Table
      of Contents


**UNITED
      STATES**


**SECURITIES
      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 August 31, 2006****q**
            **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**








**SCHIFF
      NUTRITION INTERNATIONAL, INC.**


(Exact
      name of registrant as specified 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)





**(801)
      975-5000**


(Registrant’s
      telephone number, including area code)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for 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 No q




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.




Large
      Accelerated Filer q  Accelerated
      Filer q  Non-Accelerated
      Filer ý




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes q No ý




As
      of October 12, 2006 the registrant had outstanding 11,599,250 shares of Class
      A
      common stock and 14,973,148 shares of Class B common stock.







1


Table of
      Contents




PART
      I. FINANCIAL INFORMATION




**ITEM
              1.**
            **FINANCIAL
                STATEMENTS**





**SCHIFF
      NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(in
      thousands, except share data)**





August
                31, 2006
            
            May
                31,
              2006(unaudited)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            22,151
            
            $
            24,899Available-for-sale
                securities
            
            
            43,568
            
            
            40,120Receivables,
                net
            
            
            22,490
            
            
            20,431Inventories
            
            
            24,491
            
            
            23,515Prepaid
                expenses and other
            
            
            908
            
            
            2,444Deferred
                taxes, net
            
            
            2,188
            
            
            2,419Total
                current assets
            
            
            115,796
            
            
            113,828Property
                and equipment, net
            
            
            13,819
            
            
            13,287Other
                assets:Goodwill
            
            
            4,346
            
            
            4,346Deposits
                and other assets
            
            
            279
            
            
            154Total
                other assets
            
            
            4,625
            
            
            4,500Total
                assets
            
            $
            134,240
            
            $
            131,615**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            8,558
            
            $
            10,547Accrued
                expenses
            
            
            11,002
            
            
            11,472Income
                taxes payable
            
            
            2,548
            
            
            1,293Total
                current liabilities
            
            
            22,108
            
            
            23,312Deferred
                taxes, net
            
            
            503
            
            
            796Commitments
                and contingencies (Note 8)Stockholders'
                equity:Preferred
                stock, par value $.01 per share; sharesauthorized-10,000,000;
                no shares issued and outstanding
            
            
            —
            
            
            —Class
                A common stock, par value $.01 per share; sharesauthorized-50,000,000;
                shares issued and outstanding-11,595,250 and
                11,606,193
            
            
            116
            
            
            116Class
                B common stock, par value $.01 per share; shares authorized-25,000,000;
                shares issued and outstanding-14,973,148
            
            
            150
            
            
            150Additional
                paid-in capital
            
            
            89,347
            
            
            88,488Retained
                earnings
            
            
            22,016
            
            
            18,753Total
                stockholders' equity
            
            
            111,629
            
            
            107,507Total
                liabilities and stockholders' equity
            
            $
            134,240
            
            $
            131,615





See
      notes to condensed consolidated financial statements.





2


Table of
      Contents




**SCHIFF
      NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF
      INCOME**


******(in
      thousands, except share data)**


**(unaudited)**


Three
                  Months Ended
                August
                  31,2006
              
              2005Net
                  sales
              
              $
              45,652
              
              $
              48,017Cost
                  of goods sold
              
              
              28,536
              
              
              35,308Gross
                  profit
              
              
              17,116
              
              
              12,709Operating
                  expenses:Selling
                  and marketing
              
              
              8,289
              
              
              6,016General
                  and administrative
              
              
              3,699
              
              
              3,562Research
                  and development
              
              
              816
              
              
              728Amortization
                  of intangible assets
              
              
              —
              
              
              6Reimbursement
                  of import costs
              
              
              (20
              )
              
              (1,380
              )Total
                  operating expenses
              
              
              12,784
              
              
              8,932Income
                  from operations
              
              
              4,332
              
              
              3,777Other
                  income (expense):Interest
                  income
              
              
              743
              
              
              375Interest
                  expense
              
              
              (58
              )
              
              (38
              )Foreign
                  currency translation gain
              
              
              —
              
              
              1,612Total
                  other income, net
              
              
              685
              
              
              1,949Income
                  from continuing operations before income taxes
              
              
              5,017
              
              
              5,726Income
                  tax expense
              
              
              1,754
              
              
              734Income
                  from continuing operations
              
              
              3,263
              
              
              4,992Loss
                  from discontinued operations, net of income taxes
              
              
              —
              
              
              (57
              )Net
                  income
              
              $
              3,263
              
              $
              4,935Weighted
                  average shares outstanding:Basic
              
              
              26,482,198
              
              
              26,108,622Diluted
              
              
              27,314,718
              
              
              26,774,452Net
                  income per share-basic:Income
                  from continuing operations
              
              $
              0.12
              
              $
              0.19Loss
                  from discontinued operations
              
              
              —
              
              
              —Net
                  income
              
              $
              0.12
              
              $
              0.19Net
                  income per share-diluted:Income
                  from continuing operations
              
              $
              0.12
              
              $
              0.19Loss
                  from discontinued operations
              
              
              —
              
              
              (0.01
              )Net
                  income
              
              $
              0.12
              
              $
              0.18Comprehensive
                  income
              
              $
              3,263
              
              $
              4,768


See
      notes to condensed consolidated financial statements.





3


Table of
      Contents




**SCHIFF
        NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH
        FLOWS**
 ******(in
        thousands)**
 **(unaudited)**


Three
                  Months Ended
                August
                  31,2006
              
              2005Cash
                  flows from operating activities:Net
                  income
              
              $
              3,263
              
              $
              4,935Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Deferred
                  taxes
              
              
              (62
              )
              
              1,294Depreciation
                  and amortization
              
              
              779
              
              
              745Foreign
                  currency translation
              
              
              2
              
              
              (1,612
              )Amortization
                  of financing fees
              
              
              14
              
              
              14Stock-based
                  compensation
              
              
              846
              
              
              35Excess
                  tax benefit from stock-based compensation
              
              
              (148
              )
              
              —Changes
                  in operating assets and liabilities:Receivables
              
              
              (2,209
              )
              
              (5,366
              )Inventories
              
              
              (976
              )
              
              6,855Prepaid
                  expenses and other
              
              
              1,536
              
              
              1,410Deposits
                  and other assets
              
              
              (139
              )
              
              139Accounts
                  payable
              
              
              (2,117
              )
              
              1,535Other
                  current liabilities
              
              
              933
              
              
              (6,979
              )Net
                  cash provided by operating activities
              
              
              1,722
              
              
              3,005Cash
                  flows from investing activities:Purchase
                  of property and equipment
              
              
              (1,183
              )
              
              (534
              )Proceeds
                  from sale of Haleko Unit, net (Note 1)
              
              
              —
              
              
              13,683Purchase
                  of available-for-sale securities
              
              
              (7,255
              )
              
              (14,082
              )Proceeds
                  from sale of available-for-sale securities
              
              
              3,807
              
              
              7,819Collection
                  of notes receivable
              
              
              150
              
              
              100Net
                  cash provided by (used in) investing activities
              
              
              (4,481
              )
              
              6,986Cash
                  flows from financing activities:Proceeds
                  from stock options exercised
              
              
              35
              
              
              181Acquisition
                  and retirement of common stock
              
              
              (170
              )
              
              (129
              )Excess
                  tax benefit from stock-based compensation
              
              
              148
              
              
              —Proceeds
                  from debt
              
              
              —
              
              
              2,519Payments
                  on debt
              
              
              —
              
              
              (2,768
              )Net
                  cash provided by (used in) financing activities
              
              
              13
              
              
              (197
              )Effect
                  of exchange rate changes on cash
              
              
              (2
              )
              
              53Increase
                  (decrease) in cash and cash equivalents
              
              
              (2,748
              )
              
              9,847Cash
                  and cash equivalents, beginning of period
              
              
              24,899
              
              
              11,358Cash
                  and cash equivalents, end of period
              
              $
              22,151
              
              $
              21,205




See
      notes to condensed consolidated financial statements.





4


Table of
      Contents




**SCHIFF
        NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**
 ******(in
        thousands, except share data)**
 **(unaudited)**


**1.**
            **BASIS
                OF PRESENTATION AND OTHER
                MATTERS**





The
      accompanying unaudited interim condensed consolidated financial statements
      (“interim financial statements”) do not include all disclosures provided in our
      annual consolidated financial statements. These interim financial statements
      should be read in conjunction with the consolidated financial statements and
      the
      footnotes thereto contained in our Annual Report on Form 10-K for the year
      ended
      May 31, 2006 as filed with the Securities and Exchange Commission. The May
      31,
      2006 condensed consolidated balance sheet, included herein, was derived from
      audited financial statements, but all disclosures required by generally accepted
      accounting principles are not provided in the accompanying footnotes. We are
      a
      majority-owned subsidiary of Weider Health and Fitness (“WHF”).





In
      our opinion, the accompanying interim financial statements contain all material
      adjustments necessary for a fair presentation of our financial position and
      results of operations. Results of operations and cash flows for any interim
      period are not necessarily indicative of the results of operations and cash
      flows that we may achieve for any other interim period or for the entire
      year.





On
      June 17, 2005, we announced the sale of our Haleko Unit to Atlantic Grupa of
      Zagreb, Croatia and certain of its subsidiaries for approximately $15,089 in
      cash. The transaction included the sale of the capital stock and partnership
      interests of the international subsidiaries that operate the Haleko Unit. In
      connection with the sale, we incurred transaction related costs of approximately
      $687 and relinquished cash of approximately $719. The transaction closed on
      June
      17, 2005, with an effective date of May 1, 2005 (the first day of Haleko's
      fiscal year 2006). The impact of the sale on the fiscal 2006 first quarter
      operating income was not significant.





