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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
                  1934For
                the quarterly period endedNovember
                30,2007q
            TRANSITION
                  REPORT PURSUANT TO
                  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                  1934For
                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.  YesýNoq




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
      FilerqAccelerated FilerqNon-Accelerated
      Filerý




Indicate
      by check mark whether the
      registrant is a shell company (as defined in Rule 12b-2 of the Exchange
      Act).  YesqNoý




As
      ofJanuary 10, 2008the
      registrant had outstanding11,730,034shares
      of Class A common stock and
      14,973,148 shares of Class B common stock.







1
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            Index
 PART
              I. FINANCIAL INFORMATION





ITEM
                  1.
              FINANCIAL
                  STATEMENTS


SCHIFF
      NUTRITION
      INTERNATIONAL, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE
      SHEETS


(in
      thousands, except share
      data)




November
                30,2007
            
            
            May
                31,2007ASSETS
            
            (unaudited)Current
                assets:Cash
                and cash
                equivalents
            
            $
            9,980
            
            
            $
            34,463Available-for-sale
                securities
            
            
            30,571
            
            
            
            45,817Receivables,
                net
            
            
            15,334
            
            
            
            17,732Inventories
            
            
            31,464
            
            
            
            23,698Prepaid
                expenses and
                other
            
            
            2,749
            
            
            
            2,151Deferred
                taxes,
                net
            
            
            1,393
            
            
            
            1,992Total
                current
                assets
            
            
            91,491
            
            
            
            125,853Property
                and equipment,
                net
            
            
            14,253
            
            
            
            14,438Other
                assets:Goodwill
            
            
            4,346
            
            
            
            4,346Deposits
                and other
                assets
            
            
            20
            
            
            
            105Deferred
                taxes,
                net
            
            
            1,377
            
            
            
            337Total
                other
                assets
            
            
            5,743
            
            
            
            4,788Total
                assets
            
            $
            111,487
            
            
            $
            145,079LIABILITIES
                AND STOCKHOLDERS'
                EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            8,303
            
            
            $
            7,962Accrued
                expenses
            
            
            9,587
            
            
            
            10,542Short-term
                debt
            
            
            778
            
            
            
            —Dividends
                payable
            
            
            1,082
            
            
            
            —Income
                taxes
                payable
            
            
            713
            
            
            
            2,480Total
                current
                liabilities
            
            
            20,463
            
            
            
            20,984Long-term
                liabilities:Dividends
                payable
            
            
            1,230
            
            
            
            —Other
            
            
            494
            
            
            
            —Total
                long-term
                liabilities
            
            
            1,724
            
            
            
            —Commitments
                and contingencies
                (Note 8)Stockholders'
                equity:Preferred
                stock, par value $.01
                per share; shares authorized-10,000,000; no shares issued and
                outstanding
            
            
            —
            
            
            
            —Class
                A common stock, par value
                $.01 per share; shares authorized-50,000,000; shares issued and
                outstanding-11,729,534,and
                11,664,284
            
            
            117
            
            
            
            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
            
            
            86,058
            
            
            
            92,640Retained
                earnings
            
            
            2,975
            
            
            
            31,189Total
                stockholders'
                equity
            
            
            89,300
            
            
            
            124,095Total
                liabilities and
                stockholders' equity
            
            $
            111,487
            
            
            $
            145,079




See
      notes to condensed consolidated
      financial statements.





2
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            Index
 SCHIFF
              NUTRITION
              INTERNATIONAL, INC. AND SUBSIDIARIES
 CONDENSED
              CONSOLIDATED STATEMENTS OF
              INCOME
 (in
              thousands, except share
              data)
 (unaudited)





Three
                Months EndedNovember
                30,2007
            
            
            2006Net
                sales
            
            $
            39,535
            
            
            $
            38,817Cost
                of goods
                sold
            
            
            22,974
            
            
            
            22,640Gross
                profit
            
            
            16,561
            
            
            
            16,177Operating
                expenses:Selling
                and
                marketing
            
            
            6,737
            
            
            
            8,790General
                and
                administrative
            
            
            4,452
            
            
            
            4,155Research
                and
                development
            
            
            1,276
            
            
            
            864Reimbursement
                of import
                costs
            
            
            (31
            )
            
            
            (278
            )Total
                operating
                expenses
            
            
            12,434
            
            
            
            13,531Income
                from
                operations
            
            
            4,127
            
            
            
            2,646Other
                income
                (expense):Interest
                income
            
            
            437
            
            
            
            758Interest
                expense
            
            
            (42
            )
            
            
            (45
            )Other,
                net
            
            
            6
            
            
            
            15Total
                other income,
                net
            
            
            401
            
            
            
            728Income
                before income
                taxes
            
            
            4,528
            
            
            
            3,374Income
                tax
                expense
            
            
            1,725
            
            
            
            1,125Net
                income
            
            $
            2,803
            
            
            $
            2,249Weighted
                average shares
                outstanding:Basic
            
            
            26,639,673
            
            
            
            26,541,764Diluted
            
            
            27,728,332
            
            
            
            27,330,278Net
                income per
                share:Basic
            
            $
            0.11
            
            
            $
            0.08Diluted
            
            $
            0.10
            
            
            $
            0.08Comprehensive
                income
            
            $
            2,803
            
            
            $
            2,249







See
      notes to condensedconsolidated financial statements.




3
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          Index
 SCHIFF
            NUTRITION
            INTERNATIONAL, INC. AND SUBSIDIARIES
 CONDENSED
            CONSOLIDATED STATEMENTS OF
            INCOME
 (in
            thousands, except share
            data)
 (unaudited)




SixMonths
                EndedNovember
                30,2007
            
            
            2006Net
                sales
            
            $
            80,262
            
            
            $
            84,469Cost
                of goods
                sold
            
            
            47,280
            
            
            
            51,176Gross
                profit
            
            
            32,982
            
            
            
            33,293Operating
                expenses:Selling
                and
                marketing
            
            
            13,493
            
            
            
            17,079General
                and
                administrative
            
            
            11,239
            
            
            
            7,854Research
                and
                development
            
            
            2,302
            
            
            
            1,680Reimbursement
                of import
                costs
            
            
            (31
            )
            
            
            (298
            )Total
                operating
                expenses
            
            
            27,003
            
            
            
            26,315Income
                from
                operations
            
            
            5,979
            
            
            
            6,978Other
                income
                (expense):Interest
                income
            
            
            1,258
            
            
            
            1,501Interest
                expense
            
            
            (69
            )
            
            
            (103
            )Other,
                net
            
            
            10
            
            
            
            15Total
                other income,
                net
            
            
            1,199
            
            
            
            1,413Income
                before income
                taxes
            
            
            7,178
            
            
            
            8,391Income
                tax
                expense
            
            
            2,727
            
            
            
            2,879Net
                income
            
            $
            4,451
            
            
            $
            5,512Weighted
                average shares
                outstanding:Basic
            
            
            26,602,385
            
            
            
            26,511,981Diluted
            
            
            27,480,280
            
            
            
            27,322,498Net
                income per
                share:Basic
            
            $
            0.17
            
            
            $
            0.21Diluted
            
            $
            0.16
            
            
            $
            0.20Comprehensive
                income
            
            $
            4,451
            
            
            $
            5,512






See
      notes to condensed consolidated
      financial statements.


