Smart Balance Announces 2008 First-Quart...(lion to $22.8 million in 2008 from $19.9...),Health

Date:5/7/2008

lion to $22.8 million in 2008 from $19.9 million in 2007 as the impacts of higher pricing and sales volume were greater than increases in input costs and trade related spending. Gross profit as a percent of net sales decreased to 45.0% in 2008 from 49.1% in the first quarter of 2007, as the rate of selling price increases lagged the rate of input costs increases, primarily in commodity raw materials

Operating income declined $6.2 million to $2.0 million in 2008 from $8.2 million in 2007 as the gain in gross profit was more than offset by increased selling costs and general and administrative expenses. Selling costs increased $1.6 million due to higher overhead, warehouse and freight costs. General and administrative expenses increased $7.2 million primarily due to higher infrastructure costs and non-cash expenses of $3.5 million in FAS 123R Stock Option expense, and $1.1 million for depreciation and amortization. Excluding these non-cash charges, operating income would have declined $1.6 million to $6.6 million in 2008 from $8.2 million in 2007.

2008 Outlook

Smart Balance's outlook for 2008 continues to reflect growth in net sales on an operating basis in line with its long-term target of approximately 30%. Progressively increasing distribution through the Company's 'Plus Six' drive will be supported by the innovations in its core category: extra virgin olive oil spreads, omega-3 enhanced spreads and 50/50 butter blend. The Company expects that the second half of 2008 will see accelerating sales growth as a result of these initiatives. Pricing actions include the increase that was effective in February 2008 and the announced increase for June 2008. Gross profit as a percent of net sales will be lower in 2008 versus 2007 as pricing actions are expected to continue to trail rising input costs. Marketing investments are expected to increase in order to support growth. Infrastructure costs increases versus prior year will diminish as 2008 progresses
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SOURCE Smart Balance Inc. Copyright©2008 PR Newswire. All rights reserved

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