On
      April 1, 2005, we announced the sale of certain assets of our Active Nutrition
      Unit relating to our Weider branded business domestically and internationally
      to
      Weider Global Nutrition, LLC (“WGN”), a wholly-owned subsidiary of WHF. The
      terms of the transaction provided for a cash payment of approximately $12,900
      and a note receivable of $1,100 in exchange for assets relating to the domestic
      Weider branded business, including inventory, receivables, and intangible and
      intellectual property, the capital stock of certain of our international
      subsidiaries related to the international Weider branded business (including
      the
      working capital of those subsidiaries), and the assumption of certain associated
      liabilities by WGN. The transaction closed on April 1, 2005, with an effective
      date of March 1, 2005.





In
      connection with the sale of the Weider branded business, we also entered into
      two separate agreements (domestic and European) whereby we agreed to provide
      certain general and administrative, research and development, and logistics
      services to WGN for an annual fee. The domestic service agreement provided
      for a
      one year term, with an option to either party for one additional year. The
      parties exercised this option for the second year and have further extended
      the
      term of the agreement through March 1, 2008. In connection with the sale of
      our
      Haleko Unit, the European service agreement was transferred to the purchaser
      of
      the Haleko Unit.





Historical
      operating results for the Haleko Unit are reflected as discontinued operations
      in our condensed consolidated financial statements, including the notes thereto.
      We believe our remaining business, which consists of the aggregation of several
      product-based operating segments, represents our only reportable
      segment.





On
      March 17, 2006, the Compensation Committee of our Board of Directors, pursuant
      to our 2004 Plan, approved the adoption of a long term incentive plan involving
      the grant of performance based restricted stock units (the “Units”). On March
      20, 2006, a total of 1,437,200 Units were issued to certain officers and
      employees. Each Unit represents the right to receive one share of the Company’s
      Class A common stock, subject to certain performance based vesting requirements.
      The Units will vest, if at all, based on the Company’s performance in relation
      to certain specified pre-established performance criteria targets over a
      performance period beginning on January 1, 2006 and expiring on May 31, 2008.
      The performance criteria upon which the Units may vest is based upon a “Business
      Value Created” formula, which is comprised of two performance criteria
      components: operating earnings and return on net capital. The grant date fair
      value of each Unit was $5.11. We recognize compensation expense over the
      performance period based on a periodic assessment of the probability that the
      performance criteria will be achieved. For the fiscal 2007 first quarter, we
      recognized compensation expense of $661, and the related tax benefit was
      approximately $231. At August 31, 2006, total unrecognized compensation expense,
      based on our assessment of the probability that the performance criteria will
      be
      achieved, was approximately $4,627, which is expected to be recognized over
      a
      weighted average period of 1.8 years.





5


Table
      of
      Contents




**SCHIFF
        NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)**
 ******(in
        thousands, except share data)**
 **(unaudited)**




Effective
      August 16, 2002, we issued 640,000 restricted shares of Class A common stock
      to
      certain officers and employees. The aggregate value of these restricted shares
      was approximately $1,038, which we are expensing on a straight-line
      basis over the accompanying five-year vesting period. During the fiscal 2007
      first quarter, 86,200 restricted shares vested. During the fiscal 2006 first
      quarter, 98,200 restricted shares vested, and as a result of the voluntary
      termination of an employee, 12,000 restricted shares were cancelled. During
      the
      fiscal 2007 and 2006 first quarters, concurrent with the annual vesting, we
      reacquired (and ultimately retired) 23,443 and 27,201 shares, respectively,
      from
      certain employees in connection with the payment of individual income taxes.
      As
      of August 31, 2006, of the 640,000 restricted shares originally issued, 445,000
      shares have vested, of which 80,662 shares were reacquired (and retired),
      108,800 shares have been cancelled and 86,200 shares are subject to future
      vesting.





Effective
      March 1, 2006, we adopted Statement of Financial Accounting Standards (“SFAS”)
      No. 123R using the modified prospective method and began recognizing
      compensation expense for all awards granted after March 1, 2006, and for the
      unvested portion of previously granted awards that were outstanding at March
      1,
      2006. Compensation expense is recognized over the vesting period based on the
      computed fair value on the grant date of the award.





Prior
      to March 1, 2006, we disclosed the effect of SFAS No. 123, “Accounting for
      Stock-Based Compensation,” on a proforma basis and continued to follow
      Accounting Principles Board (“APB”) Opinion No. 25 (as permitted by SFAS No.
      123) as it relates to stock based compensation.





Proforma
      information regarding net income and net income per share is required by SFAS
      No. 123R and has been determined as if we had accounted for our employee stock
      options under the fair value method of SFAS No. 123R. For the purposes of
      proforma disclosure, the estimated fair value of the stock options is amortized
      to expense over the options’ vesting period. Our proforma net income and net
      income per share are as follows:





Three
                Months Ended August 31,2006
            
            2005Net
                income, as reported
            
            $
            3,263
            
            $
            4,935Deduct
                stock-based employee compensation expense determined under fair-value
                based method, net of related tax effects
            
            
            —
            
            
            (76
            )Net
                income, proforma
            
            $
            3,263
            
            $
            4,859Basic
                net income per share, as reported
            
            $
            0.12
            
            $
            0.19Diluted
                net income per share, as reported
            
            
            0.12
            
            
            0.18Basic
                net income per share, proforma
            
            
            0.12
            
            
            0.19Diluted
                net income per share, proforma
            
            
            0.12
            
            
            0.18





**2.**
            **AVAILABLE-FOR-SALE
                SECURITIES**





Available-for-sale
      securities consist primarily of auction rate securities, long-term variable
      rate
      bonds tied to short-term interest rates that are reset through a “dutch auction”
process which occurs every 7 to 35 days, and other variable rate debt and equity
      securities.





Investment
      securities at fair value, which approximates unamortized cost, consist of the
      following:





August
                31,
            
            May
                31,2006
            
            2006Federal,
                state and municipal debt securities
            
            $
            33,662
            
            $
            29,114Corporate
                debt securities
            
            
            6,706
            
            
            7,306Corporate
                equity securities
            
            
            3,200
            
            
            3,700$
            43,568
            
            $
            40,120





6


Table of
      Contents




**SCHIFF
          NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO
          CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)**
 ******(in
          thousands, except share data)**
 **(unaudited)**


Despite
      the long-term nature of these auction rate securities’ stated contractual
      maturities, there is a ready liquid market for these securities based on the
      interest reset mechanism. These securities are classified as current assets
      in
      the accompanying consolidated balance sheets because we have the ability and
      intent to sell these securities as necessary to meet our current liquidity
      needs. Contractual maturities of debt securities are as follows at August 31,
      2006:





Less
                than one year
            
            $
            2,006One
                to five years
            
            
            1,950Over
                five years
            
            
            36,412$
            40,368





The
      amount of unrealized gains or losses for the first quarter of fiscal 2007 and
      2006 was not significant.





**3.**
            **RECEIVABLES,
                NET**





Receivables,
                net, consist of the following:August
                31, 2006
            
            May
                31, 2006Trade
                accounts
            
            $
            25,548
            
            $
            23,103Current
                portion of note receivable due from WGN
            
            
            250
            
            
            400Other
            
            
            355
            
            
            24826,153
            
            
            23,751Less
                allowances for doubtful accounts, sales returns and
                discounts
            
            
            (3,663
            )
            
            (3,320
            )Total
            
            $
            22,490
            
            $
            20,431





**4.**
            **INVENTORIES**





Inventories
                consist of the following:August
                31,
            
            May
                31,2006
            
            2006Raw
                materials
            
            $
            12,799
            
            $
            9,694Work
                in process
            
            
            1,595
            
            
            1,275Finished
                goods
            
            
            10,097
            
            
            12,546Total
            
            $
            24,491
            
            $
            23,515





**5.**
            **GOODWILL
                AND INTANGIBLE ASSETS, NET**





Goodwill
                and intangible assets, net, consist of the following:August
                31, 2006
            
            May
                31, 2006Gross
                Carrying Amount
            
            Accumul.
                Amortiz.
            
            Net
                Book Value
            
            Gross
                Carrying Amount
            
            Accumul.
                Amortiz.
            
            Net
                Book ValueGoodwill
            
            $
            4,346
            
            $
            —
            
            $
            4,346
            
            $
            4,346
            
            $
            —
            
            $
            4,346Intangible
                assets-patents and trademarks
            
            $
            2,090
            
            $
            (2,090
            )
            $
            —
            
            $
            2,090
            
            $
            (2,090
            )
            $
            —





Estimated
      amortization expense, assuming no changes in our intangible assets, is zero
      for
      all future fiscal years.





The
      carrying amount of goodwill did not change during the fiscal 2007 first quarter
      or during fiscal 2006.