4
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            Index
 SCHIFF
              NUTRITION
              INTERNATIONAL, INC. AND SUBSIDIARIES
 CONDENSED
              CONSOLIDATED STATEMENTS OF
              CASH FLOWS
 (in
              thousands)
 (unaudited)





SixMonths
                EndedNovember
                30,2007
            
            
            2006Cash
                flows from operating
                activities:Net
                income
            
            $
            4,451
            
            
            $
            5,512Adjustments
                to reconcile net
                income to net cash provided by operating
                activities:Deferred
                taxes
            
            
            (403
            )
            
            
            (520
            )Depreciation
                and
                amortization
            
            
            1,780
            
            
            
            1,615Amortization
                of financing
                fees
            
            
            8
            
            
            
            28Stock-based
                compensation
            
            
            5,437
            
            
            
            2,108Excess
                tax benefit from equity
                instruments
            
            
            (292
            )
            
            
            (144
            )Other
            
            
            (5
            )
            
            
            (14
            )Changes
                in operating assets and
                liabilities:Receivables
            
            
            2,398
            
            
            
            579Inventories
            
            
            (7,766
            )
            
            
            (5,908
            )Prepaid
                expenses and
                other
            
            
            (598
            )
            
            
            (366
            )Deposits
                and other
                assets
            
            
            77
            
            
            
            (109
            )Accounts
                payable
            
            
            806
            
            
            
            2,522Other
                current
                liabilities
            
            
            (2,079
            )
            
            
            (2,594
            )Other
                long-term
                liabilities
            
            
            17
            
            
            
            —Net
                cash provided by operating
                activities
            
            
            3,831
            
            
            
            2,709Cash
                flows from investing
                activities:Purchase
                of property and
                equipment
            
            
            (2,057
            )
            
            
            (2,857
            )Purchase
                of available-for-sale
                securities
            
            
            (21,226
            )
            
            
            (20,049
            )Proceeds
                from sale of
                available-for-sale securities
            
            
            36,472
            
            
            
            18,662Collection
                of notes
                receivable
            
            
            —
            
            
            
            300Net
                cash provided by (used in)
                investing activities
            
            
            13,189
            
            
            
            (3,944
            )Cash
                flows from financing
                activities:Proceeds
                from
                debt
            
            
            1,350
            
            
            
            1,996Payments
                on
                debt
            
            
            (572
            )
            
            
            (846
            )Proceeds
                from stock options
                exercised
            
            
            150
            
            
            
            256Purchase
                and retirement of common
                stock
            
            
            (120
            )
            
            
            (170
            )Excess
                tax benefit from equity
                instruments
            
            
            292
            
            
            
            144Dividends
                paid
            
            
            (42,605
            )
            
            
            —Net
                cash provided by (used in)
                financing activities
            
            
            (41,505
            )
            
            
            1,380Effect
                of exchange rate changes on
                cash
            
            
            2
            
            
            
            —Increase
                (decrease) in
                cash and cash
                equivalents
            
            
            (24,483
            )
            
            
            145Cash
                and cash equivalents,
                beginning of period
            
            
            34,463
            
            
            
            24,899Cash
                and cash equivalents, end of
                period
            
            $
            9,980
            
            
            $
            25,044







See
      notes to condensed consolidated
      financial statements.




5
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 SCHIFF
            NUTRITION
            INTERNATIONAL, INC. AND SUBSIDIARIES
 NOTES
            TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS
 (dollars
            in thousands, except share
            data)






1.
            BASIS
                  OF PRESENTATION AND OTHER
                  MATTERS




The
      accompanying unaudited interim
      condensed consolidated financial statements (“interim financial statements”) of
      Schiff Nutrition International, Inc. and its subsidiaries (the “Company,” “we,”
“us” and “our”) 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, 2007 as filed with the Securities and Exchange Commission (“SEC”).
      The May 31, 2007 condensed consolidated balance sheet, included herein, was
      derived from our 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.




In
      July 2007, our Board of Directors
      approved a $1.50 per share special cash dividend, which was paid on
      August 13, 2007 to shareholders of record at the close of business onJuly 31, 2007.In connection with the declaration of
      the special dividend, our Board of Directors approved certain dividend
      equivalent rights, allowing holders (employees and directors) of certain equity
      awards, including stock options and restricted stock units, to receive cash
      dividends on each share of common stock underlying the stock options and
      restricted stock units. In aggregate, atJuly 31, 2007,the record date, the Company had
      outstanding approximately 29.9 million shares of common stock (including shares
      of common stock underlying equity awards subject to dividend equivalent rights),
      including approximately 26.6 million shares of outstanding Class A and Class
      B
      common stock, approximately 1.8 million shares of Class A common stock
      underlying outstanding stock options, and approximately 1.5
      million shares of
      Class A common stock underlying outstanding restricted stock units. The
      aggregate amount of the special dividend was approximately $44,900, presuming
      100% vesting of shares underlyingequityawards
      (approximately 55%had vested as ofNovember 30,2007). To the extent outstanding
      stock
      options and restricted stock units were unvested atNovember 30,2007,the $1.50 per share
      dividend was not,
      and will not be, distributed until after such equity awards become
      vested.




In
      connection with the dividends paid or
      payable on the dividend equivalent rights received by holders (employees and
      directors) of stock options and certain restricted stock units, we recognized
      a
      non-cash compensation expense, and a corresponding increase in additional
      paid-in capital, of$657
      and $3,660, respectively,during thethree
      and six month periods endedNovember 30,
      2007.Subject to future
      vesting of these equity awards, additional compensation expense of approximately
      $1,300,together with a corresponding increase
      in additional paid-in capital, will be recognizedequallyover
      the remainingtwoquarters
      of fiscal
      2008.




