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**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-K**





x
            ANNUAL
                REPORT
                PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the
                fiscal year ended May 31, 2005o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934For
                the
                transition period from _______ to _______.Commission
                file number:
              1-14608





**WEIDER
      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)





Registrant’s
                telephone number, including area code:**(801)
                975-5000****Securities
                registered pursuant to Section 12(b) of the
                Act:****Class
                A Common Stock, par value $.01 per share**(Title
                of
                Class)**New
                York Stock Exchange**(Name
                of
                Exchange)Securities
                registered pursuant to Section 12(g) of the Act:**None**




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 x  No o
 
 Indicate
        by check
        mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
        S-K
        is not contained herein, and will not be contained, to the best of
        Registrant’s knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-K or any amendment
        to this
Form 10-K. o
 
 Indicate
        by check
        mark whether the registrant is an accelerated filer (as defined in Exchange
        Act
        Rule 12b-2). Yes o  No x
 
 The
        number of
        shares outstanding of the Registrant’s Class A and Class B common stock is
        26,289,411 (as of August 23, 2005).
 
 The
        aggregate
        market value of the voting stock held by non-affiliates of the Registrant
        is
        approximately $44,775,799 (as of November 30, 2004, the last day of the
        Registrant's second quarter).
 **DOCUMENTS
        INCORPORATED BY REFERENCE**
 
 Portions
        of the
        Registrant’s Proxy Statement for its 2005 Annual Meeting of Shareholders, which
        will subsequently be filed with the SEC, are incorporated by reference into
        Part III.










**Quick
        Links**
 
 **Part
        I**
 Item
                  1.
              Business
 Item
                  2..
              Properties
 Item
                  3..
              Legal
                  Proceedings
 Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
 **Part
        II**
 Item
                  5.
              Market
                  for Registrant’s Common Equity, Related Stockholder
                  Matters and Issuer Purchases of Equity
                  Securities
 Item
                  6.
              Selected
                  Consolidated Financial and Operating
                  Data
 Item
                  .7
              Management’s
                  Discussion and Analysis of Financial Condition
                  and Results of Operations
 Item
                  7A.
              Quantitative
                  and Qualitative Disclosures about Market
                  Risk
 Item
                  8.
              Financial
                  Statements and Supplementary
                  Data
 Item
                  9.
              Changes
                  in and Disagreements with Accountants on Accounting
                  and Financial Disclosure
 Item
                  9A.
              Controls
                  and
                  Procedures
 **Part
        III**
 Item
                  10.
              Directors
                  and Executive Officers of the
                  Registrant
 Item
                  11.
              Executive
                  Compensation
 Item
                  12.
              Security
                  Ownership of Certain Beneficial Owners and
                  Management and
 Related
        Stockholder Matters
 Item
                  13.
              Certain
                  Relationships and Related Party
                  Transactions
 Item
                  14.
              Principal
                  Accountant Fees and
                  Services
 **Part
        IV**
 Item
                  15.
              Exhibits,
                  Financial Statement Schedules and Reports on Form
                  8-K
 
 Signatures
 
 **Weider
        Nutrition International, Inc. Index to
        Consolidated Financial Statements**
  **Weider
        Nutrition International, Inc. Valuation and
        Qualifying Accounts**












**PART
      I**





**Note
      on
      Forward Looking Statements**





*Certain
      statements made in this Annual Report on Form 10-K under the captions
“Business,”“Factors Affecting Future Performance,”“Legal Proceedings,” and
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations,” and elsewhere herein are “forward-looking statements” within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended, that are based on
      management’s beliefs and assumptions, current expectations, estimates and
      projections. Statements that are not historical facts, including without
      limitation statements which are preceded by, followed by or include the words
      “believes,”“anticipates,”“plans,”“ expects,”“estimates,”“may,”“should,” or
      similar expressions, are forward-looking statements. These statements are
      subject to risks and uncertainties, certain of which are beyond our control,
      and
      therefore, actual results may differ materially. We disclaim any obligation
      to
      update any forward-looking statement whether as a result of new information,
      future events or otherwise, except as required by law. Important factors that
      may cause these forward looking statements to be false include, but are not
      limited to, the factors discussed in Items 1, 3, 7 and 7A of this Annual
      Report.*




**ITEM
      1.**  **BUSINESS**





**Recent
      Developments**





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





On
      April 1, 2005, we announced the sale of certain assets of our Active Nutrition
      Unit relating to our Weider branded business domestically and internationally
      to
      Weider Global Nutrition, LLC (“WGN”), a wholly-owned subsidiary of Weider Health
      and Fitness (“WHF”), a privately held company headquartered in California and
      our majority stockholder. The terms of the transaction provide that we receive
      approximately $14.0 million in exchange for assets relating to our domestic
      Weider branded business, including inventory, receivables, and intangible and
      intellectual property, the capital stock of certain of our international
      subsidiaries related to our international Weider branded business (including
      the
      working capital of those subsidiaries), and the assumption of certain associated
      liabilities by WGN. The transaction closed on April 1, 2005, with an effective
      date of March 1, 2005.





On
      June 17, 2005, we announced the sale of our Haleko Unit to Atlantic Grupa of
      Zagreb, Croatia and certain of its subsidiaries for approximately $15.0 million
      in cash. The transaction included the sale of the capital stock and partnership
      interests of the international subsidiaries that operate the Haleko business.
      The transaction closed on June 17, 2005, with an effective date of May 1, 2005
      (the first day of Haleko’s fiscal year 2006).





The
      sale of our
      Weider branded business occurred during fiscal year 2005. Accordingly, it is
      reflected as discontinued operations in our consolidated financial statements,
      including the notes thereto. The remaining assets and related operations for
      the
      Active Nutrition Unit, including our Tiger's Milk brand, have been consolidated
      into our Schiff Specialty Unit. The sale of the Haleko Unit was not approved
      by
      our Board of Directors until fiscal year 2006. Therefore, it is reflected as
      a
      separate operating segment for all fiscal years presented herein. Beginning
      with
      our fiscal 2006 first quarter, segment information will not be provided.
      Historical operating results for our Haleko Unit will be reflected as
      discontinued operations and all remaining assets and operations will be
      consolidated into our Schiff Specialty Unit. The following description of our
      business, however, includes historical information about both of the sold
      businesses.





**General**





Weider
      Nutrition
      International, Inc. (currently doing business as Schiff Nutrition International)
      develops, manufactures, markets, distributes and sells branded and private
      label
      vitamins, nutritional supplements and sports nutrition products 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, primarily consists of specialty supplements, vitamins and minerals, and
      nutrition bars and are primarily marketed through mass market and health food
      store distribution channels.







2







Prior
      to the sales
      of our Weider branded business and Haleko Unit referred to under “Recent
      Developments” above, we also offered various powdered drink mixes and
      ready-to-drink beverages, marketed primarily through the same channels, as
      well
      as health club and gym distribution channels. See Management's Discussion and
      Analysis of Financial Condition and Results of Operations on pages 14 to 22
      and
      Note 16 of the Notes to Consolidated Financial Statements for complete segment
      financial information.





Our
      Board of
      Directors has approved a corporate name change from Weider Nutrition
      International, Inc. to Schiff Nutrition International, Inc. We expect to seek
      stockholder approval of this name change at our 2005 annual meeting of
      stockholders.





Our
      principal
      executive offices are located at 2002 South 5070 West, Salt Lake City, Utah
      84104 and our telephone number is (801) 975-5000. We were incorporated in
      Delaware in 1996. Our internet website address is www.schiffnutrition.com .
      Our proxy
      statements, annual reports on Form 10-K, quarterly reports on Form 10-Q and
      current reports on Form 8-K, and all amendments thereto, are available free
      of
      charge through our corporate internet website, which provides a link to www.sec.gov ,
      the website
      maintained by the Securities and Exchange Commission (SEC). The public may
      record and copy any materials we file with the SEC at the SEC’s Public Reference
      Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain
      information on the operation of the Public Reference Room by calling the SEC
      at
      1-800-SEC-0330.





**Industry
      Overview**





In
      recent years, nutritional supplement companies, analysts, publications and
      other
      industry sources have indicated a slower growth rate in the nutritional
      supplement industry. We believe that the slowdown is due in part to, among
      other
      factors:





·
            increased
                competition, including intense private label
                expansion;





·
            the
                lack of
                industry-wide “blockbuster” products;
                and





·
            negative
                publicity regarding certain nutritional supplement ingredients and
                companies.





Despite
      the
      slowdown in the industry growth rate, we believe that demand for dietary
      supplements will continue over the long-term. We believe that potential growth
      will result from, among other factors:





·
            increased
                awareness of the health benefits of dietary supplements, especially
                as
                reports and medical research indicating a correlation between consumption
                of specific nutrients and better health and reduced incidence of
                certain
                diseases continue to heighten public knowledge of the benefits of
                dietary
                supplements for health;





·
            a
                growing
                population of older Americans more likely to consume dietary supplements
                and nutritional products, with an increasing interest in more proactively
                managing one’s own health needs;





·
            successful
                new product introductions; and





·
            consumers’
                desire for preventive health care.





Although
      data from
      the fragmented international markets is not readily available, we believe
      similar demographics, events, and other trends also present certain future
      opportunities in international markets.





