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   Non-TechSmart Balance (SMBL) A smart and balanced investment!


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To: Arthur Radley who wrote (12)9/10/2008 11:03:34 AM
From: Arthur Radley
   of 33
 
Stock continues to rebound on nice volume..was in the $5.00 range only a week or so ago.

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To: Glenn Petersen who wrote (10)10/14/2008 10:15:00 PM
From: Arthur Radley
   of 33
 
This is why I have a position in this stock....(SMBL)

marketwatch.com

The major investors in SMBL are investors...they are in this game to hold stocks for the long-term..they want to get in, build them up and unload.....

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To: Arthur Radley who wrote (14)10/15/2008 10:54:57 AM
From: Glenn Petersen
   of 33
 
SMBL has held up well in a very tough market.

Food stocks = Relatively save havens

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To: Glenn Petersen who wrote (15)10/20/2008 5:12:41 PM
From: Arthur Radley
   of 33
 
13% gain today and huge volume.......wish it had been either 12% or 14%. (:>)

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To: Glenn Petersen who wrote (15)10/26/2008 8:18:17 PM
From: Arthur Radley
   of 33
 
NEW YORK, Oct 26 (Reuters) - The recent rebound in shares of Smart Balance Inc (SMBL.O: Quote, Profile, Research, Stock Buzz) could continue as the healthy-food maker, which may be a takeover target, grows its market share, Barron's reported.

The paper said it is "upbeat" about Smart Balance, citing Montgomery Scott analyst Mitch Pinheiro, who has a 12-month stock price target of $11 on the company.

Shares of Smart Balance, which makes low-cholesterol buttery spreads, closed at $6.25 on Friday, up 28 percent from a low earlier this month. However, they have fallen about 42 percent so far this year.

"With its low stock price, Smart Balance also could be snapped up by a larger rival such as ConAgra (CAG.N: Quote, Profile, Research, Stock Buzz), Unilever (ULVR.L: Quote, Profile, Research, Stock Buzz) or Nestle (NESN.VX: Quote, Profile, Research, Stock Buzz)," the paper said. (Reporting by Jonathan Spicer; Editing by Phil Berlowitz)

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From: Glenn Petersen2/28/2009 6:08:02 PM
   of 33
 
Smart Balance Announces 2008 Fourth-Quarter Results

Thursday February 26, 2009, 8:30 am EST

- Net sales $65.6 million, up 29% versus year ago

- Net loss $2.6 million, includes non-cash charges of $5.9 million

- Debt reduction of $15 million

- 2009 first half outlook: net sales percentage growth high teens to mid-twenties

PARAMUS, N.J., Feb. 26 /PRNewswire-FirstCall/ -- Smart Balance, Inc. (Nasdaq: SMBL - News) today announced its results for the fourth quarter ended December 31, 2008. The Company reported net sales of $65.6 million, an increase of 28.9% versus year ago, and a net loss of $2.6 million, reflecting the after-tax impact of $5.9 million of non-cash items, including $2.9 million of stock-based compensation expense, $1.8 million of change in fair value of an interest rate swap and $1.2 million of amortization and depreciation. The net loss was $0.04 on both diluted and basic shares.

The fourth quarter net sales increase versus 2007 was due to higher pricing and a 6% increase in case shipments. Selling prices in the Company's core category of spreads were increased in February, June, and August to cover rising commodity costs. In the second half of 2008 versus 2007, sales increased 33%, within the Company's outlook of 25-35%, primarily due to higher pricing and a case volume increase of 10%. For the full year, net sales grew 26% versus 2007, on an operating basis(1)

The Company's spreads products, which represent approximately 75% of its sales, increased market share by 1.0 point in supermarkets to 13.4% in the fourth quarter versus the prior year, representing the 28th consecutive quarter of share growth, according to Information Resources, Inc. data.

"I am pleased with our top-line growth for the quarter and the year, despite the challenging economic and commodity environments, and that we were able to pay down $50 million in debt during the year," said Stephen B. Hughes, Smart Balance Chairman and CEO. "We established a solid foundation for growth in 2008 and look forward to taking the next step in building Smart Balance® into a billion dollar brand."

Gross profit margin for the quarter was 41.3%, versus 46.5% in the fourth quarter of 2007, as the rate of selling price increases lagged the rate of commodity cost increases.

The Company paid down $15.0 million of long-term debt during the quarter and met its debt covenants. Year-to-date, $50.0 million of long-term debt has been paid down. Long-term debt at year-end 2008 is now $70 million, down $90 million since the May 2007 acquisition of GFA Brands. The Company plans to pay down additional debt in 2009.

