# ** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

## **WASHINGTON, D.C.  20549**

 

----

 

### **FORM 10-Q**

 

| **ý**                                                                                                                                                                                                                 | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR  15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934**    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                       |
| **For  the quarterly period ended November 30, 2003**                                                                                                                                                                      |
|                                                                                                                                                                                                                       |
| **o**                                                                                                                                                                                                                      | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR****15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |
|                                                                                                                                                                                                                       |
| **For the transition period  from               to               .** |
|                                                                                                                                                                                                                       |
| **Commission file number:**                                                                                                                                                                                                |
| **001-14608**                                                                                                                                                                                                              |

 

**WEIDERNUTRITION INTERNATIONAL, INC.**

(Exact name of Registrant asspecified in its charter)

 

| **Delaware**                                                    |   | **87-0563574**                        |
|-----------------------------------------------------------------|--------|---------------------------------------|
| (State or other jurisdiction  of incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
|                                                            |   |                                  |
| **2002 South 5070 West  Salt Lake City, Utah**                  |   | **84104-4726**                        |
| (Address of principal executive  offices)                       |   | (Zip Code)                            |
|                                                            |   |                                  |
| Registrant’s telephone number, including area code:        |
| **(801) 975-5000**                                              |

 

Indicate by check mark whetherthe Registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the Registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  Noo

 

Indicate by check mark whetherthe Registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act).  Yes o  No ý

 

Thenumber of shares outstanding of the Registrant’s common stock is 25,944,791 (asof January 1, 2004).

 

 

----

 
| **PART I.** |   | **FINANCIAL INFORMATION** |
|-------------|--------|---------------------------|
| **ITEM 1.** |   | **FINANCIAL STATEMENTS**  |

 

### **WEIDERNUTRITION INTERNATIONAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS**

**(in thousands, exceptshare data)**

 
|                                                                                                                                     |   | **November  30,  2003** |    | **May 31,  2003** |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|-------------------|--------|
|                                                                                                                                     |   | **(unaudited)**         |    |              |   |
| **ASSETS**                                                                                                                               |   |                    |    |              |   |
| Current assets:                                                                                                                          |   |                    |    |              |   |
| Cash and cash equivalents                                                                                                                |   | $                       | 5,001   |              | $      | 3,463 |   |
| Receivables, net                                                                                                                         |   | 33,060                  |    | 27,592            |   |
| Inventories                                                                                                                              |   | 31,767                  |    | 27,543            |   |
| Prepaid expenses and other                                                                                                               |   | 3,695                   |    | 4,312             |   |
| Deferred taxes                                                                                                                           |   | 2,171                   |    | 2,908             |   |
| Assets held for sale                                                                                                                     |   | —                  |    | 5,077             |   |
|                                                                                                                                     |   |                    |    |              |   |
| Total current assets                                                                                                                     |   | 75,694                  |    | 70,895            |   |
|                                                                                                                                     |   |                    |    |              |   |
| Property and equipment, net                                                                                                              |   | 25,642                  |    | 26,676            |   |
|                                                                                                                                     |   |                    |    |              |   |
| Other assets:                                                                                                                            |   |                    |    |              |   |
| Intangible assets, net                                                                                                                   |   | 9,911                   |    | 9,738             |   |
| Deposits and other assets                                                                                                                |   | 5,229                   |    | 5,286             |   |
| Notes receivable, net (Note 5)                                                                                                           |   | 195                     |    | 2,178             |   |
| Assets held for sale                                                                                                                     |   | —                  |    | 469               |   |
|                                                                                                                                     |   |                    |    |              |   |
| Total other assets                                                                                                                       |   | 15,335                  |    | 17,671            |   |
|                                                                                                                                     |   |                    |    |              |   |
| Total assets                                                                                                                             |   | $                       | 116,671 |              | $      | 115,242 |   |
|                                                                                                                                     |   |                    |    |              |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                            |   |                    |    |              |   |
| Current liabilities:                                                                                                                     |   |                    |    |              |   |
| Accounts payable                                                                                                                         |   | $                       | 22,285  |              | $      | 20,096 |   |
| Accrued expenses                                                                                                                         |   | 14,189                  |    | 16,610            |   |
| Current portion of long-term debt                                                                                                        |   | 3,397                   |    | 8,057             |   |
| Income taxes payable                                                                                                                     |   | 100                     |    | 173               |   |
|                                                                                                                                     |   |                    |    |              |   |
| Total current liabilities                                                                                                                |   | 39,971                  |    | 44,936            |   |
|                                                                                                                                     |   |                    |    |              |   |
| Long-term debt                                                                                                                           |   | 2,096                   |    | 659               |   |
|                                                                                                                                     |   |                    |    |              |   |
| Deferred taxes                                                                                                                           |   | 3,472                   |    | 801               |   |
|                                                                                                                                     |   |                    |    |              |   |
| Commitments and contingencies (Note 8)                                                                                                   |   |                    |    |              |   |
|                                                                                                                                     |   |                    |    |              |   |
| Stockholders’ equity:                                                                                                               |   |                    |    |              |   |
| Preferred stock, par value $.01 per share;  shares authorized-10,000,000; no shares issued and outstanding                               |   | —                  |    | —            |   |
| Class A common stock, par value $.01 per  share; shares authorized-50,000,000; shares issued and outstanding-  10,949,678 and 11,916,288 |   | 109                     |    | 119               |   |
| Class B common stock, par value $.01 per  share; shares authorized-25,000,000; shares issued and outstanding-14,973,148                  |   | 150                     |    | 150               |   |
| Additional paid-in capital                                                                                                               |   | 83,277                  |    | 86,943            |   |
| Deferred compensation costs                                                                                                              |   | (749                    | )       | (873              | )      |
| Other accumulated comprehensive loss                                                                                                     |   | (3,975                  | )       | (4,951            | )      |
| Retained deficit                                                                                                                         |   | (7,680                  | )       | (12,542           | )      |
|                                                                                                                                     |   |                    |    |              |   |
| Total stockholders’ equity                                                                                                          |   | 71,132                  |    | 68,846            |   |
|                                                                                                                                     |   |                    |    |              |   |
| Total liabilities and stockholders’ equity                                                                                          |   | $                       | 116,671 |              | $      | 115,242 |   |

 

See notes to condensed consolidated financial statements.

 

2

----

 

##### **WEIDER NUTRITIONINTERNATIONAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

##### **(in thousands, exceptshare data)**

##### **(unaudited)**

 
|                                                             |   | **Three  Months Ended  November 30,** |   |
|------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                             |   | **2003**                              |   | **2002** |   |
|                                                             |   |                                  |   |   |   |
| Net sales                                                        |   | $                                     | 60,760 |   | $ | 58,017 |   |
|                                                             |   |                                  |   |   |   |
| Cost of goods sold                                               |   | 37,672                                |   | 36,148 |   |
|                                                             |   |                                  |   |   |   |
| Gross profit                                                     |   | 23,088                                |   | 21,869 |   |
|                                                             |   |                                  |   |   |   |
| Operating expenses:                                              |   |                                  |   |   |   |
| Selling and marketing                                            |   | 13,663                                |   | 9,504 |   |
| General and administrative                                       |   | 4,248                                 |   | 4,961 |   |
| Research and development                                         |   | 962                                   |   | 966 |   |
| Amortization of intangible assets                                |   | 141                                   |   | 230 |   |
|                                                             |   |                                  |   |   |   |
| Total operating expenses                                         |   | 19,014                                |   | 15,661 |   |
|                                                             |   |                                  |   |   |   |
| Income from operations                                           |   | 4,074                                 |   | 6,208 |   |
|                                                             |   |                                  |   |   |   |
| Other income (expense):                                          |   |                                  |   |   |   |
| Interest income (Note 5)                                         |   | 581                                   |   | 9 |   |
| Interest expense                                                 |   | (309                                  | )      | (793 | ) |
| Write-off of financing fees, including OID  costs                |   | —                                |   | (1,147 | ) |
| Other                                                            |   | (216                                  | )      | (32 | ) |
|                                                             |   |                                  |   |   |   |
| Total other income (expense), net                                |   | 56                                    |   | (1,963 | ) |
|                                                             |   |                                  |   |   |   |
| Income from continuing operations before  income taxes           |   | 4,130                                 |   | 4,245 |   |
| Income tax expense                                               |   | 1,547                                 |   | 1,698 |   |
|                                                             |   |                                  |   |   |   |
| Net income from continuing operations                            |   | 2,583                                 |   | 2,547 |   |
| Income (loss) from discontinued operations,  net of income taxes |   | 83                                    |   | (266 | ) |
|                                                             |   |                                  |   |   |   |
| Net income                                                       |   | $                                     | 2,666  |   | $ | 2,281 |   |
|                                                             |   |                                  |   |   |   |
| Weighted average shares outstanding:                             |   |                                  |   |   |   |
| Basic                                                            |   | 26,085,336                            |   | 26,249,436 |   |
| Diluted                                                          |   | 27,175,959                            |   | 26,301,395 |   |
|                                                             |   |                                  |   |   |   |
| Net income (loss) per share-basic and  diluted:                  |   |                                  |   |   |   |
| Net income from continuing operations                            |   | $                                     | 0.10   |   | $ | 0.10 |   |
| Net loss from discontinued operations                            |   | —                                |   | (0.01 | ) |
|                                                             |   |                                  |   |   |   |
| Net income                                                       |   | $                                     | 0.10   |   | $ | 0.09 |   |
|                                                             |   |                                  |   |   |   |
| Comprehensive income                                             |   | $                                     | 2,807  |   | $ | 2,244 |   |

 

See notes to condensed consolidated financial statements.