OnMarch
      17, 2006, the Compensation Committee
      of our
      Board of Directors, pursuant to our 2004 Incentive Award Plan, approved the
      adoption of a long term incentive plan involving the grant of performance based
      restricted stock units (the “Units”). OnMarch 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 onJanuary 1, 2006and
      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 2008 and 2007secondquarters,
      respectively, we recognized
      compensation expense of $812 and $1,149,
      and the related tax benefit was
      approximately $324 and $454. For
      the six months endedNovember 30, 2007and
      2006, respectively, we recognized
      compensation expense of $1,623 and $1,810, and the related tax benefit was
      approximately $632 and $706.AtNovember
      30,2007,total unrecognized compensation
      expense, based on our assessment of the probability that the performance
      criteria will be achieved, was approximately $1,623,which is expected to be recognized over
      a weighted average period of approximately 0.5years.




EffectiveAugust
      16, 2002,we issued 640,000 restricted
      shares of
      Class A common stock to certain officers and employees. The aggregate grant
      date
      fair value of these restricted shares was approximately $1,038, which we
      expensed on a straight-line basis over the accompanying five-year vesting periodendedAugust
      16, 2007. During the fiscal 2008
      and 2007first quarters,
      respectively, 83,800 and 86,200
      restricted shares vested and, concurrent with the annual vesting, we reacquired
      (and ultimately retired) 22,676 and 23,443 shares from certain employees in
      connection with the payment of individual income taxes. As ofAugust 31, 2007,
      of the 640,000 restricted shares
      originally issued, 528,800 shareswerevested,
      from which 103,338 shares were
      reacquired (and retired) in connection with the payment of individual income
      taxes, and 111,200 shares were cancelled.






6
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 SCHIFF
            NUTRITION INTERNATIONAL, INC. AND
            SUBSIDIARIES
 NOTES
            TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS - (continued)
 (dollars
            in thousands, except share
            data)






Property
      and equipment additions
      included in accounts payable amounted to $465and
      $249,respectively, for thesix months endedNovember
      30, 2007and 2006.




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.




Available-for-sale
      securities at fair
      value, which approximates unamortized cost, consist of the
      following:




November
                30,2007
            
            
            May
                31,
                2007Federal,
                state and municipal debt
                securities
            
            $
            23,611
            
            
            $
            32,529Corporate
                debt
                securities
            
            
            2,791
            
            
            
            9,038Corporate
                equity
                securities
            
            
            2,500
            
            
            
            4,250Other
            
            
            1,669
            
            
            
            —Total
            
            $
            30,571
            
            
            $
            45,817




Despite
      the long-term nature ofauction ratesecurities’
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 any current liquidity
      needs. Contractual maturities of debt securities are as follows atNovember 30,2007:




Less
                than one
                year
            
            $
            3,125One
                to five
                years
            
            
            —Over
                five
                years
            
            
            23,277Total
            
            $
            26,402




The
      amount of unrealized gains or losses
      for the firstsix
      monthsof fiscal 2008 and
      2007 was not significant.




3.
              RECEIVABLES,
                  NET




Receivables,
      net, consist of the
      following:


November
                30,2007
            
            
            May
                31,
                2007Trade
                accounts
            
            $
            16,660
            
            
            $
            19,467Other
            
            
            226
            
            
            
            42616,886
            
            
            
            19,893Less
                allowances for doubtful
                accounts, sales returns and discounts
            
            
            (1,552
            )
            
            
            (2,161
            )Total
            
            $
            15,334
            
            
            $
            17,732




7
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 SCHIFF
              NUTRITION INTERNATIONAL, INC. AND
              SUBSIDIARIES
 NOTES
              TO CONDENSED CONSOLIDATED
              FINANCIAL STATEMENTS - (continued)
 (dollars
              in thousands, except share
              data)





4.
              INVENTORIES




Inventories
      consist of the
      following:


November
                30,2007
            
            
            May
                31,
                2007Raw
                materials
            
            $
            12,454
            
            
            $
            8,960Work
                in
                process
            
            
            2,243
            
            
            
            2,340Finished
                goods
            
            
            16,767
            
            
            
            12,398Total
            
            $
            31,464
            
            
            $
            23,698


5.
              GOODWILL
                  AND INTANGIBLE ASSETS,
                  NET


Goodwill
      and intangible assets, net,
      consist of the following:




November
                30,2007
            
            
            May
                31,
                2007Gross
                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 thefirst six
      months offiscal 2008 or
      during fiscal 2007.




6.
              ACCRUED
                  EXPENSES


Accrued
      expenses consist of the
      following:


November
                30, 2007
            
            
            May
                31,
                2007Accrued
                personnel related
                costs
            
            $
            2,142
            
            
            $
            3,495Accrued
                promotional
                costs
            
            
            5,300
            
            
            
            4,642Other
            
            
            2,145
            
            
            
            2,405Total
            
            $
            9,587
            
            
            $
            10,542


7.
              CONCENTRATION
                  RISK


The
      combined net sales to our two
      largest customers are significant. AtNovember 30,2007andMay
      31, 2007,respectively, amounts
      due from Customer
      A represented approximately 31%
      and 40% and amounts due from Customer
      B represented approximately40%
      and 24% of total trade accounts
      receivable. For the firstsix monthsof
      fiscal 2008 and 2007, respectively,
      Customer A accounted for approximately 39% and36%
      and Customer B accounted for
      approximately37%
      and32%
      of total net sales. Net sales of our
      Schiff®Move
      Free®brand
      accounted for approximately49%
      of total net sales for thefirst six months of bothfiscal 2008 and
      2007.







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




8.
              COMMITMENTS
                  AND
                  CONTINGENCIES


From
      time to time, we are involved in
      claims, legal actions and governmental proceedings that arise from our business
      operations. Although ultimate liability cannot be determined at the present
      time, based on available information, we do not believe the resolution of these
      matters will have a material adverse effect on our results of operations and
      financial condition. However, it is possible that future litigation could arise,
      or that developments could occur in existing litigation, that could have a
      material adverse effect on our results of operations and financial
      condition.