3





**Brands,
      Products and Distribution**





The
      following table
      shows comparative net sales results categorized by business unit and as a
      percentage of net sales for fiscal 2005, 2004 and 2003 (dollars in
      thousands):





2005
            
            2004
            
            2003Schiff
                Specialty
            
            $
            173,095
            
            
            72.2
            %
            $
            168,128
            
            
            71.6
            %
            $
            154,912
            
            
            69.8
            %Haleko
            
            
            66,759
            
            
            27.8
            
            
            66,846
            
            
            28.4
            
            
            63,830
            
            
            28.8Other(1)
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            3,102
            
            
            1.4Total
            
            $
            239,854
            
            
            100.0
            %
            $
            234,974
            
            
            100.0
            %
            $
            221,844
            
            
            100.0
            %





(1)
      Amount
      represents net sales of our American Body BuildingTM and Science Foods® brands
      which were sold on July 26, 2002. Previously, these sales were included in
      our
      Active Nutrition Unit (see “Recent Developments” above).





***Schiff
      Specialty Unit***





We
      market a complete line of specialty supplements, vitamins, and minerals under
      the Schiff brand, which has been familiar to consumers for over 60 years. The
      Schiff brand emphasizes high quality and natural ingredients, primarily
      consisting of tablet, capsule and soft gel product forms.





In
      response to consumers who seek a more natural and preventive approach to their
      health care, the industry has developed emerging specialty supplement categories
      as alternatives or complements to over-the-counter and pharmaceutical products.
      Our specialty supplements include certain joint health products marketed under
      the Schiff brand, including our Move Free® and other glucosamine and chondroitin
      compounds. Our Move Free product is one of the leading joint health products
      in
      the mass market channel. Domestic net sales of Schiff Move Free brand products
      were $64.9 million, $64.0 million and $55.0 million, respectively, for fiscal
      2005, 2004 and 2003.





Our
      Schiff brand
      vitamin products are designed to provide consumers with essential vitamins
      and
      minerals as supplements to healthy diet and exercise. Schiff brand vitamin
      products include:





·
            multivitamins,
                such as Single Day;





·
            individual
                vitamins, such as Vitamin B and Vitamin
                C;





·
            minerals,
                such as Calcium;





·
            specialty
                formulas for men and women, such as Prostate Health and Folic Acid;
                and





·
            other
                specialty formulas, such as Melatonin, Niacin and
                Lutein.





The
      Schiff brand is
      marketed primarily in the mass market retail channel, with additional limited
      distribution in health food stores. Our products are sold domestically in
      leading retail outlets in all 50 states. Our mass market customers
      include:





·
            mass
                merchandisers, such as Wal-Mart, Target and
                K-Mart;





·
            warehouse
                clubs, such as Costco, Sam’s Club and
                BJ’s;





·
            supermarkets,
                such as Albertson’s, Fred Meyer, Giant, Kroger, Publix, Safeway, Stop
                & Shop, H-E-B and Raley’s; and





·
            drug
                stores,
                such as Walgreen’s, CVS, Rite Aid and
                Brooks/Eckerd.





We
      service the health food market primarily through sales to leading health food
      retailers and distributors. We also sell certain Schiff products to various
      international markets on an export basis. For certain retail customers where
      we
      sell our branded products, we also provide private label products.





Our
      Schiff
      Specialty Unit now also includes Tiger’s Milk and Fi-Bar® nutrition bar
      products. The Tiger’s Milk product line includes several nutrition bars that
      supply protein, vitamins and other essential nutrients with less fat than a
      traditional candy bar. The Fi-Bar product line is comprised of fat-free granola
      bars and fruit and nut bars coated with yogurt, chocolate or carob made without
      hydrogenated fats. The Tiger’s Milk and Fi-Bar brands are intended to provide





4





consumers
      with a
      healthy alternative to traditional snack foods and candy bars and are sold
      primarily through mass market retailers and convenience stores, with additional
      limited distribution in health food stores.





***Active
      Nutrition Unit***





Prior
      to the fiscal
      2005 fourth quarter sale of our Weider branded business referred to in “Recent
      Developments” above, our Active Nutrition Unit developed and marketed sports
      nutrition, nutritional bar and weight management products primarily under the
      Weider and Tiger’s Milk brands. The Weider brand included a wide variety of
      sports nutrition products, including powdered drink mixes, tablets and capsules,
      ready-to-drink beverages and nutrition bars, designed to enhance athletic
      performance and results achieved through exercise and training. As previously
      discussed, the Tiger’s Milk brand is now included in our Schiff Specialty
      Unit.





The
      Active
      Nutrition Unit products were primarily distributed through mass market
      retailers, convenience and health food stores, and health clubs and gyms. We
      also marketed certain Weider and other branded products on an export basis
      to
      South America, Eastern Europe, the Middle East, and the Pacific Rim through
      relationships with certain mass market retailers with international operations
      and through a network of distributors.





Net
      sales for the
      Weider branded business (net of certain inter-business unit sales eliminations),
      included in discontinued operations, were approximately $19.4 million, $22.6
      million and $19.0 million, respectively, for fiscal 2005, 2004 and
      2003.





***Haleko
      Unit***





Prior
      to the fiscal
      2006 first quarter sale of our Haleko Unit referred to in “Recent Developments”
      above, our Haleko Unit developed, manufactured and marketed nutrition products
      primarily under the Multipower and Multaben brands. Haleko had well-recognized
      nutritional supplement brands in Europe and nutritional supplement manufacturing
      capabilities in Germany.





Haleko’s
      leading
      sports nutrition brand was Multipower, which included a wide variety of products
      primarily marketed to health clubs and gyms in Germany and to a number of other
      European countries on an export basis. Haleko also marketed weight management
      and nutrition products under the Multaben brand primarily to mass market
      accounts in Germany. Multaben products included a variety of beverages, soups
      and other meal replacement products as well as nutrition bars. Haleko also
      had a
      presence in private label nutrition products, providing a variety of products
      to
      certain mass market and other customers.





Prior
      to the fiscal
      2004 first quarter sale of our Venice Beach brand, Haleko marketed a line of
      sports apparel under this brand. The sportswear was primarily sold in Germany
      to
      department stores, health clubs and gyms, and specialty sportswear retail
      stores. Net sales for the Venice Beach branded business, included in
      discontinued operations, were approximately $26.2 million for fiscal
      2003.





**Sales
      and
      Marketing**





Our
      Schiff
      Specialty Unit sales force consists of dedicated sales professionals who are
      assigned to specific accounts, classes of trade and/or geographic territories.
      These sales professionals work directly with retailers and distributors to
      increase knowledge of our products and general nutritional supplement benefits,
      solicit orders for our products, maximize our shelf presence, and provide
      related product sales assistance. We also utilize brokers to market our products
      in certain accounts and classes of trade.





For
      our Haleko
      Unit, our sales resources were dedicated to each Haleko business area.
      Multipower had a focused health club and gym and export sales force and Multaben
      had a focused mass market sales force.





We
      market our products using a mix of trade and consumer promotions; television,
      newspaper and print media advertising; and consumer education efforts. Our
      advertising and marketing expenditures, excluding sales incentives reflected
      as
      reductions in net sales or increases in cost of goods sold, were approximately
      $24.1 million, $22.6 million and $18.1 million, respectively, for fiscal 2005,
      2004 and 2003.





During
      fiscal 2005,
      we maintained our focus on brand building support for our core brands,
      particularly relating to our Schiff Move Free brand of joint health products.
      We
      continued to employ television, magazine and newspaper media in fiscal 2005,
      along with several targeted direct mail and public relations campaigns. During
      fiscal 2005, our advertisements appeared in various magazines, national
      newspapers and other publications.





5





Another
      key
      component of our marketing strategy is to educate consumers about innovative,
      safe and beneficial nutritional supplement products. We participate in consumer
      education at conferences and trade and consumer shows representing all current
      distribution channels. Our schiffvitamins.com website also provides additional
      educational information to consumers and customers.





**Product
      Research and Development**





We
      are committed to research and development to create safe and efficacious new
      products and existing product line extensions. New product development is
      important to the nutritional supplement industry to create new market
      opportunities, meet consumer demand and strengthen relationships with
      customers.





We
      maintain an extensive research library and employ a variety of industry
      relationships to identify new research and development projects offering health
      and wellness benefits. To support our research and development efforts, we
      maintain a staff of scientific and technical personnel, invest in formulation,
      processing and packaging development, perform product quality and stability
      studies, invest in product efficacy studies, and conduct consumer market
      research to sample consumer opinions on product concepts, product design,
      packaging, advertising and marketing campaigns. For research and development
      initiatives, we conduct research and development in our own facilities and
      with
      strategic third parties. Product research and development expenses were
      approximately $4.0 million, $3.8 million and $3.9 million, respectively, for
      fiscal 2005, 2004 and 2003.





**Manufacturing
      and Product Quality**





We
      manufacture the majority of our domestic products in a capsule and tablet
      manufacturing facility in Salt Lake City, Utah, which includes our main
      distribution center and primary administrative offices and also houses our
      nutrition bar manufacturing operations. Our Salt Lake City capsule and tablet
      facility is designed and operated to meet United States Pharmacopoeia (“USP”)
      compliance standards. We are participating in the USP Dietary Supplement
      Verification Program, pursuant to which our manufacturing facility has been
      certified as being compliant with USP good manufacturing practices. We were
      also
      awarded an “A” rating by the National Nutritional Foods Association (“NNFA”) in
      fiscal 2002, which was renewed in October 2004, for compliance with NNFA good
      manufacturing practices. In addition, our facility has been inspected by the
      Therapeutic Goods Administration, the Australian therapeutic goods regulatory
      agency. In November 2004, we again were certified as compliant with the good
      manufacturing practices the Therapeutic Goods Administration requires for
“Complementary Medicines.”





