|From: Glenn Petersen||8/25/2015 7:06:45 PM|
Lifeway still hasn't filed 2014 annual report
By Jessica Wohl
June 24, 2015
Michael Tercha, Chicago Tribune
Lifeway Foods is two weeks past a deadline to file key financial reports and won't say when the delayed documents might be filed.
The company risks being delisted if it does not comply with Nasdaq's standards, which include timely filings.
Lifeway, the top U.S. maker of the dairy drink kefir, has not filed its 2014 annual report or its first quarter 2015 report with the U.S. Securities and Exchange Commission. It remains on Nasdaq's noncompliance list due to the two delinquent filings.
This is not the first time the Morton Grove-based company has been late in filing its financial reports.
Lifeway, started by Russian immigrant Michael Smolyansky in his Skokie basement in 1986, gets minimal attention from Wall Street despite being the dominant U.S. player in kefir, a cultured dairy drink. Nearly 45 percent of the company's stock is held by Chairperson Ludmila Smolyansky, who worked with her late husband to grow the business. Lifeway's products are sold in the U.S., Canada, Latin America and the United Kingdom. The couple's daughter, Julie Smolyansky, is the CEO, and their son, Edward Smolyansky, is the CFO.
Earlier this year, the dairy products company said it was working "diligently" on its plan to regain compliance.
Lifeway declined to comment on Friday. In June 2014, Lifeway filed notice with the Securities and Exchange Commission that it had hired Crowe Horwath as its independent registered public accounting firm. Crowe Horwath did not comment on the matter.
Imperial Capital analyst Mitchell Pinheiro, one of only two analysts who track the company according to FactSet, upgraded shares of Lifeway to “outperform” in March, in part because lower milk prices could help the company’s profit margins. Plus, buzz around probiotics and protein-focused products may give the company, which has been spending more on advertising, a sales boost.
Another analyst who'd been following the company, Howard Halpern at Taglich Brothers, said he suspended coverage on June 15 as he waits for more information from Lifeway.
Last year's results appeared to show some success. Annual net sales were up 22 percent, to nearly $119 million, according to a March 16 press release. Still, the company has yet to file its full report with regulators or to release any financial details on its 2015 performance to date.
On May 20, Lifeway said in a press release and SEC filing that it had until June 5 to submit a plan to regain compliance with Nasdaq's filing requirements.
The company did not file certain quarterly reports in a timely fashion in 2005, 2006, 2012 and 2014. Its 2013 annual report was filed in April 2014 and amended in October.
On April 9, Lifeway said in a press release and SEC filing it expected to make its 2014 filing within two weeks and did not expect any material changes to the results it issued in its March 16 earnings press release.
Lifeway listed its shares on the over-the-counter market in 1988 at $1 per share. On Thursday, the shares closed at $18.39 on Nasdaq. The shares have fallen about 12 percent in the last month.
France's Groupe Danone controls 21.1 percent of Lifeway's stock.
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|From: Glenn Petersen||8/25/2015 7:25:44 PM|
|Lifeway Foods quintuples kefir production with new WI facility |
By Carolyn Heneghan
August 23, 2015
Dive Insight:The global market for probiotics is predicted to reach $52.34 billion by 2020. With its new massive kefir production facility, Lifeway is well-positioned to capitalize on that market's growth.
- Lifeway Foods, Inc., the U.S. leader in kefir cultured dairy products, announced it would begin production of its kefir lineup at the former Golden Guernsey dairy plant in Waukesha, WI.
- Lifeway acquired the plant in May 2013 to increase its manufacturing capacity, which has now more than quintupled in size thanks to the 170,000 square-foot plant
- "Lifeway has been processing raw milk and producing its own bottles at the plant for more than a year, following major renovations as well as food safety certification of the upgraded facility. ... The company plans to produce its top-selling products in Waukesha, taking advantage of both the large space and new high-speed manufacturing equipment to meet the demand for nutritious products from consumers throughout the country," the company said in a news release.
Lifeway has already achieved steady growth itself, having reported $119 million for 2014 net sales in its annual report, a 22% increase from the year before. Its recent profits, however, have not been as promising, with 2014's annual net income reaching $1.96 million, a steep drop from 2013's $5 million.