##### ** **

3

----

#####  

##### **WEIDER NUTRITIONINTERNATIONAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

##### **(in thousands, exceptshare data)**

##### **(unaudited)**

 
|                                                                            |   | **Six Months  Ended  November 30,** |    |
|---------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                            |   | **2003**                            |    | **2002** |   |
|                                                                            |   |                                |    |   |   |
| Net sales                                                                       |   | $                                   | 124,401 |   | $ | 127,345 |   |
|                                                                            |   |                                |    |   |   |
| Cost of goods sold                                                              |   | 77,020                              |    | 77,363 |   |
|                                                                            |   |                                |    |   |   |
| Gross profit                                                                    |   | 47,381                              |    | 49,982 |   |
|                                                                            |   |                                |    |   |   |
| Operating expenses:                                                             |   |                                |    |   |   |
| Selling and marketing                                                           |   | 28,159                              |    | 21,182 |   |
| General and administrative                                                      |   | 9,632                               |    | 11,188 |   |
| Research and development                                                        |   | 2,176                               |    | 1,839 |   |
| Amortization of intangible assets                                               |   | 283                                 |    | 532 |   |
|                                                                            |   |                                |    |   |   |
| Total operating expenses                                                        |   | 40,250                              |    | 34,741 |   |
|                                                                            |   |                                |    |   |   |
| Income from operations                                                          |   | 7,131                               |    | 15,241 |   |
|                                                                            |   |                                |    |   |   |
| Other income (expense):                                                         |   |                                |    |   |   |
| Interest income (Note 5)                                                        |   | 728                                 |    | 29 |   |
| Interest expense                                                                |   | (642                                | )       | (1,721 | ) |
| Write-off of financing fees, including OID  costs                               |   | —                              |    | (1,147 | ) |
| Other                                                                           |   | (371                                | )       | 275 |   |
|                                                                            |   |                                |    |   |   |
| Total other expense, net                                                        |   | (285                                | )       | (2,564 | ) |
|                                                                            |   |                                |    |   |   |
| Income from continuing operations before  income taxes                          |   | 6,846                               |    | 12,677 |   |
| Income tax expense                                                              |   | 2,633                               |    | 5,071 |   |
|                                                                            |   |                                |    |   |   |
| Net income from continuing operations                                           |   | 4,213                               |    | 7,606 |   |
| Income (loss) from discontinued operations,  net of income taxes                |   | 649                                 |    | (837 | ) |
|                                                                            |   |                                |    |   |   |
| Net income before cumulative effect of  change in accounting principle          |   | 4,862                               |    | 6,769 |   |
|                                                                            |   |                                |    |   |   |
| Cumulative effect of change in accounting  principle, net of income tax benefit |   | —                              |    | (15,392 | ) |
|                                                                            |   |                                |    |   |   |
| Net income (loss)                                                               |   | $                                   | 4,862   |   | $ | (8,623 | ) |
|                                                                            |   |                                |    |   |   |
| Weighted average shares outstanding:                                            |   |                                |    |   |   |
| Basic                                                                           |   | 26,161,169                          |    | 26,249,436 |   |
| Diluted                                                                         |   | 26,960,390                          |    | 26,301,395 |   |
|                                                                            |   |                                |    |   |   |
| Net income (loss) per share-basic and  diluted:                                 |   |                                |    |   |   |
| Net income from continuing operations                                           |   | $                                   | 0.16    |   | $ | 0.29 |   |
| Net income (loss) from discontinued  operations                                 |   | 0.02                                |    | (0.03 | ) |
|                                                                            |   |                                |    |   |   |
| Net income before cumulative effect of  change in accounting principle          |   | 0.18                                |    | 0.26 |   |
| Cumulative effect of change in accounting  principle                            |   | —                              |    | (0.59 | ) |
|                                                                            |   |                                |    |   |   |
| Net income (loss)                                                               |   | $                                   | 0.18    |   | $ | (0.33 | ) |
|                                                                            |   |                                |    |   |   |
| Comprehensive income (loss)                                                     |   | $                                   | 5,838   |   | $ | (8,260 | ) |

 

See notes to condensed consolidated financial statements.

 

4

----

 

**WEIDER NUTRITION INTERNATIONAL, INC. ANDSUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(dollars inthousands)**

**(unaudited)**

 
|                                                                                                |   | **Six Months  Ended  November 30,** |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                |   | **2003**                            |   | **2002** |   |
| Cash flows from operating activities:                                                               |   |                                |   |   |   |
| Net income (loss)                                                                                   |   | $                                   | 4,862  |   | $ | (8,623 | ) |
| Adjustments to reconcile net income (loss)  to net cash provided by (used in) operating activities: |   |                                |   |   |   |
| Provision for (recovery of) bad debts                                                               |   | (1,122                              | )      | 398 |   |
| Deferred taxes                                                                                      |   | 3,408                               |   | (3,554 | ) |
| Depreciation and amortization                                                                       |   | 2,498                               |   | 3,134 |   |
| Interest income on settlement of notes  receivable                                                  |   | (609                                | )      | — |   |
| Asset impairment                                                                                    |   | —                              |   | 23,321 |   |
| Gain on sale of assets held for sale and  property and equipment                                    |   | (1,301                              | )      | — |   |
| Amortization/write-off of financing fees,  including original issue discount costs                  |   | 168                                 |   | 1,691 |   |
| Amortization of deferred compensation costs                                                         |   | 93                                  |   | 77 |   |
| Changes in operating assets and  liabilities:                                                       |   |                                |   |   |   |
| Receivables                                                                                         |   | (5,384                              | )      | 10,484 |   |
| Inventories                                                                                         |   | (4,224                              | )      | (4,712 | ) |
| Prepaid expenses and other                                                                          |   | 617                                 |   | (1,394 | ) |
| Deposits and other assets                                                                           |   | (111                                | )      | (444 | ) |
| Accounts payable                                                                                    |   | 2,189                               |   | (2,076 | ) |
| Other current liabilities                                                                           |   | (2,360                              | )      | (5,098 | ) |
|                                                                                                |   |                                |   |   |   |
| Net cash provided by (used in) operating  activities                                                |   | (1,276                              | )      | 13,204 |   |
|                                                                                                |   |                                |   |   |   |
| Cash flows from investing activities:                                                               |   |                                |   |   |   |
| Purchase of property and equipment                                                                  |   | (773                                | )      | (744 | ) |
| Purchase of intangibles                                                                             |   | (224                                | )      | (186 | ) |
| Proceeds from disposition of assets held  for sale and property and equipment                       |   | 6,898                               |   | 5,400 |   |
| Proceeds from sale of available-for-sale  equity securities                                         |   | —                              |   | 1,002 |   |
| Collection of notes receivable                                                                      |   | 4                                   |   | 123 |   |
|                                                                                                |   |                                |   |   |   |
| Net cash provided by investing activities                                                           |   | 5,905                               |   | 5,595 |   |
|                                                                                                |   |                                |   |   |   |
| Cash flows from financing activities:                                                               |   |                                |   |   |   |
| Issuance of common stock                                                                            |   | 40                                  |   | — |   |
| Net change in revolving line-of-credit                                                              |   | 1,793                               |   | (1,534 | ) |
| Proceeds from debt                                                                                  |   | 2,738                               |   | 3,589 |   |
| Payments on debt                                                                                    |   | (7,949                              | )      | (20,076 | ) |
|                                                                                                |   |                                |   |   |   |
| Net cash used in financing activities                                                               |   | (3,378                              | )      | (18,021 | ) |
|                                                                                                |   |                                |   |   |   |
| Effect of exchange rate changes on cash                                                             |   | 287                                 |   | 172 |   |
|                                                                                                |   |                                |   |   |   |
| Increase in cash and cash equivalents                                                               |   | 1,538                               |   | 950 |   |
|                                                                                                |   |                                |   |   |   |
| Cash and cash equivalents, beginning of  period                                                     |   | 3,463                               |   | 2,412 |   |
|                                                                                                |   |                                |   |   |   |
| Cash and cash equivalents, end of period                                                            |   | $                                   | 5,001  |   | $ | 3,362 |   |

 

See notes to condensed consolidated financial statements.

 

5

----

 

**WEIDER NUTRITIONINTERNATIONAL, INC. AND SUBSIDIARIES**

**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS**

**(in thousands, exceptshare data)**

**(unaudited)**

 

**1.****                                      BASISOF PRESENTATION AND OTHER MATTERS**

 

Theaccompanying unaudited interim condensed consolidated financial statements(“interim financial statements”) do not include all disclosures provided in ourannual consolidated financial statements. These interim financial statements should be read in conjunction withthe consolidated financial statements and the footnotes thereto contained inour Annual Report on Form 10-K for the year ended May 31, 2003 as filed withthe Securities and Exchange Commission. The May 31, 2003 consolidated balance sheet was derived from auditedfinancial statements, but all disclosures required by generally acceptedaccounting principles are not provided in the accompanying footnotes.  We are a majority-owned subsidiary of WeiderHealth and Fitness (“WHF”).

 

In our opinion,the accompanying interim financial statements contain all adjustments (whichare of a normal recurring nature) necessary for a fair presentation of ourfinancial position and results of operations. Certain prior period amounts have been reclassified to conform with thecurrent interim period presentation. The results of operations and cash flows for any interim period are notnecessarily indicative of the results of operations and cash flows that we mayachieve for any other interim period or for the entire year.