Our
      packaging,
      counting and filling operations are fully computerized to promote accuracy
      and
      compliance with weights and measures regulations. We have invested in production
      line flexibility to accommodate various filling sizes, weights, or counts of
      product and final shipped unit configurations to fulfill customer and ultimate
      consumer  needs.
      The
      distribution center features a high-rise racked warehouse and a fully automated
      “order-pick”  system
      using
      optical readers that interpret bar coded labels on each shipping container.





We
      maintain and operate a Manufacturing Resource Planning (“MRP”) system fully
      integrated with distribution, warehousing and quality control, which provides
      real time lot and quality tracking of raw materials, work in progress and
      finished goods.





Prior
      to the sales
      of our Weider branded business and Haleko Unit referred to under “Recent
      Developments” above, we also had two other manufacturing facilities: a capsule,
      tablet and powder facility in Bleckede, Germany that manufactured products
      distributed throughout Europe, and a facility in Madrid, Spain that primarily
      produced powders for distribution in Spain, France and Italy.





Our
      quality
      management systems are detailed and rigorous, and include a supplier
      certification selection process and other analytical processes and procedures.
      The quality management systems also include professionally equipped and staffed
      analytical finished product evaluation for compliance to specification. Our
      products are also subject to extensive shelf life stability testing through
      which we determine the effects of aging on our products. Outside laboratories
      are used routinely to evaluate our internal test laboratory performance and
      to
      supplement our internal testing procedures and capabilities.





We
      employ a purchasing staff that works with marketing, product development and
      quality control personnel to source raw materials for our products. Raw
      materials are sourced principally from China and the United States.





6





**Competition**





The
      market for the
      sale of nutritional supplements is highly fragmented and competitive. We believe
      that competition is based principally upon price, quality of products, customer
      service and marketing support.





Our
      competition
      includes numerous nutritional supplement companies that are highly fragmented
      in
      terms of both geographic market coverage and product categories. In addition,
      large pharmaceutical companies and packaged food and beverage companies compete
      with us in the nutritional supplement market. These companies and many
      nutritional supplement companies have greater financial and other resources
      available to them and possess extensive manufacturing, distribution and
      marketing capabilities. Private label products of our customers, which have
      been
      significantly increasing in certain nutrition categories, compete directly
      with
      our products. In several product categories, private label items have become
      the
      market share leaders. Increased competition from such companies and from private
      label pressures could have a material adverse effect on our results of
      operations and financial condition.





As
      the nutritional supplement industry grows and evolves, we believe retailers
      will
      align themselves with suppliers who are financially stable, market a broad
      portfolio of products and offer superior customer service. We believe that
      we
      compete favorably with other nutritional supplement companies because of our
      brand names, customer service, competitive pricing, sales and marketing support
      and quality of our product lines.





**Government
      Regulation**





Our
      products
      include foods and dietary supplements, which are subject to the laws and
      regulations of federal governmental agencies, including the Food and Drug
      Administration (“FDA”), the Federal Trade Commission (“FTC”), the U.S.
      Department of Agriculture, and the Environmental Protection Agency, and also
      various agencies of the states, localities and countries in which we operate
      and
      sell our products.





The
      FDA regulates
      foods and dietary supplements through the Food Drug and Cosmetic Act (“FDCA”)
      and amendments thereto, including the Dietary Supplement Health and Education
      Act of 1994, as amended (“DSHEA”), which is intended to promote access to safe,
      quality dietary supplements, and information about dietary supplements. DSHEA
      establishes a statutory class of dietary supplements, including vitamins,
      minerals, herbs, amino acids and other dietary substances for human use to
      supplement the diet, as well as concentrates, metabolites, extracts or
      combinations of such dietary ingredients. Generally, under DSHEA, dietary
      ingredients on the market before October 15, 1994 may be used without further
      notification to the FDA. However, dietary ingredients not marketed prior to
      October 15, 1994 require submission to the FDA evidencing a history of use
      or
      other evidence of safety to establish that the ingredient will reasonably be
      expected to be safe.





DSHEA
      permits
      statements of “nutritional support” for dietary supplements that may describe
      how particular dietary ingredients, or the mechanism of action by which dietary
      ingredients, affect the structure, function or general well-being of the body.
      These statements of nutritional support, or “structure/function claims”, may not
      make a health claim or disease claim, meaning that a statement may not expressly
      or implicitly claim to treat, prevent, cure, or mitigate an illness or disease
      unless the claim was authorized by the FDA. A structure/function claim in
      advertising or on a product label must have scientific substantiation that
      the
      claim is truthful and not misleading, have a disclaimer that the statement
      has
      not been reviewed by the FDA, and have been disclosed to the FDA that the claim
      would be used for a product. Our policy is to label products in accordance
      with
      applicable laws and regulations, which are amended and repealed from time to
      time. We cannot assure you that a regulatory agency will not deem one or more
      of
      our product claims or labels to be impermissible and to take adverse action
      against us, including warning letters, fines, product recalls and product
      seizures.





The
      FDA has
      proposed final good manufacturing practice regulations (“GMPs”) for dietary
      supplements, which are authorized under DSHEA. If finalized, the proposed GMPs
      would require quality control provisions similar to, and in certain instances
      beyond, GMPs for drugs and over-the-counter products. These GMPs, if adopted,
      may result in increased expenses, changes to or discontinuance of products,
      or
      implementation of additional record keeping and administrative procedures.
      We
      cannot assure you that, if the FDA adopts the GMPs in the proposed form, we
      will
      be able to comply with the new regulations without incurring substantial
      costs.





Some
      of our
      products are conventional foods, which are also subject to the Nutrition
      Labeling and Education Act of 1990 (“NLEA”). The NLEA prohibits health claims
      being made for a food without prior FDA approval. Most of our products are
      classified as dietary supplements.





The
      FTC exercises
      jurisdiction over the advertising of nutritional and dietary supplements under
      the Federal Trade Commission Act. In November 1998, the FTC published an
      advertising guideline for the dietary supplement industry entitled “Dietary
      Supplements: An Advertising Guide for Industry.” These guidelines reiterate many
      of the policies regarding dietary supplements the FTC has periodically announced
      over the years, particularly with respect to the substantiation of claims made
      in advertising of dietary supplement products.





7







In
      the past several years, the FTC has instituted several enforcement actions
      against dietary supplement companies alleging false and misleading advertising
      of certain products. These enforcement actions have resulted in consent decrees
      and/or the payment of fines by certain of the companies involved. The FTC
      continues to monitor advertising with respect to dietary supplements and,
      accordingly, from time to time we receive inquiries from the FTC with respect
      to
      our advertising. We entered into a consent decree with the FTC effective
      November 2000 governing diet and weight loss claims and certain disease, safety
      and comparative health benefit claims.





Our
      international
      activities are subject to regulation in each country in which we have operations
      or sell or distribute our products. The various laws and regulations differ
      materially in some respects from U.S. laws and regulations, sometimes causing
      higher costs and expenses, product reformulations, and delay. In countries
      in
      which we do not have direct operations, independent distributors generally
      have
      responsibility for compliance with applicable foreign laws and regulations.
      These distributors are independent contractors over whom we have limited
      control.





**Intellectual
      Property**





Prior
      to the sales
      of our Weider branded business and Haleko Unit referred to under “Recent
      Developments” above, we owned, or had filed for, over 150 trademarks registered
      with the United States Patent and Trademark Office or similar regulatory
      agencies in certain other countries for our Schiff, Multipower, Multaben, Weider
      and Tiger’s Milk brands and certain of our products, processes and slogans.
      Subsequent to the sales, we continue to have such rights for approximately
      90
      trademarks. We also license rights for other names material to our business
      and
      for the use of our brand names, including Schiff and Tiger’s Milk, in certain
      countries outside of North America.





We
      rely on common law trademark rights to protect our unregistered trademarks.
      Common law trademark rights do not provide us with the same level of protection
      as afforded by a United States federal registration of a trademark. In addition,
      common law trademark rights are limited to the geographic area in which the
      trademark is actually used. We have registered certain of our trademarks in
      certain foreign jurisdictions where our products are sold or distributed.
      However, the protection available in such jurisdictions may not be as extensive
      as the protection available to us in the United States.





**Employees**





Prior
      to the sales
      of our Weider branded business and Haleko Unit referred to under “Recent
      Developments” above, we employed approximately 790 persons. At July 31, 2005, we
      employed approximately 368 persons, of whom approximately 213 were in
      management, sales, purchasing, logistics and administration and approximately
      155 were in manufacturing operations. In addition, we utilize temporary
      employees in some of our manufacturing processes. We are not party to any
      collective bargaining arrangements and believe that our relationship with our
      employees is good.





**Factors
      Affecting Future Performance**





***Dependence
      on Significant Customers*** **.** Our largest
      customers are Costco and Wal-Mart. Combined, these two customers accounted
      for
      approximately 52%, 53% and 52%, respectively, of our total net sales for fiscal
      2005, 2004 and 2003. Following the sale of our Haleko Unit referred to under
      “Recent Developments” above, we anticipate that the portion of our total net
      sales relating to these customers will increase. The loss of either Costco
      or
      Wal-Mart as a customer, or a significant reduction in purchase volume by Costco
      or Wal-Mart, could have a material adverse effect on our results of operations
      and financial condition. We do not have supply contracts with either Costco
      or
      Wal-Mart and therefore we cannot assure you that Costco and/or Wal-Mart will
      continue to be significant customers.





