$ 37,223,816

Cost of goods sold	10,656,598	8,750,096	23,496,517	20,018,074

Gross profit	7,788,388	7,205,110	18,224,541	17,205,742

Operating costs and expenses
Distribution expenses	2,205,980	1,541,357	4,869,964	3,492,268
Selling, and marketing expenses	1,214,705	1,018,234	3,010,717	2,620,456
General and administrative expenses	871,207	1,212,140	2,460,757	2,863,607

Income from operations	3,496,496	3,433,379	7,883,103	8,229,411

Other income (expenses)
Interest income	4,433	5,217	17,554	21,971
Interest expense	(97,641)	(141,304)	(304,394)	(373,692)
Restricted stock compensation	-	(671,700)	-	(952,200)

Income before income taxes	3,403,288	2,625,592	7,596,263	6,925,490

Income tax provision	(1,262,000)	(918,900)	(2,818,000)	(2,423,900)

Net income	$ 2,141,288	$ 1,706,692	$ 4,778,263	$ 4,501,590

Earnings per common share – basic	$0.82	$0.65	$1.83	$1.88

Earnings per common share – diluted	$0.82	$0.65	$1.83	$1.81

Shares used in basic earnings per share	2,607,898	2,607,898	2,607,898	2,391,842

Shares used in diluted earnings per share	2,607,898	2,607,898	2,607,898	2,479,668

YOCREAM INTERNATIONAL, INC BALANCE SHEETS
	July 31,	October 31,
	2010	2009
	(Unaudited)	(Audited)
ASSETS
Current assets
Cash and cash equivalents	$ 8,498,292	$ 12,118,067
Accounts receivable, net	5,801,770	2,542,618
Inventories	6,221,778	5,151,899
Income tax receivable	-	100,248
Other current assets	608,245	569,775
Deferred tax assets	243,775	243,775

Total current assets	21,373,860	20,726,382

Fixed assets, net	14,401,817	14,712,748
Intangible and other long-term assets, net	1,283,078	1,196,655
Deferred tax assets	374,200	309,500

	$ 37,432,955	$ 36,945,285

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Note payable – line of credit	$ -	$ -
Current portion of long-term debt	388,318	647,873
Accounts payable	4,675,301	3,440,694
Income tax payable	468,278	-
Other accrued liabilities	535,430	761,085

Total current liabilities	6,067,327	4,849,652

Long-term debt, less current portion	7,292,091	7,378,449
Deferred tax liabilities	2,144,975	2,144,975
Other liabilities	-	145,250

Total liabilities	15,504,393	14,518,326

Shareholders' equity
Preferred stock, no par value, none issued or outstanding	-	-
Common stock, no par value, 30,000,000 shares authorized, 2,607,898 issued and outstanding as of July 2010 and October 2009	7,750,865	7,750,865
Retained earnings	14,778,097	15,172,494
Accumulated other comprehensive income	(600,400)	(496,400)

Total shareholders' equity	21,928,562	22,426,959

	$ 37,432,955	$ 36,945,285

YOCREAM INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS For the nine months ended July 31, 2010 and 2009 (Unaudited)
	2010	2009
Cash flows from operating activities
Net income	$ 4,778,263	$ 4,501,590
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	825,604	763,623
Deferred income taxes	-	170,400
Change in assets and liabilities
Accounts receivable	(3,259,152)	(1,343,486)
Inventories	(1,069,879)	(1,967,856)
Other assets	(124,893)	(160,045)
Accounts payable	1,415,281	(412,515)
Income taxes payable	568,526	(973,361)
Restricted stock compensation	-	952,200
Other accrued liabilities	(370,905)	368,080
Net cash provided by operating activities	2,762,845	1,934,630

Cash flows from investing activities
Proceeds from sale and leaseback of equipment	-	438,753
Expenditures for fixed assets	(695,347)	(2,868,322)

Net cash used in investing activities	(695,347)	(2,429,569)

Cash flows from financing activities
Principal payments on long-term debt	(514,613)	(487,113)
Excess tax benefits of restricted stock	-	744,130
Cash dividend payment	(5,172,660)	-

Net cash provided by (used) in financing activities	(5,687,273)	257,187
Net decrease in cash and cash equivalents	(3,619,775)	(237,752)

Cash and cash equivalents, beginning of period	12,118,067	7,169,393

Cash and cash equivalents, end of period	$ 8,498,292	$ 6,931,641