(1) In addition to its GAAP results, the Company has provided operating basis results to explain year over year changes. The operating basis should not be viewed in isolation or as a substitute for GAAP results. A reconciliation of operating basis results to GAAP results is provided in the accompanying tables.

"Our plan for 2009 will build on the 2008 foundation with our new marketing campaign targeting trans fats labeling, expansion of milk into the Northeast and new product introductions in spreads, peanut butter, cooking oil, and popcorn," said Hughes. "We believe these programs will deliver case volume growth outpacing our performance in 2008. Because of the uncertain and challenging economic environment, we are only providing an outlook for the first half of 2009 at this time, with percentage growth in net sales in the range of high teens to mid-twenties. We expect the second quarter growth to be higher than the first quarter, due to Easter in April this year, versus March last year."

Change in Accounting Principles

In 2008, the Company began accounting for certain trade incentives and marketing costs as prepaid expenses to better match recognition of expense to revenue, consistent with the general practice in the consumer product goods industry. This methodology is a change from prior years. While this methodology may create timing differences between prior years' quarters on an operating basis, it has no impact on full year results. In accordance with FAS No. 154, a retrospective application of the change in accounting principle has been applied to 2007 quarterly results included herein to improve comparability.

2008 Fourth-Quarter GAAP Results

Net sales increased 28.9% to $65.6 million in 2008, from $50.9 million in 2007, primarily due to higher prices and a 6% increase in cases shipped. The Company increased prices on its products in August to cover rising costs, following similar pricing actions in February and June, to be consistent with competitive actions in the industry.

The increase in cases shipped was due primarily to growth in the core category of spreads (expansion of 50/50 butter blend, extra virgin olive oil spreads, and omega-3 enhanced spreads, partially offset by declines in the base business), higher sales of cooking oil and performance of milk in the Florida test market.

Market share for the Smart Balance® family of spreads increased versus the prior year for the 28th consecutive quarter. Market share for cooking oil also increased in the quarter while shares for peanut butter and microwave popcorn declined.

On an operating basis, net sales increased 29% in the quarter versus prior year and were below the estimated 33% growth in consumer purchases of our products across all channels - dollar sales at retail. For the full year of 2008, net sales growth of 26% versus prior year was similar to the 27% growth in estimated consumer purchases of our products across all channels for the same period. Differences between the Company's net sales and consumer purchases from quarter to quarter may arise due to differences in inventories at the retailer, timing of promotions and price differences. However, these differences are normally minor on an annual basis.

Comparison of Net Sales to Consumer Purchases Across All Channels
Change versus Prior Year

First Second Third Fourth
Quarter Quarter Quarter Quarter Full Year

Net Sales +25% +13% +38% +29% +26%
Consumer Purchases Across
All Channels (Dollar
Sales at Retail)(1) +18%(2) +21% +36% +33% +27%


(1) Source: Information Resources, Inc.; Company estimates
(2) Revised

Gross profit increased $3.5 million to $27.1 million in 2008 from $23.6 million in 2007 due to the impact of higher pricing and the growth in case shipments, partially offset by increases in input costs, primarily in commodity raw materials, and higher coupon redemption expenses. Gross profit as a percent of net sales decreased to 41.3% in 2008 from 46.5% in the fourth quarter of 2007, as the rate of selling price increases lagged the rate of input cost increases, in addition to higher coupon redemption expenses.

Operating income increased $14.4 million to $1.7 million in 2008 from a loss of $12.7 million in 2007 due primarily to the impact of lower non-cash charges in 2008. Excluding the impact of the non-cash charges, operating income declined $1.8 million as the increase in gross profit was more than offset by higher general and administrative expenses from the expansion of the Company's infrastructure, timing of certain legal expenses in the prior year and marketing investment increases of $1.5 million.

Operating income in the fourth quarters of 2008 and 2007 included non-cash charges of $5.2 million and $21.4 million, respectively. See the table below for the non-cash items affecting operating income.

Items Affecting GAAP Operating Income - Fourth Quarter

$ in Millions 2008 2007

Operating Income (Loss) 1.7 (12.7)
Non-cash charges affecting Operating Income:
FAS 123R Stock Option Expense 4.0 1.9
Depreciation & Amortization 1.2 1.0
Performance Based Shares - 18.5
5.2 21.4
Operating Income excluding non-cash charges 6.9 8.7


Net Loss was lower by $8.1 million to $2.6 million in 2008 versus $10.7 million in 2007. Excluding the after-tax impact of non-cash charges, net income in 2008 was $3.3 million versus $5.4 million in 2007. Included in the non-cash charges in 2008 was a $2.5 million ($1.8 million after tax) non-cash change in fair value of an interest rate swap related to the Company's long-term debt. See the table below for non-cash items affecting net income (loss).