***Dependence
      on Individual Products*** **.** Certain products
      and product lines account for a significant amount of our total net sales.
      Domestic net sales for our Schiff Move Free brand were approximately 27%, 27%
      and 25%, respectively, of our total net sales for fiscal 2005, 2004 and 2003.
      Following the sale of our Haleko Unit referred to under “Recent Developments”
      above, we anticipate that the portion of our total net sales relating to our
      Schiff Move Free brand will increase. Net sales for Haleko's Multipower brand
      were approximately 12%, 13% and 12%, respectively, of our total net sales for
      fiscal 2005, 2004 and 2003. We cannot assure you that Schiff Move Free or other
      of our products currently experiencing strong popularity and growth will
      maintain sales levels over time. The inability to successfully implement
      marketing and spending programs behind our Schiff Move Free brand and other
      branded products could have a material adverse effect on our results of
      operations and financial condition.





8





***Availability
      of Raw Materials.*** We obtain all of
      our raw materials for the manufacture of our products from third parties. A
      significant portion of our raw materials relate to our joint care category.
      We
      cannot assure you that suppliers will provide the raw materials we need in
      the
      quantities requested, at a price we are willing to pay, or that meet our quality
      standards and labeling requirements. Any significant delay in or disruption
      of
      the supply of raw materials could, among other things, substantially increase
      the cost of such materials, require reformulation or repackaging of products,
      require the qualification of new suppliers, or result in our inability to meet
      customer demands for certain products. In addition, we acquire a significant
      amount of ingredients for a number of our products (particularly joint care
      products) from suppliers outside of the United States, particularly in China.
      Accordingly, the acquisition of these ingredients is subject to the risks
      generally associated with importing raw materials, including, among other
      factors, delays in shipments, changes in economic and political conditions,
      quality assurance, tariffs, trade disputes and foreign currency fluctuations.
      The discovery of Bovine Spongiform Encephalopathy, commonly referred to as
“mad
      cow disease”, in a country from which we obtain a significant amount of our raw
      materials derived from bovine sources could prevent us from purchasing such
      raw
      materials in the required quantities, at an acceptable price, or at all. The
      occurrence of any of the foregoing, particularly with respect to raw materials
      needed for our joint care products, could have a material adverse effect on
      our
      results of operations and financial condition.





***Dependence
      on New Products*** **.** We believe our
      ability to grow in existing markets is partially dependent upon our ability
      to
      introduce new and innovative products. Although we seek to introduce additional
      products each year, the success of new products is subject to a number of
      variables, including developing products that will appeal to customers and
      comply with applicable regulations. For example, if we are unable to
      successfully launch and gain distribution for our Schiff Lubriflex 3 TM
      product and
      Schiff Move Free product enhancements, our results of operations could suffer.
      We cannot assure you that our efforts to develop and introduce innovative new
      products will be successful or that customers will accept new
      products.





***Acquisitions
      and Investments.*** An
      element of our
      strategy going forward includes expanding our product offerings, enhancing
      business development and gaining access to new skills and other resources
      through strategic acquisitions and investments when attractive opportunities
      arise. There can be no assurance that attractive acquisition opportunities
      will
      be available to us, that we will be able to obtain financing for or otherwise
      consummate any acquisitions or that any acquisitions which are consummated
      will
      prove to be successful.





***Risks
      of Competition*** **.** The market for the
      sale of nutritional supplements is highly competitive. Certain of our principal
      competitors have greater financial and other resources available to them and
      possess extensive manufacturing, distribution and marketing capabilities.
      Private label products of our customers, which have been significantly
      increasing in certain nutrition categories, also create significant competition
      with our products. Pricing pressure could adversely affect our ability to pass
      on raw material price increases to customers and negatively impact our financial
      performance. Increased competition from competitors and from private label
      pressures could have a material adverse effect on our results of operations
      and
      financial condition.





***Effect
      of Unfavorable Publicity*** **.** We believe our
      sales depend on consumer perceptions of the safety, quality and efficacy of
      our
      products as well as products distributed and sold by other companies. Consumer
      perceptions are influenced by national media attention regarding our products
      and other nutritional supplements. We expect that there will be some unfavorable
      future publicity or scientific research. Future unfavorable reports or publicity
      could have a material adverse effect on our results of operations and financial
      condition.





***Product
      Liability and Availability of Related Insurance*** **.** As a manufacturer
      and distributor of products designed to be ingested, we face an inherent risk
      of
      exposure to product liability claims. Certain damages in litigation, such as
      punitive damages, are generally not covered by insurance. In the event that
      we
      do not have adequate insurance or other indemnification coverage, product
      liability claims could have a material adverse effect on our results of
      operations and financial condition.





We
      have been and are currently named as a defendant in product liability lawsuits
      allegedly regarding certain of our former ephedra products. See “Item 3 -
      Legal Proceedings.” Prior to September 1, 2001, we maintained, on an occurrence
      basis, both primary and excess insurance coverage regarding our ephedra
      products. Subsequent to September 1, 2001, we maintained, on a claims made
      basis, primary but not excess coverage regarding our ephedra products, with
      very
      limited coverage on only certain ephedra products for the policy period which
      ended on September 1, 2003. Subsequent to September 1, 2003, we have not
      maintained any insurance coverage regarding ephedra products. None of our
      ongoing lawsuits regarding ephedra products is covered by insurance. In
      connection with the sale of the American Body Building and Science Foods brands
      in July 2002, we discontinued the sale of products that contain ephedra.
      However, we cannot assure you that we will not be subject to further litigation
      with respect to ephedra products we have already sold.





9





***Impact
      of Government Regulation on Our Operations*** **.** Our operations,
      properties and products are subject to regulation by various foreign, federal,
      state and local government entities and agencies, particularly the FDA and
      FTC.
      See “Business-Government Regulation” above. Among other matters, government
      regulation covers statements and claims made in connection with the packaging,
      labeling, marketing and advertising of our products. Governmental agencies
      have
      a variety of processes and remedies available to them, including initiating
      investigations, issuing warning letters and cease and desist orders, requiring
      corrective labeling or advertising, requiring consumer redress, seeking
      injunctive relief or product seizure, imposing civil penalties or commencing
      criminal prosecution. As a result of our efforts to comply with applicable
      statutes and regulations, from time to time we have reformulated, eliminated
      or
      relabeled certain of our products and revised certain aspects of our sales,
      marketing and advertising programs.





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





***Restrictions
      Imposed by Terms of Our Indebtedness*** **.** Our borrowing
      arrangements impose certain financial and operating covenants, including, among
      others, requirements that we maintain, under certain circumstances, certain
      financial ratios and satisfy certain financial tests, limitations on capital
      expenditures and limitations on our ability to incur debt, pay dividends, or
      take certain other corporate actions, all of which may restrict our ability
      to
      expand or pursue our business strategies. Changes in economic or business
      conditions, results of operations or other factors could cause a violation
      of
      one or more covenants in our credit facility.





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





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





***Risks
      Associated with International Markets*** **.** Historically, we
      have had significant international operations, with approximately 30% of our
      net
      sales for fiscal 2005 generated outside the United States. We anticipate that
      the sales of our Weider branded business and Haleko Unit referred to under
      “Recent Developments” above will significantly reduce the amount of our sales
      generated outside the United States. Operating in international markets exposes
      us to certain risks, including, among others, changes in or interpretations
      of
      foreign regulations that may limit our ability to sell certain products or
      repatriate products to the United States, foreign currency fluctuations, the
      potential imposition of trade or foreign exchange restrictions or increased
      tariffs and political instability. The occurrence of any of the foregoing could
      have a material adverse effect on our results of operations and financial
      condition.





10





**ITEM
      2.**  **PROPERTIES**





At
      May 31, 2005, we
      owned or leased the following facilities:





**Location**
            **Function**
            **Approximate**
              **Square
                Feet**
            **Lease/Own**
            **Expiration
                Date of Lease**Salt
                Lake City, UT
            Company
                Headquarters, Manufacturing & Production, Warehouse & Distribution
                (Schiff Specialty Unit and, historically, Active Nutrition
                Unit)
            418,000
            Lease
            March
                2013Levada,
                Italy *
            Administrative
                Offices & Warehouse (Haleko Unit)
            13,000
            Lease
            March
                2009Hamburg,
                Germany *
            Administrative
                Offices (Haleko Unit)
            35,200
            Lease
            July
                2009Bleckede,
                Germany *
            Manufacturing
                & Production, Warehouse (Haleko Unit)
            100,000
            Own
            N/A





*These
      properties
      were sold or transferred in connection with the sale of our Haleko Unit
      effective during our fiscal 2006 first quarter. Haleko also had several small
      sales and administrative offices located in Western Europe.





**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





In
      July 2003, we were named as a defendant in *Cain
      v.
      Metabolife, Inc., Weider Nutrition International, Inc., et. al.* filed in Texas
      state court. In connection with the bankruptcy filing of another defendant
      company, the case was removed to a U.S. District Court in New Jersey. The
      lawsuit alleges that the consumption of various products containing ephedra
      (distributed by several different companies) caused injuries and damages to
      the
      plaintiff. We dispute the allegations and are opposing the lawsuit. This lawsuit
      is not covered by our insurance. In connection with the recent bankruptcy filing
      of a second defendant, the matter has been stayed.