 

Effective inour fiscal 2004 first quarter, we sold the assets of our Haleko Venice Beach®sports apparel business to Hucke AG, a German apparel company, for cumulativenet cash proceeds of approximately $6,898. In accordance with Statement of Financial Accounting Standards (“SFAS”)No. 144, the operating results for Venice Beach® are reflected as discontinuedoperations and the associated assets are included in assets held for sale inthe accompanying condensed consolidated financial statements.  We recognized in income from discontinuedoperations an after-tax gain on the sale of approximately $831.  Fiscal 2004 results from discontinuedoperations may subsequently be impacted by certain lease related and/or othercosts, as well as by final settlement of net assets sold in the transaction.

 

EffectiveAugust 16, 2002, we issued 640,000 restricted shares of Class A common stock tocertain officers and employees.  Theaggregate value of the restricted shares was approximately $1,038, which we areexpensing on a straight-line basis over the accompanying five-year vestingperiod.  In August 2003, 13,600 of theserestricted shares were cancelled as a result of the voluntary termination ofcertain employees.

 

Effective July26, 2002, we sold substantially all of the assets and certain associatedliabilities relating to our American Body Building® and Science Foods®brands.  The impact of the sale on thefiscal 2003 first quarter operating results was not significant.

 

Effective June1, 2002, we adopted SFAS No. 142, “Goodwill and Other Intangible Assets”, whichestablishes new accounting and reporting standards for goodwill and otherintangible assets.  (See Note 4 toCondensed Consolidated Financial Statements).

 

6

----

 

We disclosethe effect of SFAS No. 123 “Accounting for Stock-Based Compensation”, on aproforma basis and continue to follow Accounting Principles Board (“APB”)Opinion No. 25 (as permitted by SFAS No. 123) as it relates to stock basedcompensation.

 

Proformainformation regarding net income (loss) and net income (loss) per share isrequired by SFAS No. 123, as amended by SFAS No. 148, and has been determinedas if we had accounted for our employee stock options and previously unvestedperformance units under the fair value method of SFAS No. 123.  For the purposes of proforma disclosure, theestimated fair value of the stock options is amortized to expense over theoptions vesting period.  Our proformanet income (loss) and net income (loss) per share were as follows:

 
|                                              |   | **Three  Months  Ended  November 30,** |   | **Six Months  Ended  November 30,** |   |
|---------------------------------------------------|--------|----------------------------------------|--------|-------------------------------------|--------|
|                                              |   | **2003**                               |   | **2002**                            |   | **2003** |   | **2002** |   |
| Net income (loss), as reported                    |   | $                                      | 2,666  |                                | $      | 2,281 |   | $ | 4,862 |   | $ | (8,623 | ) |
| Net income (loss), proforma                       |   | 2,570                                  |   | 2,266                               |   | 4,722 |   | (8,593 | ) |
| Basic net income (loss) per share, as  reported   |   | 0.10                                   |   | 0.09                                |   | 0.18 |   | (0.33 | ) |
| Diluted net income (loss) per share, as  reported |   | 0.10                                   |   | 0.09                                |   | 0.18 |   | (0.33 | ) |
| Basic net income (loss) per share, proforma       |   | 0.10                                   |   | 0.09                                |   | 0.18 |   | (0.33 | ) |
| Diluted net income (loss) per share,  proforma    |   | 0.09                                   |   | 0.09                                |   | 0.18 |   | (0.33 | ) |
|                                                   |        |                                        |        |                                     |        |  |  |  |  |  |  |  |  |

 

**2.****                                      RECEIVABLES,NET**

 

Receivables,net, consist of the following:

 
|                                                    |   | **November  30,  2003** |   | **May 31,  2003** |   |
|---------------------------------------------------------|--------|-------------------------|--------|-------------------|--------|
|                                                    |   |                    |   |              |   |
| Trade accounts                                          |   | $                       | 38,973 |              | $      | 35,242 |   |
| Other, including income taxes                           |   | 616                     |   | 670               |   |
|                                                    |   |                    |   |              |   |
|                                                    |   | 39,589                  |   | 35,912            |   |
| Less allowance for doubtful accounts and  sales returns |   | (6,529                  | )      | (8,320            | )      |
|                                                    |   |                    |   |              |   |
| Total                                                   |   | $                       | 33,060 |              | $      | 27,592 |   |

 

**3.****                                      INVENTORIES**

** **

Inventoriesconsist of the following:

** **
|            |   | **November  30,  2003** |   | **May 31,  2003** |   |
|-----------------|--------|-------------------------|--------|-------------------|--------|
|            |   |                    |   |              |   |
| Raw materials   |   | $                       | 10,451 |              | $      | 8,487 |   |
| Work in process |   | 3,272                   |   | 1,691             |   |
| Finished goods  |   | 18,044                  |   | 17,365            |   |
|            |   |                    |   |              |   |
| Total           |   | $                       | 31,767 |              | $      | 27,543 |   |

 

7

----

 

**4.****                                      INTANGIBLEASSETS, NET**

 

Intangibleassets, net, consist of the following:

 
|                   |   | **November  30, 2003**      |   | **May 31,  2003**      |   |
|------------------------|--------|-----------------------------|--------|------------------------|--------|
|                   |   | **Gross  Carrying  Amount** |   | **Accumul.  Amortiz.** |   | **Net Book  Value** |   | **Gross  Carrying  Amount** |   | **Accumul.  Amortiz.** |   | **Net Book  Value** |   |
|                   |   |                        |   |                   |   |   |   |   |   |   |   |   |   |
| Patents and trademarks |   | $                           | 10,320 |                   | $      | (4,755 | ) | $ | 5,565 |   | $ | 9,743 |   | $ | (4,351 | ) | $ | 5,392 |   |
| Goodwill               |   | 4,346                       |   | —                 |   | 4,346 |   | 4,346 |   | — |   | 4,346 |   |
|                   |   | $                           | 14,666 |                   | $      | (4,755 | ) | $ | 9,911 |   | $ | 14,089 |   | $ | (4,351 | ) | $ | 9,738 |   |

 

Estimatedamortization expense, assuming no changes in our intangible assets, for each ofthe five succeeding fiscal years, beginning with fiscal 2004, is $564 (2004),$417 (2005), $417 (2006), $395 (2007), and $373 (2008).

 

Upon theimplementation of SFAS No. 142, we tested goodwill for impairment by comparingthe carrying amount, including goodwill, for each of our reporting (business)units at June 1, 2002 to the estimated fair value for each of our reportingunits.  We assessed the fair value ofthe reporting units by evaluating their current and future cash flows incomparison to our overall market capitalization.  Based on this comparison, we concluded that the net book carryingvalue for two of our reporting units, Active Nutrition and Haleko, exceededtheir respective fair values.  For thosetwo reporting units, we then compared the implied fair value of theirrespective goodwill to their respective net book carrying values to determinethe asset impairment amount.  Based onthis comparison, effective June 1, 2002, we recognized an impairment loss of$23,321, or an after-tax charge of $15,392, as a cumulative effect of a changein accounting principle.

 

The changes inthe carrying amount of goodwill, broken down by business unit, for fiscal 2003is as follows:

 
|                     |   | **Schiff®  Specialty** |   | **Active  Nutrition** |   | **Haleko** |   | **Total** |   |
|--------------------------|--------|-----------------------------|--------|-----------------------|--------|------------|--------|-----------|--------|
|                     |   |                        |   |                  |   |       |   |      |   |
| Balance at June 1, 2002  |   | $                           | 4,346  |                  | $      | 1,843      |   | $         | 21,478 |   | $ | 27,667 |   |
| Adoption of SFAS No. 142 |   | —                      |   | (1,843                | )      | (21,478    | )      | (23,321   | )      |
|                     |   |                        |   |                  |   |       |   |      |   |
| Balance at May 31, 2003  |   | $                           | 4,346  |                  | $      | —     |   | $         | — |   | $ | 4,346 |   |

 

The carryingamount of goodwill did not change during the first six months of fiscal 2004.

 

8

----

 

 

**5.****                                      NOTESRECEIVABLE, NET**

 

Notesreceivable (including accrued interest), net, were $195 and $2,178,respectively, at November 30, 2003 and May 31, 2003.  The original notes receivable are recourse,collateralized by debtors’ shares of our Class A common stock and repayablebeginning in June 2002 and ending December 2006.  Certain allowances for, or adjustments to, unrealizable amountsare recognized to adjust the outstanding balances to the underlying collateral valueand/or to consider other factors that may impact the valuation of the notesreceivable.  If shares of our Class Acommon stock are received in lieu of cash payment, a portion of, or the entireamount of outstanding notes receivable, including contractually due interestthereon, is reclassified as treasury stock and/or reflected as a directreduction of capital within stockholders’ equity.

 

In connectionwith collection efforts, we have been pursuing negotiations with the five noteholders who are no longer employed by the company.  During our fiscal 2004 first quarter, we received $68 in cash andacquired and retired 140,434 shares of our Class A common stock valued atapproximately $434 as full payment of principal and interest accrued on notesdue from two note holders.  During ourfiscal 2004 second quarter, we received $31 in cash and acquired and retired826,175 shares of our Class A common stock valued at approximately $3,259 asfull payment of principal and interest accrued on notes due from two additionalnote holders.  We are continuing topursue collection of amounts due from the remaining note holder.

 

The fiscal2004 settlement of outstanding notes receivable resulted in the reduction ofpreviously recognized allowances for unrealizable amounts of $1,069, reflectedas a reduction of general and administrative expense, and recognition ofcontractually due interest income of $675, during the six months ended November30, 2003.  Notes receivable balances arereflected net of aggregate allowances for unrealizable amounts of $54 and$1,304, respectively, at November 30, 2003 and May 31, 2003.