Items Affecting GAAP Net Income (Loss) - Fourth Quarter

$ in Millions 2008 2007

Net (Loss) (2.6) (10.7)

Non-cash charges after-tax affecting Net Loss:
FAS 123R Stock Option Expense 2.9 1.2
Depreciation & Amortization 0.9 0.7
Accelerated Financing Amortization 0.3 0.7
Change in Fair Value of an Interest Rate Swap 1.8 -
Performance Based Shares - 18.5
(Gain) on Derivative Liability - (5.0)
5.9 16.1
Net Income excluding non-cash charges after-tax 3.3 5.4


2008 Full Year Results - Operating Basis Comparison

The Company's GAAP financial statements include the results of its acquisition of GFA Brands, Inc. since the date of acquisition on May 21, 2007. Because there were no operations prior to the acquisition, year-to-date results are not comparable to prior periods. The Company has provided operating basis results below that include the operating results of Smart Balance Inc. from the date of its acquisition of GFA Brands, Inc. and the operating results of GFA Brands prior to the acquisition. Management believes that the presentation of operating basis results 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. Year-to-date operating results and a reconciliation of operating basis results to GAAP results are provided in the accompanying table.

Net sales increased 26.4% to $221.9 million in 2008 from $175.5 million in 2007. This increase was largely due to increased selling prices in most product categories and a 6.7% increase in case volume due to the introduction of Smart Balance® butter blend sticks, higher sales of cooking oil and sales of milk introduced in the Florida test market beginning in late 2007. Prices were increased in response to higher input costs. Prices in the core category of spreads were increased in February, June, and August. Selling prices were partially offset by an increase in coupon redemption costs and higher trade promotion spending.

Gross profit for 2008 increased $10.9 million to $95 million from $84.1 million in 2007. Gross profit as a percentage of net sales decreased to 42.8% in 2008 from 47.9% in 2007, as the rate of input costs increases were only partially offset by selling price increases.

Operating income increased $3.3 million to $5.7 million in 2008 from $2.4 million in 2007 as the gain in gross profit and lower general and administrative costs were partially offset by increased marketing investments and higher selling and distribution expenses. General and administrative expenses were lower in 2008 versus 2007 due primarily to a decrease in non-cash expenses. Operating income excluding non-cash items decreased $5.1 million to $25.1 million in 2008 from $30.2 million in 2007 as the gain in gross profit was more than offset by a $7.4 million increase in infrastructure costs during the first full year of operation of the company since the acquisition of GFA, a $4.9 million increase in marketing investment and increases in selling and distribution costs.

Items Affecting Operating Income - Full Year Operating Basis

$ in Millions 2008 2007

Operating Income 5.7 2.4
Non-cash charges affecting Operating Income:
FAS 123R Stock Option Expense 14.9 6.7
Depreciation & Amortization 4.5 2.6
Performance Based Shares - 18.5
19.4 27.8
Operating Income excluding non-cash charges 25.1 30.2


2009 First-half Outlook

Smart Balance's outlook for 2009 first half percentage growth versus 2008 in net sales is high teens to mid-twenties, with second quarter growth expected to be higher than first quarter growth. The Company expects continued volume growth led by increased distribution and new products in spreads, peanut butter, cooking oil and popcorn, as well as expansion of its milk products. The food industry will likely experience uncertainty in 2009 around consumer reaction to the economy, potentially impacting the ability to generate trial of the Company's premium priced products by new consumers. Gross profit as a percent of net sales is expected to improve to 45%+ in 2009 as input costs are expected to be below the prior year. Marketing investments will increase in 2009 versus 2008 as the Company will continue to aggressively support its core user base and develop awareness among new consumers. The Company anticipates additional non-cash changes in the fair value of an interest rate swap, given the current interest rate environment. For the year, the Company plans to pay down debt from operating cash flows and expects to meet the covenants related to its long-term debt.

<snip>

About Smart Balance, Inc.

Smart Balance, Inc. (NasdaqGM: SMBL - News) is committed to providing superior tasting heart healthier alternatives in every category it enters by avoiding trans fats naturally, balancing fats and/or reducing saturated fats, total fat and cholesterol. The Company's products include Smart Balance® Buttery Spreads, Milk, Butter Blend Sticks, Cream Cheese, Peanut Butter, Microwave Popcorn, Cooking Oil, Mayonnaise, Non-Stick Cooking Spray and Cheese. For more information about products and the Smart Balance(TM) Food Plan, visit smartbalance.com.