In
      September 2003, we were named as a defendant in *Borgese
      v.
      Cytodyne Technologies, Inc., Weider Nutrition International, Inc. et al.* filed
      in New Jersey
      state court. In connection with the bankruptcy filing of another defendant
      company, the case was removed to a U.S. District Court in New Jersey. The
      lawsuit alleged that the consumption of various products containing ephedra
      (distributed by several different companies) caused injuries and damages to
      the
      plaintiff. We disputed the allegations and opposed the lawsuit. We also tendered
      the matter to our insurance carriers, which assumed defense of the matter.
      In
      connection with mediation ordered by the bankruptcy court, we settled our
      portion of the matter with the plaintiffs in June 2005 for a nominal amount,
      all
      of which is covered by insurance. The settlement agreement is subject to
      bankruptcy court approval.





In
      November 2004, we were named as a defendant in *Willis
      v.
      American Body Building Products, Optimum Nutrition, Weider Nutrition et.
      al.* filed in Illinois
      state court. The lawsuit alleges that consumption of an American Body Building
      brand product containing ephedra caused injuries and damages to the plaintiff.
      We sold the American Body Building brand to Optimum Nutrition (“Optimum”) in
      July 2002, and have tendered the matter to Optimum under the indemnification
      provisions of the related Asset Purchase Agreement. Optimum initially denied
      the
      tender for indemnification; however, we are disputing the denial and pursuing
      further the indemnification coverage with Optimum. This matter is not covered
      by
      insurance. We dispute the allegations of the lawsuit and are defending the
      matter.





As
      the remaining two ephedra cases are not covered by insurance, a large adverse
      damage award could have a material adverse effect on our results of operations
      and financial condition. In connection with the sale of the American Body
      Building and Science Foods brands in July 2002, we discontinued the sale of
      products that contain ephedra. However, we cannot assure you that we will not
      be
      subject to further litigation with respect to ephedra products we have already
      sold.





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





**ITEM4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





No
      matter was submitted to the vote of security holders during the fiscal 2005
      fourth quarter.





11





**PART
      II**





**ITEM5.**  **MARKET
      FOR
      REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
      EQUITY       SECURITES**





Our
      Class A common
      stock is traded on the New York Stock Exchange under the symbol “WNI”. The high
      and low closing prices of our Class A common stock for each quarter of fiscal
      2005 and 2004, respectively, are set forth below:





**Fiscal
                Year Ended May 31, 2005:**
            
            **High**
            
            **Low**First
                Quarter
            
            $
            5.04
            
            $
            3.00Second
                Quarter
            
            
            4.74
            
            
            3.11Third
                Quarter
            
            
            4.75
            
            
            4.14Fourth
                Quarter
            
            
            6.28
            
            
            3.88





**Fiscal
                Year Ended May 31, 2004:**
            
            **High**
            
            **Low**First
                Quarter
            
            $
            3.25
            
            $
            2.18Second
                Quarter
            
            
            4.76
            
            
            2.65Third
                Quarter
            
            
            4.90
            
            
            4.25Fourth
                Quarter
            
            
            5.24
            
            
            3.79





Our
      Board of
      Directors will determine dividend policy in the future based upon, among other
      factors, our 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 (See Note 10 to the
      Consolidated Financial Statements). We can give no assurance that we will pay
      dividends in the future.





The
      closing price
      of our Class A common stock on August 23, 2005 was $4.70. The approximate number
      of stockholders of record of our Class A common stock on August 23, 2005 was
      349. WHF owns all of the outstanding shares of our Class B common
      stock.





The
      following table
      presents information about our Class A common stock that may be issued upon
      the
      exercise of options, warrants and rights under existing equity compensation
      plans at May 31, 2005:





**Plan
                category**
            
            **Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
            
            **Weighted-average
                exercise price of outstanding options, warrants and
                rights**
            
            **Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))****(a)**
            
            **(b)**
            
            **(c)**Equity
                compensation plans approved by security holders
            
            2,246,169
            
            $2.85
            
            2,136,953Equity
                compensation plans not approved by security holders
            
            —
            
            —
            
            —Total
            
            2,246,169
            
            $2.85
            
            2,136,953





We
      did not repurchase any of our Class A common stock during the fiscal 2005 fourth
      quarter.








12





**ITEM6.**  **SELECTED
      CONSOLIDATED FINANCIAL AND OPERATING DATA**





The
      following
      selected consolidated financial data as of, and for the fiscal years ended
      May
      31, 2001 through May 31, 2005, have been derived from our consolidated financial
      statements, which have been audited by Deloitte & Touche LLP, our
      independent auditors. The financial data should be read in conjunction with
      the
      consolidated financial statements and notes thereto, included elsewhere in
      this
      Annual Report on Form 10-K. See “Item 7 - Management’s Discussion and Analysis
      of Financial Condition and Results of Operations”.





Fiscal
                Year
                Ended May 31,2001
            
            2002
            
            2003
            
            2004
            
            2005**Operating
                Statement Data (1), (3) and (5):**
            
            (in
                thousands, except per share data)Net
                sales
            
            $
            272,419
            
            $
            259,386
            
            $
            221,844
            
            $
            234,974
            
            $
            239,854Cost
                of goods
                sold
            
            
            172,331
            
            
            171,981
            
            
            138,782
            
            
            147,139
            
            
            156,280Gross
                profit
            
            
            100,088
            
            
            87,405
            
            
            83,062
            
            
            87,835
            
            
            83,574Operating
                expenses
            
            
            83,803
            
            
            75,281
            
            
            66,052
            
            
            71,208
            
            
            68,790Asset
                impairment loss (2) and (6)
            
            
            —
            
            
            9,027
            
            
            —
            
            
            —
            
            
            9,346Total
                operating expenses
            
            
            83,803
            
            
            84,308
            
            
            66,052
            
            
            71,208
            
            
            78,136Income
                from
                operations
            
            
            16,285
            
            
            3,097
            
            
            17,010
            
            
            16,627
            
            
            5,438Other
                income
                (expense):Interest,
                net
            
            
            (6,242
            )
            
            (5,671
            )
            
            (3,411
            )
            
            (651
            )
            
            (1
            )Securities
                impairment loss
            
            
            (2,177
            )
            
            —
            
            
            —
            
            
            —
            
            
            —Other
            
            
            (592
            )
            
            (545
            )
            
            578
            
            
            109
            
            
            (82
            )Total
                other
                expense, net
            
            
            (9,011
            )
            
            (6,216
            )
            
            (2,833
            )
            
            (542
            )
            
            (83
            )Income
                (loss)
                from continuing operations before income taxes
            
            
            7,274
            
            
            (3,119
            )
            
            14,177
            
            
            16,085
            
            
            5,355Income
                tax
                expense (benefit)
            
            
            2,317
            
            
            (12
            )
            
            5,600
            
            
            6,097
            
            
            (467
            )Income
                (loss)
                from continuing operations
            
            
            4,957
            
            
            (3,107
            )
            
            8,577
            
            
            9,988
            
            
            5,822Income
                (loss)
                from discontinued operations, net of income taxes (3) and
                (5)
            
            
            (4,746
            )
            
            (4,437
            )
            
            (719
            )
            
            (1,101
            )
            
            747Income
                (loss)
                before cumulative effect of change in accounting principle
            
            
            211
            
            
            (7,544
            )
            
            7,858
            
            
            8,887
            
            
            6,569Cumulative
                effect of change in accounting principle, net of income tax benefit
                (4)
            
            
            —
            
            
            —
            
            
            (15,392
            )
            
            —
            
            
            —Net
                income
                (loss)
            
            $
            211
            
            $
            (7,544
            )
            $
            (7,534
            )
            $
            8,887
            
            $
            6,569Weighted
                average shares outstanding:Basic
            
            
            26,244
            
            
            26,249
            
            
            26,249
            
            
            25,874
            
            
            25,817Diluted
            
            
            26,245
            
            
            26,249
            
            
            26,249
            
            
            26,771
            
            
            26,418Net
                income
                (loss) per share:Basic
            
            $
            0.01
            
            $
            (0.29
            )
            $
            (0.29
            )
            $
            0.34
            
            $
            0.25Diluted
            
            $
            0.01
            
            $
            (0.29
            )
            $
            (0.29
            )
            $
            0.33
            
            $
            0.25




At
                May
                31,2001
            
            2002
            
            2003
            
            2004
            
            2005**Balance
                Sheet Data (2) (3) and (5):**
            
            (in
                thousands)Cash
                and cash
                equivalents
            
            $
            2,293
            
            $
            2,412
            
            $
            3,463
            
            $
            7,449
            
            $
            11,358Working
                capital
            
            
            45,307
            
            
            31,683
            
            
            25,959
            
            
            46,456
            
            
            66,012Total
                assets
            
            
            209,268
            
            
            158,243
            
            
            114,938
            
            
            114,924
            
            
            128,226Total
                debt
            
            
            73,428
            
            
            39,967
            
            
            8,716
            
            
            1,224
            
            
            3,020Total
                stockholders’ equity
            
            
            85,800
            
            
            76,741
            
            
            68,846
            
            
            75,813
            
            
            89,835





(1)
            Effective
                March 1, 2002, we adopted EITF No. 01-9, which requires certain sales
                incentives and promotional costs to be reclassified as reductions
                in net
                sales and/or increases in cost of goods sold. Fiscal 2001 has been
                reclassified to reflect the approximate impact of adopting EITF No.
                01-9.





