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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

for the Quarterly Period Ended March 31, 2010

Commission file number 000-23731

LOGO

NUTRACEUTICAL INTERNATIONAL CORPORATION(Exact name of registrant as specified in its charter)

Delaware(State of incorporation)

87-0515089(IRS Employer Identification No.)1400 Kearns Boulevard, 2nd Floor, Park City, Utah(Address of principal executive office)

84060(Zip code)


(435) 655-6106(Registrant's telephone number, including area code)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. YES ý    NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). YES o    NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not check if a
smaller reporting company)

Smaller reporting company o


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

At April 29, 2010, the registrant had 10,384,185 shares of common stock outstanding.



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Table of Contents



NUTRACEUTICAL INTERNATIONAL CORPORATION

INDEX



Description

Page No.Part I.

Financial Information


3Item 1.

Financial Statements (unaudited)


3Condensed Consolidated Balance SheetsSeptember 30, 2009 and March 31, 2010


3Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)Three Months and Six Months Ended
March 31, 2009 and 2010


4Condensed Consolidated Statements of Cash FlowsSix Months Ended March 31, 2009 and 2010


5Notes to Condensed Consolidated Financial Statements


6Item 2.

Management's Discussion and Analysis of Financial Condition and
Results of Operations


13Item 3.

Quantitative and Qualitative Disclosures about Market
Risk


21Item 4.

Controls and Procedures


22Part II.

Other Information


23Item 1.

Legal Proceedings


23Item 1A.

Risk Factors


23Item 2.

Unregistered Sales of Equity Securities and Use of
Proceeds


23Item 4.

Submission of Matters to a Vote of Security Holders


23Item 6.

Exhibits


24


2

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Table of Contents

PART IFINANCIAL INFORMATION



Item 1.    Financial Statements



NUTRACEUTICAL INTERNATIONAL CORPORATION        CONDENSED CONSOLIDATED BALANCE SHEETS        (unaudited)        (dollars in thousands)

September 30,
2009(1)

March 31,
2010ASSETSCurrent assetsCash and cash equivalents

$
5,858

$
6,609Accounts receivable, net


11,539


13,436Inventories, net


29,238


36,192Prepaid expenses and other current assets


2,344


1,724Deferred income taxes


1,603


1,612Total current assets


50,582


59,573Property, plant and equipment, net


55,584


61,455Goodwill


1,177


4,738Intangible assets, net


14,452


18,613Other non-current assets, net


1,094


2,611Deferred income taxes, net


11,071


10,048Total assets

$
133,960

$
157,038LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable

$
11,248

$
15,117Accrued expenses


6,890


6,981Total current liabilities


18,138


22,098Long-term debt


18,500


30,500Other non-current liabilities


1,684


2,198Total liabilities


38,322


54,796Stockholders' equityCommon stock


106


104Additional paid-in capital


26,458


24,094Retained earnings


68,751


77,796Accumulated other comprehensive income


323


248Total stockholders' equity


95,638


102,242Total liabilities and stockholders' equity

$
133,960

$
157,038


(1)The
condensed consolidated balance sheet as of September 30, 2009 has been prepared using information from the audited financial statements at that
date.


The
accompanying notes are an integral part of these condensed consolidated financial statements.

3

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NUTRACEUTICAL INTERNATIONAL CORPORATION        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  AND COMPREHENSIVE INCOME (LOSS)        (unaudited)    
  (dollars in thousands, except per share data)

Three months ended March 31,

Six months ended March 31,2009

2010

2009

2010Net sales

$
41,957

$
47,896

$
81,586

$
92,735Cost of sales


19,517


22,553


37,714


43,918Gross profit


22,440


25,343


43,872


48,817Operating expensesSelling, general and administrative


15,713


16,679


31,486


33,428Amortization of intangible assets


158


314


317


612Impairment of goodwill


37,519





37,519


Income (loss) from operations


(30,950
)

8,350


(25,450
)

14,777Interest and other (income) expense, net


264


147


774


256Income (loss) before provision (benefit) for income taxes


(31,214
)

8,203


(26,224
)

14,521Provision (benefit) for income taxes


(7,855
)

3,102


(5,977
)

5,476Net income (loss)

$
(23,359
)
$
5,101

$
(20,247
)
$
9,045Other comprehensive income (loss)Foreign currency translation adjustment, net of tax


343


(77
)

(433
)

(75
)Comprehensive income (loss)

$
(23,016
)
$
5,024

$
(20,680
)
$
8,970Net income (loss) per common shareBasic

$
(2.15
)
$
0.49

$
(1.86
)
$
0.87Diluted


(2.15
)

0.49


(1.86
)

0.86Weighted average common shares outstandingBasic


10,870,769


10,385,927


10,859,876


10,437,342Dilutive effect of stock options





92,759





87,265Diluted


10,870,769


10,478,686


10,859,876


10,524,607


The
accompanying notes are an integral part of these condensed consolidated financial statements.

4

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NUTRACEUTICAL INTERNATIONAL CORPORATION        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        (unaudited)        (dollars in thousands)

Six months ended
March 31,2009

2010Cash flows from operating activitiesNet income (loss)

$
(20,247
)
$
9,045Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


3,276


3,527Amortization of deferred financing fees


28


28Impairment of goodwill


37,519


Losses on disposals of property and equipment


2


Deferred income taxes


(9,850
)

1,014Changes in assets and liabilities, net of effects of acquisitionsAccounts receivable, net


687


(566
)Inventories, net


2,883


(5,654
)Prepaid expenses and other current assets


831


713Other non-current assets, net


(306
)

(1,508
)Accounts payable


(1,950
)

3,869Accrued expenses


(1,382
)

(9
)Other non-current liabilities


311


514Net cash provided by operating activities


11,802


10,973Cash flows from investing activitiesAcquisitions of businesses, net of cash acquired





(11,608
)Purchases of property and equipment


(6,395
)

(8,206
)Net cash used in investing activities


(6,395
)

(19,814
)Cash flows from financing activitiesProceeds from long-term debt


3,000


17,500Payments on long-term debt


(8,500
)

(5,500
)Proceeds from issuances of common stock


266


421Purchases of common stock for treasury





(2,830
)Tax benefit from stock option exercises


36


43Net cash provided by (used in) financing activities


(5,198
)

9,634Effect of exchange rate changes on cash and cash equivalents


(153
)

(42
)Net increase in cash and cash equivalents


56


751Cash and cash equivalents at beginning of period


5,189


5,858Cash and cash equivalents at end of period

$
5,245

$
6,609


The
accompanying notes are an integral part of these condensed consolidated financial statements.