9.
              RECENTLY
                  ISSUED ACCOUNTING
                  STANDARDS


In
      July 2006, the Financial Accounting
      Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for
      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. We were required to apply the provisions
      of FIN No. 48 onJune 1,
      2007.The cumulative effect
      of adopting FIN No. 48 resulted in a decrease in retained earnings of
      approximately $88. The total amount of unrecognized tax benefits atJune 1, 2007was
      $473, which includes unrecognized
      tax benefits of $88 that, if recognized, would favorably affect the effective
      tax rate. The remaining unrecognized tax benefits relate to temporary items
      that
      would not affect the annual effective tax rate. We recognize any interest and
      penalties accrued related to unrecognized tax benefits in income tax expense.As ofJune
      1, 2007,we
      had approximately $29 for the payment
      of accruedinterestrecognized
      in our
      consolidatedbalance sheet.
      We do not believe it is reasonably possible that we will have any significant
      increases or decreases to the liability for unrecognized tax benefits within
      the
      next twelve months. We file income tax returns in the U.S. federal jurisdiction,
      and in various state and local jurisdictions. We are no longer subject to U.S.
      federal income tax examinations for years prior to fiscal 2003 and we are no
      longer subject to state and local income tax examinations for years prior to
      fiscal 2002. The adoption of FIN No. 48 resulted in the reclassification of
      $38
      in deferred taxes, $351 in income taxes payable and $88 in retained earnings
      to
      other long-term liabilities.




In
      September 2006, the FASB issued
      Statement of Financial Accounting Standards (“SFAS”) No. 157, "Fair Value
      Measurements," that defines fair value, establishes a framework for measuring
      fair value, and expands disclosures about fair value measurements. SFAS No.
      157
      retains the exchange price notion in defining fair value and clarifies that
      the
      exchange price is the price in an orderly transaction between market
      participants to sell the asset or transfer the liability in the market in which
      the reporting entity would transact for the asset or liability. The definition
      focuses on the price that would be received to sell the asset or paid to
      transfer the liability (an exit price), not the price that would be paid to
      acquire the asset or received to assume the liability (an entry price). SFAS
      No.
      157 expands disclosure about the use of fair value to measure assets and
      liabilities in interim and annual periods subsequent to initial recognition.
      The
      additional disclosure focuses on the inputs used to measure fair value and
      the
      effect of the measurements on net income for the reporting period. The fair
      value measurement and disclosure provisions of SFAS No. 157 are effective for
      financial statements issued for fiscal years beginning afterNovember 15, 2007.We have not yet determined the impact
      of adopting SFAS No. 157 on our results of operations and financial
      condition.




In
      February 2007, the FASB issued SFAS
      No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,”
which permits entities to choose to measure many financial instruments and
      certain other items at fair value that are not currently required to be measured
      at fair value. SFAS No. 159 also establishes presentation and disclosure
      requirements designed to facilitate comparisons between entities that choose
      different measurement attributes for similar types of assets and liabilities.
      The measurement and disclosure provisions of SFAS No. 159 are effective as
      of
      the beginning of an entity’s first fiscal year that begins afterNovember 15, 2007.We have not yet determinedwhether we will choose
      to measure any
      financial assets or liabilities at fair value. Therefore,the impact of adopting
      SFAS No. 159 on
      our results of operations and financial conditionis unknown.







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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 and other reports filed with the SEC.Sections of this
      Form 10-Qincluding, in particular,
      our
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations,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 (the “Exchange Act”).These statementsare
      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,” “intends,” or similar expressions, are
      forward-looking statements.These statementsare
      subject to risks and uncertainties,
      certain of which are beyond our control, and therefore, actual results may
      differ materially.Important factors that may cause results tomateriallydiffer
      from these forward-looking
      statements include, but are not limited to, the factors indicated from time
      to
      time in our reportsfiled
      with the SEC,copies of
      which are available upon request from our investor relations group or which
      may
      be obtained at the SEC’s website (www.sec.gov).Forward-looking
      statements only speak as
      of the date hereof and we do not undertake and expressly disclaim any obligation
      to update or release any revisions to any forward-looking statement whether
      as a
      result of new information, future events or otherwise, except as required by
      law.




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.




During
      fiscal 2007 and thefirst half offiscal
      2008, we continued to provide
      selling and marketing support intended both to defend ouroverallMove
      Free business against competition,
      including private label, and ultimately to increase our market share in the
      joint care product category. The introduction of Move Free Advanced into
      substantially all of our significant retail accounts during the second half
      of
      fiscal 2006 was substantially completed in the fiscal 2007second quarter.During fiscal 2007 and continuing in
      fiscal 2008, we are attempting to increasethedistribution
      of our joint care products
      in international markets. Subject to the impact of our Move Free Advanced
      marketing initiatives and competitive joint care product category pricing
      pressures, including private label, and the success of increasing distribution
      in international markets, we believe fiscal 2008 net sales will be relatively
      constant, as compared to fiscal 2007 net sales. We believe any incremental
      sales
      volume in fiscal 2008 for our existing business may be offset by incremental
      price-discounting promotional activity.




Our
      operating results for fiscal 2007
      were impacted by profit margin volatility due to several factors, including
      significant raw material pricing fluctuations, particularly in the joint care
      product category, and a strong competitive environment. During fiscal 2006,
      joint care product category raw material prices, which increased significantly
      during fiscal 2005, returned to pre-fiscal 2005 levels. However, our gross
      profit percentage for fiscal 2007 was impacted by previous raw material purchase
      commitments.




Our
      operating results for fiscal 2008
      wereand will beimpacted
      by the declaration
      of a special cash dividend in July 2007. In connection with the declaration
      of
      the special dividend, our Board of Directors approved certain dividend
      equivalent rights allowing holders (employees and directors) of certain equity
      awards, including stock options and restricted stock units, to receive cash
      dividends on each share of common stock underlying the stock options and
      restricted stock units. As a result, we recognized a non-cash compensation
      expense, and a corresponding increase in additional paid-in capital, of
      approximately $0.7 million
      and $3.7million,respectively, during the three and six
      month periods endedNovember 30, 2007.Subject to future vesting of these
      equity awards, additional compensation expense of approximately $1.3million,
      together with a corresponding
      increase in additional paid-in capital, will be recognizedequallyover
      the remainingtwoquarters
      of fiscal
      2008.




In
      December 2007, we announced the
      fiscal 2008 third quarter introduction of smaller tablets for our existing
      Move
      Free items as well as a Move Free line extension. Operating results for fiscal
      2008, as compared to fiscal 2007, are impacted by the shifting of advertising
      support from the first half to the second half of fiscal 2008 in support of
      these Move Free marketing initiatives.  As a result, advertising
      expense for the first half of fiscal 2008 was significantly less than the amount
      recognized in the corresponding prior year period, and advertising expense
      for
      the second half of fiscal 2008 is expected to exceed the amount recognized
      in
      the corresponding period for fiscal 2007.