7


Table
      of
      Contents




**SCHIFF
        NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)**
 ******(in
        thousands, except share data)**
 **(unaudited)**


**6.**
            **ACCRUED
                EXPENSES**





Accrued
                expenses consist of the following:August
                31,
            
            May
                31,2006
            
            2006Accrued
                personnel related costs
            
            $
            1,740
            
            $
            3,477Accrued
                promotional costs
            
            
            6,597
            
            
            5,260Other
            
            
            2,665
            
            
            2,735Total
            
            $
            11,002
            
            $
            11,472





**7.**
            **CONCENTRATION
                RISK**





The
      combined net sales to our two largest customers are significant. At August
      31,
      2006, and May 31, 2006, respectively, amounts due from Customer A represented
      approximately 26% and 30% and amounts due from Customer B represented
      approximately 42% and 27% of total trade accounts receivable. For the first
      quarter of fiscal 2007 and 2006, respectively, Customer A accounted for
      approximately 31% and 33% and Customer B accounted for approximately 42% and
      36%
      of total net sales. Net sales of our Schiff® Move Free® brand accounted for
      approximately 53% and 50%, respectively, of total net sales for the fiscal
      2007
      and 2006 first quarters.





**8.**
            **COMMITMENTS
                AND CONTINGENCIES**





We
      are currently named as a defendant in one lawsuit alleging that consumption
      of
      certain of our discontinued products containing ephedra caused or contributed
      to
      injuries and damages. We dispute the allegations, and are opposing the lawsuit.
      This case is not covered by insurance.





From
      time to time, we are involved in other claims, legal actions and governmental
      proceedings that arise from our business operations. Although ultimate liability
      cannot be determined at the present time, we believe that any liability
      resulting from these matters, if any, after taking into consideration our
      insurance coverage will not have a material adverse effect on our results of
      operations and financial condition.





**9.**
            **RECENTLY
                ISSUED ACCOUNTING
                STANDARDS**





In
      November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      151, “Inventory Costs,” which amends the guidance in Accounting Research
      Bulletin (“ARB”) No. 43, Chapter 4, “Inventory Pricing,” to clarify that
      abnormal amounts of idle facility expense, freight, handling costs, and wasted
      material (spoilage) should be recognized as a current-period expense. In
      addition, SFAS No. 151 requires that allocation of fixed production overheads
      to
      the costs of conversion be based on the normal capacity of the production
      facilities. The inventory costing provisions of SFAS No. 151 are effective
      for
      inventory costs incurred during fiscal years beginning after June 15, 2005.
      The
      adoption of SFAS No. 151 did not have a material impact on our results of
      operations and financial condition.





In
      December 2004, the FASB issued SFAS No. 123R, which replaces SFAS No. 123,
      supersedes APB Opinion No. 25 and amends SFAS No. 95, “Statement of Cash Flows.”
SFAS No. 123R eliminates the ability for public companies to measure share-based
      compensation transactions at the intrinsic value as allowed by APB Opinion
      No.
      25, and requires that such transactions be accounted for based on the grant
      date
      fair value of the award. SFAS No. 123R also amends SFAS No. 95, to require
      that
      excess tax benefits be reported as a financing cash inflow rather than as a
      reduction of taxes paid. Under the intrinsic value method allowed under APB
      Opinion No. 25, the difference between the quoted market price as of the date
      of
      the grant and the contractual purchase price of the share is charged to
      operations over the vesting period, and no compensation expense is recognized
      for fixed stock options with exercise prices equal to the market price of the
      stock on the dates of grant. Under the fair value based method as prescribed
      by
      SFAS No. 123R, we are required to charge the value of all newly granted
      stock-based compensation to expense over the vesting period based on the
      computed fair value on the grant date of the award. Effective March 1, 2006,
      we
      adopted SFAS No. 123R using the modified prospective method, recording
      compensation expense for all awards granted after the date of adoption and
      for
      the unvested portion of previously granted awards that remain outstanding at
      the
      date of adoption. The adoption of SFAS No. 123R resulted in incremental
      stock-based compensation expense of approximately $151 for the fiscal 2007
      first
      quarter. The incremental stock-based compensation expense caused income from
      continuing operations to decrease by $151 and net income to decrease by $97.
      The
      impact on basic and diluted earnings per share was nil. Cash provided by
      operating activities decreased and cash provided by financing activities
      increased by $148 related to excess tax benefits from stock-based payment
      arrangements.




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**SCHIFF
        NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)**
 ******(in
        thousands, except share data)**
 **(unaudited)**


In
      November 2005, the FASB issued FASB Staff Position No. 123R-3 “Transition
      Election Related to Accounting for Tax Effects of Share-Based Payment Awards”
that allows for a simplified method to establish the beginning balance of the
      additional paid-in capital pool (“APIC Pool”) related to the tax effects of
      employee stock-based compensation, and to determine the subsequent impact on
      the
      APIC Pool and Consolidated Statements of Cash Flows of the tax effects of
      employee stock-based compensation awards that are outstanding upon adoption
      of
      SFAS No. 123R. We are still in the process of calculating the APIC Pool and
      have
      not yet determined if we will elect to adopt the simplified method.





In
      July 2006, the FASB issued Interpretation No. 48, “Uncertainty in Income Taxes,”
(“FIN No. 48”), which establishes guidelines for recognizing, measuring and
      disclosing uncertainties relating to tax benefits reflected in an enterprise’s
      financial statements. FIN No. 48 establishes a “more-likely-than-not”
recognition threshold that must be met before a tax benefit, relative to a
      tax
      position in which the enterprise may be uncertain as to whether it will
      ultimately be sustained as filed in its tax return, can be recognized in the
      financial statements. The tax benefit recognizing, measuring and disclosing
      provisions of FIN No. 48 are effective at the beginning of the first fiscal
      year
      that begins after December 15, 2006. We have not yet determined the impact
      of
      implementing FIN No. 48 on our results of operations and financial
      condition.




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**ITEM
              2.**
            **MANAGEMENT'S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS**





The
      following discussion and analysis should be read in conjunction with the
      condensed consolidated financial statements, including the notes thereto,
      appearing elsewhere in this Quarterly Report on Form 10-Q. We disclaim any
      obligation to update any forward-looking statements whether as a result of
      new
      information, future events or otherwise.





**General**





Schiff
      Nutrition International, Inc. develops, manufactures, markets and distributes
      branded and private label vitamins, nutritional supplements and nutrition bars
      in the United States and throughout the world. We offer a broad range of
      capsules, tablets and nutrition bars. Our portfolio of recognized brands,
      including Schiff and Tiger’s Milk®, is marketed primarily through the mass
      market (including club) and, to a lesser extent, health food store distribution
      channels.





Prior
      to fiscal 2006, we were organized into three business units: the Schiff
      Specialty Unit, the Active Nutrition Unit and the Haleko Unit. The business
      units generally were managed independently, each with its own sales and
      marketing resources, and supported by common product research and development,
      operations and technical services and administrative functions. The Schiff
      Specialty Unit included the Schiff brand, as well as private label (contract
      manufacturing) business limited to customers that otherwise carry our products.
      The Active Nutrition Unit included our Weider branded global business and the
      Tiger's Milk brand. The Haleko Unit, our primary European operations, included
      the Multipower and Multaben nutritional supplement brands and private label
      businesses.





On
      June 17, 2005, we announced the sale of our Haleko Unit to Atlantic Grupa of
      Zagreb, Croatia and certain of its subsidiaries for approximately $15.1 million
      in cash. The transaction included the sale of the capital stock and partnership
      interests of the international subsidiaries that operate the Haleko Unit. The
      transaction closed on June 17, 2005, with an effective date of May 1, 2005
      (the
      first day of Haleko’s fiscal year 2006).





On
      April 1, 2005, we announced the sale of certain assets of our Active Nutrition
      Unit relating to our Weider branded business domestically and internationally
      to
      Weider Global Nutrition, LLC (“WGN”), a wholly-owned subsidiary of Weider Health
      and Fitness (“WHF”), a privately held company headquartered in California and
      our majority stockholder. The terms of the transaction provided for a cash
      payment of approximately $12.9 million and a note receivable of $1.1 million
      in
      exchange for assets relating to our domestic Weider branded business, including
      inventory, receivables, and intangible and intellectual property, the capital
      stock of certain of our international subsidiaries related to our international
      Weider branded business (including the working capital of those subsidiaries),
      and the assumption of certain associated liabilities by WGN. The transaction
      closed on April 1, 2005, with an effective date of March 1, 2005.





In
      connection with the sale of the Weider branded business, we also entered into
      two separate agreements (domestic and European) whereby we agreed to provide
      certain general and administrative, research and development, and logistics
      services to WGN for an annual fee. The domestic service agreement provided
      for a
      one year term, with an option to either party to extend the term for one
      additional year. The parties exercised this option for the second year and
      have
      further extended the term of the agreement through March 1, 2008. In connection
      with the sale of our Haleko Unit, the European service agreement was transferred
      to the purchaser of the Haleko Unit.





Historical
      operating results for the Haleko Unit are reflected as discontinued operations
      in our condensed consolidated financial statements, including the notes thereto.
      We believe our remaining business, which consists of the aggregation of several
      product-based operating segments, represents our only reportable
      segment.





During
      fiscal 2006 and the fiscal 2007 first quarter, we continued to provide selling
      and marketing support intended both to defend our Move Free business against
      competition, including private label, and ultimately to increase our market
      share in the joint care product category. Our primary initiative was the
      introduction of our Move Free Advanced product, which we believe is an improved,
      more effective version of our existing Move Free product. We began implementing
      the Move Free Advanced initiative during the latter part of the fiscal 2006
      second quarter, and provided incremental selling and marketing support during
      the second half of fiscal 2006 and continuing in the fiscal 2007 first quarter.
      The introduction of Move Free Advanced into substantially all of our significant
      retail accounts continued during the second half of fiscal 2006 and was
      substantially completed in the fiscal 2007 first quarter. Subject to the impact
      of Move Free Advanced marketing initiatives and competitive joint care category
      pricing pressures, including private label, we believe our fiscal 2007 net
      sales
      may be relatively constant, as compared to fiscal 2006 net sales.