5

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NUTRACEUTICAL INTERNATIONAL CORPORATION        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (unaudited)        (dollars in thousands, except
per share data)

1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all necessary adjustments to present fairly the consolidated financial
position of Nutraceutical International Corporation and its subsidiaries (the "Company") as of March 31, 2010, the results of their operations for the three and six months ended
March 31, 2009 and 2010 and their cash flows for the six months ended March 31, 2009 and 2010, in conformity with accounting principles generally accepted in the United States of America
for interim financial information applied on a consistent basis. Results for the three and six months ended March 31, 2010 are not necessarily indicative of the results to be expected for the
full fiscal year.

Certain
information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United
States of America have been omitted. Accordingly, these financial statements should be read in conjunction with the Company's Form 10-K for the Fiscal Year Ended
September 30, 2009, which was filed with the Securities and Exchange Commission on December 10, 2009.

2. ACCOUNTS RECEIVABLE, NET

Accounts receivable, net of allowances for sales returns and doubtful accounts, consisted of the following:

September 30,
2009

March 31,
2010Accounts receivable

$
13,718

$
15,668Less allowances


(2,179
)

(2,232
)$
11,539

$
13,436


3. INVENTORIES, NET

Inventories, net of reserves for slow moving, obsolete and/or damaged inventory, were comprised of the following:

September 30,
2009

March 31,
2010Raw materials

$
12,608

$
14,614Work-in-process


4,847


6,107Finished goods


13,705


17,54531,160


38,266Less reserves


(1,922
)

(2,074
)$
29,238

$
36,192


6

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NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

4. GOODWILL AND INTANGIBLE ASSETS

The change in the carrying amount of goodwill from September 30, 2009 to March 31, 2010 was as follows:

GoodwillBalance as of September 30, 2009Goodwill

$
41,571Accumulated impairment losses


(40,394
)1,177Goodwill attributable to fiscal 2010 acquisitions


3,561Balance as of March 31, 2010Goodwill


45,132Accumulated impairment losses


(40,394
)$
4,738


The
carrying amounts of intangible assets at September 30, 2009 and March 31, 2010 were as follows:

September 30, 2009

March 31, 2010Weighted-
Average
Amortization
Period (Years)Gross
Carrying
Amount(1)

Accumulated
Amortization(1)

Net
Carrying
Amount

Gross
Carrying
Amount(1)

Accumulated
Amortization(1)

Net
Carrying
AmountIntangible assets subject to amortization:Trademarks/trade names/patents

$
516

$
(411
)
$
105

$
548

$
(434
)
$
114


5Customer relationships/distribution rights


4,251


(1,223
)

3,028


6,402


(1,707
)

4,695


6Developed software and technology


772


(450
)

322


772


(528
)

244


55,539


(2,084
)

3,455


7,722


(2,669
)

5,053Intangible assets not subject to amortization:Trademarks/trade names/licenses


10,997





10,997


13,560





13,560$
16,536

$
(2,084
)
$
14,452

$
21,282

$
(2,669
)
$
18,613


(1)Amounts
include the impact of foreign currency translation adjustments.


7

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NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

4. GOODWILL AND INTANGIBLE ASSETS (Continued)




Estimated future amortization expense related to the March 31, 2010 net carrying amount of $5,053 for intangible assets subject to
amortization is as follows:

Year Ending September 30,

Estimated
Amortization
Expense2010(1)

$
6242011


1,2392012


1,0722013


8752014


638Thereafter


605$
5,053


(1)Estimated
amortization expense for the year ending September 30, 2010 includes only amortization to be recorded after March 31, 2010.


During
the three months ended March 31, 2009, the Company recorded a non-cash goodwill impairment charge of $37,519 ($27,288 after tax, or $2.51 per diluted share for
the three and six months ended March 31, 2009) related to the Company's branded and natural food markets reporting units. The ongoing uncertainty in general and economic conditions may continue
to impact
retail and consumer demand, as well as the market price of the Company's common stock, and could negatively impact the Company's future operating performance, cash flow and/or stock price and could
result in additional goodwill and/or intangible asset impairment charges being recorded in future periods which could materially impact the Company's consolidated financial statements. The valuation
of goodwill and intangible assets is subject to a high degree of judgment and complexity.

8

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NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

In September 2006, the Financial Accounting Standards Board issued authoritative guidance which is included in Accounting Standards Codification 820, "Fair Value Measurements and
Disclosures". This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The
guidance does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in prior accounting pronouncements. On October 1, 2008, the Company adopted the
provisions of this guidance for assets and liabilities measured at fair value on a recurring basis. On October 1, 2009, the Company adopted the provisions of this guidance for assets and
liabilities measured at fair value on a non-recurring basis. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

On
a quarterly basis, the Company measures at fair value certain financial assets, including cash equivalents, using a hierarchy of valuation techniques based on whether the inputs to
those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's own assumptions. The
following fair value hierarchy prioritizes the inputs into three broad levels:



This
hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The fair value of the
Company's financial assets at March 31, 2010 was determined using the following level of input:

Fair Value Measurements as of March 31, 2010Total

Level 1

Level 2

Level 3Assets:Cash equivalentsmoney market fund

$
1,312


1,312








The
fair value of the money market fund, classified as Level 1, was obtained from a quoted market price.