(2)
            In
                July 2002,
                we sold substantially all assets and certain associated liabilities
                relating to our American Body Building and Science Foods brands (See
                Note
                2 of the Notes to Consolidated Financial
                Statements).





13






(3)
            Effective
                in
                our fiscal 2004 first quarter, we sold substantially all of the assets
                relating to our Venice Beach brand. In accordance with SFAS No. 144,
                the
                fiscal years presented have been restated to reflect the Venice Beach
                operating results as discontinued operations (See Note 2 of the Notes
                to
                Consolidated Financial Statements).




(4)
            Effective
                June 1, 2002, we adopted SFAS No. 142, which establishes accounting
                and
                reporting standards for goodwill and other intangible assets (See
                Note 7
                of the Notes to Consolidated Financial
                Statements).





(5)
            Effective
                March 1, 2005, we sold certain assets of our Active Nutrition Unit
                relating to our Weider branded business. In accordance with SFAS
                No. 144,
                the fiscal years presented have been restated to reflect the Weider
                branded business operating results as discontinued operations (See
                Note 2
                of the Notes to Consolidated Financial Statements).





(6)
            Effective
                in
                our fiscal 2006 first quarter, we sold our Haleko Unit (See Note
                18 of the
                Notes to Consolidated Financial Statements).





**ITEM7.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





*The
      following
      discussion and analysis should be read in conjunction with the consolidated
      financial statements, including the notes thereto, appearing elsewhere in this
      Annual Report on Form 10-K.*





**Overview**





Weider
      Nutrition
      International, Inc., (currently doing business as Schiff Nutrition
      International) develops, manufactures, markets, distributes and sells branded
      and private label vitamins, nutritional supplements and sports nutrition
      products 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, primarily consist of specialty supplements,
      vitamins, minerals and nutrition bars and are primarily marketed through mass
      market and health food store distribution channels. Prior to the sales of our
      Weider branded business and Haleko Unit (discussed below), we also offered
      various powdered drink mixes and ready-to-drink beverages, marketed primarily
      through the same channels, as well as health club and gym distribution
      channels.





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





On
      April 1, 2005, we announced the sale of certain assets of our Active Nutrition
      Unit relating to our Weider branded business domestically and internationally
      to
      WGN, a wholly-owned subsidiary of WHF, a privately held company headquartered
      in
      California and our majority stockholder. The terms of the transaction provide
      that we receive approximately $14.0 million in exchange for assets relating
      to
      our domestic Weider branded business, including inventory, receivables, and
      intangible and intellectual property, the capital stock of certain of our
      international subsidiaries related to our international Weider branded business
      (including the working capital of those subsidiaries), and the assumption of
      certain associated liabilities by WGN. The transaction closed on April 1, 2005,
      with an effective date of March 1, 2005.





On
      June 17, 2005, we announced the sale of our Haleko Unit to Atlantic Grupa of
      Zagreb, Croatia and certain of its subsidiaries for approximately $15.0 million
      in cash. The transaction included the sale of the capital stock and partnership
      interests of the international subsidiaries that operate the Haleko business.
      The transaction closed on June 17, 2005, with an effective date of May 1, 2005
      (the first day of Haleko's fiscal year 2006).





The
      sale of our
      Weider branded business occurred during fiscal year 2005. Accordingly, it is
      reflected as discontinued operations in our consolidated financial statements,
      including the notes thereto. The remaining assets and related operations for
      the
      Active Nutrition Unit, including our Tiger's Milk brand, have been consolidated
      into our Schiff Specialty Unit. The sale of the Haleko Unit was not approved
      by
      our Board of Directors until fiscal year 2006. Therefore, it is reflected as
      a
      separate operating segment for all fiscal years presented herein. Beginning
      with
      our fiscal 2006 first quarter, segment information will not be provided.
      Historical operating results for our Haleko Unit will be reflected as
      discontinued operations and all remaining assets and operations will be
      consolidated into our Schiff Specialty Unit. The following discussion of our
      financial results, however, includes certain historical information about both
      of the sold businesses.





14





Our
      operating
      results for fiscal 2005, 2004 and 2003 were affected by an industry slow down
      (including lack of successful new product introductions), increased competitive
      pressures (particularly from increasing private label growth), the
      implementation of our Schiff Move Free initiatives to defend the brand against
      competition, and the sale of our Venice Beach, American Body Building, Science
      Foods and Weider brands.





During
      fiscal 2005,
      we experienced margin volatility due to several factors, including significant
      raw material pricing increases, particularly in the joint care category, and
      a
      continuing strong competitive environment. Our operating results were also
      impacted by the launch of Lubriflex 3 .
      During fiscal
      2006, we continue to expect margin volatility due to raw material pricing in
      our
      joint care category and a continuing strong competitive
      environment.





During
      the fiscal
      2003 fourth quarter, we began implementing our Schiff Grow Move Free initiative.
      This initiative included incremental selling and marketing support intended
      to
      both defend our Move Free business against competition, including private label,
      and ultimately to increase our market share in the joint care product category.
      During fiscal 2004 and 2005, we continued our incremental selling and marketing
      investment in support of our Move Free brand. During the fiscal 2005 second
      quarter, we launched our Lubriflex 3 product and have
      supported the introduction with significant selling and marketing support.
      We
      believe that our overall fiscal 2005 and 2004 Move Free and other branded joint
      care category net sales benefited from these initiatives. During fiscal 2005,
      as
      a result of significant volatility in raw material costing and the inability
      to
      secure an acceptable price increase from the customer, we discontinued certain
      private label or contract manufacturing services. Although we expect selling
      and
      marketing support for joint care product initiatives to continue in fiscal
      2006,
      we expect branded net sales (after giving effect to the subsequent sale of
      our
      Haleko Unit) to be relatively constant due to competitive conditions and other
      factors.





On
      May 1, 2003 (the first day of Haleko’s fiscal year 2004), we sold substantially
      all of the assets relating to Haleko’s Germany-based Venice Beach sports apparel
      brand. The transaction included the sale of Venice Beach receivables,
      inventories, intellectual property and certain fixed assets and the assumption
      by the purchaser of approximately 47 Venice Beach employees. The net cash
      proceeds from the sale were approximately $7.1 million. In accordance with
      SFAS
      No. 144, operating results for Venice Beach are reflected as discontinued
      operations for all periods presented.





On
      July 26, 2002, we announced the sale of substantially all of the assets and
      certain associated liabilities relating to our American Body Building and
      Science Foods brands. The sales price included approximately $5.7 million in
      cash and the assumption by the buyer of an approximate $0.2 million mortgage
      on
      the accompanying beverage facility.





On
      June 1, 2002, we adopted SFAS No. 142 and recognized an after-tax goodwill
      impairment charge of approximately $15.4 million.





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





The
      following table
      shows selected items as reported and as a percentage of net sales for the years
      ended May 31 (dollars in thousands):





2005
            
            2004
            
            2003Net
                sales
            
            $
            239,854
            
            
            100.0
            %
            $
            234,974
            
            
            100.0
            %
            $
            221,844
            
            
            100.0
            %Cost
                of goods
                sold
            
            
            156,280
            
            
            65.2
            
            
            147,139
            
            
            62.6
            
            
            138,782
            
            
            62.6Gross
                profit
            
            
            83,574
            
            
            34.8
            
            
            87,835
            
            
            37.4
            
            
            83,062
            
            
            37.4Operating
                expenses
            
            
            68,790
            
            
            28.6
            
            
            71,208
            
            
            30.3
            
            
            66,052
            
            
            29.7Asset
                impairment loss
            
            
            9,346
            
            
            3.9
            
            
            —
            
            
            —
            
            
            —
            
            
            —Total
                operating expenses
            
            
            78,136
            
            
            32.6
            
            
            71,208
            
            
            30.3
            
            
            66,052
            
            
            29.7Income
                from
                operations
            
            
            5,438
            
            
            2.2
            
            
            16,627
            
            
            7.1
            
            
            17,010
            
            
            7.7Other
                expense, net
            
            
            83
            
            
            —
            
            
            542
            
            
            0.2
            
            
            2,833
            
            
            1.3Income
                tax
                expense (benefit)
            
            
            (467
            )
            
            (0.2
            )
            
            6,097
            
            
            2.6
            
            
            5,600
            
            
            2.5Income
                from
                continuing operations
            
            $
            5,822
            
            
            2.4
            %
            $
            9,988
            
            
            4.3
            %
            $
            8,577
            
            
            3.9
            %








15





**Results
      of
      Operations**


*Fiscal
      200* *5
      Compared to
      Fiscal 2004*





The
      following
      tables show comparative results for continuing operations, by business unit,
      for
      fiscal 2005 and 2004 (in thousands).