SMART BALANCE, INC. AND SUBSIDIARY
Consolidated Balance Sheets

December 31, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $5,492,330 $37,648,754
Accounts receivable, net of allowance
of: 2008 - $256,100 and 2007 - $228,871 14,282,956 11,733,117
Accounts receivable - other 691,823 799,470
Inventories 9,322,093 7,202,198
Prepaid taxes 708,828 6,517,833
Prepaid expenses and other assets 1,018,927 1,454,866
Deferred tax asset 650,100 1,079,509
Total current assets 32,167,057 66,435,747
Property and equipment, net 4,300,642 1,805,331
Other assets:
Goodwill 374,885,923 374,885,923
Intangible assets, net 155,223,243 159,645,634
Deferred costs, net 1,737,220 3,519,412
Other assets 221,516 74,975
Total other assets 532,067,902 538,125,944
Total assets $568,535,601 $606,367,022
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $24,937,236 $20,355,419
Income taxes payable 1,080,466 1,035,149
Total current liabilities 26,017,702 21,390,568
Long term debt 69,504,174 119,504,174
Derivative liability 5,132,231 -
Deferred tax liability 46,268,286 53,293,528
Other Liabilities 161,711 -
Total liabilities 147,084,104 194,188,270
Commitment and contingencies
Stockholders' equity
Series A Convertible Preferred stock,
$.0001 par value, 50,000,000 shares
authorized; 15,388,889 issued and
outstanding, liquidation preference,
$175,659,013 (converted on
January 3, 2008) - 175,659,013
Common stock, $.0001 par value,
250,000,000 shares authorized;
62,630,683 (2008) and 43,113,863
(2007) issued and outstanding 6,263 4,311
Additional paid in capital 507,377,418 315,479,759
Retained deficit (85,932,184) (78,964,331)
Total stockholders' equity 421,451,497 412,178,752
Total liabilities and stockholders' equity $568,535,601 $606,367,022

SMART BALANCE, INC. AND SUBSIDIARY
Consolidated Statements of Operations

Three Months Three Months
ended ended
December 31, December 31,
2008 2007

Net sales $65,560,606 $50,859,951
Cost of goods sold 38,505,855 27,232,232
Gross profit 27,054,751 23,627,719
Operating expenses:
Marketing 9,547,421 8,094,207
Selling 4,993,869 4,220,684
General and administrative 10,854,668 5,511,380
Performance based shares
released from escrow - 18,455,815
Formation and operating costs - -
Total operating expenses 25,395,958 36,282,086
Operating Income (loss) 1,658,793 (12,654,367)
Other income (expense):
Interest income 8,463 143,905
Interest expense (1,863,305) (3,655,465)
Gain (Loss) on derivative liability (2,549,977) 4,976,728
Other expense, net (922,883) (1,154,883)
Total other income (expense) (5,327,702) 310,285
Loss before income taxes (3,668,909) (12,344,082)
(Benefit) provision for income taxes (1,027,920) (1,654,748)

Net loss $(2,640,989) $(10,689,334)

Less: Unpaid dividends on
convertible preferred stock $- $33,096,540
Net loss available for common shares $(2,640,989) $(43,785,874)

Net loss per share - basic and diluted $(0.04) $(1.27)
Weighted average shares
outstanding - basic and diluted 62,630,683 34,433,180

Year ended Year ended
December 31, December 31,
2008 2007

Net sales $221,871,912 $111,038,295
Cost of goods sold 126,903,498 58,715,013
Gross profit 94,968,414 52,323,282
Operating expenses:
Marketing 33,286,061 15,118,184
Selling 17,671,462 12,268,066
General and administrative 38,317,244 17,931,109
Performance based shares released
from escrow - 18,455,815
Formation and operating costs - -
Total operating expenses 89,274,767 63,773,174
Operating Income (loss) 5,693,647 (11,449,892)
Other income (expense):
Interest income 291,949 2,449,614
Interest expense (9,049,019) (9,677,881)
Gain (Loss) on derivative liability (5,132,231) (45,556,199)
Other expense, net (2,335,752) (1,019,607)
Total other income (expense) (16,225,053) (53,804,073)
Loss before income taxes (10,531,406) (65,253,965)
(Benefit) provision for income taxes
(3,563,553) (705,897)
Net loss $(6,967,853) $(64,548,068)

Less: Unpaid dividends on
convertible preferred stock $- $37,159,011
Net loss available for common shares $(6,967,853) $(101,707,079)

