Thank you, Kevin and good morning everyone. With me today are Steve Hughes, our Chairman and CEO and Chris Sacco, our CFO and Treasurer. Earlier this morning, we issued our second quarter earnings release. If you have not seen the press release, its available on the investor center page of our website at www.smartbalance.com.
The company uses the terms cash operating income and net income and earnings per share, excluding non-cash and certain items as a non-GAAP measure. The company believes that these measures better explain its profitability and performance consistent with the way the investor’s and security analyst evaluate our company in a competitive environment in which we operate.
Cash operating income is defined as operating income excluding stock-based compensation expense, depreciation and amortization and acquisition and integration related costs. In addition the company uses the term adjusted EBITDA, when referring to Udi’s as management believes that this measure better explains the acquired company’s profitability and performance consistent with the way the investor and security analysts evaluate the performance in the competitive environment in which we operate.
Adjusted EBITDA is defined as operating income or net income excluding interest, taxes, depreciation amortization and other non-cash and one-time items. The company believes that the exclusion of both non-cash and certain items provide a better reflection of the operating profitability of the company and strongly complement the company’s planning and forecasting models used in providing investor and security analyst with important supplemental information regarding the company’s underlying profitability and operating performance.
Finally, the company uses the term cash EPS which is defined as GAAP EPS plus incremental
amortization of intangibles and depreciation related to the Udi’s transaction.
However, non-GAAP financial measures to be viewed in addition to and not as an alternative for the company’s results prepared in accordance with GAAP. In addition, the non-GAAP measures the company views may differ from the non-GAAP measures used by other companies. We have included in our press release reconciliations of cash operating income to operating income and of net income and EPS excluding non-cash and certain items to net income and EPS in each case as calculated in accordance with GAAP.