Schiff
            
            Haleko
            
            Total2005:Net
                sales
            
            $
            173,095
            
            $
            66,759
            
            $
            239,854Cost
                of goods
                sold
            
            
            113,351
            
            
            42,929
            
            
            156,280Gross
                profit
            
            
            59,744
            
            
            23,830
            
            
            83,574Operating
                expenses:Selling
                and
                marketing
            
            
            27,750
            
            
            18,056
            
            
            45,806General
                and
                administrative
            
            
            13,956
            
            
            4,107
            
            
            18,063Research
                and
                development
            
            
            3,245
            
            
            772
            
            
            4,017Amortization
                of intangible assets
            
            
            30
            
            
            874
            
            
            904Asset
                impairment loss
            
            
            —
            
            
            9,346
            
            
            9,346Total
                operating expenses
            
            
            44,981
            
            
            33,155
            
            
            78,136Income
                (loss)
                from operations
            
            $
            14,763
            
            $
            (9,325
            )
            $
            5,4382004:Net
                sales
            
            $
            168,128
            
            $
            66,846
            
            $
            234,974Cost
                of goods
                sold
            
            
            107,472
            
            
            39,667
            
            
            147,139Gross
                profit
            
            
            60,656
            
            
            27,179
            
            
            87,835Operating
                expenses:Selling
                and
                marketing
            
            
            26,389
            
            
            17,204
            
            
            43,593General
                and
                administrative
            
            
            17,250
            
            
            5,878
            
            
            23,128Research
                and
                development
            
            
            2,975
            
            
            836
            
            
            3,811Amortization
                of intangible assets
            
            
            120
            
            
            556
            
            
            676Total
                operating expenses
            
            
            46,734
            
            
            24,474
            
            
            71,208Income
                from
                operations
            
            $
            13,922
            
            $
            2,705
            
            $
            16,627





***Net
      Sales.*** **** Net
      sales increased
      approximately 2.1% to $239.9 million for fiscal 2005, from $235.0 million for
      fiscal 2004. The increase in net sales was primarily attributable to an increase
      in branded sales in our Schiff Specialty Unit and the positive impact of foreign
      currency exchange rates, partially offset by a decrease in Schiff Specialty
      private label sales.





Schiff
      Specialty
      net sales increased approximately 3.0% to $173.1 million for fiscal 2005, from
      $168.1 million for fiscal 2004. Aggregate branded sales increased approximately
      9.3% to $124.8 million for fiscal 2005, from $114.2 million for fiscal 2004.
      Branded joint product sales volume, including Lubriflex 3 results, increased
      approximately $13.2 million, and export sales volume increased approximately
      $1.6 million. These increases were partially offset by a $4.1 million decrease
      in other Schiff branded sales volume and a $5.7 million reduction in private
      label sales volume. Move Free net sales were $64.9 million and $64.0 million,
      respectively, for fiscal 2005 and 2004. As a result of significant volatility
      in
      raw material costing and the inability to secure an acceptable price increase,
      we discontinued certain private label or contract manufacturing services. Net
      sales for the discontinued private label business amounted to approximately
      $22.6 million and $29.8 million, respectively, for fiscal 2005 and
      2004.





Haleko
      net sales,
      including the positive impact of foreign currency exchange rates, remained
      relatively constant for fiscal 2005 and 2004. Excluding the favorable foreign
      currency exchange impact of approximately $4.6 million, net sales decreased
      $4.6
      million, or approximately 6.9%. Continuing difficult economic conditions in
      Germany and heightened competitive pressures, resulting in reduced pricing
      to
      mass market and health club customers, contributed to a $6.1 million reduction
      in branded sales volume. The reduction in branded sales was partially offset
      by
      a $1.5 million increase in private label sales volume.





***Gross
      Profit.*** **** Gross
      profit
      decreased approximately 4.9% to $83.6 million for fiscal 2005, from $87.8
      million for fiscal 2004. Gross profit, as a percentage of net sales, was 34.8%
      for fiscal 2005, compared to 37.4% for fiscal 2004. Gross profit, and the gross
      profit percentage, decreased in both our Schiff Specialty and Haleko units.





Schiff
      Specialty
      gross profit decreased approximately 1.5% to $59.7 million for fiscal 2005,
      from
      $60.7 million for fiscal 2004. Gross profit, as a percentage of net sales,
      was
      34.5% and 36.1%, respectively, for fiscal 2005 and 2004. The decrease was
      primarily due to a $8.1 million increase in joint product raw material costs
      and
      a $7.3 million increase in price discount-like promotions, which are accounted
      for as a direct reduction of sales, partially





16





offset
      by an
      approximate $12.5 million increase resulting from a change in sales mix and
      a
      $1.8 million increase resulting from a reduction in sales credits and inventory
      related costs. The increase in price discount-like promotions was in response
      to
      competitive pricing conditions. We anticipate that the increased joint product
      raw material costs will continue to impact gross profit in fiscal
      2006.





Haleko
      gross profit
      decreased approximately 12.3% to $23.8 million for fiscal 2005, from $27.2
      million for fiscal 2004. Gross profit, as a percentage of net sales, was 35.7%
      and 40.7%, respectively, for fiscal 2005 and 2004. The decrease primarily
      resulted from a reduction in sales volume due to economic conditions and a
      reduction in pricing to mass market and health club customers due to heightened
      competitive conditions. The margin percentage was also negatively impacted
      by a
      higher mix of lower margin private label sales.





***Operating
      Expenses.*** **** Operating
      expenses
      increased approximately 9.7% to $78.1 million for fiscal 2005, from $71.2
      million for fiscal 2004. The increase was primarily attributable to a $9.3
      million asset impairment loss recognized in our Haleko Unit (see Note 18 of
      the
      Notes to Consolidated Financial Statements). The $2.2 million increase in
      selling and marketing expenses was more than offset by a $5.1 million decrease
      in general and administrative expenses.





Selling
      and
      marketing expenses, including sales, marketing, advertising, freight and other
      costs, increased to approximately $45.8 million for fiscal 2005, from $43.6
      million for fiscal 2004. Selling and marketing expenses increased approximately
      $1.4 million in our Schiff Specialty Unit, and approximately $0.8 million in
      our
      Haleko Unit. The Schiff Specialty increase primarily resulted from $7.5 million
      in marketing costs in support of our fiscal 2005 launch of Lubriflex 3 and
      a $1.8 million
      increase in variable selling expenses resulting from increased sales volume,
      partially offset by a $6.8 million increase in reclassified discount-like
      promotions, which are accounted for as a direct reduction of sales. The Haleko
      increase was primarily due to the impact of foreign currency exchange rates.





General
      and
      administrative expenses decreased to approximately $18.1 million for fiscal
      2005, from $23.1 million for fiscal 2004. The decrease in general and
      administrative expenses resulted primarily from a $6.4 million reduction in
      legal related costs, including approximately $2.0 million in income recognized
      in fiscal 2005 relating to the favorable outcome of a previously recognized
      contingent liability. The decrease was partially offset by the fiscal 2004
      recovery of approximately $1.1 million of previously recognized notes receivable
      valuation allowances.





Research
      and
      development expenses increased to $4.0 million for fiscal 2005, from $3.8
      million for fiscal 2004, primarily due to an increase in contracted research
      costs. Amortization of intangibles increased to $0.9 million for fiscal 2005,
      from $0.7 million for fiscal 2004, due to a reduction in the estimated remaining
      useful lives of certain Haleko trademarks.





***Other
      Income/Expense.*** **** Other
      expense, net,
      was $0.1 million for fiscal 2005, compared to $0.5 million for fiscal 2004.
      We
      recognized approximately $0.4 million of incremental interest income in fiscal
      2005 resulting from the increase in cash and short-term investments. We settled
      certain outstanding notes receivable in fiscal 2004 primarily through
      reacquiring 994,017 shares of our outstanding Class A common stock. As a result
      of these settlement transactions, we recognized approximately $0.7 million
      in
      previously unrecognized interest income on the notes receivable. During fiscal
      2004, we recognized a modest gain on the sale of certain assets held for sale
      which was substantially offset by the write-down of an investment, both within
      our Haleko Unit. We also recognized less interest expense in fiscal 2005 due
      to
      an overall reduction in total indebtedness.





***Provision
      for Income Taxes.*** Provision for
      income taxes was $0.5 million benefit for fiscal 2005, compared to $6.1 million
      expense for fiscal 2004. The change resulted primarily from a decrease in
      pre-tax income and a significant decrease in our effective tax rate. During
      fiscal year 2002, we implemented a tax initiative which created a significant
      tax net operating loss (“NOL”). The NOL was carried back to obtain tax refunds
      and the remaining balance was carried forward. At the time of the transaction,
      we established an approximate $2.5 million valuation allowance as a contingency
      against potential claims from a subsequent Internal Revenue Service (“IRS”)
      challenge, and the potential implications to the NOL carryforwards. During
      fiscal year 2004, the IRS commenced an examination of the company’s fiscal year
      2002 U.S. tax return and subsequently expanded the audit to include fiscal
      years
      2003 and 2004. Upon the recent conclusion of the IRS audit, we recognized an
      income tax benefit of approximately $2.9 million, which includes the reversal
      of
      substantially all of the valuation allowance and an adjustment for research
      and
      development credits.





17





**Results
      of
      Operations**


*Fiscal
      2004
      Compared to Fiscal 2003*





The
      following
      tables show comparative results for continuing operations, by business unit,
      for
      fiscal 2004 and 2003 (in thousands).