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Our
      operating results for the fiscal 2006 first quarter were impacted by margin
      volatility due to several factors, including significant raw material pricing
      fluctuations, particularly in the joint care category, a strong competitive
      environment and the implementation of our Schiff Move Free Advanced initiative.
      During fiscal 2006, joint care category raw material prices, which increased
      significantly during fiscal 2005, returned to pre-fiscal 2005 levels. However,
      our gross profit throughout fiscal 2006 was impacted by previous raw material
      purchase commitments. During fiscal 2005 and early fiscal 2006, as a result
      of
      significant volatility in raw material costs and the inability to secure an
      acceptable price increase from customers, we discontinued certain private label
      (contract manufacturing) business.





Our
      operating results for the fiscal 2006 first quarter were favorably impacted
      by
      the recognition of approximately $1.4 million in reimbursements of import
      related costs, the recognition of approximately $1.6 million of non-taxable
      foreign currency related gain and an overall effective tax rate of approximately
      12.8%.





Factors
      affecting our historical results, including the previous implementation of
      strategic initiatives as well as continuing refinement of our growth and
      business strategies, are ongoing considerations and processes. While the focus
      of these considerations is to improve future profitability, no assurance can
      be
      given that our decisions relating to these initiatives will not adversely impact
      our results of operations and financial condition.





Our
      principal executive offices are located at 2002 South 5070 West, Salt Lake
      City,
      Utah 84104, and our telephone number is (801) 975-5000.





**Results
      of Operations(unaudited)**


*Three
      Months Ended August 31, 2006 Compared to Three Months*


*Ended
      August 31, 2005*





The
      following tables show comparative results for selected items as reported and
      as
      a percentage of net sales for the three months ended August 31, (dollars in
      thousands):


2006
              
              2005Net
                  sales
              
              $
              45,652
              
              
              100.0
              %
              $
              48,017
              
              
              100.0
              %Cost
                  of goods sold
              
              
              28,536
              
              
              62.5
              
              
              35,308
              
              
              73.5Gross
                  profit
              
              
              17,116
              
              
              37.5
              
              
              12,709
              
              
              26.5Operating
                  expenses:Selling
                  and marketing
              
              
              8,289
              
              
              18.1
              
              
              6,016
              
              
              12.6General
                  and administrative
              
              
              3,699
              
              
              8.1
              
              
              3,562
              
              
              7.4Research
                  and development
              
              
              816
              
              
              1.8
              
              
              728
              
              
              1.5Amortization
                  of intangible assets
              
              
              —
              
              
              —
              
              
              6
              
              
              —Reimbursement
                  of import costs
              
              
              (20
              )
              
              —
              
              
              (1,380
              )
              
              (2.9
              )Total
                  operating expenses
              
              
              12,784
              
              
              28.0
              
              
              8,932
              
              
              18.6Income
                  from operations
              
              
              4,332
              
              
              9.5
              
              
              3,777
              
              
              7.9Other
                  income, net
              
              
              685
              
              
              1.5
              
              
              1,949
              
              
              4.0Income
                  tax expense
              
              
              (1,754
              )
              
              (3.9
              )
              
              (734
              )
              
              (1.5
              )Income
                  from continuing operations
              
              $
              3,263
              
              
              7.1
              %
              $
              4,992
              
              
              10.4
              %




**Net
      Sales.** Net
      sales decreased approximately 4.9% to $45.7 million for the fiscal 2007 first
      quarter, from $48.0 million for the fiscal 2006 first quarter. Overall, the
      decrease in net sales was primarily attributable to a decrease in non-joint
      care
      category branded sales and private label sales.





Aggregate
      branded net sales decreased approximately 1.9% to $37.1 million for the fiscal
      2007 first quarter, from $37.9 million for the fiscal 2006 first quarter.
      Branded joint care product sales volume increased approximately $3.7 million,
      or
      9.4%, which was more than offset by a $3.3 million increase in aggregate branded
      sales promotional incentives classified as sales price reductions and a $1.0
      million increase in actual and potential product returns associated with branded
      sales. Classification of promotional costs as a sales reduction is required
      when
      the promotion effectively represents a price reduction. We are utilizing more
      price-discount like promotions due to increased competition, including from
      private label, and to support and ultimately increase our market share. Move
      Free net sales were $24.2 million and $23.9 million, respectively, for the
      fiscal 2007 and 2006 first quarters.


Private
        label sales were $8.5 million for the fiscal 2007 first quarter, compared
        to
        $10.1 million for the fiscal 2006 first quarter. The decrease in private
        label
        net sales was primarily attributable to certain discontinued private label
        business, pass-through of certain lower raw material costs to customers and
        timing of customer orders, partially offset by new private label business.
        During fiscal 2005 and early fiscal 2006, as a result of significant volatility
        in raw material costing and the inability to secure an acceptable price increase
        from customers, we discontinued certain private label (contract manufacturing)
        business. Net sales for the discontinued private label business amounted
        to
        approximately $1.7 million for the fiscal 2006 first quarter.
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**Gross
      Profit.** Gross
      profit increased approximately 34.7% to $17.1 million for the fiscal 2007 first
      quarter, from $12.7 million for the fiscal 2006 first quarter. Gross profit,
      as
      a percentage of net sales, was 37.5% for the fiscal 2007 first quarter, compared
      to 26.5% for the fiscal 2006 first quarter. The increase was primarily due
      to an
      approximate $6.8 million decrease in joint care raw material costs, partially
      offset by increases in promotional incentives classified as sales price
      reductions.





**Operating
      Expenses.** Operating
      expenses increased approximately 43.1% to $12.8 million for the fiscal 2007
      first quarter, from $8.9 million for the fiscal 2006 first quarter. Operating
      expenses, as a percentage of net sales, were 28.0% and 18.6%, respectively,
      for
      the fiscal 2007 and 2006 first quarters. The increase resulted primarily from
      an
      increase in selling and marketing expenses and the fiscal 2006 first quarter
      inclusion of approximately $1.4 million in reimbursement from certain suppliers
      of previously incurred costs associated with imported raw materials. These
      reimbursements, resulting primarily from the favorable outcome of litigation
      between one of our suppliers and the U.S. Government, represent refunds of
      previously paid tariffs on imported raw materials.





Selling
      and marketing expenses, including sales, marketing, advertising, freight and
      other costs, increased to approximately $8.3 million for the fiscal 2007 first
      quarter, from $6.0 million for the fiscal 2006 first quarter. The increase
      was
      primarily due to a $1.7 million increase in advertising expense, primarily
      in
      support of our Move Free Advanced product, a $0.2 million increase in management
      incentive program costs, including incremental stock-based compensation expense
      recognized as a result of adopting SFAS 123R on March 1, 2006, and an increase
      in consulting fees in support of our export business.





General
      and administrative expenses remained relatively constant at $3.7 million for
      the
      fiscal 2007 first quarter, compared to $3.6 million for the fiscal 2006 first
      quarter. An increase in personnel related costs of approximately $0.6 million
      was substantially offset by a reduction in legal related costs. The fiscal
      2007
      quarter includes approximately $0.7 million in incremental management incentive
      program costs and the fiscal 2006 first quarter includes approximately $0.4
      million in severance expense.





Research
      and development costs increased to approximately $0.8 million for the fiscal
      2007 first quarter, from $0.7 million for the fiscal 2006 first quarter,
      primarily resulting from an increase in personnel related costs.





**Other
      Income/Expense.** Other
      income/expense, net, was $0.7 million income for the fiscal 2007 first quarter,
      compared to $1.9 million income for the fiscal 2006 first quarter. During the
      fiscal 2007 first quarter, we recognized approximately $0.4 million of
      incremental interest income resulting from an increase in cash and investment
      (available-for-sale) securities. During the fiscal 2006 first quarter, as a
      result of the divestiture of our Haleko Unit, certain international operating
      entities were substantially liquidated. Accordingly, we recognized a non-taxable
      net foreign currency translation gain, previously reported as other accumulated
      comprehensive income in stockholders' equity, of approximately $1.6
      million.





**Provision
      for Income Taxes.** Provision
      for income taxes was $1.8 million for the fiscal 2007 first quarter, compared
      to
      $0.8 million for the fiscal 2006 first quarter. In addition to the non-taxable
      foreign currency translation gain noted in “Other Income/Expense” above, the
      fiscal 2006 first quarter sale of the Haleko Unit resulted in the recognition
      of
      a gain under Internal Revenue Code Section 987 (“Section 987”). We reduced our
      estimated deferred tax liability for Section 987 obligations by approximately
      $0.8 million, which was reflected as a decrease in fiscal 2006 first quarter
      income tax expense. As a result of these unusual items, the fiscal 2006 first
      quarter tax rate was 12.8%, compared to the fiscal 2007 first quarter tax rate
      of 35.0%.