Long-term
debt was comprised of the following:

September 30,
2009

March 31,
2010Revolving Credit Facility

$
18,500

$
30,500


9

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Table of Contents

NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The
Company's debt is stated at book value which approximated its fair value at September 30, 2009 and March 31, 2010.

The
Company's current revolving credit facility has available credit borrowings of $60,000 with no automatic reductions and provides an accordion feature that can increase the available
credit borrowings to $90,000, subject to approval by the lenders and compliance with certain covenants and conditions. The lenders under the revolving credit facility are Rabobank International and
Wells Fargo. To date, the Company has not experienced any difficulties in accessing the available funds under the revolving credit facility.

At
March 31, 2010, the Company had outstanding revolving credit borrowings of $30,500. Borrowings under the revolving credit facility are collateralized by substantially all
assets of the Company. At the Company's election, borrowings bear interest at the applicable Eurodollar Rate plus a variable margin or at a base rate, which is the higher of the Federal Funds Rate
plus 0.5% or the Prime Lending Rate, plus a variable margin. At March 31, 2010, the applicable weighted-average interest rate for outstanding borrowings was 1.28%. The Company is also required
to pay a variable quarterly fee on the unused balance under the revolving credit facility. At March 31, 2010, the applicable rate was 0.20%. Accrued interest on Eurodollar Rate borrowings is
payable based on elected intervals of one, two or three months. Accrued interest on base rate borrowings is payable quarterly. The revolving credit facility matures on September 7, 2011, and
the Company is required to repay all principal and interest outstanding under the revolving credit facility on such date.

The
revolving credit facility contains restrictive covenants, including limitations on incurring other indebtedness and requirements that the Company maintain certain financial ratios.
Upon the occurrence of a default, the lender has various remedies or rights, which may include proceeding against the collateral or requiring the Company to repay all amounts outstanding under the
revolving credit facility.

6. SHARE REPURCHASES

During the three months ended March 31, 2010, the Company purchased and retired 50,100 shares of common stock for an aggregate price of $605. During the six months ended
March 31, 2010, the Company purchased and retired 239,409 shares of common stock for an aggregate price of $2,830. During the three and six months ended March 31, 2009, the Company did
not purchase or retire any shares of common stock. As of March 31, 2010, the Company was permitted to purchase up to 967,731 additional shares under its approved purchase plan. The Company
accounts for treasury shares using the cost method.

10

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NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

7. STOCK OPTIONS

The following table summarizes stock option activity during the six months ended March 31, 2010:

Number of
Options

Weighted-Average
Exercise
PriceOptions outstanding and exercisable at September 30, 2009


457,917

$
8.85Exercised


(12,729
)

4.33Options outstanding and exercisable at March 31, 2010


445,188

$
8.98


Options
to purchase 52,500 and 142,650 shares of common stock for the three and six months ended March 31, 2010, respectively, were excluded from the computation of diluted
earnings per share because the exercise prices of these stock options were greater than the average share price of the Company's common stock and, therefore, the effect would have been antidilutive.
Options to purchase shares of common stock were excluded from the computation of diluted earnings per share for the three and six months ended March 31, 2009 because the Company recognized a
net loss.

During
the six months ended March 31, 2010, the Company received proceeds of $55 related to the exercise of stock options. During this same period, the Company recorded a tax
benefit of $43 and optionees realized an aggregate pre-tax gain of $112 from these stock option exercises. During the six months ended March 31, 2009, the Company received proceeds
of $166 from the exercise of stock options, the Company recorded a tax benefit of $36 related to these option exercises and optionees realized an aggregate pre-tax gain of $93 from these
stock option exercises.

8. SEGMENTS

Segment identification and selection is consistent with the management structure used by the Company to evaluate performance and make decisions regarding resource allocation, as well as
the materiality of financial results consistent with that structure. Based on the Company's management structure and method of internal reporting, the Company has one operating segment. The Company
does not review operating results on a disaggregated basis; rather, management reviews operating results on an aggregate basis.

Net
sales attributed to customers in the United States and foreign countries for the three and six months ended March 31, 2009 and 2010 were as follows:

Three months ended
March 31,

Six months ended
March 31,2009

2010

2009

2010United States

$
37,971

$
41,933

$
73,253

$
81,958Foreign countries


3,986


5,963


8,333


10,777$
41,957

$
47,896

$
81,586

$
92,735


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NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

8. SEGMENTS (Continued)

Certain
net sales attributed to customers in the United States are sold to customers who in turn may sell such products to customers in foreign countries while certain net sales
attributed to customers in foreign countries are sold to customers who in turn may sell such products to customers in the United States.

The
Company's net sales by product group for the three and six months ended March 31, 2009 and 2010 were as follows:

Three months ended
March 31,

Six months ended
March 31,2009

2010

2009

2010Branded nutritional supplements and other natural products

$
37,906

$
43,963

$
73,411

$
84,908Other(1)


4,051


3,933


8,175


7,827$
41,957

$
47,896

$
81,586

$
92,735


(1)Net
sales for any other product or group of similar products are less than 10% of consolidated net sales.


9. SUBSEQUENT EVENTS

On April 15, 2010, the Company acquired substantially all of the operating assets of Honey Gardens Apiaries, Inc. and Apitherapy, LLC for approximately $1,550 in
cash. The primary assets acquired included accounts receivable, inventory, fixed assets, trademarks/tradenames, customer relationships and goodwill. As of the date of these financial statements, the
Company is determining the fair value of the acquired assets and the related allocation of the purchase price.

12

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Table of Contents

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis should be read in conjunction with this report on Form 10-Q, including
Part I, Item 1.

We
are an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold primarily to and through domestic health and
natural food
stores. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers. Our core business
strategy is to acquire, integrate and operate businesses in the natural products industry that manufacture, market and distribute branded nutritional supplements. We believe that the consolidation and
integration of these acquired businesses provides ongoing financial synergies through increased scale and market penetration, as well as strengthened customer relationships.