 

**6.****                                      OPERATINGSEGMENTS**

 

Our operationsare organized into three business units. These business units are the Schiff® Specialty Unit, the ActiveNutrition Unit and the Haleko Unit (our primary European subsidiary).  The business units are managedindependently, each with its own sales and marketing resources, and supportedby product research and development, operations and technical services, andadministrative functions.

 

9

----

 

We manufactureand market nutritional products, including a full line of specialtysupplements, vitamins and minerals through our Schiff® Specialty Unit.  Schiff® Specialty Unit products are marketedprimarily in the United States through mass-market distribution channels.  We manufacture and market a variety ofsports nutrition, nutritional bar and weight management products through ourActive Nutrition Unit.  The ActiveNutrition Unit also includes certain Schiff® branded products marketed outsidethe United States.  Active NutritionUnit products are marketed domestically and internationally primarily throughmass market and health club and gym distribution channels.  We also manufacture and market nutritionalproducts, including a full line of sports nutrition supplements, together withcertain other nutraceuticals within our Haleko Unit.  Haleko Unit products are marketed primarily in Europe through massmarket and health club and gym distribution channels.

 

The accountingpolicies of these business units are the same as those described in Note 1 tothe consolidated financial statements in our Annual Report on Form 10-K.  We evaluate the performance of our businessunits based on actual and expected operating results of the respective businessunits.  Certain domestic assets are notallocated to the Schiff® Specialty and Active Nutrition Units.  Accordingly, asset segment information isprovided on a total domestic and non-domestic basis consistent with the mannerin which management evaluates the business.

 

Segment information for the three months ended November 30, 2003 and2002 is summarized as follows:

 
|                       |   | **Net Sales** |       | **Income  (Loss)  From  Operations** |       | **Interest  Expense** |       |
|----------------------------|--------|---------------|------------|--------------------------------------|------------|-----------------------|------------|
| **2003:**                  |   |          | ** ** |                                 | ** ** |                  | ** ** |
| **Schiff® Specialty** |   | **$**         | **35,893** | ** **                           | **$**      | **3,223**             | ** ** | **$** | **201** | ** ** |
| **Active Nutrition**       |   | **9,755**     | ** ** | **(84**                              | **)**      | **21**                | ** ** |
| **Haleko**                 |   | **16,510**    | ** ** | **909**                              | ** ** | **126**               | ** ** |
| **Eliminations**           |   | **(1,398**    | **)**      | **26**                               | ** ** | **(39**               | **)**      |
|                       |   | **$**         | **60,760** |                                 | **$**      | **4,074**             | ** ** | **$** | **309** | ** ** |
|                       |   |          | ** ** |                                 | ** ** |                  | ** ** |
| **2002:**                  |   |          | ** ** |                                 | ** ** |                  | ** ** |
| **Schiff® Specialty** |   | **$**         | **34,530** | ** **                           | **$**      | **5,600**             | ** ** | **$** | **581** | ** ** |
| **Active Nutrition**       |   | **7,595**     | ** ** | **321**                              | ** ** | **66**                | ** ** |
| **Haleko**                 |   | **16,435**    | ** ** | **287**                              | ** ** | **146**               | ** ** |
| **Eliminations**           |   | **(543**      | **)**      | **—**                           | ** ** | **—**            | ** ** |
|                       |   | **$**         | **58,017** |                                 | **$**      | **6,208**             | ** ** | **$** | **793** | ** ** |

 

10

----

 

Segment information for the six months ended November 30, 2003 and 2002is summarized as follows:

 
|                       |   | **Net Sales** |        | **Income  (Loss)  From  Operations** |       | **Interest  Expense** |       |
|----------------------------|--------|---------------|-------------|--------------------------------------|------------|-----------------------|------------|
| **2003:**                  |   |          | ** **  |                                 | ** ** |                  | ** ** |
| **Schiff® Specialty** |   | **$**         | **74,925**  | ** **                           | **$**      | **6,235**             | ** ** | **$** | **402** | ** ** |
| **Active Nutrition**       |   | **19,178**    | ** **  | **(221**                             | **)**      | **41**                | ** ** |
| **Haleko**                 |   | **33,029**    | ** **  | **1,068**                            | ** ** | **256**               | ** ** |
| **Eliminations**           |   | **(2,731**    | **)**       | **49**                               | ** ** | **(57**               | **)**      |
|                       |   | **$**         | **124,401** |                                 | **$**      | **7,131**             | ** ** | **$** | **642** | ** ** |
|                       |   |          | ** **  |                                 | ** ** |                  | ** ** |
| **2002:**                  |   |          | ** **  |                                 | ** ** |                  | ** ** |
| **Schiff® Specialty** |   | **$**         | **75,778**  | ** **                           | **$**      | **13,449**            | ** ** | **$** | **1,267** | ** ** |
| **Active Nutrition**       |   | **19,458**    | ** **  | **1,260**                            | ** ** | **147**               | ** ** |
| **Haleko**                 |   | **33,604**    | ** **  | **532**                              | ** ** | **307**               | ** ** |
| **Eliminations**           |   | **(1,495**    | **)**       | **—**                           | ** ** | **—**            | ** ** |
|                       |   | **$**         | **127,345** |                                 | **$**      | **15,241**            | ** ** | **$** | **1,721** | ** ** |

 

Reconciliationof total assets for domestic and international operations is as follows:

 
|                       |   | **November  30,2003** |    | **May 31,2003** |   |
|----------------------------|--------|-----------------------|---------|-----------------|--------|
| Total domestic assets      |   | $                     | 131,739 |            | $      | 128,420 |   |
| Total international assets |   | 46,129                |    | 49,101          |   |
| Eliminations               |   | (61,197               | )       | (62,279         | )      |
| Total                      |   | $                     | 116,671 |            | $      | 115,242 |   |

 

Capitalexpenditures for domestic and international operations were $325 and $448,respectively, for the six months ended November 30, 2003, and $439 and $305,respectively, for the six months ended November 30, 2002.

 

**7.****                                      SALESTO MAJOR CUSTOMERS**

 

Our twolargest customers combined accounted for approximately 50% and 49%,respectively, of net sales for the six months ended November 30, 2003 and2002.  At both November 30, 2003, andMay 31, 2003, amounts due from these customers represented approximately 39% oftotal trade accounts receivable.

 

**8.****                                      CONTINGENCIES**

 

In October2003, we were named as a defendant in *Rexall v. Weider Nutrition International, Inc. andLeiner Health Products, Inc.*filed in the United States District Courtin the Western District of Wisconsin. The lawsuit alleges that certain of the defendant’s joint care productsinfringe upon a Rexall patent relating to the percentage of excipientscontained in a tablet.  We vigorouslydispute the allegations and are opposing the lawsuit.  Discovery is proceeding.

 

11

----

 

We arecurrently named as a defendant in four lawsuits alleging that consumption ofcertain products containing ephedra that we formerly manufactured and soldcaused injuries and damages to certain individuals.  We dispute the allegations and are opposing the lawsuits.  Our insurance carriers have assumed thedefense of three of the matters.

 

We arecurrently named as a defendant, along with numerous other dietary supplementcompanies, in purported class actions in certain state courts alleging that thedefendants sold androstenedione and other purportedly similar products inviolation of certain statutes and utilized false and misleading claims andadvertising.  We dispute the allegationsand are opposing the lawsuits.

 

We arecurrently named as a defendant in a lawsuit in Florida state court allegingbreach of contract and other claims against us relating to the termination in1999 of an agreement relating to the development and distribution of certainbeverage products.  We dispute theallegations and are opposing the lawsuit.

 

From time totime, we are involved in other claims, legal actions and governmentalproceedings that arise from our business operations.  Although ultimate liability cannot be determined at the presenttime, we believe that liability resulting from these matters, if any, aftertaking into consideration our insurance coverage, will not have a materialadverse effect on our financial statements.

 

**9.****                                      RECENTLYISSUED ACCOUNTING STANDARDS**

 

In June 2002,the FASB issued SFAS No. 146, “Accounting for Costs Associated With Exit orDisposal Activities”, which requires that costs associated with an exit ordisposal activity be recognized when the liability is incurred and nullifiesEITF No. 94-3.  SFAS No. 146 iseffective for any exit or disposal activities occurring after December 31,2002.  The requirements of SFAS No. 146were applied in the accounting treatment for the disposition of Venice Beach®assets.

 

In November2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting andDisclosure Requirements for Guarantees, Including Indirect Guarantees ofIndebtedness to Others” (“FIN No. 45”), which addresses the disclosure to bemade by a guarantor in its interim and annual financial statements about itsobligations under guarantees.  FIN No.45 also requires the guarantor to recognize a liability for the non-contingentcomponent of the guarantee, which is the obligation to stand ready to performin the event that specified triggering events or conditions occur.  The recognition and measurement provisionsof FIN No. 45 are effective for all guarantees entered into or modified afterDecember 31, 2002.  We have not enteredinto any such guarantees and therefore the adoption of this standard did notimpact our consolidated financial statements.

 

12

----

 

In December2002, the FASB issued SFAS No. 148, “Accounting for Stock –Based Compensation –Transition and Disclosure – an amendment of SFAS No. 123”.  SFAS No. 148 amends SFAS No. 123,“Accounting for Stock-Based Compensation”, to require disclosure in the summaryof significant accounting policies of the effects of an entity’s accountingpolicy with respect to stock-based employee compensation on reported net incomeand earnings per share in annual and interim financial statements.  We have adopted the disclosure provisions ofSFAS No. 148.