**Liquidityand
      Capital Resources**





Working
      capital increased approximately $3.2 million to $93.7 million at August 31,
      2006, from $90.5 million at May 31, 2006, primarily due to the financial results
      for the fiscal 2007 first quarter. Inventories increased approximately $1.0
      million, which reflected the impact of forward purchasing of certain raw
      materials. Receivables increased approximately $2.1 million, which reflects
      the
      timing impact of fiscal 2007 first quarter sales compared to fiscal 2006 fourth
      quarter sales. Prepaid expenses decreased by approximately $1.5 million
      primarily resulting from a reduction of prepaid insurance. Certain annually
      expiring insurance policies were renewed at September 1, 2006. Accounts payable
      and accrued expenses decreased approximately $2.5 million primarily resulting
      from timing of payments for raw material deliveries and payment of accrued
      management annual incentive costs. Finally, income taxes payable increased
      approximately $1.2 million resulting from the increase in our effective income
      tax rate discussed in “Provision for Income Taxes” above.





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On
      June 30, 2004, we entered into, through our wholly-owned direct operating
      subsidiary Schiff Nutrition Group, Inc. (“SNG”), a $25.0 million revolving
      credit facility (the “Credit Facility”) with KeyBank National Association, as
      Agent. In August 2006, we agreed to extend the maturity of the Credit Facility
      from June 30, 2007 to June 30, 2009. The Credit Facility contains customary
      terms and conditions, including, among others, financial covenants that may
      limit our ability to pay dividends on our common stock and certain other
      restrictions. Our obligations under the Credit Facility are secured by a first
      priority security interest on all of the capital stock of SNG. If our total
      coverage ratio exceeds a certain limit, our obligations will also be secured
      by
      a first priority security interest in all of our domestic assets. In the event
      we exceed certain other ratio limits, we will be subject to a borrowing base
      and
      will be able to borrow up to a lesser of $25.0 million or the sum of (i) 85%
      of
      eligible accounts receivable and (ii) 65% of eligible inventory. Borrowings
      under the Credit Facility bear interest at floating rates based on the KeyBank
      National Association prime rate or the Federal Funds effective rate. The Credit
      Facility can be used to fund our normal working capital and capital expenditure
      requirements, with availability to fund certain permitted strategic
      transactions. At August 31, 2006, there were no amounts outstanding and $25.0
      million was available for borrowing under the Credit Facility.





We
      believe that our cash, cash flows from operations and the Credit Facility will
      be sufficient to meet our normal cash operating requirements during the next
      twelve months. However, we continue to review opportunities to acquire or invest
      in companies, product rights and other investments that are compatible with
      or
      complementary to our existing business. We could use cash and financing sources
      discussed herein, or financing sources that subsequently become available,
      to
      fund additional acquisitions or investments. In addition, we may consider
      issuing additional debt or equity securities in the future to fund potential
      acquisitions or growth, or to refinance existing debt. If a material
      acquisition, divestiture or investment is completed, our operating results
      and
      financial condition could change materially in future periods. However, no
      assurance can be given that additional funds will be available on satisfactory
      terms, or at all, to fund such activities.





Our
      Board of Directors will determine dividend policy in the future based upon,
      among other factors, results of operations, financial condition, contractual
      restrictions and other factors deemed relevant at the time. In addition, the
      Credit Facility contains certain customary financial covenants that may limit
      our ability to pay dividends on our common stock. We can give no assurance
      that
      we will pay dividends in the future.





A
      summary of our outstanding contractual obligations at August 31, 2006 is as
      follows (in thousands):





Contractual
              Cash
                Obligations
            
            Total
                Amounts Committed
            
            Less
                than 1 Year
            
            1-3
              Years
            
            3-5
              Years
            
            After
              5
                YearsOperating
                leases
            
            $
            15,618
            
            $
            2,416
            
            $
            4,895
            
            $
            4,648
            
            $
            3,659Purchase
                obligations
            
            
            12,712
            
            
            12,712
            
            
            —
            
            
            —
            
            
            —Total
                obligations
            
            $
            28,330
            
            $
            15,128
            
            $
            4,895
            
            $
            4,648
            
            $
            3,659





Purchase
      obligations consist primarily of open purchase orders for goods and services,
      including primarily raw materials, packaging and outsourced contract
      manufacturing commitments.





**CriticalAccounting
      Policies and
      Estimates**





In
      preparing our condensed consolidated financial statements, we make assumptions,
      estimates and judgments that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the dates
      of
      the condensed consolidated financial statements and the reported amounts of
      net
      sales and expenses during the reported periods. We periodically evaluate our
      estimates and judgments related to the valuation of inventories and intangible
      assets, allowances for doubtful accounts, notes receivable, sales returns and
      discounts, valuation of deferred tax assets, valuation of share-based payments
      and recoverability of long-lived assets. Note 1 of the consolidated financial
      statements contained in our Annual Report on Form 10-K for the year ended May
      31, 2006, filed with the SEC, describes the accounting policies governing each
      of these matters. Our estimates are based on historical experience and on our
      future expectations that are believed to be reasonable. The combination of
      these
      factors forms the basis for making judgments about the carrying values of assets
      and liabilities that are not readily apparent from other sources. Actual results
      may differ from our current estimates and those differences may be
      material.





We
      believe the following accounting policies affect some of our more significant
      estimates and judgments used in preparation of our condensed consolidated
      financial statements:




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·
            We
                provide for inventory valuation adjustments for estimated obsolescence
                or
                unmarketable inventory equal to the difference between the cost of
                inventory and the estimated market value based upon assumptions about
                future demand, market conditions and/or liquidation value. For the
                fiscal
                2007 and 2006 first quarters, inventory valuation adjustments resulted
                in
                a decrease in our gross profit and operating income of approximately
                $0.2
                million and $0.1 million, respectively. At August 31, 2006 and May
                31,
                2006, our inventory valuation allowance amounted to approximately
                $0.9
                million and $0.8 million, respectively. If actual demand and/or market
                conditions are less favorable than those projected by management,
                additional inventory write-downs would be
                required.





·
            We
                maintain allowances for doubtful accounts, sales returns and discounts
                for
                estimated losses resulting from known customer exposures, including
                among
                others, product returns, inability to make payments and expected
                utilization of offered discounts. Changes in our allowances for doubtful
                accounts, sales returns and discounts resulted in a decrease in our
                gross
                profit and operating income of approximately $0.4 million for the
                fiscal
                2007 first quarter. The fiscal 2006 first quarter gross profit and
                operating income was not significantly impacted by changes in these
                allowances. At August 31, 2006 and May 31, 2006, our allowances for
                doubtful accounts, sales returns and discounts amounted to approximately
                $3.7 million and $3.3 million, respectively. Actual results may differ
                from our current estimates, resulting in adjustment of the respective
                allowance(s).





·
            We
                currently have deferred tax assets resulting from certain tax credit
                carryforwards and other temporary differences between financial and
                income
                tax reporting. These deferred tax assets are subject to periodic
                recoverability assessments. The realization of these deferred tax
                assets
                is primarily dependent on future operating results. To the extent
                that it
                is more likely than not that future operations will not generate
                sufficient profit to utilize the tax credit carryforwards, valuation
                allowances are established. Changes in these valuation allowances
                did not
                significantly impact net income for the fiscal 2007 and 2006 first
                quarters. At August 31, 2006 and May 31, 2006, our deferred tax asset
                valuation allowances, primarily relating to foreign net operating
                loss and
                tax credit carryforwards, amounted to approximately $0.7 million.





·
            We
                recognize compensation expense for certain performance based equity
                instrument awards (share-based payments) over the performance period
                based
                on a periodic assessment of the probability that the performance
                criteria
                will be achieved. For the fiscal 2007 first quarter, we recognized
                compensation expense related to these awards of approximately $0.7
                million. At August 31, 2006, total unrecognized compensation expense,
                based on our assessment of the probability that the performance criteria
                will be achieved, was approximately $4.6
                million.





·
            We
                have certain intangible assets, primarily consisting of goodwill.
                The
                determination of whether or not goodwill is impaired involves significant
                judgment. Changes in strategy or market conditions could significantly
                impact our judgment and require adjustment to the recorded goodwill
                balance.





**Impactof
      Inflation**





Inflation
      affects the cost of raw materials, goods and services we use. In recent years,
      inflation has been modest. We seek to mitigate the adverse effects of inflation
      primarily through improved productivity, strategic buying initiatives, and
      cost
      containment programs. However, the nutritional supplement industry competitive
      environment limits our ability to recover higher costs resulting from inflation
      by raising prices. During fiscal 2006, we were unable to pass on increases
      in
      raw material costs relating to our joint care products to our customers. See
      further discussion of raw material pricing matters in the “General” and “Results
      of Operations” sections above, and under “Risk Factors” below.





**Seasonality**





Our
      business can be seasonal, with fluctuations in sales resulting from timing
      of
      marketing and promotional activities, customer buying patterns and consumer
      spending patterns. In addition, as a result of changes in the amount of sales
      price reductions utilized for promotional incentives, product sales mix,
      competitive conditions, raw material pricing pressures and other factors
      discussed above, we experience fluctuations in gross profit and operating
      margins on a quarter-to-quarter basis.





**ITEM
              3.**
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**





The
      following discussion involves forward-looking statements of market risk which
      assume that certain adverse market conditions may occur. Actual future market
      conditions may differ materially from such assumptions. Accordingly, the
      forward-looking statements should not be considered our projections of future
      events or losses.