We
manufacture and sell nutritional supplements and other natural products under numerous brands includingSolaray®, VegLife®,KAL®,Nature's
Life®,LifeTime®,Sunny Green®, Action Labs®,Natural Balance®,
NaturalMax®,bioAllers®,Herbs for Kids, Natra-Bio®,NaturalCare®, Zand®,Health from the Sun®, Life-flo®,Larenim®, TheraNeem®,TheraVeda®,Living Flower
Essences®,Pioneer®,Thompson®, Natural Sport®,Supplement Training Systems®,Premier
One®,Montana Big Sky,ActiPet®, FunFresh Foods,Dowd & Rogers, CompliMed®,AllVia,Oakmont
Labs®,Healthway®,Body Gold®, Sayge®,
Monarch Nutraceuticals andGreat Basin
Botanicals. Under the nameWoodland Publishing, we publish, print and market a line of books and
booklets to, among others, book distributors, national retail bookstores and health and natural food stores. We also distribute branded products of certain third parties.

We
own neighborhood natural food markets, which operate under the trade namesThe Real Food Company, Thom's Natural Foods andCornucopia Community Market. We also own health food
stores, which operate under the trade namesFresh Vitamins andGranola's.

We
were formed in 1993 to effect a consolidation strategy in the fragmented vitamin, mineral, herbal and other nutritional supplements industry (the "VMS Industry"). Since our formation,
we have completed twenty-eight acquisitions of assets or stock. As a result of acquisitions, internal growth and cost management, we believe that we are well positioned to continue to capitalize on
acquisition opportunities that arise in the VMS Industry.

Critical Accounting Policies

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America
required us to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements
and the reported amounts of net sales and expenses during the reported periods. Significant estimates included values and lives assigned to
acquired intangible assets, reserves for customer returns and allowances, uncollectible accounts receivable, slow moving and obsolete and/or damaged inventory and valuation and recoverability of
long-lived assets. Actual results may differ from these estimates. Our critical accounting policies include the following:

Accounts ReceivableProvision is made for estimated bad debts based on periodic analysis of individual customer balances, including an evaluation of
days sales outstanding, payment history, recent payment trends and perceived credit worthiness. If general economic conditions and/or customer financial condition were to change, additional provisions
for bad debts may be required, which could have a material impact on the consolidated financial statements.

13

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InventoriesProvision is made for slow moving, obsolete and/or damaged inventory based on periodic analysis of individual inventory items, including
an evaluation of historical usage and/or movement, age, expiration date and general condition. If market demand and/or consumer preferences are less favorable than historical trends or future
expectations, additional provisions for slow moving, obsolete and/or damaged inventory may be required, which could have a material impact on the consolidated financial statements.

Property, Plant and EquipmentDepreciation and amortization expense is impacted by our judgments regarding the estimated useful lives of assets placed
in service. If the actual lives of assets are significantly less than expected, depreciation and amortization expense would be accelerated, which could have a material impact on the consolidated
financial statements.

We
evaluate the recoverability of our property, plant and equipment which are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of an
asset may not be recoverable. We measure recoverability of the asset by comparison of its carrying amount to the future undiscounted cash flows we expect the asset to generate. If we consider the
asset to be impaired, we measure the amount of any impairment as the difference between the carrying amount and the fair value of the impaired asset.

Goodwill and Intangible AssetsGoodwill and intangible assets require estimates and judgments in determining the initial recognition and measurement
of goodwill and intangible assets, including factors and assumptions used in determining fair values and useful lives. Intangible assets with finite useful lives are amortized, while intangible assets
with indefinite useful lives are not amortized. Amortizable intangible assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Goodwill and non-amortizable intangible assets are tested annually for impairment and are tested for impairment between annual tests if an event occurs that would cause us to believe that
value is impaired. We perform our annual impairment testing as of September 30 each year, which is the last day of our fiscal year.

During
the three months ended March 31, 2009, we recorded a non-cash goodwill impairment charge of $37.5 million ($27.3 million after tax, or $2.51 per
diluted share for the three and six months ended March 31, 2009) related to our branded and natural food markets reporting units. The ongoing uncertainty in general and economic conditions may
continue to impact retail and consumer demand, as well as the market price of our common stock, and could negatively impact our future operating performance, cash flow and/or stock price and could
result in additional goodwill and/or intangible asset impairment charges being recorded in future periods which could materially impact our consolidated financial statements. The valuation of goodwill
and intangible assets is subject to a high degree of judgment and complexity.

Revenue RecognitionRevenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the
product has been shipped and the customer takes ownership and assumes the risk of loss; (3) the selling price is fixed or determinable; and (4) collection of the resulting receivable is
reasonably assured. We believe that these criteria are satisfied upon shipment from our facilities or, in the case of our neighborhood natural food markets and health food stores, at the point of sale
within these stores. Revenue is reduced by provisions for estimated returns and allowances, which are based on historical averages that have not varied significantly for the periods presented, as well
as specific known claims, if any. No other significant deductions from revenue must be estimated at the point in time that revenue is recognized.

Other
than our previous discussion of goodwill impairment, our estimates and judgments related to our critical accounting policies, including factors and assumptions considered in making
these estimates and judgments, did not vary significantly for the periods presented and had no material impact on the consolidated financial statements as reported.