 

In January2003, the FASB issued Interpretation No. 46, “Consolidation of VariableInterest Entities”, (“FIN No. 46”) an interpretation of ARB No. 51.  FIN No. 46 addresses consolidation bybusiness enterprises of variable interest entities.  FIN No. 46 applies immediately to variable interest entitiescreated after January 31, 2003 and to variable interest entities in which anenterprise obtains an interest after that date.  FIN No. 46 applies in the first year or interim period endingafter December 15, 2003 to variable interest entities in which an enterprise holdsa variable interest that it acquired before February 1, 2003.  We do not have an interest in any variableinterest entity and therefore the adoption of FIN No. 46 did not impact ourconsolidated financial statements.

 

In April 2003,the FASB issued SFAS No. 149, “Amendment of Statement 133 on DerivativeInstruments and Hedging Activities”, which amends and clarifies accounting forderivative instruments, including certain derivative instruments embedded inother contracts, and for hedging activities under SFAS No. 133.  SFAS No. 149 is effective for contractsentered into or modified after June 30, 2003 and for hedging relationshipsdesignated after June 30, 2003.  Theadoption of SFAS No. 149 did not have an impact on our consolidated financialstatements.

 

In May 2003,the FASB issued SFAS No. 150, “Accounting for Certain Financial Instrumentswith Characteristics of both Liability and Equity”, which establishes standardsfor how an issuer classifies and measures certain financial instruments withcharacteristics of both liability and equity in its statement of financialposition.  SFAS No. 150 is effective fornew or modified financial instruments beginning June 1, 2003, and for existinginstruments beginning August 1, 2003. The adoption of SFAS No. 150 did not have an impact on our consolidatedfinancial statements.

 

13

----

 

**ITEM2.****                                   MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

The followingdiscussion and analysis should be read in conjunction with the consolidatedfinancial statements, including the notes thereto, appearing elsewhere in thisQuarterly Report on Form 10-Q.  Wedisclaim any obligation to update any forward-looking statements whether as aresult of new information, future events or otherwise.

 

**General**

 

WeiderNutrition International, Inc. develops, manufactures, markets, distributes andsells branded and private label vitamins, nutritional supplements and sportsnutrition products in the United States and throughout the world.  We offer a broad range of capsules andtablets, powdered drink mixes, ready-to-drink beverages and nutrition barsconsisting of approximately 800 stock keeping units (“SKUs”).  Our portfolio of brands, including Schiff®,Weider®, Tiger’s Milk®, Multipower® and Multaben, are primarily marketedthrough mass market, health food store and health club and gym distributionchannels.  We market our brandednutritional supplement products, both domestically and internationally, in fiveprincipal categories: specialty supplements; vitamins and minerals; sportsnutrition; weight management; and nutrition bars.

 

Effective inour fiscal 2004 first quarter, we sold substantially all of the assets relatingto Haleko’s Germany-based Venice Beach® sports apparel brand.  The transaction included the sale of VeniceBeach® receivables, inventories, intellectual property and certain fixed assetsand the assumption by the purchaser of approximately 47 Venice Beach®employees.  The cumulative net cash proceedsfrom the sale were approximately $6.9 million. In accordance with SFAS No. 144, operating results for Venice Beach® arereflected as discontinued operations for all periods presented.  Fiscal 2004 results from discontinuedoperations may subsequently be impacted by certain lease related and/or othercosts, as well as by final settlement of net assets sold in the transaction.

 

Effective inour fiscal 2004 first quarter, we reclassified the Weider Germany brandedbusiness from our Haleko unit to our Active Nutrition unit.  Accordingly, Weider Germany branded salesare included in Active’s operating results. Haleko continues to provide manufacturing services for the Weider Germanybusiness and therefore also includes the sale (transfer) of these products intheir stand-alone private label operating results.  These inter-business unit sales from Haleko to Active Nutritionare eliminated in the consolidated financial statements.

 

During thefirst six months of fiscal 2004, we entered into settlement agreements withfour former employees relating to certain outstanding notes due to us,including interest accrued thereon.  Asa result of the respective settlement agreements, we received an aggregate of$99,000 in cash, acquired and retired a total of 966,609 shares of our Class Acommon stock, reversed approximately $1.1 million of previously recognizedallowances for unrealizable amounts and recognized approximately $0.7 millionof contractually due interest income.

 

14

----

 

For fiscal2004, our priorities include initiatives to defend our Schiff® Move Free®business against competition, including private label, and ultimately toincrease our market share in the joint care product category.  Accordingly, we expect to continueimplementation of these initiatives for our Schiff® Move Free® business duringfiscal 2004.  While the focus of theseconsiderations is to improve future profitability, no assurance can be giventhat our decisions relating to these initiatives will not adversely effect ourresults of operations or financial condition.

 

Our principalexecutive offices are located at 2002 South 5070 West, Salt Lake City, Utah84104 and our telephone number is (801) 975-5000.

 

**Results of Operations (Unaudited)**

*Three Months Ended November 30, 2003 Comparedto Three Months*

*Ended November 30, 2002*

 

The followingtables show comparative results for continuing operations, by business unit,for the three months ended November 30, 2003 and 2002.  Certain indirect costs, including primarilygeneral and administrative and research and development expenses, are chargedto the business units based on various allocation methodologies (in thousands).

 
|                              |   | **Schiff®  Specialty** |   | **Active  Nutrition** |   | **Haleko** |   | **Other  (1)** |   | **Total** |   |
|-----------------------------------|--------|-----------------------------|--------|-----------------------|--------|------------|--------|----------------|--------|-----------|--------|
| 2003:                             |   |                        |   |                  |   |       |   |           |   |      |   |
| Net sales                         |   | $                           | 35,893 |                  | $      | 9,755      |   | $              | 16,510 |      | $      | (1,398 | ) | $ | 60,760 |   |
| Cost of goods sold                |   | 23,145                      |   | 5,730                 |   | 10,195     |   | (1,398         | )      | 37,672    |   |
| Gross profit                      |   | 12,748                      |   | 4,025                 |   | 6,315      |   | —         |   | 23,088    |   |
| Operating expenses:               |   |                        |   |                  |   |       |   |           |   |      |   |
| Selling and marketing             |   | 6,481                       |   | 3,065                 |   | 4,117      |   | —         |   | 13,663    |   |
| General and administrative        |   | 2,393                       |   | 835                   |   | 1,020      |   | —         |   | 4,248     |   |
| Research and development          |   | 630                         |   | 142                   |   | 190        |   | —         |   | 962       |   |
| Amortization of intangible assets |   | 21                          |   | 67                    |   | 79         |   | (26            | )      | 141       |   |
| Total operating expenses          |   | 9,525                       |   | 4,109                 |   | 5,406      |   | (26            | )      | 19,014    |   |
|                              |   |                        |   |                  |   |       |   |           |   |      |   |
| Income (loss) from operations     |   | $                           | 3,223  |                  | $      | (84        | )      | $              | 909    |      | $      | 26 |   | $ | 4,074 |   |
|                              |   |                        |   |                  |   |       |   |           |   |      |   |
| 2002:                             |   |                        |   |                  |   |       |   |           |   |      |   |
| Net sales                         |   | $                           | 34,530 |                  | $      | 7,595      |   | $              | 16,435 |      | $      | (543 | ) | $ | 58,017 |   |
| Cost of goods sold                |   | 21,374                      |   | 4,323                 |   | 10,994     |   | (543           | )      | 36,148    |   |
| Gross profit                      |   | 13,156                      |   | 3,272                 |   | 5,441      |   | —         |   | 21,869    |   |
| Operating expenses:               |   |                        |   |                  |   |       |   |           |   |      |   |
| Selling and marketing             |   | 4,163                       |   | 2,095                 |   | 3,246      |   | —         |   | 9,504     |   |
| General and administrative        |   | 2,645                       |   | 660                   |   | 1,656      |   | —         |   | 4,961     |   |
| Research and development          |   | 662                         |   | 118                   |   | 186        |   | —         |   | 966       |   |
| Amortization of intangible assets |   | 86                          |   | 78                    |   | 66         |   | —         |   | 230       |   |
| Total operating expenses          |   | 7,556                       |   | 2,951                 |   | 5,154      |   | —         |   | 15,661    |   |
|                              |   |                        |   |                  |   |       |   |           |   |      |   |
| Income from operations            |   | $                           | 5,600  |                  | $      | 321        |   | $              | 287    |      | $      | — |   | $ | 6,208 |   |

 

----

(1) Amounts include inter-business unit sales and expense eliminations.

 

15

----

 

**NetSales.**  Netsales increased approximately 4.7% to $60.8 million for the fiscal 2004 secondquarter, from $58.0 million for the fiscal 2003 second quarter.  Overall, the increase in net sales wasprimarily attributable to the impact of foreign currency exchange rates and anincrease in Schiff® Specialty sales.

 

Schiff® Specialty net sales increased approximately 4.0% to $35.9 millionfor the fiscal 2004 second quarter, from $34.5 million for the fiscal 2003second quarter.  The increase primarilyresulted from increased volume in Schiff® Move Free® and other joint productsales, partially offset by a reduction in private label net sales.  Net sales of Schiff® Move Free® were $12.7million for the fiscal 2004 second quarter, compared to $11.5 million for thefiscal 2003 second quarter.

 

Active Nutrition net sales increased approximately 28.4% to $9.8million for the fiscal 2004 second quarter, from $7.6 million for the fiscal2003 second quarter.  The increase wasprimarily attributable to an increase in international sales due to thereclassification/inclusion of $2.0 million in Weider Germany branded sales (aportion of which is also included in Haleko private label sales beforeinter-business unit eliminations) and the impact of foreign currency exchangerates.  Prior to fiscal 2004, WeiderGermany branded sales were included only in Haleko’s operating results.