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, we cannot assure you that our decisions relating
      to these initiatives will not adversely impact our results of operations and
      financial condition.







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




Resultsof
      Operations (unaudited)


Three
      Months EndedNovember 30,2007Compared to Three
      Months


EndedNovember
      30,2006




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




2007
            
            
            2006Net
                sales
            
            $
            39,535
            
            
            
            100.0
            %
            
            $
            38,817
            
            
            
            100.0
            %Cost
                of goods
                sold
            
            
            22,974
            
            
            
            58.1
            
            
            
            22,640
            
            
            
            58.3Gross
                profit
            
            
            16,561
            
            
            
            41.9
            
            
            
            16,177
            
            
            
            41.7Operating
                expenses:Selling
                and
                marketing
            
            
            6,737
            
            
            
            17.0
            
            
            
            8,790
            
            
            
            22.7General
                and
                administrative
            
            
            4,452
            
            
            
            11.3
            
            
            
            4,155
            
            
            
            10.7Research
                and
                development
            
            
            1,276
            
            
            
            3.2
            
            
            
            864
            
            
            
            2.2Reimbursement
                of import
                costs
            
            
            (31
            )
            
            
            —
            
            
            
            (278
            )
            
            
            (0.7
            )Total
                operating
                expenses
            
            
            12,434
            
            
            
            31.5
            
            
            
            13,531
            
            
            
            34.9Income
                from
                operations
            
            
            4,127
            
            
            
            10.4
            
            
            
            2,646
            
            
            
            6.8Other
                income,
                net
            
            
            401
            
            
            
            1.0
            
            
            
            728
            
            
            
            1.9Income
                tax
                expense
            
            
            (1,725
            )
            
            
            (4.3
            )
            
            
            (1,125
            )
            
            
            (2.9
            )Net
                income
            
            $
            2,803
            
            
            
            7.1
            %
            
            $
            2,249
            
            
            
            5.8
            %




Net
      Sales.Net salesincreased
      approximately 1.8% to $39.5million
      for the fiscal 2008secondquarter,
      from $38.8million
      for the fiscal 2007secondquarter.
      Overall, theincreasein net sales was primarily attributable
      to an increasein
      branded sales,substantially offset
      by a decrease in
      private label sales.




Aggregate
      branded net salesincreased
      approximately8.6%to $32.2million
      for the fiscal 2008secondquarter,
      from $29.6million
      for the fiscal 2007secondquarter.
      Theincrease
      was primarily due to
      an increase
      in branded joint care product
      sales volume of approximately $8.7million,
      or29.6%,and
      a modest $0.2 million decrease in
      estimated sales returns,partially offset by a$1.2
      million decrease in other branded
      sales volume and a$5.1millionincrease
      in aggregate branded sales
      promotional incentives classified as sales price reductions. Classification
      of
      promotional costs as a sales reduction is required when the promotion
      effectively represents a price reduction. Theincreasein branded joint care product sales
      volume was primarily attributable to promotional timing considerations. Move
      Free net sales were $18.9million
      and $17.4million,
      respectively, for the fiscal
      2008 and 2007secondquarters.




Private
      label salesdecreased approximately
      19.9% to $7.4
      million for the fiscal 2008 second quarter, from $9.2 million for the fiscal
      2007 second quarter, primarily due to a reduction in customer promotional
      activity.




Gross
      Profit.Gross profitincreased
      approximately2.4%to $16.6million
      for the fiscal 2008secondquarter,
      from $16.2million
      for the fiscal 2007secondquarter,
      primarily due to an increasein net sales. Gross profit, as a
      percentage of net sales,remained relatively constant
      at 41.9%
      and 41.7%, respectively, for the second quarter of fiscal 2008 and
      2007.  An approximate $1.5 million decrease in joint care product raw
      material costs and a lower mix of lower-margin private label sales was
      substantially offset by the increase in sales promotional incentives and certain
      initial transition costs related to introduction of the smaller Move Free
      tablet.




Operating
      Expenses.Operating expensesdecreased
      approximately8.1%to $12.4million
      for the fiscal 2008second quarter,
      from $13.5million
      for the fiscal 2007second quarter.
      Operating expenses, as a percentage of
      net sales, were31.5%and34.9%,
      respectively, for the fiscal 2008 and
      2007second
      quarters. Thedecreasein operating expenses resulted
      primarily froma decrease
      in selling and marketing expenses, partially offset by increases in general
      and
      administrative and research and development expenses. In addition, the
      fiscal 2007 second quarter includes approximately $0.3 million in reimbursement
      from certain suppliers of previously recognized import costs as compared to
      less
      than $0.1 million in similar reimbursement for the second quarter of fiscal
      2008.







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Selling
      and marketing expenses,
      including sales, marketing, advertising, freight and other costs, decreased
      to
      approximately $6.7million
      for the fiscal 2008second quarter,from $8.8million
      for the fiscal 2007second quarter,primarily due toa $2.4million
      reduction in advertising costs,
      partially offset bya $0.2
      million increase in selling variables due to the increase in
      sales. The decrease in
      advertising costs primarily resulted from a decision to shift certain television
      advertising to the second half of fiscal 2008 to coincide with the introduction
      of the smaller tablet and line extension for our Move Free
      business.




General
      and administrative expenses
      increased to approximately $4.5million
      for the fiscal 2008second quarter,
      from approximately $4.2million
      for the fiscal 2007second quarter,
      primarily due to the fiscal 2008secondquarter
      recognition of approximately
      $0.5million
      in incremental compensation
      expense for thespecialdividend, partially
      offset by a decrease in legal
      fees.The special dividend
      compensation expense represents a non-cash charge for dividend equivalent rights
      received by holders (employees and directors) of certain equity awards,
      including stock options and restricted stock units. Subject to future vesting
      of
      these equity awards, additional compensation expense, primarily included in
      general and administrative expenses, of approximately $1.3 million will be
      recognized equally over the remaining two quarters of fiscal
      2008.




Research
      and development costs increased
      to approximately $1.3million
      for the fiscal 2008second quarter,from $0.9million
      for the fiscal 2007second quarter,primarily due to an increase in
      expenses associated with product researchand product testing related
      to the
      registration of products in countries outside of the United
      States.




Other
      Income/Expense.Other income, net, was
      $0.4million
      for the fiscal 2008second quarter,compared to $0.7 million for the fiscal
      2007second
      quarter.Thedecreasewas primarily due toa reduction ininterest
      income resulting from adecreasein cash and available-for-sale
      securitiesreflectingthe
      impact of the special
      dividend which was funded from cash and liquidation of available-for-sale
      securities.