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Table of Contents

Results of Operations

The following table sets forth certain consolidated statements of operations data as a percentage of net sales for the periods
indicated:

Three Months
Ended
March 31,

Six Months
Ended
March 31,2009

2010

2009

2010Net sales


100.0
%

100.0
%

100.0
%

100.0
%Cost of sales


46.5
%

47.1
%

46.2
%

47.4
%Gross profit


53.5
%

52.9
%

53.8
%

52.6
%Selling, general and administrative


37.5
%

34.8
%

38.6
%

36.0
%Amortization of intangible assets


0.4
%

0.7
%

0.4
%

0.7
%Impairment of goodwill


89.4
%


%

46.0
%


%Income (loss) from operations


(73.8
)%

17.4
%

(31.2
)%

15.9
%Interest and other (income) expense, net


0.6
%

0.3
%

0.9
%

0.2
%Income (loss) before provision (benefit) for income taxes


(74.4
)%

17.1
%

(32.1
)%

15.7
%Provision (benefit) for income taxes


(18.7
)%

6.5
%

(7.3
)%

5.9
%Net income (loss)


(55.7
)%

10.6
%

(24.8
)%

9.8
%Adjusted EBITDA(1)


19.6
%

21.1
%

18.8
%

19.7
%


(1)See
"Adjusted EBITDA."


Comparison of the Three Months Ended March 31, 2010 to the Three Months Ended March 31, 2009

Net Sales.Net sales increased by $5.9 million, or 14.2%, to $47.9 million for the three months ended March 31, 2010
("second
quarter of fiscal 2010") from $42.0 million for the three months ended March 31, 2009 ("second quarter of fiscal 2009"). Net sales of branded nutritional supplements and other natural
products increased by $6.1 million, or 16.0%, to $44.0 million for the second quarter of fiscal 2010 compared to $37.9 million for the second quarter of fiscal 2009. The increase
in net sales of branded nutritional supplements and other natural products was primarily related to the net sales contributions of the two fiscal 2010 acquisitions and the fiscal 2009 acquisition, as
well as an increase in sales volume of branded products to certain customers. The impact on net sales of branded products attributable to price changes was not material. Other net sales remained
relatively flat at $3.9 million for the second quarter of fiscal 2010 compared to $4.1 million for the second quarter of fiscal 2009.

Gross Profit.Gross profit increased by $2.9 million, or 12.9%, to $25.3 million for the second quarter of fiscal 2010 from
$22.4 million for the second quarter of fiscal 2009. This increase in gross profit was primarily attributable to the increase in net sales. As a percentage of net sales, gross profit decreased
to 52.9% for the second quarter of fiscal 2010 from 53.5% for the second quarter of fiscal 2009. This decrease in gross profit percentage was primarily attributable to increased material costs, which
were primarily due to vendor price increases, and, to a lesser extent, changes in sales mix.

Selling, General and Administrative.Selling, general and administrative expenses increased by $1.0 million, or 6.1%, to
$16.7 million
for the second quarter of fiscal 2010 from $15.7 million for the second quarter
of fiscal 2009. This increase in selling, general and administrative expenses was primarily attributable to operational and transition costs related to the fiscal 2009 and the fiscal 2010
acquisitions. As a percentage of net sales, selling, general and administrative expenses decreased to 34.8% for the second quarter of fiscal 2010 compared to 37.5% for the second quarter of fiscal
2009. This decrease in selling, general and administrative expenses as a percentage of net sales was primarily attributable to the increase in net sales, which allowed us to better leverage our cost
structure as well as year-over-year cost improvements in certain selling, general and administrative expense areas.

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Table of Contents

Amortization of Intangible Assets.Amortization of intangible assets was $0.3 million for the second quarter of fiscal 2010 and
$0.2 million for the second quarter of fiscal 2009. For each period, amortization expense was primarily related to intangible assets recorded in connection with acquisitions.

Impairment of Goodwill.During the second quarter of fiscal 2009, we recorded a non-cash goodwill impairment charge of
$37.5 million ($27.3 million after tax, or $2.51 per diluted share) related to our branded and natural food markets reporting units.

Interest and Other (Income) Expense, Net.Net interest and other (income) expense was $0.1 million for the second quarter of fiscal
2010 and
$0.3 million for the second quarter of fiscal 2009 and primarily consisted of interest expense on indebtedness under our revolving credit facility with the decrease being primarily related to a
reduction in interest rates.

Provision (Benefit) for Income Taxes.Our effective tax rate was 37.8% for the second quarter of fiscal 2010 and (25.2%) for the second
quarter of
fiscal 2009. During the second quarter of fiscal 2009, we recorded a non-cash goodwill impairment charge of $37.5 million of which $11.0 million related to
non-tax-deductible goodwill and reduced our effective tax rate from 37.7% to (25.2%).

Comparison of the Six Months Ended March 31, 2010 to the Six Months Ended March 31, 2009

Net Sales.Net sales increased by $11.1 million, or 13.7%, to $92.7 million for the six months ended March 31, 2010 from
$81.6 million for the six months ended March 31, 2009. Net sales of branded nutritional supplements and other natural products increased by $11.5 million, or 15.7%, to
$84.9 million for the six months ended March 31, 2010 compared to $73.4 million for the six months ended March 31, 2009. The increase in net sales of branded nutritional
supplements and other natural products was primarily related to the net sales contributions of the two fiscal 2010 acquisitions and the fiscal 2009 acquisition, as well as an increase in sales volume
of branded products to certain customers. The impact on net sales of branded products attributable to price changes was not material. Other net sales were $7.8 million for the six months ended
March 31, 2010 compared to $8.2 million for the six months ended March 31, 2009.

Gross Profit.Gross profit increased by $4.9 million, or 11.3%, to $48.8 million for the six months ended March 31, 2010
from
$43.9 million for the six months ended March 31, 2009. This increase in gross profit was primarily attributable to the increase in net sales. As a percentage of net sales, gross profit
decreased to 52.6% for the six months ended March 31, 2010 from 53.8% for the six months ended March 31, 2009. This decrease in gross profit percentage was primarily attributable to
increased material costs, which were primarily due to vendor price increases, and, to a lesser extent, changes in sales mix.