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Our
      cash flows and net earnings may be subject to fluctuations resulting from
      changes in interest rates. Our current policy does not allow speculation in
      derivative instruments for profit or execution of derivative instrument
      contracts for which there is no underlying exposure. We do not use financial
      instruments for trading purposes. We measure market risk, related to our
      holdings of financial instruments, based on changes in interest rates utilizing
      a sensitivity analysis. We do not believe that a hypothetical 10% change in
      interest rates would have a material effect on our pretax earnings or cash
      flows.





Previously,
      our cash flows and net earnings were also subject to fluctuations resulting
      from
      changes in foreign currency exchange rates. However, as a result of the
      divestitures of our Weider branded business and Haleko Unit, we no longer have
      operating subsidiaries whose net sales and expenses are denominated in foreign
      currencies. Therefore, changes in foreign currency exchange rates are not
      expected to have a material impact on future cash flows and net earnings.





**ITEM
              4.**
            **CONTROLS
                AND PROCEDURES**





We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our Securities Exchange Act reports
      is
      recorded, processed, summarized and reported within the time periods specified
      in the SEC’s rules and forms and that such information is accumulated and
      communicated to our management, including our Chief Executive Officer and Chief
      Financial Officer, as appropriate, to allow for timely decisions regarding
      required disclosure. In designing and evaluating the disclosure controls and
      procedures, we recognize that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving the
      desired control objectives, and we are required to apply our judgment in
      evaluating the cost-benefit relationship of possible controls and
      procedures.





As
      required by SEC Rule 13a-15(b), we carried out an evaluation, under the
      supervision and with the participation of our management, including our Chief
      Executive Officer and Chief Financial Officer, of the effectiveness of the
      design and operation of our disclosure controls and procedures as of the end
      of
      the year covered by this report. Based on the foregoing, our Chief Executive
      Officer and Chief Financial Officer have concluded that our disclosure controls
      and procedures were effective at the reasonable assurance level.





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


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**PART
      II. OTHER INFORMATION**





**ITEM
              1.**
            **LEGAL
                PROCEEDINGS**





The
      information set forth in Note 8 to the Notes to Condensed Consolidated Financial
      Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q is
      incorporated herein by reference.





**ITEM
              1A.**
            **RISK
                FACTORS**





Investors
      are cautioned that, except for the historical information contained herein,
      the
      matters discussed in this Quarterly Report contain forward-looking statements
      within the meaning of Section 27A of the Securities Act of 1933, as amended,
      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. Statements that are not historical facts, including without
      limitation statements which are preceded by, followed by, or include the words
      “believes,” “anticipates,” “plans,” “expects,” “estimates,” “may,” “should,” or
      similar expressions, are forward-looking statements. These statements are
      subject to risks and uncertainties, certain of which are beyond our control,
      and
      therefore, actual results may differ materially. Important
      factors that may affect our future performance or cause these forward-looking
      statements to be false include, but are not limited to the following risk
      factors.


The
        risk factors
        presented below update, and should be considered in addition to, the risk
        factors previously disclosed by us in Part I, Item 1A of our Annual Report
        on
        Form 10-K for the fiscal year ended May 31, 2006.





***Dependence
      on Significant Customers*** **.** Our largest customers are Costco and Wal-Mart. Combined, these two customers
      accounted for approximately 73% and 69%, respectively, of our total net sales
      for the fiscal 2007 and 2006 first quarters. We do not have supply contracts
      with either Costco or Wal-Mart and therefore cannot assure you that either
      Costco or Wal-Mart will continue to be significant customers in the future.
      The
      loss of either Costco or Wal-Mart as a customer, or a significant reduction
      in
      purchase volume by Costco or Wal-Mart, would have a material adverse effect
      on
      our results of operations and financial condition.





***Dependence
      on Individual Products and Product Lines*** **.** Certain products and product lines account for a significant amount of our
      total
      net sales. Net sales of our Schiff Move Free brand were approximately 53% and
      50%, respectively, of total net sales for the fiscal 2007 and 2006 first
      quarters. We cannot assure you that Move Free or other of our products currently
      experiencing strong popularity and growth will maintain sales levels over time.
      A significant decrease in Move Free or joint care category sales could have
      a
      material adverse effect on our results of operations and financial
      condition.





***New
      Products and Product Enhancements*** **.** We believe our ability to grow in existing markets is partially dependent upon
      our ability to introduce new and innovative products and product enhancements.
      The development and commercialization process, particularly relating to
      innovative products, is both time-consuming and costly and involves a high
      degree of business risk. Although we seek to introduce additional products
      each
      year, the success of new products or product enhancements is subject to a number
      of variables, including developing products that will appeal to customers,
      accurately anticipate consumer needs, be successfully commercialized in a timely
      manner, be priced competitively, be differentiated from those of our
      competitors, and comply with applicable regulations. For example, the inability
      to successfully implement the marketing and spending programs or strategic
      initiatives in support of Move Free Advanced and other branded products or
      product enhancements could have a material adverse effect on our results of
      operations and financial condition. We cannot assure you that our efforts to
      develop and introduce new products or existing product innovations will be
      successful, or that customers will accept new products. The failure to
      successfully launch or gain distribution for new product offerings or product
      enhancements could have a material adverse effect on our results of operations
      and financial condition.





***Risks
      of Competition and Pricing Pressures*** **.** The market for the sale of nutritional supplements is highly competitive.
      Certain of our principal competitors have greater financial and other resources
      available to them and possess extensive manufacturing, distribution and
      marketing capabilities. Private label products of our customers, which have
      been
      significantly increasing in certain nutrition categories (including joint care),
      also create significant competition with our products. Because nutritional
      supplements can be purchased in various channels of distribution, we also
      compete with products sold outside of the mass market retail channel, including
      health food stores, direct sales, direct mail and internet distribution
      channels. Increased competition from competitors, including expansion of private
      label products, or increased pricing pressure, could have a material adverse
      effect on our results of operations and financial condition.





Among
      other factors, competition among manufacturers, distributors and retailers
      of
      nutritional supplements is based upon price. Because of the high degree of
      price
      competition, we have not always been able to pass on increases in raw material
      prices to our customers. If one or more of our competitors significantly reduce
      their prices in order to gain market share (particularly relating to the joint
      care category), or if raw material prices increase and we are unable to pass
      along the increased cost to our customers (particularly relating to the joint
      care category), our results of operations and financial condition could be
      materially adversely affected.





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***Dependence
      on Third-Party Suppliers.*** We acquire all of the raw materials for the manufacture of our products from
      third parties. A considerable portion of our raw materials relates to our joint
      care category, which accounts for a significant amount of our total net sales.
      We cannot assure you that suppliers will provide the raw materials we need
      in
      the quantities requested, at a price we are willing to pay or that meet our
      quality standards and labeling requirements.





We
      typically do not enter into long-term contracts with our suppliers. However,
      we
      do have a long-term supply agreement with a third-party supplier for a key
      ingredient used in our Move Free Advanced product that is proprietary and may
      only be acquired from that supplier. While we have a contract in place providing
      for the continuing supply of this ingredient, we cannot assure you that the
      supplier will continue to supply the ingredient in the quantities we require,
      or
      at all. In addition, from time to time, we enter into forward purchase
      commitments regarding certain raw materials, primarily relating to the joint
      care category. We cannot assure you that the suppliers will supply the raw
      materials in accordance with the terms of the forward purchase commitments,
      or
      at all. Any failure to supply or changes in the material terms of supply by
      the
      Move Free Advanced key ingredient supplier or our other raw materials suppliers
      could have a material adverse effect on our results of operations and financial
      condition.





We
      are subject to potential delays in the delivery of raw materials caused by
      events beyond our control, including, among other factors, strikes or labor
      disputes, transportation interruptions, weather-related events, natural
      disasters or other catastrophic events, and changes in government regulations.
      Any significant delay in or disruption of the supply of raw materials could,
      among other things, substantially increase the cost of such materials, require
      reformulation or repackaging of products, require the qualification of new
      suppliers, or result in our inability to meet customer demands for certain
      products. The occurrence of any of the foregoing, particularly with respect
      to
      raw materials needed for our joint care products, could have a material adverse
      effect on our results of operations and financial condition.





***Raw
      Material Price Increases.*** Raw materials account for a significant portion of our manufacturing costs.
      We
      have encountered material fluctuations in the pricing of key raw materials
      in
      the past, particularly relating to joint care category products. During fiscal
      2005 and continuing into fiscal 2006, we experienced margin volatility due
      to
      several factors, including significant raw material pricing increases in the
      joint care category. During fiscal 2005 and early fiscal 2006, as a result
      of
      the raw material pricing volatility and the inability to secure acceptable
      price
      increases from customers, we discontinued certain private label (contract
      manufacturing) business. During the fiscal 2006 second and third quarters,
      raw
      material pricing in the joint care category decreased and appears to have
      stabilized. Nevertheless, the price of key raw materials may not remain
      relatively constant. Significant increases in raw material prices, particularly
      relating to the joint care category, could have a material adverse effect on
      our
      results of operations and financial condition. Historically, we have not always
      been able to pass along raw material price increases, and may not be able to
      do
      so in the future.