Provision
      for Income
      Taxes.Provision for income
      taxes was $1.7million
      for the fiscal 2008second quarter,compared to $1.1million
      for the fiscal 2007second quarter.Theincreaseresulted froman increasein
      pre-tax incomeandan
      increase in our effective tax rate
      primarily due to an increase in certain non-deductible officer compensation
      resulting from the special dividendand a decrease in tax-exempt
      interest
      income.The fiscal 2008second
      quartertax rate was38.1%,
      compared to the fiscal 2007second quartertax
      rate of33.4%.




Resultsof
      Operations (unaudited)


SixMonths
      EndedNovember 30,2007Compared toSixMonths


EndedNovember
      30,2006




The
      following tables show comparative
      results for selected items as reported and as a percentage of net sales for
      thesixmonths
      endedNovember 30,(dollars in
      thousands):




2007
            
            
            2006Net
                sales
            
            $
            80,262
            
            
            
            100.0
            %
            
            $
            84,469
            
            
            
            100.0
            %Cost
                of goods
                sold
            
            
            47,280
            
            
            
            58.9
            
            
            
            51,176
            
            
            
            60.6Gross
                profit
            
            
            32,982
            
            
            
            41.1
            
            
            
            33,293
            
            
            
            39.4Operating
                expenses:Selling
                and
                marketing
            
            
            13,493
            
            
            
            16.8
            
            
            
            17,079
            
            
            
            20.2General
                and
                administrative
            
            
            11,239
            
            
            
            14.0
            
            
            
            7,854
            
            
            
            9.3Research
                and
                development
            
            
            2,302
            
            
            
            2.9
            
            
            
            1,680
            
            
            
            2.0Reimbursement
                of import
                costs
            
            
            (31
            )
            
            
            —
            
            
            
            (298
            )
            
            
            (0.4
            )Total
                operating
                expenses
            
            
            27,003
            
            
            
            33.7
            
            
            
            26,315
            
            
            
            31.1Income
                from
                operations
            
            
            5,979
            
            
            
            7.4
            
            
            
            6,978
            
            
            
            8.3Other
                income,
                net
            
            
            1,199
            
            
            
            1.5
            
            
            
            1,413
            
            
            
            1.6Income
                tax
                expense
            
            
            (2,727
            )
            
            
            (3.4
            )
            
            
            (2,879
            )
            
            
            (3.4
            )Net
                income
            
            $
            4,451
            
            
            
            5.5
            %
            
            $
            5,512
            
            
            
            6.5
            %




Net
      Sales.Net salesdecreased
      approximately5.0%to $80.3million
      for thesix months endedNovember
      30, 2007,from $84.5million
      for thesix months endedNovember
      30, 2006,primarily due to a decrease
      in both
      branded and private label net sales.





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Aggregate
      branded net sales decreased
      approximately3.4%to $64.5million
      for thesix months endedNovember
      30, 2007,from $66.7million
      for thesix months endedNovember
      30, 2006. An approximate $2.6 million,
      or 3.5%,
      increase in branded joint care product sales volume and an approximate $0.5
      million reduction in estimated sales returns were more than offset by a $1.2
      million, or 8.5%, decrease in other branded sales volumeand an approximate $4.7
      million increase
      in branded sales promotional incentives classified as sales price reductions.Classification of
      promotional costs as a sales reduction is required when the promotion
      effectively represents a price reduction. Move Free net sales were $39.7million
      and $41.6million,
      respectively, for thesix months endedNovember
      30, 2007and
      2006.




Private
      label salesdecreased approximately
      10.9% to $15.8
      million for the six months endedNovember 30, 2007,from $17.7 million for the six months
      endedNovember 30,
      2006,primarily due to a
      reduction in customer promotional activity.




Gross
      Profit.Gross profit remained
      relatively constant at $33.0 million and $33.3 million, respectively, for the
      six months endedNovember
      30, 2007and 2006.Gross
      profit, as a
      percentage of net sales,increased to 41.1% for
      the six months
      endedNovember 30,
      2007,from 39.4% for the
      six months endedNovember
      30, 2006,primarily due to
      an approximate $4.6 million decrease in joint care product raw material costs
      and a lower mix of lower-margin private label sales, partially offset by the
      increase in sales promotional incentives. The approximate $0.5 million
      decrease in estimated sales returns was offset by an equal increase in inventory
      valuation adjustments.




Operating
      Expenses.Operating expensesincreased
      approximately2.6%to $27.0million
      for thesix months endedNovember
      30, 2007,from $26.3million
      for thesix months endedNovember
      30, 2006.Operating expenses,
      as a percentage of
      net sales, were 33.7%
      and31.1%,
      respectively, for thesix months endedNovember
      30, 2007and 2006.Theincreasein operating expenses resulted
      primarily froman increase
      in general and administration expenses and research and development expenses,
      substantially offset by a decrease in selling and marketing expenses. In
      addition, the six months endedNovember 30, 2006includes
      approximately $0.3 million in
      reimbursement from certain suppliers of previously recognized import costs
      as
      compared to less than $0.1 million in similar reimbursements for the fiscal
      2008
      comparable period.




Selling
      and marketing expenses,
      including sales, marketing, advertising, freight and other costs, decreased
      to
      approximately $13.5million
      for thesix months endedNovember
      30,
      2007,from $17.1million
      for thesix months endedNovember
      30, 2006,primarily due to a$3.4million
      reduction in advertising
      costs.The decrease in
      advertising costs primarily results from a decision to shift certain television
      advertising to the second half of fiscal 2008 to coincide with the introduction
      of the smaller tablet and line extension for our Move Free
      business.




General
      and administrative expenses
      increased to approximately $11.2million
      for thesix months endedNovember
      30, 2007,from approximately $7.9million
      for thesix months endedNovember
      30, 2006,primarily due to the
      recognition of
      approximately $3.4million
      in incremental
      compensation expense for thespecialdividend.The
      special dividend compensation
      expense represents a non-cash charge for dividend equivalent rights received
      by
      holders (employees and directors) of certain equity awards, including stock
      options and restricted stock units. Subject to future vesting of these equity
      awards, additional compensation expense, primarily included in general and
      administrative expenses, of approximately $1.3 million will be recognized
      equally over the remaining two quarters of fiscal 2008.




Research
      and development costs increased
      to approximately $2.3million
      for thesix months endedNovember
      30,
      2007,from $1.7million
      for thesix months endedNovember
      30, 2006,primarily due to an
      increase in
      expenses associated with product researchand product testing related
      to the
      registration of products in countries outside of the United
      States.




