YoCream International Announces Another Record Quarter: Sales Up 79.8% for the Quarter and 52.4% for the Year

PORTLAND, Ore., Jan. 27 /PRNewswire-FirstCall/ -- YoCream International, Inc. (Pink Sheets: YOCM), a manufacturer and wholesaler of frozen desserts and beverages, today reported the financial results for the fourth quarter and fiscal year ended October 31, 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20011003/SFW058LOGO-b)

The record fourth quarter of 2008 represents the tenth consecutive quarter of double digit sales growth for YoCream with sales up 79.8% to $13,340,000 and a record quarterly net income of $1,446,000.

    Fiscal year 2008 was an outstanding year with sales up 52.4% to
$42,971,000.  Gross profit margins were 42.7% in 2008 compared with 36.6% in
2007; net income was $4,380,000 or $1.89 per share, compared with $619,000 or
$0.29 per share for the prior year. The breakdown of sales by category was as
follows:



                     12 months    %     12 months    %        Dollar      %
    Category           2008     Total     2007      Total    Increase   Change

    Frozen
     Desserts      $32,313,000  75.2%  $16,715,000  59.3%   $15,598,000  93.3%
    Frozen
     Beverages      10,503,000  24.4%   10,086,000  35.8%       417,000   4.1%
    Co-packing         155,000   0.4%    1,389,000   4.9%    (1,234,000)
    Total          $42,971,000 100.0%  $28,190,000 100.0%   $14,781,000  52.4%

The 93.3% increase in frozen desert sales in fiscal 2008 primarily came from the Company's core frozen yogurt products. YoCream's flagship sweeter- profile frozen yogurt sales were outstanding and continue to grow as consumers focus on wellness and affordable enjoyment. The Company realized significant sales of its Original Tart(TM) frozen yogurt, which was reintroduced in the second quarter of 2007. These sales were augmented by the introduction of EuroTart(TM) frozen yogurt at the beginning of fiscal 2008. YoCream frozen yogurt far exceeds the culture requirements set forth by the National Yogurt Association and the Company displays the Live and Active Cultures (LAC) seal on these products to help consumers identify them as real frozen yogurt. The 4.1% increase in the frozen beverage category in fiscal 2008 primarily related to sales of Jolly Rancher(R) frozen beverage. YoCream developed and introduced the Jolly Rancher(R) Frozen Beverage brand in mid-2006 and released new flavors in 2008, including Cherry Orange and Tropical Tremor(TM) Fruit Punch. The Company is pleased with the continued growth of these products and enjoys business with major chains and convenience stores throughout the nation.

In 2008, foodservice sales increased approximately 128%, exceeding expectations. Copacking sales were purposefully limited to meet the explosive growth of the Company's proprietary products.

YoCream is well positioned to build on its 2008 success in fiscal 2009, especially with the launch of new branded flavors. In the fourth quarter of 2008 the Company introduced YoCream Select frozen yogurt exclusively featuring Hershey(R)'s branded flavors. This line features six popular flavor profiles: Hershey(R)'s Kisses(TM) Chocolate, York(TM) Chocolate Peppermint, Heath(TM) Toffee, Reese's(TM) Peanut Butter, Bubble Yum(TM), and Hershey(R)'s Kisses(TM) Chocolate Cherry Cordial. YoCream has developed new Rockstar(R) Original and Rockstar(R) Punched frozen beverage products for introduction in the second quarter of 2009. Rockstar(R) is the one of the top energy drink brands on the market. The frozen beverage line will be rounded out with Ice Breakers(TM) sugar free frozen beverages. Ice Breakers(TM) Peach Dragonfruit and Lime Coconut are available for purchase and two new flavors will be added in the spring. YoCream will also release a new Original Tart(TM) frozen yogurt flavor in the second quarter of 2009. YoCream's complete annual report and management's discussion and analysis is posted at http://www.yocream.com and http://www.pinksheets.com.

YoCream International, Inc., with headquarters and a dairy and manufacturing facility in Portland, OR, is a pioneer and leading producer of frozen yogurt, desserts and beverages. Founded in 1977, YoCream produces, markets and sells its signature frozen yogurt, tart frozen yogurt, ice cream and frozen custard mixes under the YoCream brand. YoCream's frozen beverage product lines include Fruitquake(TM) Frozen Drinks and Smoothies for blender, bar drinks and lemonades or ice teas as well as Jolly Rancher(TM), Bubble Yum(TM), Twizzlers(TM), and Jarritos(TM) Frozen Beverages for frozen carbonated and uncarbonated machine dispensing. The Company also co-packs similar products for other companies. 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.