 

Haleko net sales, including the significant positive impact of foreigncurrency exchange rates, were relatively constant for the fiscal 2004 secondquarter compared to the fiscal 2003 second quarter.  Net sales volume decreased, excluding foreign currency exchangerates.  Economic conditions in Germanycontinue to decline and may negatively impact operating results in our Halekobusiness unit for the foreseeable future.

 

**GrossProfit.**  Gross profit increased approximately5.6% to $23.1 million for the fiscal 2004 second quarter, from $21.9 millionfor the fiscal 2003 second quarter.  Theincrease primarily resulted from higher margins in our Haleko unit andincreased sales in our Active Nutrition unit. Gross profit, as a percentage of net sales, was 38.0% for the fiscal2004 second quarter, compared to 37.7% for the fiscal 2003 second quarter.  Gross profit percentage decreased in ourSchiff® Specialty and Active Nutrition business units and increased in ourHaleko unit.

 

Schiff® Specialty gross profit decreased approximately 3.1% to $12.7million for the fiscal 2004 second quarter, from $13.2 million for the fiscal2003 second quarter.  Gross profit, as apercentage of net sales, was 35.5% for the fiscal 2004 second quarter, comparedto 38.1% for the fiscal 2003 second quarter. The decrease resulted primarily from reduced margins on private labelsales volumes due to competitive pricing pressures and increased salesincentives due to incremental promotional spending.

 

Active Nutrition gross profit increased approximately 23.0% to $4.0million for the fiscal 2004 second quarter, from $3.3 million for the fiscal2003 second quarter, primarily resulting from an increase in sales.  Gross profit, as a percentage of net sales,was 41.3% for the fiscal 2004 second quarter, compared to 43.1% for the fiscal2003 second quarter.  The decrease wasprimarily attributable to the inclusion of lower margin Weider Germany sales.

 

16

----

 

Haleko gross profit increased approximately 16.1% to $6.3 million forthe fiscal 2004 second quarter, from $5.4 million for the fiscal 2003 secondquarter.  Gross profit, as a percentageof net sales, was 38.2% for the fiscal 2004 second quarter, compared to 33.1%for the fiscal 2003 second quarter.  Theincrease was primarily attributable to higher margins on our branded business,lower sales deductions and a decrease in inventory charges.

 

**OperatingExpenses.**  Operating expenses increasedapproximately 21.4% to $19.0 million for the fiscal 2004 second quarter, from$15.7 million for the fiscal 2003 second quarter.  Operating expenses, as a percentage of net sales, were 31.3% and27.0%, respectively, for the fiscal 2004 and 2003 second quarters.  The increase in operating expenses, as apercentage of net sales, was primarily attributable to increases in selling andmarketing costs in support of our brand building initiatives for all businessunits, particularly relating to our Schiff® Move Free® product.  The increase was partially offset by thefiscal 2004 second quarter recovery of approximately $.5 million in notesreceivable valuation allowances.

 

Selling and marketing expenses, including sales, marketing,advertising, freight and other costs, were $13.7 million for the fiscal 2004second quarter, compared to $9.5 million for the fiscal 2003 secondquarter.  The increase in selling andmarketing expenses resulted primarily from incremental transition and marketingcosts associated with our long-term Move Free® strategy, and increased sellingand marketing in support of new products in our Schiff® Specialty and ActiveNutrition business units.  Incrementalmarketing costs for our Move Free® business includes an increase in nationaladvertising costs of approximately $1.5 million.

 

General and administrative expenses decreased to $4.2 million for thefiscal 2004 second quarter, from $5.0 million for the fiscal 2003 secondquarter, primarily resulting from the fiscal 2004 recovery of previouslyrecognized notes receivable valuation allowances mentioned above.

 

Research and development costs remained constant at approximately $1.0million for the fiscal 2004 and 2003 second quarters.

 

**OtherIncome/Expense. **Otherincome/expense, net, was $0.1 million income for the fiscal 2004 secondquarter, compared to $2.0 million expense for the fiscal 2003 secondquarter.  Effective in our fiscal 2004second quarter, we settled certain additional outstanding notes receivableprimarily through reacquiring 826,175 shares of our outstanding Class A commonstock.  As a result of these settlementtransactions, we recognized approximately $.6 million in previouslyunrecognized interest income on the notes receivable.  In November 2002, we paid off $5.0 million in remainingsubordinated debt with borrowings available from our senior bank creditfacility, which resulted in an approximate $1.1 million write-off of previouslycapitalized financing fees.

 

**Provisionfor Income Taxes. **Provisionfor income taxes was a $1.5 million expense for the fiscal 2004 second quarter,compared to a $1.7 million expense for the fiscal 2003 second quarter.  The change resulted primarily from a modestreduction in our effective tax rate due to a decrease in recognized valuationallowances.

 

17

----

 

**Results of Operations(Unaudited)**

*Six Months EndedNovember 30, 2003 Compared to Six Months*

*Ended November 30,2002*

 

The following tables show comparative results for continuingoperations, by business unit, for the six months ended November 30, 2003 and2002.  Certain indirect costs, includingprimarily general and administrative and research and development expenses, arecharged to the business units based on various allocation methodologies (inthousands).

 
|                              |   | **Schiff®  Specialty** |   | **Active  Nutrition** |   | **Haleko** |   | **Other********(1)** |   | **Total** |   |
|-----------------------------------|--------|-----------------------------|--------|-----------------------|--------|------------|--------|----------------------|--------|-----------|--------|
| 2003:                             |   |                        |   |                  |   |       |   |                 |   |      |   |
| Net sales                         |   | $                           | 74,925 |                  | $      | 19,178     |   | $                    | 33,029 |      | $      | (2,731 | ) | $ | 124,401 |   |
| Cost of goods sold                |   | 48,466                      |   | 11,053                |   | 20,232     |   | (2,731               | )      | 77,020    |   |
| Gross profit                      |   | 26,459                      |   | 8,125                 |   | 12,797     |   | —               |   | 47,381    |   |
| Operating expenses:               |   |                        |   |                  |   |       |   |                 |   |      |   |
| Selling and marketing             |   | 13,367                      |   | 6,131                 |   | 8,661      |   | —               |   | 28,159    |   |
| General and administrative        |   | 5,332                       |   | 1,761                 |   | 2,539      |   | —               |   | 9,632     |   |
| Research and development          |   | 1,483                       |   | 319                   |   | 374        |   | —               |   | 2,176     |   |
| Amortization of intangible assets |   | 42                          |   | 135                   |   | 155        |   | (49                  | )      | 283       |   |
| Total operating expenses          |   | 20,224                      |   | 8,346                 |   | 11,729     |   | (49                  | )      | 40,250    |   |
|                              |   |                        |   |                  |   |       |   |                 |   |      |   |
| Income (loss) from operations     |   | $                           | 6,235  |                  | $      | (221       | )      | $                    | 1,068  |      | $      | 49 |   | $ | 7,131 |   |
|                              |   |                        |   |                  |   |       |   |                 |   |      |   |
| 2002:                             |   |                        |   |                  |   |       |   |                 |   |      |   |
| Net sales                         |   | $                           | 75,778 |                  | $      | 19,458     |   | $                    | 33,604 |      | $      | (1,495 | ) | $ | 127,345 |   |
| Cost of goods sold                |   | 46,325                      |   | 11,160                |   | 21,373     |   | (1,495               | )      | 77,363    |   |
| Gross profit                      |   | 29,453                      |   | 8,298                 |   | 12,231     |   | —               |   | 49,982    |   |
| Operating expenses:               |   |                        |   |                  |   |       |   |                 |   |      |   |
| Selling and marketing             |   | 8,672                       |   | 4,885                 |   | 7,625      |   | —               |   | 21,182    |   |
| General and administrative        |   | 5,878                       |   | 1,667                 |   | 3,643      |   | —               |   | 11,188    |   |
| Research and development          |   | 1,287                       |   | 253                   |   | 299        |   | —               |   | 1,839     |   |
| Amortization of intangible assets |   | 167                         |   | 233                   |   | 132        |   | —               |   | 532       |   |
| Total operating expenses          |   | 16,004                      |   | 7,038                 |   | 11,699     |   | —               |   | 34,741    |   |
|                              |   |                        |   |                  |   |       |   |                 |   |      |   |
| Income from operations            |   | $                           | 13,449 |                  | $      | 1,260      |   | $                    | 532    |      | $      | — |   | $ | 15,241 |   |

 

----

(1) Amounts include inter-business unit sales andexpense eliminations.

 

**NetSales.**  Netsales decreased approximately 2.3% to $124.4 million for the six months endedNovember 30, 2003, from $127.3 million for the six months ended November 30,2002.  Overall, the decrease in netsales was primarily attributable to the fiscal 2003 first quarter sale of ourAmerican Body Building and Science Foods brands.  Fiscal 2003 net sales of American Body BuildingTM andScience Foods® branded products, prior to divestiture, were $3.1 million.

 

Schiff® Specialty net sales decreased approximately 1.1% to $74.9million for the six months ended November 30, 2003, from $75.8 million for thesix months ended November 30, 2002.  Thedecrease primarily resulted from reductions in private label net sales,partially offset by increases in Schiff® Move Free® and other joint productsales.  Private label net sales were$25.0 million for the six months ended November 30, 2003, compared to $26.9million for the six months ended November 30, 2002.  The decrease was primarily attributable to customer orderingpatterns and competitive pricing pressures. Net sales of Schiff® Move Free® were 

 

18

----

 

30.8 million for the six monthsended November 30, 2003, compared to $30.2 million for the six months endedNovember 30, 2002.