Net loss per share - basic and diluted $(0.11) $(4.12)
Weighted average shares outstanding
- basic and diluted 62,523,742 24,667,344


SMART BALANCE, INC. AND SUBSIDIARY

Reconciliation of Operating Basis to GAAP Basis

Prior to Smart Balance, Inc.'s May 21, 2007 acquisition of GFA Brands, Inc., operating income consisted largely of formation costs and other expenses incurred in seeking and evaluating potential business combinations. We have added these expenses back to the operating basis results below, as GFA incurred its own operating expenses for these periods, and the inclusion of the parent company's expenses prior to the date of acquisition make it difficult to compare operating results year to year. With the information set forth below, management and stockholders would be better able to determine whether or not sales or operating income of the acquired business have improved in 2008 compared with 2007. The operating basis results provided below are intended to assist the reader in comparing the operating performance of the GFA business we acquired, for the periods before and after the acquisition. However, they do not indicate what consolidated results would have been had we acquired GFA on January 1, 2007. The operating basis results should not be viewed in isolation or as a substitution for GAAP results.

($ in millions) (unaudited)
GAAP
results Add GFA
reported Results
in Prior to Adjust- Operating
Form 10-K Acquisition ments(1) Basis

Year Ended December 31, 2008
Net Sales $221.9 $- $- $221.9
Gross Profit 95.0 - - 95.0
Operating Income 5.7 - - 5.7

Year Ended December 31, 2007
Net Sales $111.0 $64.4 $0.1 $175.5
Gross Profit 52.3 31.7 0.1 84.1
Operating (Loss) Income (11.4) 12.7 1.1 2.4


(1) To remove parent company pre-acquisition expenses from results prior to the acquisition date. Parent company expenses incurred beginning May 21, 2007 remain included in operating basis results.

Copyright © 2008 PR Newswire

Press release

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From: Glenn Petersen4/24/2009 9:14:07 AM
   of 33
 
[t]SMBL[/t] gets a mention in Business Week's "Inside Wall Street" column:

Healthy Milk from Smart Balance

Fat-free milk that tastes like whole milk, enhanced with Omega-3? That's what Smart Balance (SMBL) is counting on to boost sales—along with its "naturally trans-fat-free margarine" and other foods using a proprietary vegetable oil blend. Its milk was launched in Florida in 2007 and in the Northeast last year. Milk sales in Florida hit $4 million in 2008 and could reach $10 million-$12 million in 2009. Shares have risen to 6.82 from 4 in October.

Ken Gau of investment firm Waddell & Reed, which owns stock, says Smart Balance's growth will be driven by such new products. Rising sales "give us confidence the company is on track to achieve first-quarter growth in the range of 18%," says Jon Anderson of William Blair, which has done banking for Smart Balance. He sees profits of 30 cents a share on sales of $266 million in 2009 and forecasts 47 cents on $320 million in 2010.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

—Gene Marcial

Story link

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From: Glenn Petersen5/7/2009 2:01:57 PM
   of 33
 
InPlay 8:32AM Smart Balance beats by $0.02, beats on revs (SMBL) 7.38 : Reports Q1 (Mar) earnings of $0.02 per share, $0.02 better than the First Call consensus of ($0.00); revenues rose 23.2% year/year to $62.6 mln vs the $59.4 mln consensus. "Smart Balance's outlook for the first half of 2009 percentage growth in net sales versus 2008 is high teens to mid-twenties. The Company expects continued volume growth led by increased distribution and new products in spreads, peanut butter, cooking oil and popcorn, as well as expansion of its milk products. The food industry is experiencing uncertainty in 2009 around consumer reaction to the economy, potentially delaying trial by prospective consumers of the Company's premium-priced products. Gross profit as a percent of net sales is expected to improve to 45%+ in 2009 as input costs for the year are expected to be lower than 2008. Marketing investments will increase in 2009 versus 2008 as the Company will continue to aggressively support its core user base and develop awareness among new consumers."

Smart Balance Announces 2009 First Quarter Results

On Thursday May 7, 2009, 8:30 am EDT

- Net sales $62.6 million, up 23% versus year ago

- Becomes second largest marketer of branded spreads in U.S.

PARAMUS, N.J., May 7 /PRNewswire-FirstCall/ -- Smart Balance, Inc. (Nasdaq: SMBL - News) today announced its results for the first quarter ended March 31, 2009. The Company reported net sales of $62.6 million, an increase of 23.3% versus year ago, and earnings per share of $0.02, versus a loss of $0.02 per share in 2008.