Other
      Income/Expense.Other income, net, was
      $1.2million
      for thesix months endedNovember
      30, 2007,compared to $1.4million
      for thesix months endedNovember
      30, 2006.Thedecreasewas primarily due toa reduction ininterest
      income resulting from adecreasein cash and available-for-sale
      securitiesreflecting the
      impact of the special dividend which was funded from cash and liquidation of
      available-for-sale securities.




Provision
      for Income
      Taxes.Provision for income
      taxes was $2.7million
      for thesix months endedNovember
      30, 2007,compared to $2.9million
      for thesix months endedNovember
      30, 2006. The effective tax rate
      was 38.0% and
      34.3%, respectively, for the six months endedNovember 30, 2007and
      2006.Theincreasein our effective tax ratewasprimarily
      due to an increase in certain
      non-deductible officer compensation resulting from the special dividendand a decrease in
      tax-exempt interest income.




Liquidityand
      Capital Resources




Working
      capital decreased approximately
      $33.9
      million to $71.0million
      atNovember 30,2007,from $104.9 million
      atMay 31, 2007,primarily due to a decrease of
      approximately $39.7million
      in cash and
      available-for-sale securities due to thefiscal 2008 first quarterpayment
      or accrual of the special
      dividend. Inventories increased approximately $7.8million,
      which reflects an increase in
      finished goods for fiscal 2008thirdquarter
      promotions,consistent with the
      prior year, as well
      as a decision to build up quantities of certain other inventory
      components.Prepaid
      expensesincreased
      by approximately $0.6million,
      primarily due to anincrease
      inprepaid insurance as
      certain annual
      insurance policies were renewed atSeptember 1, 2007.Current
      liabilities decreased approximately $0.5million
      primarily due to the
      payment of accrued management annual incentive costsand income taxes, substantiallyoffset
      by dividends payable on
      non-vested stock options and restricted stock unitsand the short-term financing
      of annual
      premiums due from the renewal of the annual insurance
      policies.







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OnJune
      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 extended the maturity of
      the
      Credit Facility fromJune
      30, 2007toJune
      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. AtNovember
      30,2007,there were no amounts outstanding and
      $25.0 million was available for borrowing under the Credit
      Facility.




In
      July 2007, our Board of Directors
      approved a $1.50 per share special cash dividend, which was paid on
      August 13, 2007 to shareholders of record at the close of business onJuly 31, 2007.In connection with the declaration of
      the special dividend, our Board of Directors approved certain dividend
      equivalent rights, allowing holders (employees and directors) of certain equity
      awards, including stock options and restricted stock units, to receive cash
      dividends on each share of common stock underlying the stock options and
      restricted stock units. In aggregate, atJuly 31, 2007,the record date, the Company had
      outstanding approximately 29.9 million shares of common stock (including shares
      of common stock underlying equity awards subject to dividend equivalent rights),
      including approximately 26.6 million shares of outstanding Class A and Class
      B common stock, approximately 1.8 million shares of Class A common stock
      underlying outstanding stock options, and approximately 1.5 million shares
      of
      Class A common stock underlying outstanding restricted stock units. The
      aggregate amount of the special dividend was approximately $44.9 million,
      presuming 100% vesting of shares underlying equity awards (approximately
      55%had vested as ofNovember 30,2007). To the extent outstanding
      stock
      options and restricted stock units were unvested atNovember 30,2007,the $1.50 per share
      dividend was not,
      and will not be, distributed until after such equity awards become
      vested.




The
      special dividend was funded from
      cash and liquidation of available-for-sale securities. Approximately $42.6
      million of the distribution occurred in August 2007, and the remaining amounthas been orwill
      be distributed, if at all, upon
      vesting of the stock options and upon issuance of the shares underlying
      restricted stock units.




We
      believe that our cash, cash flows
      from operations and the financing sources discussed above 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 complimentary
      to our existing business. We could use cash and financing sources discussed
      herein, or financing sources that subsequently become available, to fund
      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, our 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.







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A
      summary of our outstanding contractual
      obligations atNovember
      30,2007is
      as follows (in
      thousands):




Contractual Cash
                Obligations
            
            Total
                Amounts
                Committed
            
            
            Less
                than
              1
                Year
            
            
            1-3
              Years
            
            
            3-5
              Years
            
            
            After
              5
                YearsOperating
                leases
            
            $
            12,617
            
            
            $
            2,535
            
            
            $
            4,689
            
            
            $
            4,623
            
            
            $
            770Purchase
                obligations(1)
            
            
            9,642
            
            
            
            9,642
            
            
            
            —
            
            
            
            —
            
            
            
            —Debt
                obligations
            
            
            788
            
            
            
            788
            
            
            
            —
            
            
            
            —
            
            
            
            —Total
                obligations
            
            $
            23,047
            
            
            $
            12,965
            
            
            $
            4,689
            
            
            $
            4,623
            
            
            $
            770




(1)
            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, uncertainties related
      to certain tax benefits, valuation of deferred tax assets, valuation of
      share-based payments and recoverability of long-lived assets. Note 1 of Notes
      to
      the Consolidated Financial Statements contained in our Annual Report on Form
      10-K for the year endedMay
      31, 2007,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:




●
            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 thesix months
                endedNovember 30,2007and
                2006,inventory
                valuation adjustments
                resulted in a decrease in our gross profit and operating income of
                approximately $0.5million and
                $0.4million,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 discountsresulted in
                an increase inour gross profit
                and
                operating incomeof
                approximately $0.5 millionfor thesix
                months endedNovember 30,
                2007and 2006.AtNovember 30,2007andMay
                31, 2007,our allowances
                for doubtful
                accounts, sales returns and discounts amounted to approximately
                $1.6million
                and $2.2 million,
                respectively. Actual results may differ from our current estimates,
                resulting in adjustment of the respective
                allowance(s).




●
            We
                recognize tax benefits relative
                to certain tax positions in which we may be uncertain as to whether
                that
                tax position will ultimately be sustained as filed in our tax return.
                The
                recognition or derecognition of these tax benefits is subject to
                periodic
                evaluation of the sustainability of the tax position based upon changes
                in
                facts, circumstances or available information. Changes in the recognition
                of these tax benefits did not significantly impact net income for
                thesix months
                endedNovember 30,
                2007and
                2006.