***Dependence
      on Raw Materials Acquired From Suppliers Outside the United
      States.*** We acquire a significant amount of ingredients for a number of our products
      (particularly joint care products) from suppliers outside of the United States,
      particularly China. Accordingly, the acquisition of these ingredients is subject
      to the risks generally associated with importing raw materials, including,
      among
      other factors, delays in shipments, changes in economic and political
      conditions, quality assurance, nonconformity to specifications or laws and
      regulations, tariffs, trade disputes and foreign currency fluctuations. While
      we
      have a supplier certification program and periodically audit and inspect our
      suppliers’ facilities both in the United States and internationally, we cannot
      assure you that raw materials received from suppliers outside of the United
      States will conform to all specifications, laws and regulations. In addition,
      the discovery of Bovine Spongiform Encephalopathy, commonly referred to as
“mad
      cow disease,” in a country from which we obtain a significant amount of our raw
      materials (particularly related to the joint care category) derived from bovine
      sources could prevent us from purchasing such raw materials in the required
      quantities, at an acceptable price, or at all. The occurrence of any of the
      foregoing, particularly with respect to raw materials needed for our joint
      care
      products, could have a material adverse effect on our results of operations
      and
      financial condition.





***Effect
      of Unfavorable Publicity*** **.** We believe our sales depend on consumer perceptions of the safety, quality
      and
      efficacy of our products as well as products distributed and sold by other
      companies. Consumer perceptions are influenced by scientific research or
      findings and national media attention regarding our products and other
      nutritional supplements. From time to time, there is some unfavorable publicity
      or scientific research regarding our industry. If future scientific research
      or
      media attention is perceived by consumers as less favorable or questions earlier
      research or publicity, our sales could be materially adversely affected. Adverse
      publicity in the form of published scientific research or otherwise, whether
      or
      not accurate, that associates consumption of our products or similar products
      with illness or other adverse effects, that questions the benefit of our
      products or similar products or that claims that any such products are
      ineffective could have a material adverse effect on our results of operations
      and financial condition.


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***Impact
      of Government Regulation on Our Operations*** **.** Our operations, properties and products are subject to regulation by various
      foreign, federal, state and local government entities and agencies, particularly
      the Food and Drug Administration (“FDA”) and Federal Trade Commission (“FTC”) in
      the United States. Among other matters, government regulation covers statements
      and claims made in connection with the packaging, labeling, marketing and
      advertising of our products. Governmental agencies have a variety of processes
      and remedies available to them, including initiating investigations, issuing
      warning letters and cease and desist orders, requiring corrective labeling
      or
      advertising, requiring consumer redress, seeking injunctive relief or product
      seizure, imposing civil penalties or commencing criminal prosecution. As a
      result of our efforts to comply with applicable statutes and regulations, from
      time to time we have reformulated, eliminated or relabeled certain of our
      products and revised certain aspects of our sales, marketing and advertising
      programs. We cannot assure you that we will not have to make such changes or
      revisions in the future, which could have a material adverse effect on our
      results of operations and financial condition.





The
      FDA has proposed extensive good manufacturing practice regulations for dietary
      supplements. In addition, we may be subject to additional laws or regulations
      administered by federal, state, or foreign regulatory authorities, the repeal
      or
      amendment of laws or regulations which we consider favorable, such as the
      Dietary Supplement Health and Education Act of 1994 (“DSHEA”), or more stringent
      interpretations of current laws or regulations. We are unable to predict the
      nature of such future laws, regulations, interpretations or applications, nor
      can we predict what effect additional governmental regulations or administrative
      orders, when and if promulgated, would have on our business in the future.
      Any
      or all of these requirements and the related costs to comply with such
      requirements could have a material adverse effect on our results of operations
      and financial condition.





***Product
      Liability and Availability of Related Insurance*** **.** As a manufacturer and distributor of products designed to be ingested, we face
      an inherent risk of exposure to product liability claims and litigation. In
      addition, the manufacture and sale of our products involve the risk of injury
      to
      consumers due to tampering by unauthorized third parties or product
      contamination. We carry insurance coverage in the types and amounts that we
      believe are reasonably appropriate for our business. However, our current
      product liability coverage excludes claims relating to certain categories of
      products and products that contain certain ingredients. In addition, certain
      damages in litigation, such as punitive damages, are generally not covered
      by
      insurance. In the event that we do not have adequate insurance or other
      indemnification coverage, product liability claims and litigation could have
      a
      material adverse effect on our results of operations and financial
      condition.





We
      are currently named as a defendant in a product liability lawsuit allegedly
      regarding certain of our former ephedra products. Subsequent to September 1,
      2003, we have not maintained any insurance coverage regarding ephedra products.
      Our ongoing lawsuit regarding ephedra products is not covered by insurance.
      In
      connection with the sale of the American Body Building and Science Foods brands
      in July 2002, we discontinued the sale of products that contain ephedra.
      However, we cannot assure you that we will not be subject to further litigation
      with respect to ephedra products we have already sold.





***Dependence
      on Single Manufacturing Facility.*** We
      manufacture most of our products at our manufacturing facility in Salt Lake
      City, Utah. Accordingly, we are highly dependent on the uninterrupted and
      efficient operation of our manufacturing facility. Power failures, the
      breakdown, failure, or substandard performance of equipment, the improper
      installation or operation of equipment, workforce disruptions, natural or other
      disasters, or the failure to comply with the requirements or directives of
      government agencies, including the FDA, could disrupt our operations and have
      a
      material adverse effect on our results of operations and financial condition.
      While we do carry business interruption insurance, we cannot assure you that
      our
      coverage will be sufficient to cover losses from these types of business
      disruptions or that this insurance will continue to be available to us at an
      acceptable price, or at all.





***Possibility
      of Product Recalls.*** Manufacturers and distributors of products in our industry are sometimes subject
      to the recall of their products for a variety of reasons, including product
      defects, such as ingredient contamination, packaging safety and inadequate
      labeling disclosure. If any of our products are recalled due to a product defect
      or for any other reason, we could be required to incur the unexpected expense
      of
      the recall and any legal proceedings that might arise in connection with the
      recall. We acquire all of our raw materials for the manufacture of our products
      from third parties. Although we have procedures in place for testing raw
      materials used in our products, we cannot assure you that any quality, potency
      or contamination problems will be detected in time to avoid unforeseen product
      recalls or lawsuits. There can be no assurance that we would be able to recover
      these expenses from our suppliers. Additionally, if one of our significant
      brands were subject to recall, the image of that brand and our company could
      be
      harmed, which could have a material adverse effect on our results of operations
      and financial condition.





***Risks
      Associated with International Markets.*** Our international sales efforts are comprised of selling product, particularly
      our joint care products, from the United States on an export basis to retail
      customers or distributors abroad. Operating in international markets exposes
      us
      to certain risks, including, among others, changes in or interpretations of
      foreign regulations that may limit our ability to sell certain products, the
      potential imposition of trade or foreign exchange restrictions or increased
      tariffs and political instability. We are often required to reformulate our
      products before commencing sales in a given country. We must comply with various
      and changing local labeling, customs and other regulations. Trademark rights
      are
      often difficult to obtain and enforce in countries outside the United States.
      There is also no assurance that we will be able to obtain and retain the
      necessary permits and approvals necessary for our international efforts. Our
      inability to successfully launch and maintain sales (especially in the joint
      care category) outside of the United States while maintaining the integrity
      of
      the products sold and complying with local regulations could have a material
      adverse effect on our results of operations and financial
      condition.





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***Intellectual
      Property Rights and Proprietary Techniques.*** Although the nutritional supplement industry has historically been characterized
      by products with naturally occurring ingredients in capsule or tablet form,
      recently it is becoming more common for suppliers and competitors to apply
      for
      patents or develop proprietary technologies and processes. Although we make
      efforts not to infringe the intellectual property rights of others, there can
      be
      no assurance that third parties will not assert intellectual property
      infringement claims against us or our intellectual property licensors. To the
      extent that these developments prevent us from offering or supplying competitive
      products or our licensed proprietary ingredient in the marketplace, or result
      in
      litigation or threatened litigation against us related to alleged or actual
      infringement of third-party rights, these developments could have a material
      adverse effect on our results of operations and financial condition.




We
      protect our intellectual property related to investments in research and
      development by relying on trade secret laws and confidentiality agreements
      with
      third parties who have access to information about our research and development
      activities. When we license our intellectual property from a third party, we
      typically have contractual rights to require the licensor to adequately protect
      our intellectual property interests. Nevertheless, we can not guarantee that
      such measures will be sufficient to protect our interests.





***Dependence
      Upon Information Technology Systems.*** Our
      success is dependent on the accuracy, reliability and proper use of
      sophisticated and dependable information processing systems and management
      information technology. Our information technology systems are designed and
      selected in order to facilitate order entry and customer billing, maintain
      customer records, accurately track purchases, manage accounting, finance and
      manufacturing operations, generate reports, and provide customer service and
      technical support. Although off-site data back-up is maintained, an interruption
      in these systems could have a material adverse effect on our results of
      operations and financial condition.





***Control
      by Principal Stockholder*** **.** WHF owns all of our outstanding shares of Class B common stock, representing
      over 90% of the aggregate voting power of all outstanding shares of our common
      stock. Three of our directors also serve on the board of directors of WHF.
      WHF
      is in a position to exercise control over us and to determine the outcome of
      all
      matters required to be submitted to stockholders for approval (except as
      otherwise provided by law or by our amended and restated certificate of
      incorporation or amended and restated bylaws) and otherwise to direct and
      control our operations. Accordingly, we cannot engage in any strategic
      transactions without the approval of WHF.





***Acquisitions
      and Investments.*** An
      element of our strategy includes expanding our product offerings, enhancing
      business development and gaining access to new skills and other resources
      through strategic acquisitions and investments when attractive opportunities
      arise. We cannot assure you that attractive acquisition opportunities will
      be
      available to us, that we will be able to obtain financing for or otherwise
      consummate any acquisitions or that any acquisitions which are consummated
      will
      prove to be successful.