 

Active Nutrition net sales decreased approximately 1.4% to $19.2million for the six months ended November 30, 2003, from $19.5 million for sixmonths ended November 30, 2002.  Thedecrease was primarily attributable to the sale of our American Body Building®and Science Foods® brands, partially offset by the reclassification/inclusionof $3.7 million in Weider Germany branded sales (a portion of which is alsoincluded in Haleko private label sales before inter-business uniteliminations.)  Prior to fiscal 2004,Weider Germany branded sales were included only in Haleko’s operating results).

 

Haleko net sales decreased approximately 1.7% to $33.0 million for thesix months ended November 30, 2003, from $33.6 million for the six months endedNovember 30, 2002.  The decreaseprimarily resulted from a decline in Multaben and private label sales volumepartially offset by the impact of foreign currency exchange rates.

 

**GrossProfit. **Grossprofit decreased approximately 5.2% to $47.4 million for the six months endedNovember 30, 2003, from $50.0 million for the six months ended November 30,2002.  The decrease primarily resultedfrom a decrease in sales, including reduced margins on Schiff® Specialtyprivate label revenues.  Gross profit,as a percentage of net sales, was 38.1% for the six months ended November 30,2003, compared to 39.2% for the six months ended November 30, 2002.

 

Schiff® Specialty gross profit decreased approximately 10.2% to $26.5million for the six months ended November 30, 2003, from $29.5 million for thesix months ended November 30, 2002. Gross profit, as a percentage of net sales, was 35.3% for the six monthsended November 30, 2003, compared to 38.9% for the six months ended November30, 2002.  The decrease resultedprimarily from reduced margins on private label sales volumes due tocompetitive pricing pressures and increased sales incentives due to incrementalpromotional spending.

 

Active Nutrition gross profit decreased approximately 2.1% to $8.1million for the six months ended November 30, 2003, from $8.3 million for thesix months ended November 30, 2002, primarily resulting from a decrease in sales.  Gross profit, as a percentage of net sales,remained relatively constant at 42.4% and 42.6%, respectively, for the sixmonths ended November 30, 2003 and 2002.

 

Haleko gross profit increased approximately 4.6% to $12.8 million forthe six months ended November 30, 2003, from $12.2 million for the six monthsended November 30, 2002.  Gross profit,as a percentage of net sales, was 38.7% for the six months ended November 30,2003, compared to 36.4% for the six months ended November 30, 2002.  The increase was primarily attributable tohigher margins on our branded business, lower sales deductions and a decreasein inventory charges.

 

**OperatingExpenses. **Operatingexpenses increased approximately 15.9% to $40.3 million for the six monthsended November 30, 2003, from $34.7 million for the six months ended November30, 2002.  Operating expenses, as apercentage of net sales, were 32.4% and 27.3%, respectively, for the fiscal2004 and 2003 six month period.  Theincrease in operating expenses, as a percentage of net sales, was primarilyattributable to increases in selling and marketing costs in support of ourbrand building initiatives for all business units, particularly relating to ourSchiff® Move Free joint product category. The increase was partially offset by 

 

19

----

 

the fiscal 2004 recovery ofapproximately $1.1 million of previously recognized notes receivable valuationallowances.

 

Selling and marketing expenses, including sales, marketing,advertising, freight and other costs, were $28.2 million for the six monthsended November 30, 2003, compared to $21.2 million for the six months endedNovember 30, 2002.  The increase inselling and marketing expenses resulted primarily from incremental transitionand marketing costs associated with our long-term Move Free® strategy, andincreased selling and marketing in support of new products in our Schiff®Specialty and Active Nutrition business units. Incremental marketing costs for our Move Free® business includes anincrease in national advertising costs of approximately $2.8 million.

 

General and administrative expenses decreased to $9.6 million for thesix months ended November 30, 2003, from $11.2 million for the six months endedNovember 30, 2002, primarily resulting from the fiscal 2004 recovery of notesreceivable valuation allowances mentioned above and Haleko infrastructureefficiencies.

 

Research and development costs were $2.2 million for the six monthsended November 30, 2003, compared to $1.8 million for the six months endedNovember 30, 2002, primarily resulting from an increase in contracted productresearch costs.

 

**OtherExpense. **Otherexpense, net, was $0.3 million for the six months ended November 30, 2003,compared to $2.6 million for the six months ended November 30, 2002.  During the first six months of fiscal 2004,we settled certain outstanding notes receivable primarily through reacquiring966,609 shares of our outstanding Class A common stock.  As a result of these settlementtransactions, we recognized approximately $.7 million in previouslyunrecognized interest income on the notes receivable.  We also recognized less interest expense due to a reduction intotal indebtedness for the six months ended November 30, 2003.  In November 2002, we paid off $5.0million in remaining subordinated debt with borrowings available from oursenior bank credit facility, which resulted in an approximate $1.1 millionwrite-off of previously capitalized financing fees.  We also recognized approximately $0.3 million in income on thesale of certain held-for-sale equity securities during the six months endedNovember 30, 2002.

 

**Provisionfor Income Taxes. **Provisionfor income taxes was a $2.6 million expense for the six months endedNovember 30, 2003, compared to a $5.1 million expense the six monthsended November 30, 2002.  The changeresulted primarily from the decrease in pre-tax earnings, and a modestreduction in our effective tax rate due to a decrease in recognized valuationallowances.

 

**Liquidityand Capital Resources**

 

Working capital increased $9.7 million toapproximately $35.7 million at November 30, 2003, from $26.0 million atMay 31, 2003.  The increase inworking capital resulted primarily from an increase in receivables andinventories, partially offset by the sale of our Venice Beach®  sports apparel business.  The increase in net receivables resultedprimarily from higher sales in the fiscal 2004 second quarter, as compared tothe fiscal 2003 fourth quarter.  Theincrease in inventories was primarily due to increased promotional activity andan overall increase in joint category inventory items primarily in support ofour Schiff®  Move Free® initiative.

 

20

----

 

We are party to a senior credit facility (the “Credit Facility”) withBankers Trust Company, effective June 30, 2000, on behalf of our domesticsubsidiaries.  The Credit Facility, assubsequently amended, is comprised of a $45.0 million revolving loan.  Under the revolving loan,  we may borrow up to the lesser of $45.0million or the sum of (i) 85% of eligible accounts receivable and (ii) thelesser of $22.5 million or 65% of the eligible inventory.  The Credit Facility contains customary termsand conditions, including, among others, financial covenants regarding minimumcash flows and limitations on indebtedness and our ability to pay dividendsunder certain circumstances.  Ourobligations under the Credit Facility are secured by a first priority lien on allowned or acquired tangible and intangible assets of our domesticsubsidiaries.  The Credit Facility,which expires in March 2005, is being used to fund our normal working capitaland capital expenditure requirements. At November 30, 2003, amounts outstanding under the Credit Facility wereapproximately $1.8 million and available revolving loan funds wereapproximately $22.8 million.

 

Our domestic operations were also supported by a subordinated loan (the“Subordinated Loan”) obtained in conjunction with the Credit Facility.  Effective May 31, 2002, we used fundsavailable under our revolving loan to pay down $5.0 million of the SubordinatedLoan.  Effective November 27, 2002, weused funds available under our revolving loan to pay-off the remaining $5.0million of the Subordinated Loan.

 

Our European working capital needs (primarily our Haleko business unit)are supported by a Germany-based secured credit facility (the “HalekoFacility”) that is subject to annual renewal in June.  Our obligations under the Haleko Facility are secured by a firstpriority lien on substantially all Haleko tangible and intangible assets.  During June 2003, we renewed the HalekoFacility with Deutsche Bank AG in the approximate amount of $11.6 million (atrecent exchange rate).  Net proceedsfrom the sale of our Venice Beach® sports apparel business were used to repay aportion of our outstanding indebtedness under the Haleko Facility.  At

November 30, 2003, there were no amounts outstanding under the Halekofacility and available revolving loan funds were approximately $11.6 million.

 

We believe that our cash, cash flows from operations and the financingsources discussed above will be sufficient to meet our normal cash operatingrequirements during the next twelve months. However, we continue to review opportunities to acquire or invest incompanies, product rights and other investments that are compatible with ourexisting business.  We could use cashand financing sources discussed herein, or financing sources that subsequentlybecome available, to fund additional acquisitions or investments.  In addition, we may consider issuingadditional debt or equity securities in the future to fund potentialacquisitions or growth, or to refinance existing debt.  If a material acquisition or investment iscompleted, our operating results and financial condition could changematerially in future periods.  However,no assurance can be given that additional funds will be available onsatisfactory terms, or at all, to fund such activities.

