Smart Balance Announces 2008 First-Quart...() Depreciation & Amortization ...),Health

Depreciation & Amortization (0.6)

Accelerated Financing Amortization (0.5)

(3.2)

Net Loss less non-cash charges after-tax 2.0

2008 First Quarter Operating Basis Results

The following discussion of operating basis results includes the operating results of Smart Balance Inc. from the date of its acquisition of GFA Brands, Inc. on May 21, 2007 and the operating results of GFA Brands prior to the acquisition. Management believes that this presentation provides more useful information because it reflects the performance of the operating entity in both the current and prior periods presented. The operating basis results should not be viewed in isolation or as a substitute for reported GAAP results. A reconciliation of operating basis results to GAAP results is provided in the accompanying tables.

Net sales increased 25.1% to $50.8 million in 2008, from $40.6 million in 2007, due to higher prices across almost all categories and a 10% increase in case volume. The case increase was due to shipments of new products (extra virgin olive oil spreads, omega-3 enhanced spreads, 50/50 butter blend, milk and cream cheese) and higher sales of peanut butter. The gains in prices and volume were partially offset by higher trade and promotion costs.

Both dollar and volume market shares for spreads increased versus the prior year for the 25th consecutive quarter. During the Easter promotion period, the Company raised promoted prices to maintain margins in step with the February price increase, while the category generally kept previous holiday pricing levels in place. As anticipated, this resulted in a lower holiday performance at retail for Smart Balance products in March. Market shares for peanut butter and cooking oil also increased while mayonnaise and popcorn declined.

Gross profit increased $2.9 mil
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