"Renovating the building to meet our specific manufacturing and packaging needs has been a top priority, and the start of kefir production in Waukesha is an important milestone that will help drive the next chapter in the company's growth," Julie Smolyansky, president and CEO of Lifeway Foods, said in the news release.
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|From: Glenn Petersen||8/26/2015 7:25:47 PM|
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On August 25, 2015, Lifeway Foods, Inc. (the “Company”) received a letter (the “Nasdaq Notice”) from The NASDAQ Stock Market LLC (“Nasdaq”) notifying the Company that because it had not yet filed with the SEC its Quarterly Reports on Form 10-Q for the fiscal quarter ended March 31, 2015 (the “First Quarter Form 10-Q”) and the fiscal quarter ended June 30, 2015 (the “Second Quarter Form 10-Q”), the Company is not in compliance with the periodic filing requirements for continued listing set forth in Nasdaq Listing Rule 5250(c)(1). The Nasdaq Notice set the deadline to file the First Quarter Form 10-Q and the Second Quarter 10-Q on September 28, 2015.
The Company issued a press release on August 26, 2015 disclosing the Company’s receipt of the Nasdaq Letter. A copy of such press release is attached as Exhibit 99.1 hereto.
Changes in Certifying Accountant.
On August 20, 2015, the Company was notified by its independent registered public accounting firm, Crowe Horwath LLP (“Crowe”) that it would not stand for reappointment as it’s independent registered public accounting firm for 2015. The Company had engaged Crowe as the Company’s independent registered public accounting firm for the year ending December 31, 2014. The Company has substantially completed the drafting of the First Quarter Form 10-Q and expects to complete the drafting of the Second Quarter Form 10-Q promptly. The Company has also begun the process of identifying, receiving proposals from and interviewing auditing firms as well as responding to their information requests. The Company expects to appoint new auditors very soon and looks forward to regaining compliance with the Nasdaq requirements shortly thereafter.
During the year ended December 31, 2014 and the subsequent interim period through August 20, 2015, there were no: (1) disagreements with Crowe on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to their satisfaction, would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable events under Item 304(a)(1)(v) of Regulation S-K except as set forth below.
As disclosed in Item 9A of the Company’s annual report on Form 10-K for its fiscal year ended December 31, 2014 (the “Form 10-K”), the Company’s President and Chief Executive Officer and its Chief Financial Officer concluded that the Company’s internal controls were not effective because material weaknesses existed in the Company’s internal control over financial reporting. Specifically, the following material weaknesses were identified:
1. Entity level controls –
a. The Company has not established an effective program for monitoring the design and operational effectiveness of internal controls over financial reporting whether manual or IT related on an on-going basis, including the testing and other procedures necessary to ensure that material weaknesses and other control deficiencies are identified and remediated in a timely fashion, thus causing differences in accordance with generally accepted accounting principles which could materially impact the consolidated financial statements.
b. The Audit Committee’s oversight of accounting, financial reporting and internal control matters has not been effective.
2. Financial reporting controls –
a. The financial statement preparation process requires the involvement of a small team of both Company employees and outside consultants and such involvement is not consistently reviewed, coordinated or timely.
b. The Company has not consistently demonstrated effective preparation, support and review practices over journal entries and account reconciliations.
3. Accounting For Corporate Credit Card Expenditures – The Company has not maintain sufficient internal controls over corporate credit card expenditures used by senior management and others to ensure compliance with its policies and practices for the timely and accurate accounting for, and reimbursement of these expenses.
4. Fixed asset accounting – The Company did not maintain effective processing and monitoring controls to ensure that fixed asset additions are recorded in the proper accounting period and that such additions are timely placed into service with the proper depreciable life.
5. Accounting for income taxes – The Company did not have adequate design or operation of controls that provide reasonable assurance that the accounting for income taxes was in accordance with U.S. GAAP. Specifically, the Company relied on third-party subject matter experts and did not have sufficient technical expertise in the income tax function to provide adequate review and control with respect to (a) the complete and accurate recording of inputs to the consolidated income tax provision and related accruals; and (b) identification and ongoing evaluation of uncertain tax positions.
The audit reports of Crowe on the Company’s consolidated financial statements as of and for the year ended December 31, 2014 did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.