The first quarter net sales increase versus 2008 was due to higher pricing carried over from the prior year and a 6% increase in case shipments. The improvement in earnings per share was due to increased gross profits and lower financing-related costs partially offset by higher operating expenses.

The Company increased market share in its core category of spreads by 1.5 points to 15.1% in the first quarter versus the same quarter in 2008, representing the 29th consecutive quarter of market share growth, according to Information Resources, Inc. (IRI) data. With that increase, Smart Balance became the second largest marketer of branded spreads in the United States, based on dollar sales in retail food outlets, according to IRI data.

"I am pleased with both our revenue growth and our earnings per share," said Stephen B. Hughes, Smart Balance Chairman and CEO. "Despite the challenging economic environment, consumers are embracing our premium priced value proposition as evidenced by our continued share growth. Reaching the number two market share position in our core category is an important milestone on the road to building Smart Balance® into a billion dollar brand."

Gross profit margin for the quarter was 45.1%, versus 45.0% for the first quarter of 2008, as the rate of selling price increases was offset by the rate of commodity cost increases and coupon redemption expenses.

2009 First-Quarter Results

Net sales for the first quarter of 2009 increased 23.3% to $62.6 million from $50.8 million for the first quarter of 2008. The increase was primarily due to a combination of higher prices and increased case shipments, partially offset by higher coupon redemption expenses. Selling prices for the Company's spreads, which represent approximately 76% of its net sales, were increased three times in 2008 to cover rising commodity costs, consistent with competitive actions in the industry.

The increase in cases shipped was due primarily to the introduction of milk in the Northeast, growth in the core category of spreads, and higher sales of cooking oil. The 6% growth in cases occurred despite the increase in retail inventories in the prior year as part of the Company's distribution expansion.

Consumer purchases of the Company's products at retail grew 31.8% for the quarter versus 2008, based on IRI data and company estimates. The net sales increase of 23.3% was lower than the consumer purchases growth primarily due to the inventory build in 2008 and higher coupon redemption expenses in 2009 net sales. Differences between net sales and consumer purchases at retail may arise due to changes in inventories at retailers, timing of promotions and price variations. However, these differences are normally minor on an annual basis.

Gross profit increased $5.5 million to $28.3 million for the first quarter of 2009 from $22.8 million in 2008 due to the benefit of higher pricing and the growth in case shipments, partially offset by increases in product input costs, notably vegetable oils, and higher coupon redemption expenses.

Operating income increased $1.2 million, or 60%, to $3.2 million for the first quarter of 2009 compared with $2.0 million in 2008 as the $5.5 million increase in gross margin was partially offset by a $4.2 million increase in operating expenses. The increase in operating expenses reflected higher marketing investments and continued expansion of general and administrative expenses, primarily increased staff and related costs, to support a $500 million business.

Excluding the impact of non-cash charges, operating income increased $1.8 million to $8.4 million in 2009 from $6.6 million in 2008. See the table below for the non-cash items affecting operating income.

Items Affecting Operating Income - First Quarter

$in Millions 2009 2008

Operating Income 3.2 2.0
--- ---
Non-cash charges affecting Operating
Income:
FAS 123R Stock Option Expense 4.0 3.5
Depreciation & Amortization 1.2 1.1
--- ---
5.2 4.6
--- ---
Operating Income excluding non-cash
charges 8.4 6.6
=== ===


Net income for the first quarter of 2009 was $1.1 million compared to a loss of $1.2 million for the first quarter of 2008, an increase of $2.3 million, reflecting the gains at operating income, lower interest and other expenses and the gain on derivatives liability related to an interest rate swap, partially offset by higher provisions for income taxes. Included in the 2008 interest expense is a prepayment penalty of $0.6 million for the $30 million prepayment of the second lien debt. Other expense in 2008 reflects $0.9 million of accelerated amortization of deferred financing costs resulting from the prepayment of debt.

Excluding the after-tax impact of non-cash charges, net income for the first quarter of 2009 was $4.0 million versus $2.1 million in 2008. See the table below for non-cash items affecting net income (loss).

Items Affecting Net Income (Loss) - First Quarter

$in Millions 2009 2008

Net Income(Loss) 1.1 (1.2)
--- ---
Non-cash charges after-tax affecting Net
Income(Loss):
FAS 123R Stock Option Expense 2.4 2.1
Depreciation & Amortization 0.8 0.7
Change in Fair Value of an Interest Rate
Swap (0.3) -
Accelerated Financing Amortization - 0.5
--- ---
2.9 3.3
--- ---
Net Income excluding non-cash charges
after-tax 4.0 2.1
=== ===


Outlook

Smart Balance's outlook for the first half of 2009 percentage growth in net sales versus 2008 is high teens to mid-twenties. The Company expects continued volume growth led by increased distribution and new products in spreads, peanut butter, cooking oil and popcorn, as well as expansion of its milk products. The food industry is experiencing uncertainty in 2009 around consumer reaction to the economy, potentially delaying trial by prospective consumers of the Company's premium-priced products.