Selling, General and Administrative.Selling, general and administrative expenses increased by $1.9 million, or 6.2%, to
$33.4 million
for the six months ended March 31, 2010 from $31.5 million for the six months ended March 31, 2009. This increase in selling, general and administrative expenses was primarily
attributable to operational and transition costs related to the fiscal 2009 and the fiscal 2010 acquisitions. As a percentage of net sales, selling, general and administrative expenses decreased to
36.0% for the six months ended March 31, 2010 compared to 38.6% for the six months ended March 31,
2009. This decrease in selling, general and administrative expenses as a percentage of net sales was primarily attributable to the increase in net sales, which allowed us to better leverage our cost
structure as well as year-over-year cost improvements in certain selling, general and administrative expense areas.

Amortization of Intangibles.Amortization of intangibles was $0.6 million for the six months ended March 31, 2010 and
$0.3 million for the six months ended March 31, 2009. For each period, amortization expense was primarily related to intangible assets recorded in connection with acquisitions.

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Table of Contents

Impairment of Goodwill.During the six months ended March 31, 2009, we recorded a $37.5 million ($27.3 million after tax,
 or
$2.51 per diluted share) non-cash goodwill impairment charge related to our branded and natural food markets reporting units.

Interest and Other (Income) Expense, Net.Net interest and other (income) expense was $0.3 million for the six months ended
March 31,
2010 and $0.8 million for the six months ended March 31, 2009 and primarily consisted of interest expense on indebtedness under our revolving credit facility with the decrease being
primarily related to a reduction in interest rates.

Provision (Benefit) for Income Taxes.Our effective tax rate was 37.7% for the six months ended March 31, 2010 and (22.8%) for the
six months
ended March 31, 2009. During the six months ended March 31, 2009, we recorded a non-cash goodwill impairment charge of $37.5 million of which $11.0 million
related to non-tax-deductible goodwill and reduced our effective tax rate from 37.7% to (22.8%).

Adjusted EBITDA

Adjusted EBITDA (a non-GAAP measure) is defined in our debt covenants and performance measures as earnings before net
interest and other (income) expense, taxes, depreciation, amortization and goodwill and intangible asset impairment. Adjusted EBITDA has some inherent limitations in measuring operating performance
due to the exclusion of certain financial elements such as depreciation and amortization and is not necessarily comparable to other similarly-titled captions of other companies due to potential
inconsistencies in the method of calculation. Furthermore, Adjusted EBITDA is not intended to be a substitute for cash flows from operating activities, as a measure of liquidity, or an alternative to
net income in determining our operating performance in accordance with generally accepted accounting principles. Our use of an EBITDA-based metric should be considered within the following
context:



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Table of Contents

The
following table sets forth a reconciliation of net income (loss) to Adjusted EBITDA for each period included herein:

Three Months Ended
March 31,

Six Months Ended
March 31,2009

2010

2009

2010(dollars in thousands)Net income (loss)

$
(23,359
)
$
5,101

$
(20,247
)
$
9,045Provision (benefit) for income taxes


(7,855
)

3,102


(5,977
)

5,476Interest and other (income) expense, net(1)


264


147


774


256Depreciation and amortization


1,642


1,767


3,276


3,527Impairment of goodwill(2)


37,519





37,519


Adjusted EBITDA

$
8,211

$
10,117

$
15,345

$
18,304


(1)Includes
amortization of deferred financing fees.(2)For
the three months and six months ended March 31, 2009, a non-cash goodwill impairment charge of $37.5 million was recorded
related to our branded and natural food markets reporting units.


Our
Adjusted EBITDA increased to $10.1 million for the second quarter of fiscal 2010 from $8.2 million for the second quarter of fiscal 2009. Adjusted EBITDA as a
percentage of net sales increased to 21.1% for the second quarter of fiscal 2010 from 19.6% for the second quarter of fiscal 2009.

Our
Adjusted EBITDA increased to $18.3 million for the six months ended March 31, 2010 from $15.3 million for the six months ended March 31, 2009. Adjusted
EBITDA as a percentage of net sales increased to 19.7% for the six months ended March 31, 2010 from 18.8% for the six months ended March 31, 2009.

Seasonality

We believe that our business is characterized by minor seasonality. However, sales to any particular customer or sales of any
particular product can vary substantially from
one quarter to the next based on such factors as industry trends, timing of promotional discounts, domestic and international economic conditions and acquisition-related activities. Excluding the
effect of acquisitions, we have historically recorded higher branded products sales volume during the second fiscal quarter (January through March) due to increased interest in health-related products
among consumers following the holiday season.

Liquidity and Capital Resources

We had working capital of $37.5 million as of March 31, 2010 compared to $32.4 million as of September 30,
2009. This increase in working capital was primarily the result of increases in cash, accounts receivable and inventories partially offset by a decrease in prepaid expenses and other current assets
and an increase in accounts payable.

Net
cash provided by operating activities for the six months ended March 31, 2010 was $11.0 million compared to $11.8 million for the comparable period in fiscal
2009. This decrease in net cash provided by operating activities for the six months ended March 31, 2010 was primarily attributable to changes in assets and liabilities, net of effects of
acquisitions.

Net
cash used in investing activities was $19.8 million for the six months ended March 31, 2010 compared to $6.4 million for the comparable period in fiscal 2009.
Our investing activities during these

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Table of Contents

periods
consisted of acquisitions of businesses and capital expenditures primarily related to building improvements related to facility consolidation efforts, distribution and manufacturing equipment
and information systems. Also, on December 11, 2009, we purchased a facility for $2.8 million in cash to expand our Rapid Response Center in Ogden, Utah. This facility is adjacent to our
existing facilities and will provide us approximately 105,000 square feet of additional gross building space located on 5.4 acres.

During
the six months ended March 31, 2010, we acquired two businesses for $11.6 million in cash. On October 9, 2009, we acquired selected assets of Nutritional
Specialties, Inc. for $8.6 million in cash and on December 18, 2009, we acquired selected assets of Organix-South, Inc. for $3.0 million in cash. We did not acquire
any businesses during the six months ended March 31, 2009.