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

                           Three Months Ended      Twelve Months Ended
                               October 31,              October 31,
                           2008         2007         2008         2007

    Sales              $13,340,245   $7,419,433  $42,971,072  $28,190,440

    Cost of goods sold   7,412,709    4,750,137   24,628,048   17,866,468

      Gross profit       5,927,536    2,669,296   18,343,024   10,323,972

    Operating costs and
     expenses
      Distribution
       expenses          1,252,407      887,250    4,623,787    3,560,245
      Selling, and
       marketing expenses  958,393      728,004    3,142,396    2,828,478
      General and
       administrative
       expenses          1,195,946      607,433    2,955,925    2,153,645

      Income from
       operations        2,520,790      446,609    7,620,916    1,781,604

    Other income (expenses)
      Interest income       18,615            -       21,997       14,516
      Other (net)            1,525        3,000        1,525        5,188
      Interest expense    (136,119)    (127,785)    (529,602)    (501,588)
      Restricted stock
       compensation       (214,270)    (335,300)    (411,170)    (372,700)

      Income before
       income taxes      2,190,541      (13,476)   6,703,666      927,020

    Income tax provision   744,500        7,100    2,324,000      308,000

      Net income        $1,446,041      $(6,376)  $4,379,666     $619,020

    Earnings per common
     share - basic           $0.65        $0.00        $1.99        $0.29

    Earnings per common
     share - diluted         $0.61        $0.00        $1.89        $0.29

    Shares used in
     basic earnings
     per share           2,239,355    2,124,556    2,200,753    2,103,850

    Shares used in
     diluted earnings
     per share           2,370,767    2,197,310    2,323,198    2,156,452



                         YOCREAM INTERNATIONAL, INC.
                                BALANCE SHEETS
                                 October 31,
                                                     2008           2007
                          ASSETS

    Current assets
      Cash and cash equivalents                   $7,169,393        $70,701
      Accounts receivable, net of allowance
       for doubtful accounts of $43,400 in 2008
       and $17,300 in 2007                         2,346,555      1,562,955
      Inventories                                  3,614,226      3,748,525
      Other current assets                           346,722        388,931
      Deferred tax assets                            218,877        172,708

        Total current assets                      13,695,773      5,943,820

    Fixed assets, net                             14,297,886     15,005,641
    Intangible and other long-term assets, net     1,108,290      1,035,022
    Deferred tax assets                              191,900        101,100

                                                 $29,293,849    $22,085,583
            LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Note payable - line of credit              $         -       $634,475
      Current portion of long-term debt              616,155        569,588
      Accounts payable                             2,661,073      1,616,467
      Income tax payable                           1,778,606        125,882
      Other accrued liabilities                      833,459        473,633

        Total current liabilities                  5,889,293      3,420,045

    Long-term debt, less current portion           7,720,045      7,996,013
    Deferred tax liabilities                       1,344,077      1,184,908
    Other liabilities                                119,376        100,895

        Total liabilities                         15,072,791     12,701,861

    Shareholders' equity
      Preferred stock, no par value, 5,000,000
       shares authorized, none issued or outstanding       -              -
      Common stock, no par value, 30,000,000
       shares authorized                           6,618,865      6,426,965
      Unearned compensation - restricted stock    (1,623,830)    (2,035,000)
      Retained earnings                            9,533,723      5,154,057
      Accumulated other comprehensive income        (307,700)      (162,300)

        Total shareholders' equity                14,221,058      9,383,722

                                                 $29,293,849    $22,085,583



                          YOCREAM INTERNATIONAL, INC
                           STATEMENTS OF CASH FLOWS
                       For the years ended October 31,

                                                     2008           2007
    Cash flows from operating activities
      Net income                                  $4,379,666       $619,020
      Adjustments to reconcile net income
       to net cash provided by operating
       activities
        Depreciation and amortization                954,034        886,724
        Deferred income taxes                        113,000         29,000
        Change in assets and liabilities
          Accounts receivable                       (783,600)      (225,351)
          Inventories                                134,299       (359,371)
          Other assets                               (31,059)      (190,732)
          Accounts payable                         1,044,606       (639,551)
          Income taxes receivable and payable      1,652,724         95,385
          Restricted stock compensation              411,170        372,700
          Other accrued liabilities                  378,307        192,770

            Net cash provided by operating
             activities                            8,253,147        780,594

    Cash flows from investing activities
      Proceeds from sale and lease back of
       equipment                                   1,000,314              -
      Expenditures for fixed assets               (1,336,593)    (3,514,614)

            Net cash used in investing activities   (336,279)    (3,514,614)

    Cash flows from financing activities
      Proceeds from (payments on) line of credit    (634,475)       634,475
      Proceeds from term loan                              -        139,393
      Proceeds from long-term debt                    90,000              -
      Proceeds from development grant                 90,000              -
      Proceeds from stock options                     23,150              -
      Repurchase of common stock                     (46,250)             -
      Principal payments on long-term debt          (555,601)      (427,792)
      Excess tax benefits of options and
       restricted stock                              215,000         72,000

            Net cash provided by (used in)
             financing activities                   (818,176)       418,076

            Net increase (decrease) in cash
             and cash equivalents                  7,098,692     (2,315,944)

    Cash and cash equivalents, beginning of year      70,701      2,386,645

    Cash and cash equivalents, end of year        $7,169,393        $70,701

SOURCE YoCream International, Inc.