Gross profit as a percent of net sales is expected to improve to 45%+ in 2009 as input costs for the year are expected to be lower than 2008. Marketing investments will increase in 2009 versus 2008 as the Company will continue to aggressively support its core user base and develop awareness among new consumers.

<snip>


SMART BALANCE, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(In thousands, except share data)

March 31, December 31,
2009 2008
-------- ----------
Assets (unaudited)
Current assets:
Cash and cash equivalents $8,136 $5,492
Accounts receivable, net of allowance
of: 2009 - $313 and 2008 - $256 14,832 14,283
Accounts receivable - other 889 692
Inventories 8,421 9,322
Prepaid taxes 840 709
Prepaid expenses and other assets 10,103 1,019
Deferred tax asset 509 650
------ ------
Total current assets 43,730 32,167
------ ------
Property and equipment, net 4,389 4,301
------ ------
Other assets:
Goodwill 374,886 374,886
Intangible assets, net 154,207 155,223
Deferred costs, net 1,674 1,737
Other assets 428 222
------- -------
Total other assets 531,195 532,068
------- -------
Total assets $579,314 $568,536
======= =======
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $30,591 $24,938
Income taxes payable 2,482 1,080
------ ------
Total current liabilities 33,073 26,018
------ ------
Long term debt 69,504 69,504
Derivative liability 4,587 5,132

Deferred tax liability 45,165 46,268
Other liabilities 377 163
------- -------
Total liabilities 152,706 147,085
------- -------

Commitment and contingencies
Stockholders' equity
Preferred stock, $.0001 par value,
50,000,000 shares authorized - -
Common stock, $.0001 par value,
250,000,000 shares authorized;
62,630,683 (2009) and 62,630,683 (2008)
issued and outstanding 6 6
Additional paid in capital 511,388 507,377
Retained deficit (84,786) (85,932)
------- -------
Total stockholders' equity 426,608 421,451
------- -------
Total liabilities and stockholders'
equity $579,314 $568,536
======= =======

SMART BALANCE, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share data)

Three Months Ended
March 31,
------------------
2009 2008
---- ----
Net sales $62,599 $50,790
Cost of goods sold 34,345 27,940
------ ------
Gross profit 28,254 22,850
------ ------
Operating expenses:
Marketing 8,800 7,398
Selling 4,517 4,146
General and administrative 11,729 9,346
------ ------
Total operating expenses 25,046 20,890
------ -----
Operating income 3,208 1,960
------ -----
Other income (expense):
Interest income 1 251
Interest expense (1,679) (3,232)
Gain on derivative liability 546 -
Other expense, net (143) (941)
----- -----
Total other income (expense) (1,275) (3,922)
----- -----
Income (loss) before income
taxes 1,933 (1,962)
Provision (benefit) for
income taxes 787 (785)
Net income (loss) $1,146 $(1,177)
===== =====

Income (loss) per share:
Basic $0.02 $(0.02)
==== ====
Diluted $0.02 $(0.02)
==== ====
Weighted average shares
outstanding:
Basic 62,630,683 62,196,988
========== ==========
Diluted 62,706,184 62,196,988
========== ==========


finance.yahoo.com

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To: Glenn Petersen who wrote (20)5/7/2009 3:47:31 PM
From: Arthur Radley
   of 33
 
Glenn,
Any time a premium brand name can gain market share in this kind of economic envirnoment, is impressive. IMO, SMBL will be bought in the near future.......this operation is merely about 50-60 key employees with marketing savvy.....they have no manfg. capability...so one of the big food companies will gobble them up.

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To: Arthur Radley who wrote (21)6/8/2009 3:15:39 PM
From: Arthur Radley
   of 33
 
Smart Balance Keeps Tight Focus on Creativity
Heart-Healthy Food Developer Outsources Manufacturing, Distribution to Target In-House Strength on New Produc

By JOANN S. LUBLIN
PARAMUS, N.J. -- The product-development laboratory at Smart Balance Inc., a food marketer keen to grow through innovation, contains chemical analyzers, lab benches and refrigerated cases. But there are rarely people.