Net
cash provided by financing activities was $9.6 million for the six months ended March 31, 2010 compared to net cash used in financing activities of $5.2 million
for the comparable period in fiscal
2009. During these periods, financing activities primarily related to borrowings and repayments under our revolving credit facility, purchases of common stock for treasury and proceeds from the
issuance of common stock related to stock option exercises and the direct stock purchase plan.

In
October 2007, we registered a direct stock purchase plan with the Securities and Exchange Commission. The purpose of this direct stock purchase plan is to provide a convenient way for
existing stockholders, as well as new investors, to purchase shares of our common stock. A total of 1,500,000 shares of our common stock were registered under the plan with 29,681 shares purchased
during the six months ended March 31, 2010. As of March 31, 2010, there were 1,434,295 shares of common stock available for purchase.

Our
current revolving credit facility has available credit borrowings of $60.0 million with no automatic reductions and provides an accordion feature that can increase the
available credit borrowings to $90.0 million, subject to approval by the lenders and compliance with certain covenants and conditions.

At
March 31, 2010, we had outstanding revolving credit borrowings of $30.5 million. Borrowings under the revolving credit facility are collateralized by substantially all
of our assets. At our election, borrowings under the revolving credit facility bear interest at the applicable Eurodollar Rate plus a variable margin or at a base rate, which is the higher of the
Federal Funds Rate plus 0.5% or the Prime Lending Rate, plus a variable margin. At March 31, 2010, the applicable weighted-average interest rate for outstanding borrowings was 1.28%. We are
also required to pay a variable quarterly fee on the unused balance under the revolving credit facility. At March 31, 2010, the applicable rate was 0.20%. Accrued interest on Eurodollar Rate
borrowings is payable based on elected intervals of one, two or three months. Accrued interest on base rate borrowings is payable quarterly. The revolving credit facility matures on
September 7, 2011, and we are required to repay all principal and interest outstanding under the revolving credit facility on such date.

The
revolving credit facility contains restrictive covenants, including limitations on incurring certain other indebtedness and requirements that we maintain certain financial ratios. As
of March 31, 2010, we were in compliance with the restrictive covenants. Upon the occurrence of a default, the lender has various remedies or rights, which may include proceeding against the
collateral or requiring us to repay all amounts outstanding under the revolving credit facility.

In
the current volatile credit market, there is risk that any lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal
commitments and obligations under existing credit commitments, including but not limited to: extending credit up to the maximum permitted by a credit facility, allowing access to additional credit
features and otherwise accessing capital and/or honoring loan commitments. The lenders under our credit facility are Rabobank International and Wells Fargo. If our lenders failed to honor their legal
commitments under our credit facility, it could be difficult in this environment to replace our credit facility on similar terms. To date, we have not experienced any difficulties in accessing the
available funds under our credit facility.

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A key component of our business strategy is to seek to make additional acquisitions, which may require that we obtain additional financing, which could include
the incurrence of substantial additional indebtedness or the issuance of additional stock. We believe that borrowings under our current revolving credit facility or a replacement credit facility,
together with cash flows from operations, will be sufficient to make required payments under the current credit facility or any such replacement facility, and to make anticipated capital expenditures
and fund working capital needs for the next twelve months.

Our
significant non-cancelable contractual obligations as of March 31, 2010 were as follows:

Payments Due By PeriodContractual Obligations

Total

Less Than
1 Year

1-3
Years

4-5
Years

After
5 Years(dollars in thousands)Revolving credit facility

$
30,500

$


$
30,500

$


$
Interest on revolving credit facility(a)


695


478


217





Operating leases


5,085


3,203


1,659


185


38Total

$
36,280

$
3,681

$
32,376

$
185

$
38


(a)Represents
estimated interest obligations associated with our outstanding revolving credit facility balance of $30.5 million at March 31,
2010, assuming no principal payments are made before maturity, a weighted-average interest rate of 1.28% and an underutilization fee rate of 0.20%.


New Accounting Standards

In September 2006, the Financial Accounting Standards Board ("FASB") issued authoritative guidance which is included in Accounting
Standards Codification ("ASC") 820, "Fair Value Measurements and Disclosures". This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting
principles and expands disclosures about fair value measurements. The guidance does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in prior
accounting pronouncements. We adopted the provisions of this guidance as of October 1, 2008 for assets and liabilities measured at fair value on a recurring basis. On October 1, 2009, we
adopted the provisions of this guidance for assets and liabilities measured at fair value on a non-recurring basis. The adoption of this guidance did not have a material impact on our
consolidated financial statements.

In
December 2007, the FASB issued authoritative guidance included in ASC 805, "Business Combinations", which addresses fair value accounting and the related disclosure for assets and
liabilities acquired in a business combination and generally requires acquisition-related costs to be expensed as incurred. This guidance was effective for us as of October 1, 2009 and did not
have a material impact on the two acquisitions completed in the first quarter of fiscal 2010 but may have an impact on future acquisitions depending on the nature of the acquisition.

In
December 2007, the FASB issued authoritative guidance included in ASC 810, "Consolidation", which changes the accounting and reporting for the noncontrolling interests in a subsidiary
in consolidated financial statements. The guidance recharacterizes minority interests as noncontrolling interests and requires noncontrolling interests to be classified as a component of stockholders'
equity. This guidance was effective for us as of October 1, 2009 and did not have a material impact on our consolidated financial statements.

In
April 2008, the FASB issued authoritative guidance included in ASC 350, "IntangiblesGoodwill and Other", which amends the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a recognized intangible asset. This guidance

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was
effective for us as of October 1, 2009 and did not have a material impact on our consolidated financial statements.

We
periodically review new accounting standards that are issued from time to time. Although some of these accounting standards may be applicable to us, we have not identified any other
new standards that we believe merit further discussion, and we expect that none would have a significant impact on our consolidated financial statements.