●
            We
                currently have deferred tax
                assets resulting from 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. Changes in these
                valuation allowances did not significantly impact net income for
                thesix months
                endedNovember 30,
                2007and 2006.AtNovember 30,2007andMay
                31, 2007,deferred tax
                asset valuation
                allowances were nil.







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●
            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. Our
                periodic assessment of the probability that the performance criteria
                will
                be achieved considers such factors as historical financial results
                and
                future financial expectations, including an analysis of sales trends
                and
                operating margins; as well as changes in the nutritional supplements
                industry and competitive environment. For thesix months
                endedNovember 30,2007and
                2006,we recognized compensation
                expense related to these awards of approximately $1.6 millionand
                $1.8million,
                respectively. AtNovember
                30,2007,total unrecognized compensation
                expense, based on our assessment of the probability that the performance
                criteria will be achieved, was approximately $1.6million.




●
            We
                have certain intangible assets,
                primarily consisting of goodwill, which are tested for impairment
                at least
                annually. 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. See further discussion of raw material pricing matters in the “General”
and “Results of Operations” sections above.




Seasonality




Our
      business is not inherently seasonal;
      however, we experience 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 product sales mix, competitive
      conditions, raw material pricing pressures and other factors, as 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.




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. Our Credit Facility, under
      which borrowings bear interest at floating rates, had no amounts outstanding
      atNovember 30,2007.We do not believe that
      a hypothetical
      10% change in interest rates would have a material effect on our pretax earnings
      or cash flows.




ITEM
                  4.
              CONTROLS
                  AND
                  PROCEDURES


We
      maintain disclosure controls and
      procedures that are designed to ensure that information required to be disclosed
      in our 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 Exchange Act 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 fiscal quarter 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.




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.




ITEM
                  4T.
              CONTROLS
                  AND
                  PROCEDURES
  Not
        Applicable.





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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


There
      have been no material
      changes to the risk factors previously disclosed by us in Part I, Item 1A
      of our Annual Report on Form 10-K for the year endedMay 31, 2007.




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


Our
      Credit Facility contains certain
      customary financial covenants that may limit our ability to pay dividends on our common
      stock.





ITEM
                  3.
              DEFAULTS
                  UPON SENIOR
                  SECURITIES


None.




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


Our
      Annual Meeting of Stockholders was
      held onOctober 25, 2007for
      the following
      purposes:





Proposal
      1: Election of our Board of
      Directors.


For
              
              Withheld
                  AuthorityEric
                  Weider
              
              156,630,398
              
              2,666,653George
                  F.
                  Lengvari
              
              156,737,969
              
              2,559,082Bruce
                  J.
                  Wood
              
              156,632,798
              
              2,664,253Ronald
                  L.
                  Corey
              
              158,347,584
              
              949,467Roger
                  H.
                  Kimmel
              
              156,737,669
              
              2,559,382Brian
                  P.
                  McDermott
              
              158,347,584
              
              949,467H.F.
                  Powell
              
              158,252,587
              
              1,044,464





Proposal
      2: Approval of the Amendment to
      our 2004 Incentive Award Plan.





For
            
            Against
            
            Abstentions151,946,195
            
            5,029,331
            
            266,290





ITEM
                  5.
              OTHER
                  INFORMATION


Not
      applicable.





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ITEM
                  6.
              EXHIBITS




3.1.
              Amended
                  and Restated Certificate
                  of Incorporation of Schiff Nutrition International, Inc.
                  (1)3.2.
              Amended
                  and Restated Bylaws of
                  Weider Nutrition International, Inc. (2)4.1.
              Revolving
                  Credit Agreement dated
                  as ofJune 30,
                  2004between Weider
                  Nutrition Group, Inc. and KeyBank National
                  Association. (3)4.2.
              Form
                  of specimen Class A common
                  stock certificate. (4)10.1.
              License
                  Agreement dated as ofSeptember
                  19, 2007between Mariz
                  Gestao
                  E Investimentos Limitada and Schiff Nutrition Group, Inc.
                  (5)10.2.
              Employment
                  and Change in Control
                  Agreement dated as ofJune 1, 2007between
                  Schiff Nutrition Group,
                  Inc. and Bruce J. Wood. (5)*10.3.
              Form
                  of Amended and Restated
                  Agreement between Schiff Nutrition Group, Inc. and certain of its
                  executive officers. (5)*10.4.
              Amendment
                  No. 1 to the Schiff
                  Nutrition International, Inc. 2004 Incentive
                  Award Plan.
                  (6)*31.1.
              Certification
                  of Chief Executive
                  Officer pursuant to Section 302 of the
                  Sarbanes-Oxley
                  Act. (7)31.2.
              Certification
                  of Chief Financial
                  Officer pursuant to Section 302 of the
                  Sarbanes-Oxley
                  Act. (7)32.1.
              Certification
                  of Chief Executive
                  Officer and Chief Financial Officer pursuant to Section 906 of the
                  Sarbanes-Oxley
                  Act. (8)
  
 (1)
              Previously
                  field in the Company’s
                  Quarterly Report on Form 10-Q filed onJanuary 17,
                  2006and 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 onJuly 8, 2004and
                  incorporated herein by
                  reference.(4)
              Previously
                  filed in the Company’s
                  Annual Report on Form 10-K filed onAugust 29,
                  2006and incorporated
                  herein by
                  reference.(5)
              Previously
                  filed in the Company’s
                  Current Report on Form 8-K filedSeptember
                  25, 2007and incorporated
                  herein by
                  reference.(6)
              Previously
                  filed in the Company’s
                  Definitive Proxy Statement on Form14A filed
                  onSeptember
                  27, 2007and incorporated
                  herein by
                  reference.(7)
              Filed
                  herewith.(8)
              Furnished
                  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:
January
              11,2008
            By:
            /s/Bruce
                  J.
                  WoodBruce
                J.
                WoodPresident,
                  Chief Executive Officer
                  and Director







Date:
January
              11,2008
            By:
            /s/Joseph
                  W.
                  BatyJoseph
                W.
                BatyExecutive
                  Vice President and Chief
                  Financial Officer










19




Schiff
        Nutrition
        International, Inc.
 Index





PART
      I. FINANCIAL
      INFORMATION





ITEM
                1.
            FINANCIAL
                STATEMENTS





CONDENSED
                CONSOLIDATED BALANCE
                SHEETS


CONDENSED
                CONSOLIDATED STATEMENTS
                OF INCOME(3
                months)CONDENSED
              CONSOLIDATED STATEMENTS OF INCOME (6
              months)


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)(3
      months)


- Results
      of Operations (unaudited)(6
      months)


-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


ITEM 4T.
            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
                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