 

21

----

 

A summary ofour outstanding long-term debt and operating lease contractual obligations atNovember 30, 2003 is as follows (in thousands):

 
| **Contractual  Cash Obligations** |   | **Total  Amounts  Committed** |   | **Less than  1 Year** |   | **1-3 Years** |   | **4-5 Years** |   | **After  5 Years** |   |
|-----------------------------------|--------|-------------------------------|--------|-----------------------|--------|---------------|--------|---------------|--------|--------------------|--------|
|                              |   |                          |   |                  |   |          |   |          |   |               |   |
| Long-term debt                    |   | $                             | 5,493  |                  | $      | 3,397         |   | $             | 2,096  |               | $      | — |   | $ | — |   |
| Operating leases                  |   | 25,821                        |   | 3,950                 |   | 5,871         |   | 5,663         |   | 10,337             |   |
|                              |   |                          |   |                  |   |          |   |          |   |               |   |
| Total obligations                 |   | $                             | 31,314 |                  | $      | 7,347         |   | $             | 7,967  |               | $      | 5,663 |   | $ | 10,337 |   |

 

## **Critical Accounting Policies and Estimates**

 

In preparingour consolidated financial statements, we make assumptions, estimates andjudgments that affect the amounts reported. We periodically evaluate our estimates and judgments related tovaluation of inventories, allowances for doubtful accounts, notes receivableand sales returns, valuation of deferred tax assets and recoverability oflong-lived assets.  Note 1 to theconsolidated financial statements contained in our Annual Report on Form 10-Kfor the year ended May 31, 2003, filed with the Securities Exchange Commission,describes the accounting policies governing each of these matters.  Our estimates are based on historicalexperience and on our future expectations that are believed to bereasonable.  The combination of thesefactors forms the basis for making judgments about the carrying values ofassets and liabilities that are not readily apparent from other sources.  Actual results are likely to differ from ourcurrent estimates and those differences may be material.

 

We believe the following critical accounting policies affect our moresignificant estimates and judgements used in preparation of our consolidatedfinancial statements:

 

•                  We provide aninventory reserve for estimated obsolescence or unmarketable inventory equal tothe difference between the cost of inventory and the estimated market valuebased upon assumptions about future demand and market conditions.  If actual market conditions are lessfavorable than those projected by management, additional inventory write-downswould be required.

 

•                  We maintainallowances for doubtful accounts, notes receivable and sales returns forestimated losses resulting from known customer exposures, including productreturns and inability to make payments. We also consider collateral values and other factors in evaluatingcollectibility of notes receivable. Actual results may differ, resulting in adjustment of the respectiveallowance(s).

 

•                  We currentlyhave deferred tax assets resulting from certain loss carryforwards and othertemporary differences between financial and income tax reporting.  These deferred tax assets are subject toperiodic recoverability assessments. The realization of these deferred tax assets is primarily dependent onfuture operating results.  To the extentwe are uncertain whether future operations will generate sufficient profit toutilize the loss carryforwards, valuation allowances are established.

 

22

----

 

•                  We havesignificant intangible assets, including trademarks, patents and goodwill.  The determination of related estimateduseful lives and whether or not these assets are impaired involves significantjudgments.  Changes in strategy ormarket conditions could significantly impact these judgments and requireadjustments to recorded asset balances.

 

**Impact of Inflation**

 

Historically, we have been able to pass inflationary increases for rawmaterials and other costs onto our customers through price increases and weanticipate that we will be able to continue to do so in the future.

 

**Seasonality**

 

Our business can be seasonal, with fluctuations in sales resulting fromtiming of marketing and promotional activities, customer buying patterns andconsumer spending patterns.  Inaddition, as a result of changes in product sales mix and other factors, asdiscussed above, we experience fluctuations in gross profit and operatingmargins on a quarter-to-quarter basis.

 

**Forward LookingStatements**

 

Investors are cautioned that, except for the historical information containedherein, the matters discussed in this Quarterly Report contain forward-lookingstatements within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, as amended,that are based on management’s beliefs and assumptions, current expectations,estimates, and projections.  Statementsthat are not historical facts, including without limitation statements whichare preceded by, followed by or include the words “believes,” “anticipates,”“plans,” “expects,” “estimates,” “may,” “should” or similar expressions areforward-looking statements.  Thesestatements are subject to risks and uncertainties, certain of which are beyondour control, and, therefore, actual results may differ materially.

 

Important factors that may cause these forward looking statements to befalse include, but are not limited to:

 

•                  theinability to successfully and cost effectively implement initiatives to ourSchiff® Move Free® business against the competition;

•                  theinability to achieve cost savings and operational efficiencies;

•                  theinability to increase operating margins and increase revenues;

•                  dependenceon individual products and customers;

•                  theinability to successfully restructure the Haleko business unit and make itprofitable;

•                  theimpact of competitive products and pricing (including private label);

•                  marketand industry conditions, including pricing, demand for products, level of tradeinventories and raw materials availability and pricing;

•                  thesuccess of product development and new product introductions into themarketplace;

•                  changesin laws and regulations, including recently proposed FDA regulations regardinggood manufacturing practices;

•                  litigationand government regulatory action;

•                  lackof available product liability insurance for products containing ephedra;

 

23

----

 

•                  adversepublicity regarding the consumption of nutritional supplements;

•                  changesin accounting standards; and

•                  otherfactors indicated from time to time in our SEC reports, copies of which areavailable upon request from our investor relations department or may beobtained at the SEC’s website (www.sec.gov).

 

## **ITEM 3**.                                                     QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The followingdiscussion involves forward-looking statements of market risk which assume foranalytical purposes that certain adverse market conditions may occur.  Actual future market conditions may differmaterially from such assumptions. Accordingly, the forward-looking statements should not be considered ourprojections of future events or losses.

 

Our cash flowsand net earnings (losses) are subject to fluctuations resulting from changes ininterest rates and foreign exchange rates. We currently are party to one modest derivative instrument.  Our current policy does not allowspeculation in derivative instruments for profit or execution of derivativeinstrument contracts for which there are no underlying exposure.  We do not use financial instruments for tradingpurposes.

 

We measuremarket risk, related to our holdings of financial instruments, based on changesin interest rates utilizing a sensitivity analysis.  We do not believe that a hypothetical 10% change in interestrates would have a material effect on our pretax earnings or cash flows.

 

**ITEM 4.****                                                     CONTROLSAND PROCEDURES**

 

We maintain disclosure controls and procedures that are designed toensure that information required to be disclosed in our Exchange Act reports isrecorded, processed, summarized and reported within the time periods specifiedin the Securities and Exchange Commission’s rules and forms and that suchinformation is accumulated and communicated to our management, including ourChief Executive Officer and Chief Financial Officer, as appropriate, to allowfor timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls andprocedures, we recognize that any controls and procedures, no matter how welldesigned and operated, can provide only reasonable assurance of achieving thedesired control objectives, and we are required to apply our judgment inevaluating the cost-benefit relationship of possible controls and procedures.

 

As required by SEC Rule 13a-15(b), we carried out an evaluation, underthe supervision and with the participation of management, including our ChiefExecutive Officer and Chief Financial Officer, of the effectiveness of thedesign and operation of the Company’s disclosure controls and procedures as ofthe end of the quarter covered by this report. Based on the foregoing, the Chief Executive Officer and Chief FinancialOfficer have concluded that the Company’s disclosure controls and procedureswere effective at the reasonable assurance level.

 

There has been no change in our internal controls over financialreporting during our most recent fiscal quarter that has materially affected,or is reasonably likely to materially affect, our internal controls overfinancial reporting.

 

24

----

 

**PARTII.****                                   OTHERINFORMATION**

 

**Item 1.  Legal Proceedings.**

 

The information set forth in Note 8 to Condensed Consolidated FinancialStatements in Item 1 of this Quarterly Report on Form 10-Q is incorporatedherein by reference.

 

**Item 2.  Changes in Securities.**

 

Not applicable.

 

**Item 3.  Defaults Upon Senior Securities.**

 

Not applicable.

 

**Item 4.  Submission of Matters to a Vote of SecurityHolders.**

 

Our Annual Meeting of Shareholders was held on October 28, 2003 for thefollowing purpose:

 

Proposal: Electionof our Board of Directors.

 
|               |   | **For**     |   | **Withheld  Authority** |   |
|--------------------|--------|-------------|--------|-------------------------|--------|
| Eric Weider        |   | 158,765,472 |   | 84,874                  |   |
| George F. Lengvari |   | 158,811,127 |   | 39,219                  |   |
| Bruce J. Wood      |   | 158,745,972 |   | 104,374                 |   |
| Ronald L. Corey    |   | 158,720,711 |   | 129,635                 |   |
| David J. Gustin    |   | 158,746,311 |   | 104,035                 |   |
| Roger H. Kimmel    |   | 158,810,588 |   | 39,758                  |   |
| Brian P. McDermott |   | 158,720,372 |   | 129,974                 |   |
| H. F. Powell       |   | 158,720,472 |   | 129,874                 |   |

 

**Item 5.****           OtherInformation.**

 

Not applicable.

## ** **

## **Item 6.**           Exhibits andReports on Form 8-K

 

(a)                                  Exhibits

 

31.1                           Certification of Chief ExecutiveOfficer pursuant to Section 302 of the Sarbanes-Oxley Act

31.2                           Certification of ChiefFinancial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

32.1                           Certification of ChiefExecutive Officer and Chief Financial Officer pursuant to Section 906 of theSarbanes-Oxley Act

 

(b)                                 Reportson Form 8-K

 

On September 25,  2003, we fileda report on Form 8-K with the commission regarding our fiscal 2004 firstquarter press release.

 

25

----

 

**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 
|   | **WEIDER NUTRITION  INTERNATIONAL, INC.** |
|--------|-------------------------------------------|
|   |
|   |
| Date:  | January 14, 2004                          | By: /s/ | Bruce J. Wood |   |
|   |                                      |   | Bruce J. Wood |   |
|   |                                      |   | President, Chief Executive |   |
|   |                                      |   | Officer and Director |   |
|   |                                      |   |   |
| Date:  | January 14, 2004                          | By: /s/ | Joseph W. Baty |   |
|   |                                      |   | Joseph W. Baty |   |
|   |                                      |   | Executive Vice President and |   |
|   |                                      |   | Chief Financial Officer |   |
|        |                                           |  |  |  |  |

 

----