Inflation

Inflation affects the cost of raw materials, goods and services used by us. In recent years, inflation has been modest. The competitive
environment somewhat limits our ability to recover higher costs resulting from inflation by raising prices. We seek to mitigate the adverse effects of inflation primarily through improved productivity
and cost containment programs. We do not believe that inflation has had a material impact on our results of operations for the periods presented, except with respect to increased costs in
manufacturing, packaging and distribution resulting from increased fuel and other petrochemical costs, as well as payroll-related costs, insurance premiums and other costs arising from or related to
government imposed regulations.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995 with respect to our financial condition, results of operations and business. These forward-looking statements can be identified by the use of terms such as "believe," "expects," "plan,"
"intend," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy. These statements involve known and
unknown risks, uncertainties and other factors that may cause industry trends or our actual results to be materially different from any future results expressed or implied by these statements.
Important factors that may cause our results to differ from these forward-looking statements include, but are not limited to: (i) slow or negative growth in the nutritional supplement industry
or the healthy foods channel, (ii) adverse publicity or negative consumer perception regarding nutritional supplements, (iii) unavailability of desirable acquisitions or inability to
complete them, (iv) changes in or new government regulations or increased enforcement of the same, (v) litigation and claims, including product liability, intellectual property and other
types, (vi) insurance coverage issues, (vii) increased competition, (viii) increased costs, including from increased energy prices, (ix) the loss of key personnel or the
inability to manage our operations efficiently, (x) disruptions from acquisitions including the loss of customers, (xi) issues with obtaining raw materials of adequate quality or
quantity, or increases in the cost, (xii) problems with information management systems, manufacturing efficiencies and operations, (xiii) changes in general worldwide economic or
political conditions, (xiv) the volatility of the stock market generally and of our stock specifically, (xv) increases in the cost of borrowings or unavailability of additional debt or
equity capital, or both, or fluctuations in foreign currencies, and (xvi) interruption of business or negative impact on sales and earnings due to acts of God, acts of war, terrorism,
bio-terrorism, civil unrest and other factors outside of our control.

We
undertake no obligation to update or revise publicly any forward-looking statements to reflect new information, events or circumstances occurring after the date of this
Form 10-Q.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

At our election, borrowings under our revolving credit facility bear interest at the applicable Eurodollar Rate plus a variable margin
or at a base rate, which is the higher of the Federal Funds Rate plus 0.5% or the Prime Lending Rate, plus a variable margin. At March 31, 2010, the applicable

21

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Table of Contents

weighted-average
interest rate for borrowings was 1.28% and we had total borrowings outstanding of $30.5 million.

With
respect to our international operations, we are subject to currency fluctuations; however, we do not believe that these fluctuations would have a material adverse impact on our
financial position because the majority of our net sales to foreign countries are transacted in U.S. dollars. Net sales to foreign countries not transacted in U.S. dollars include sales to customers
in Norway, Sweden, the U.K., the Netherlands and Japan. To date, we have not hedged any of our potential foreign currency exposures.

Item 4.    Controls and Procedures

Evaluation of Disclosure 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 Securities and Exchange Commission's rules and forms and
that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow for timely decisions regarding
required disclosure.

In
designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and we are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As
required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision of and with the participation of our management, including our principal
executive and principal financial officers, of the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive and principal financial officers have concluded that our disclosure controls and
procedures were effective.

Changes in Internal Control Over Financial Reporting.There were no changes in our internal control over financial reporting that
occurred during the
last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Table of Contents

PART IIOTHER INFORMATION

Item 1.    Legal Proceedings

As discussed in our other filings, we are subject to regulation by a number of federal, state and foreign agencies and are involved in
various legal matters arising in the normal course of business.

We
carry insurance coverage in the types and amounts that we consider reasonably adequate to cover the risks we face in the industry in which we compete.

In
our opinion, the outcomes of individual regulatory and legal matters in which we are presently involved are not probable and no estimate can be made of the range of potential gains or
losses. While incapable of estimation, in the opinion of management, the individual regulatory and legal matters in which we are involved are not expected to have a material adverse effect on our
consolidated financial position, results of operations or cash flows.

Item 1A.    Risk Factors

There have been no material changes in our risk factors from those disclosed in our 2009 Annual Report on Form 10-K.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any unregistered equity securities during the period covered by this Form 10-Q for the Quarterly
Period Ended March 31, 2010.

Prior
to fiscal 2009, our Board of Directors approved a share purchase program authorizing us to buy up to 2,500,000 shares of our common stock. During the year ended
September 30, 2009, our Board of Directors approved the addition of 1,000,000 shares to our previously approved share purchase program. As of March 31, 2010, there are 967,731 shares
available for purchase under this program. The shares available for purchase under this program have no expiration date. Purchases under this program during the three months ended March 31,
2010 occurred in January as follows:

Period

Total Number
of Shares
Purchased

Average Price
Paid Per
Share

Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plan

Maximum
Number of
Shares that
May Yet Be
Purchased Under
the Plan1/1/10 to 1/31/10


50,100

$
12.08


50,100


967,731


Item 4.    Submission of Matters to a Vote of Security Holders

The Annual Meeting of Stockholders of the Company was held on February 18, 2010, at which meeting the stockholders voted to
elect two individuals to serve as Class III Directors and to ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the
fiscal year ending September 30, 2010.

The
nominees for election as Class III Directors of the Company are listed below. The results were as follows:

Nominee

For

Against/
Withheld

AbstainFrank W. Gay II


7,928,194


96,248


2,396,910Gregory M. Benson


7,944,738


79,704


2,396,910


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The
names of other Directors of the Company whose term of office continued after the meeting are as follows:



Other
matters voted upon at the meeting and the results of those votes were as follows:

For

Against/
Withheld

AbstainRatification of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm


8,924,872


460,416


1,036,064


Item 6.    Exhibits

31.1

Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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SIGNATURE

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.

NUTRACEUTICAL INTERNATIONAL
CORPORATION
(Registrant)Date: April 29, 2010

By:

/s/ CORY J. MCQUEEN Cory J. McQueen Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)


25

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