"We don't have legions of white coats," explains Robert S. Gluck, Smart Balance's chief operating officer. Six of its staffers are charged with developing products, but they often work in suppliers' facilities nowhere near its headquarters here.

Smart Balance helps people stay lean with "heart healthy" merchandise, including low-cholesterol spreads, peanut butter, popcorn, cooking oil and milk. The company itself is lean as well, with just 67 employees and scant fixed assets. Its "virtual" business model outsources almost everything else, including manufacturing, product distribution and sales. The unusual approach is attracting attention, especially as recession-battered businesses slow new-product introduction



"We are a pretty aggressive innovator despite the economic downturn," says Chief Executive Steve Hughes. Smart Balance's revenue doubled last year to about $222 million, and the company reported its first quarterly profit in the first quarter. Mr. Hughes thinks revenue can reach $1 billion by 2014, with most of the increase coming from new products. Even then, he expects the company will employ only about 125 people.

Kara Gruver, head of the North American consumer-products practice for consultants Bain & Co. says Smart Balance's model "plays to their strengths," by keeping new-product development and marketing in house, while tapping outsiders for most other functions. (Smart Balance is not a Bain client.) She says more consumer-products companies are looking at outsourcing, as sales lag and capital remains scarce.

Smart Balance spreads were introduced in 1996 by GFA Brands Inc., a small food marketer that crafted a trans-fat-free margarine after licensing a patented blend of natural vegetable oils developed at Brandeis University. The blend raises a consumer's ratio of "good" to "bad" cholesterol. Retail sales grew quickly, spurred by studies showing that trans fats clog arteries and increase the risk of heart disease.

Recipe for Lean Innovation?
Steve Hughes, CEO of Smart Balance Inc., suggests these key ingredients for developing new products with little staff.

Establish a clear vision and long-range blueprint.
Outsource all activities someone else can do better.
Relentlessly commit to continuous improvement.
Develop a strong internal team and external business partnerships.
Create a focused new-product process mixing creativity and practicality.
Invest in building the brand, rather than physical assets.
Messrs. Hughes and Gluck, food-industry veterans, bought GFA Brands for $490 million in May 2007, and later changed the company's name. Their subsequent plunge into peddling milk illustrates their lean innovation method.

Peter L. Dray, executive vice president of product development for the company's operating unit, started tinkering with milk in 2005. He hoped to add Vitamin E and Omega 3 fatty acids, which are said to cut the risk of heart disease, cancer and arthritis.

The problem: Omega 3, which is derived from fish oil, "becomes rancid and tastes fishy very quickly," Mr. Dray says. He previously had solved that problem for Smart Balance peanut butter. But it's more challenging to add Omega 3 to a lower-fat product like milk, he says.

Mr. Dray enlisted help from a Brandeis scientist and a research-and-development consultant. When GFA's new owners made the project a top priority in 2007, Mr. Dray ran tests and trial production runs at a dairy processor. He hired an outside laboratory to assess nutritional claims. Another agency handled consumer taste tests, with some help. "I drank a half gallon every three days," Mr. Dray recalls.

Smart Balance began selling the milk in Florida grocery stores in October 2007. Sales hit $4 million in 2008. The company expanded into the Northeast in January. Mr. Hughes hopes to capture 2% of the nation's $12 billion in annual grocery milk sales by 2011.


"We are a pretty aggressive innovator despite the economic downturn," says Smart Balance Chief Executive Steve Hughes.

Mr. Dray believes the virtual model helps Smart Balance innovate. "There aren't as many roadblocks," he says.

Now, Smart Balance intends to hasten its innovation pace, with a new product or food category every year. Officials say they're eying heart-healthy ice cream, coffee creamers, salad dressing and sour cream.

Mr. Gluck says experienced product developers like Mr. Dray help Smart Balance succeed with a larger share of its innovations than the typical food and beverage business. But he concedes that its small staff means the company can't pursue every potentially good idea. He says he recently nixed marketing colleagues' suggestion for a low-oil snack chip.

"We'd have to compete with Frito-Lay," Mr. Gluck says. "There have been lots of big companies that tried to take them on -- and not very successfully."

Bain's Ms. Gruver says Smart Balance may be rolling out new products too quickly, before existing offerings reach their full potential. "Companies who launch products too quickly are likely not maximizing the profits of the entire portfolio," she says.

Mr. Hughes says the company can boost profits from existing products while adding new ones. Mr. Gluck says Smart Balance will add product-development employees as it grows, including more researchers and quality-control staffers.

Mr. Dray also knows he can tap an extensive network of experts, amassed during 25 years in the food business. "We have a big Rolodex here," he observes.

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