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**ITEM
              2.**
            **UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS**





The
      following table presents information regarding repurchases of our Class A common
      stock during the fiscal 2007 first quarter:




Period
            
            Total
                number
              of
                shares purchased
            
            Average
                price paid per share
            
            Total
                number
              of
                shares purchased as part of publicly announced plans or
                programs
            
            Maximum
                number of shares that mayyet
                be purchased under the plansor
                programsJune
                1 - June 30
            
            —
            
            —
            
            —
            
            —July
                1 - July 31
            
            —
            
            —
            
            —
            
            —August
                1 - August 31
            
            23,443(1)
            
            $
                7.25
            
            —
            
            —Total
            
            23,443
            
            $
                7.25
            
            —
            
            —





(1)  Repurchase
      of these shares was to satisfy employee tax withholding obligations due upon
      vesting of restricted shares. See Note 1 to the Notes to Condensed Consolidated
      Financial Statements.





**ITEM
              3.**
            **DEFAULTS
                UPON SENIOR SECURITIES**





Not
      applicable





**ITEM
              4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**





None





**ITEM
              5.**
            **OTHER
                INFORMATION**





Not
      applicable




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**ITEM
              6.**
            **EXHIBITS**





3.1.
            Amended
                and Restated Certificate of Incorporation of Weider Nutrition
                International, Inc. (1)3.2.
            Amended
                and Restated Bylaws of Weider Nutrition International, Inc.
                (2)4.1.
            Revolving
                Credit Agreement dated as of June 30, 2004 between Weider Nutrition
                Group,
                Inc. and KeyBank National Association. (3)4.2.
            Form
                of specimen Class A common stock certificate. (4)10.1.
            Build-To-Suit
                Lease Agreement, dated March 20, 1996, between SCI Development Services
                Incorporated and Weider Nutrition Group, Inc. (2)10.2.
            Agreement
                by and between Joseph Weider and Weider Health and Fitness.
                (2)10.3.
            1997
                Equity Participation Plan of Weider Nutrition International, Inc.
                (2)10.4.
            Form
                of Tax Sharing Agreement by and among Weider Nutrition International,
                Inc.
                and its subsidiaries and Weider Health and Fitness and its
                subsidiaries. (2)10.5.
            License
                Agreement between Mariz Gestao E Investmentos Limitada and Weider
                Nutrition Group, Limited. (2)10.6.
            Agreement
                between Schiff Nutrition Group, Inc. and Bruce J. Wood.
                (5)*10.7.
            Form
                Agreement between Schiff Nutrition Group, Inc. and certain of its
                executives. (5)*10.8.
            Amendments
                to 1997 Equity Participation Plan of Weider Nutrition International,
                Inc.
                (6)10.9.
            Employment
                Agreement between Weider Nutrition Group, Inc. and Bruce J. Wood.
                (7)*10.10.
            Consulting
                Agreement between Weider Nutrition Group, Inc. and Gustin Foods,
                LLC dated
                as of February 1, 2004. (8)10.11.
            Weider
                Nutrition International, Inc. 2004 Incentive Award Plan.
                (9)10.12.
            Amendment
                effective as of March 1, 2005 to License Agreement between Mariz
                Gestao E
                Investmentos Limitada and Weider Nutrition Group, Inc.
                (10)10.13.
            Stock
                and Asset Purchase Agreement effective as of March 1, 2005 among
                Weider
                Nutrition International, Inc., Weider Nutrition Group, Inc. and Weider
                Global Nutrition, LLC. (10)10.14.
            Promissory
                Note of Weider Global Nutrition, LLC payable to Weider Nutrition
                Group,
                Inc. (10)10.15.
            Guarantee
                by Weider Health and Fitness in favor of Weider Nutrition International,
                Inc. and Weider Nutrition Group, Inc. (10)10.16.
            Share
                Sale and Transfer Agreement dated June 17, 2005 among Weider Nutrition
                GmbH, Haleko Management GmbH, Atlantic Grupa d.o.o., Hopen Investments
                BV
                and Svalbard Investments GmbH. (11)10.17.
            Form
                of Indemnification Agreement between Weider Nutrition Group, Inc.
                and
                certain of its executives and directors. (12)*10.18.
            Form
                of Restricted Stock Unit Award Grant Notice, Restricted Stock Unit
                Award
                Agreement and Deferral Election between Schiff Nutrition International,
                Inc. and certain of its executives. (13)*10.19.
            Amended
                and Restated License and Product Supply
                Agreement dated as of October 13, 2006 between Unigen Pharmaceuticals,
                Inc. and Schiff Nutrition Group, Inc. (14)21.1.
            Subsidiaries
                of Weider Nutrition International, Inc. (4)31.1.
            Certification
                of Chief Executive Officer pursuant
                to Section 302 of the Sarbanes-Oxley Act. (14)31.2.
            Certification
                of Chief Financial Officer pursuant
                to Section 302 of the Sarbanes-Oxley Act. (14)32.1.
            Certification
                of Chief Executive Officer and Chief
                Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
                (14)(1)
            Previously
                field in the Company’s Quarterly Report on Form 10-Q filed on January 17,
                2006 and incorporated herein by reference.(2)
            Previously
                filed in the Company's Registration Statement on Form S-1 (File No.
                333-12929) and incorporated herein by reference.(3)
            Previously
                filed in the Company's Current Report on Form 8-K filed on July 8,
                2004
                and incorporated herein by reference.(4)
            Previously
                filed in the Company’s Annual Report on Form 10-K filed on August 29, 2006
                and incorporated herein by reference.(5)
            Previously
                filed in the Company's Current Report on Form 8-K filed on February
                3,
                2006 and incorporated herein by reference.(6)
            Previously
                filed in the Company's Quarterly Report on Form 10-Q filed on January
                14,
                2002 and incorporated herein by reference.(7)
            Previously
                filed in the Company's Annual Report on Form 10-K filed on August
                29, 2002
                and incorporated herein by reference.(8)
            Previously
                filed in the Company's Quarterly Report on Form 10-Q filed on April
                14,
                2004 and incorporated herein by reference.(9)
            Previously
                filed in the Company's Definitive Proxy Statement on Form 14A filed
                on
                September 28, 2004 and incorporated herein by
                reference.(10)
            Previously
                filed in the Company's Current Report on Form 8-K filed on April
                4, 2005
                and incorporated herein by reference.(11)
            Previously
                filed in the Company's Current Report on Form 8-K filed on June 23,
                2005
                and incorporated herein by reference.(12)
            Previously
                filed in the Company's Current Report on Form 8-K filed on August
                10, 2005
                and incorporated herein by reference.(13)
            Previously
                filed in the Company’s Current Report on Form 8-K filed March 23, 2006 and
                incorporated herein by reference.(14)
            Filed
                herewith.*
            Management
                contract.





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**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 the undersigned thereunto
      duly authorized.





**SCHIFF NUTRITION INTERNATIONAL, INC.**








Date:
                October 16, 2006
            By:
                */s/**Bruce
                J. Wood*Bruce
                J. WoodPresident,
                Chief Executive Officer and
                Director








Date:
                October 16, 2006
            By:
                */s/**Joseph
                W. Baty*Joseph
                W. BatyExecutive
                Vice President and Chief Financial
                Officer





22


**Schiff
        Nutrition International, Inc.**
 **Index**





**PART
        I. FINANCIAL INFORMATION**
 
 ITEM
              1.
            FINANCIAL
                STATEMENTS 
 CONDENSED
        CONSOLIDATED BALANCE SHEETS
 CONDENSED
        CONSOLIDATED STATEMENTS OF
        INCOME
 CONDENSED
        CONSOLIDATED STATEMENTS OF CASH
        FLOWS
 NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS
 1.
            BASIS
                OF PRESENTATION AND OTHER
                MATTERS 2.
            AVAILABLE-FOR-SALE
                SECURITIES 3.
            RECEIVABLES,
                NET 4.
            INVENTORIES 5.
            GOODWILL
                AND INTANGIBLE ASSETS,
                NET 6.
            ACCRUED
                EXPENSES 7.
            CONCENTRATION
                RISK 8.
            COMMITMENTS
                AND
                CONTINGENCIES 9.
            RECENTLY
                ISSUED ACCOUNTING
                STANDARDS 
 ITEM
              2.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS 
 -  General
 -  Results
        of Operations (Unaudited)
 -  Liquidity
        and Capital Resources
 -  Critical
        Accounting Policies and Estimates
 -  Impact
        of Inflation
 -  Seasonality
 
 ITEM
              3.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK ITEM
              4.
            CONTROLS
                AND PROCEDURES 
 **PART
        II. OTHER INFORMATION**
 
 ITEM
              1.
            LEGAL
                PROCEEDINGS ITEM
              1A.
            RISK
                FACTORS ITEM
              2.
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS ITEM
              3.
            DEFAULTS
                UPON SENIOR
                SECURITIES ITEM
              4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS ITEM
              5.
            OTHER
                INFORMATION ITEM
              6.
            EXHIBITS 
 **SIGNATURES**
 
 **Exhibit
        10.19** - Amended and
        Restated License and Product Supply Agreement
  **Exhibit
        31.1** - Certification of CEO
        pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  **Exhibit
        31.2** - Certification of CFO
        pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  **Exhibit
        32.1** - CEO and CFO
        Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
        2002