YOCREAM International, Inc., a manufacturer and wholesale of frozen desserts and smoothies, today reported that sales for the quarter ended April 30, 2000 were up for the eighth consecutive quarter.

Sales for the second quarter were $3.7 million, a 2.4 percent increase compared to sales of $3.6 million in the same 1999 quarter. Net income for the second quarter was $237,000, or $.10 per share, compared to $308,000, or $.13 per share for last year. The gross margin of 32 percent was in line with the year ago quarter and improved compared to recent quarters. Current period earnings were affected by an increase in general and administrative expenses to 11 percent of sales compared with 9.6 percent a year ago, and an increase in the effective tax rate to 38 percent compared with 28 percent a year ago. The increase in general and administrative expenses in both the quarter and the six-month period was primarily due to additional personnel and increases in salaries and related expenses. The effective tax rate a year ago was less than normal due to recognizing the remaining net operating loss carryforward benefit from prior years.

“The rate of sales growth was higher a year ago because a couple of major customers were involved at that time in a significant product ramp up in their operations,” said Douglas Caudell, chief financial officer of YOCREAM International. “We expect that sales in the third quarter will show stronger improvement over last year as a major customer continues to expand its locations, and we begin to rollout another new product.”

“We are currently reconfiguring and upgrading our production facilities which will more than double production capacity,” said Caudell. “These steps are being taken because we anticipate a continued positive growth curve.”

For the six months, sales of $6.6 million increased 12.8 percent from $5.8 million. Although the gross margin remained level at approximately 31.6 percent, the increase in administrative expenses and the effective tax rate resulted in a net income of $313,000, or $.13 per share, from $358,000, or $.15 per share, for the comparable 1999 six months.

YOCREAM International, Inc. makes, markets and sells frozen desserts, snacks and smoothies throughout the United States and in several foreign countries. It sells primarily to food distributors and wholesales clubs; and the company’s products are available in restaurants, convenience stores, schools, hospitals, corporate cafeterias and wholesale clubs.

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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 co-packing relationships and strategic alliances and other economic, competitive, governmental, regulatory and factors affecting the company’s operations, pricing, products and service. For a more complete discussion of the risks associated with forward-looking information, refer to the Risk Factors contained in the company’s Form 10-K filed with the Securities and Exchange Commission on January 28, 2000.

Income Statement

Three Months Ended Six Months Ended
April 30, April 30,
2000 1999 2000 1999

Sales $3,736,716 $3,650,515 $6,574,740 $5,828,381

Cost of sales 2,539,756 2,460,895 4,505,509 3,988,248

Gross profit 1,196,960 1,189,620 2,069,231 1,840,133

Selling, general
and administrative
expenses 806,961 737,796 1,555,325 1,297,550

Income from operations 389,999 451,824 513,906 542,583

Other income (expenses) (5,284) (22,673) (5,766) (44,917)

Income before taxes 384,715 429,151 508,140 497,666

Income tax provision 147,700 121,000 195,100 140,000

Net income $237,015 $308,151 $313,040 $357,666

Earnings per common share
Basic $0.10 $0.13 $0.14 $0.15
Diluted $0.10 $0.13 $0.13 $0.15

Shares used in per share calculation
Basic 2,288,860 2,318,349 2,293,625 2,318,629
Diluted 2,307,397 2,372,761 2,321,908 2,378,609