The audit report of Crowe on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014 did contain an adverse opinion, but did not contain a disclaimer of opinion nor was it modified or qualified as to the uncertainty, audit scope, or accounting principles. The adverse opinion as of December 31, 2014 was due to the effect of the material weaknesses and Crowe concluded in its audit report that the Company did not maintain effective internal control over financial reporting as a result of the material weaknesses reported in Item 9A of the Form 10-K as described above.
As disclosed in Item 9A of the Form 10-K, the Company has made remediation of the control deficiencies a top priority and is are committed to continually improving our internal controls over financial reporting. Under the oversight of the Audit Committee of the Board of Directors, management has launched a dual path for its remediation. One path toward remediation is broadly aimed at fundamental changes while the other path is more narrowly focused on the specifics of our control deficiencies.
To date the broader remedial actions have included the following:
-- During December 2014, the Company identified and engaged an outside consultant to perform the function of internal audit. In 2015, the consultant began assisting us in documenting, evaluating and improving the design and operating effectiveness of our internal controls over financial reporting.
-- During December 2014, the newly established Compensation Committee of the Board of Directors of the Company (the “Committee”) has hired outside advisors to advise the Committee and the Company on developing and/or changing processes, procedures and policies related to compensation practices, including expense reimbursement.
-- During December 2014 the Audit Committee reviewed and updated its Audit Committee charter.
-- In July 2015, the Company hired a Vice President of Finance with public company reporting experience and hired an assistant to the controller. These additions to the Company’s management and staff were made to enable more effective and consistent leadership and organizational focus on accounting, financial reporting and internal controls among other things.
To date the more specific remedial actions taken have included the following:
-- The Company established a formal checklist to be adhered to by the controller and accounting department which the chief financial officer will use to monitor the completeness and timeliness of the close process. Testing of the effectiveness of the new process is planned in 2015.
-- The Company developed and implemented a plan to simplify the process of recording fixed asset additions, improve the related segregation of duties and improve the related monitoring controls. Testing of the effectiveness of the new process is planned in 2015.
-- The Company has drafted a new policy for account reconciliations and the frequency of completed account reconciliations has improved. The new policy is expected to be implemented and additional testing of compliance is planned during 2015.
-- The Company has instituted more frequent and regular reviews and approvals of expense reimbursement requests, classification of reimbursed employee expenses, improved segregation of duties relating to such reimbursemnd reduced the number of employees granted a corporate credit card.
The Company believes that the remediation measures discussed above will be sufficient to remediate the material weaknesses we have identified. As the Company continues to evaluate and work to improve our internal controls over financial reporting, it may determine that additional measures are necessary to address control deficiencies. Moreover, the Company may decide to modify certain of the remediation measures we implement as it continues to evaluate and work to improve the internal controls over financial reporting.
The Company furnished a copy of the above disclosures to Crowe and requested that Crowe provide a letter addressed to the Commission stating whether or not it agrees with the statements made above. A copy of Crowe’s letter is attached as Exhibit 16.1 to this Form 8-K.
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|To: Ahda who wrote (301)||9/21/2015 7:51:25 PM|
|Form 8-K for LIFEWAY FOODS INC 15-Sep-2015 Changes in Registrant's Certifying Accountant |
Item 4.01 Changes in Registrant's Certifying Accountant. On September 12, 2015, the Audit Committee of the Board of Directors of Lifeway Foods, Inc. (the "Company") engaged Mayer Hoffman McCann P. C. ("MHM") as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2015 effective immediately. During the fiscal years ended December 31, 2014 and 2013 through September 12, 2015 neither the Company nor anyone acting on the Company's behalf consulted with MHM in any capacity, nor consulted with any member of that firm, as to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered as to the financial statements, nor was a written report or oral advice rendered that was an important factor considered by the Company or any of its employees in reaching a decision as to an accounting, auditing or financial reporting issue, or any matter that was either the subject of a disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions thereto, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.
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|To: richardred who wrote (292)||10/17/2015 3:24:59 PM|
|From: Glenn Petersen|
|Pepsi, Coca-Cola competing for investment in Chobani|
Tuesday, 13 Oct 2015 | 7:00 AM ET
PepsiCo and Coca-Cola are in talks to invest in Chobani, in a deal that the Greek yogurt maker hopes could value it at as much $3 billion, including debt, according to people familiar with the matter.
The negotiations illustrate how soft drink giants are making a push to diversify beyond the slow-growth carbonated beverage sector into the U.S. consumer market's faster-growing healthy lifestyle segment.
Chobani is exploring selling a minority stake, including warrants owned by private equity firm TPG Capital LP that account for between 10 percent and 20 percent of the yogurt maker's equity depending on its financial performance, the people said.
Sled hockey player Rico Roman (L) and para-snowboarder Evan Strong hand out Chobani.
Chobani is looking for a strategic investor to help expand its supply chain, distribution, manufacturing base and geographic footprint for its popular yogurts like Flip, which combine yogurt with flavors such as peanut butter and coffee, the people added.
The deal under negotiation could change and there is no certainty that either Pepsi or Coca-Cola will reach an agreement, the people said. Other companies are also in talks with Chobani about a potential investment, the people said.
The sources asked not to be identified because the negotiations are confidential. Chobani, TPG and Cola-Cola declined to comment. Pepsi did not immediately respond to a request for comment.
Based in New Berlin, New York, Chobani was founded in 2005 by Turkish immigrant Hamdi Ulukaya, its majority owner and chief executive. While its yogurt has become one of the top-selling Greek brands in the United States, Chobani has also experienced some growing pains. Private equity firm TPG Capital LP gave a $750 million loan to the company last year to help it fund a turnaround.
Pepsi and Coca-Cola are no strangers to the dairy sector. In 2012, Pepsi started selling yogurt through a joint venture with German dairy company Theo Müller. This year, Coca-Cola began national distribution of a milk product called FairLife, which it created through a joint venture with Select Milk Producers.
Pepsi, whose snack category includes "better for you" products such as Quaker Oats, as well as Frito-Lay chip and other offerings, has a broader snack portfolio than Coke.
Coca-Cola has a track record of minority investments in growth consumer segments, including stakes in coffee company Keurig Green Mountain, energy drink Monster Beverage, and juice brand Suja Life.
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|To: Glenn Petersen who wrote (308)||2/9/2016 12:04:28 AM|
|Greek-yogurt maker Chobani often encourages consumers to make the right choice, but it may not be taking its own advice.|
The company said late Friday it had rejected PepsiCo's offer to take a majority stake because it was only interested in selling a minor piece of itself.
So even though Goldman Sachs found it an established partner that could help with distribution and production, the company intends to pay for its own growth plans. Those include entry into new markets such as Mexico and expanding its "Flip" product, which packages yogurt with toppings such as almonds, dark chocolate and graham crackers.
Staying independent is a bold call. Chobani has recovered from a string of setbacks -- including a product recall, canceled orders and production delays -- mainly because it accepted a $750 million cash injection from private-equity firm TPG. Such hiccups and others may arise as it enters new markets or launches new products like yogurt-based dips, which currently only exist in Australia.
Chobani commands a leading 11.6 percent share of the U.S. yogurt market by dollars spent, according to January data from Chicago-based market research firm IRI, but its lead is narrowing and has slipped from 15.3 percent as recently as two years ago. Adding insult to injury, a judge last month halted a Chobani ad campaign that slammed Dannon's "Light & Fit" and Yoplait's "Greek 100" rival products, calling it misleading.
Chobani has a narrow lead on U.S. rivals.
While fighting to keep an edge on rivals, Chobani faces a hard truth: The growth of Greek yogurt has slowed since 2014, according to EuroMonitor International. To survive that trend, Chobani must keep innovating, and now without any help from the deep pockets of Pepsi, which spent $718 million on research and development in 2014. (PepsiCo is due to report 2015 numbers on Thursday.)
It Pays to Innovate
Global expansion has already proven tough. In 2013, Chobani withdrew from the U.K. market and has yet to attempt to relaunch there or anywhere else in Europe -- counterintuitive, considering the region is home to the world's highest per capita consumption of yogurt, according to EuroMonitor International
The market research firm expects Chinese consumers to buy more yogurt than British consumers by 2020, meaning Chobani needs to try to crack the world's most populous market sooner rather than later. That certainly would be easier with help from a strategic investor such as Pepsi, which operates its largest food and beverage research and development facility outside the U.S. in Shanghai and recently opened a Quaker Oats plant in Beijing. If it can thrive on its own, then Chobani seems destined for an initial public offering. But it must prove its mettle.
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