Schiff
            
            Haleko
            
            Other(1)
            
            Total2004:Net
                sales
            
            $
            168,128
            
            $
            66,846
            
            $
            —
            
            $
            234,974Cost
                of goods
                sold
            
            
            107,472
            
            
            39,667
            
            
            —
            
            
            147,139Gross
                profit
            
            
            60,656
            
            
            27,179
            
            
            —
            
            
            87,835Operating
                expenses:Selling
                and
                marketing
            
            
            26,389
            
            
            17,204
            
            
            —
            
            
            43,593General
                and
                administrative
            
            
            17,250
            
            
            5,878
            
            
            —
            
            
            23,128Research
                and
                development
            
            
            2,975
            
            
            836
            
            
            —
            
            
            3,811Amortization
                of intangible assets
            
            
            120
            
            
            556
            
            
            —
            
            
            676Total
                operating expenses
            
            
            46,734
            
            
            24,474
            
            
            —
            
            
            71,208Income
                from
                operations
            
            $
            13,922
            
            $
            2,705
            
            $
            —
            
            $
            16,6272003:Net
                sales
            
            $
            154,912
            
            $
            63,830
            
            $
            3,102
            
            $
            221,844Cost
                of goods
                sold
            
            
            99,192
            
            
            37,771
            
            
            1,819
            
            
            138,782Gross
                profit
            
            
            55,720
            
            
            26,059
            
            
            1,283
            
            
            83,062Operating
                expenses:Selling
                and
                marketing
            
            
            23,549
            
            
            15,284
            
            
            712
            
            
            39,545General
                and
                administrative
            
            
            14,287
            
            
            7,907
            
            
            (309
            )
            
            21,885Research
                and
                development
            
            
            3,197
            
            
            652
            
            
            17
            
            
            3,866Amortization
                of intangible assets
            
            
            414
            
            
            261
            
            
            81
            
            
            756Total
                operating expenses
            
            
            41,447
            
            
            24,101
            
            
            501
            
            
            66,052Income
                from
                operations
            
            $
            14,273
            
            $
            1,955
            
            $
            782
            
            $
            17,010





(1) Amounts represent
      operations of our American Body Building and Science Foods brands which were
      sold on July 26, 2002. Previously, these operations were included in our Active
      Nutrition Unit (see “Overview” above).





***Net
      Sales.*** Net sales
      increased approximately 5.9% to $235.0 million for fiscal 2004, from $221.8
      million for fiscal 2003. The increase in net sales was primarily attributable
      to
      an increase in branded sales in our Schiff Specialty Unit and the positive
      impact of foreign currency exchange rates, partially offset by the impact from
      the sale of our American Body Building and Science Foods brands. Fiscal 2003
      net
      sales of American Body Building and Science Foods branded products, prior to
      divestiture, were $3.1 million.





Schiff
      Specialty
      net sales increased approximately 8.5% to $168.1 million for fiscal 2004, from
      $154.9 million for fiscal 2003. The increase primarily resulted from increases
      in Move Free and other joint product sales volume. Net sales of Move Free were
      $64.0 million for fiscal 2004, compared to $55.0 million for fiscal 2003. We
      believe our fiscal 2004 Move Free and other branded joint category sales results
      benefited from our Schiff Grow Move Free initiative.





Haleko
      net sales
      increased approximately 4.7% to $66.8 million for fiscal 2004, from $63.8
      million for fiscal 2003. An approximate $9.7 million positive impact of foreign
      currency exchange rates was partially offset by volume reductions of $2.8
      million in branded sales and $3.9 million in private label sales. Excluding
      foreign currency exchange rates, net sales decreased $6.6 million, or
      approximately 10.4%, primarily due to competitive pressures and economic
      conditions. We re-launched our leading Multipower sports nutrition and Multaben
      weight management brands during fiscal 2004 in response to sales trends.





***Gross
      Profit.*** **** Gross
      profit
      increased approximately 5.7% to $87.8 million for fiscal 2004, from $83.1
      million for fiscal 2003. Gross profit, as a percentage of net sales, was 37.4%
      for fiscal 2004 and 2003.





Schiff
      Specialty
      gross profit increased approximately 8.9% to $60.7 million for fiscal 2004,
      from
      $55.7 million for fiscal 2003. Gross profit, as a percentage of net sales,
      was
      relatively constant at 36.1% for fiscal 2004, compared to 36.0% for fiscal
      2003.
      An increase in higher margin Move Free and other joint product sales offset
      the
      impact of reduced margins on private label sales.





Haleko
      gross profit
      increased approximately 4.3% to $27.2 million for fiscal 2004, from $26.1
      million for fiscal 2003. The increase resulted from the positive impact of
      foreign currency exchange rates. Gross profit, as a percentage of net sales,
      remained relatively constant at 40.7% and 40.8%, respectively, for fiscal 2004
      and 2003.





18





***Operating
      Expenses.*** ** Operating expenses
      increased approximately 7.8% to $71.2 million fiscal 2004, from $66.1 million
      for fiscal 2003. The overall increase was primarily attributable to increases
      in
      selling and marketing costs in support of our brand building initiatives for
      all
      business units and the impact of foreign currency exchange rates.





Selling
      and
      marketing expenses, including sales, marketing, advertising, freight and other
      costs, were $43.6 million for fiscal 2004, compared to $39.5 million for fiscal
      2003. The increase in selling and marketing expenses resulted primarily from
      $1.4 million in incremental transition and marketing costs associated with
      our
      Grow Move Free initiative, $0.5 million in increased selling and marketing
      in
      support of new products in our Schiff Specialty Unit and an approximate $2.5
      million foreign currency exchange rate impact in our Haleko Unit.





General
      and
      administrative expenses were $23.1 million for fiscal 2004, compared to $21.9
      million for fiscal 2003. Increases in aggregate legal related costs of
      approximately $3.7 million were partially offset by the fiscal 2004 recovery
      of
      approximately $1.1 million of previously recognized notes receivable valuation
      allowances and reduced Haleko systems and personnel related costs, including
      impact from the sale of Venice Beach. Foreign currency exchange rates also
      contributed to the increase in general and administrative expenses.





Research
      and
      development costs remained relatively constant at $3.8 million and $3.9 million,
      respectively, for fiscal 2004 and 2003. Amortization of intangible assets also
      remained relatively constant at $0.7 million and $0.8 million, respectively,
      for
      fiscal 2004 and 2003.





***Other
      Expense.*** **** Other
      expense, net,
      was $0.5 million for fiscal 2004, compared to $2.8 million for fiscal 2003.
      We
      settled certain outstanding notes receivable in fiscal 2004 primarily through
      reacquiring 994,017 shares of our outstanding Class A common stock. As a result
      of these settlement transactions, we recognized approximately $0.7 million
      in
      previously unrecognized interest income on the notes receivable. We recognized
      less interest expense in fiscal 2004 due to an overall reduction in total
      indebtedness. We recognized a modest gain on the sale of certain assets held
      for
      sale in fiscal 2004 which was substantially offset by the write-down of an
      investment, both within our Haleko Unit. In November 2002, we paid off $5.0
      million in remaining subordinated debt with borrowings available from our senior
      bank credit facility, which resulted in an approximate $1.1 million write-off
      of
      previously capitalized financing fees during fiscal 2003. Finally, we recognized
      an approximate $0.5 million gain on the sale of certain held-for-sale equity
      securities during fiscal 2003.





***Provision
      for Income Taxes.*** **** Provision
      for
      income taxes was $6.1 million for fiscal 2004, compared to $5.6 million for
      fiscal 2003. The change resulted primarily from the decrease in pre-tax
      earnings, and a modest reduction in our effective tax rate due to utilization
      of
      certain fully reserved capital loss carryforwards.





**Liquidity
      and Capital Resources**





Working
      capital
      increased $19.5 million to approximately $66.0 million at May 31, 2005, from
      $46.5 million at May 31, 2004. The increase in working capital resulted
      primarily from an increase in cash, short-term investments and inventories,
      partially offset by a decrease in receivables and an increase in current income
      taxes payable. The increase in cash and short-term investments was primarily
      due
      to operating cash flows and the sale of the Weider branded business. The
      increase in inventories primarily resulted from an increase in joint care
      product and the impact of foreign currency exchange rates. The decrease in
      receivables resulted primarily from lower sales in the fiscal 2005 fourth
      quarter, as compared to the fiscal 2004 fourth quarter, and the sale of the
      Weider branded business. Current income taxes payable increased due to an
      increase in pre-tax income for tax reporting purposes.





Effective
      June 30,
      2000, we were party to a senior credit facility (the “Credit Facility”) with
      Bankers Trust Company, on behalf of our domestic subsidiaries. The Credit
      Facility, as subsequently amended, was comprised of a $45.0 million revolving
      loan. The Credit Facility, which was being used to fund normal working capital
      and capital expenditure requirements, was terminated on June 30, 2004 in favor
      of a new credit facility discussed below.





Our
      domestic
      operations were also supported by a subordinated loan (the “Subordinated Loan”)
      obtained in conjunction with the Credit Facility. Effective November 27, 2002,
      we used funds available under our revolving loan to pay-off the remaining $5.0
      million of the Subordinated Loan. As a result of the repayment of the
      Subordinated Loan, during fiscal 2003 we recognized write-offs of approximately
      $1.1 million of previously capitalized financing fees, including OID
      costs.





On
      June 30, 2004, we entered into, through our wholly-owned direct operating
      subsidiary Weider Nutrition Group, Inc. (“WNG”), a new $25.0 million revolving
      credit facility (the “New Credit Facility”) with KeyBank National Association,
      as Agent. The New Credit Facility contains customary terms and conditions,
      including, among others, financial covenants and certain restrictions. Our
      obligations under the New Credit Facility are secured by a first priority





19





security
      interest
      on all of the capital stock of WNG. 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 New Credit
      Facility bear interest at floating rates based on the KeyBank National
      Association prime rate or the Federal Funds effective rate, and the New Credit
      Facility matures on June 30, 2007, with options for one-year extensions under
      certain circumstances. The New Credit Facility can be used to fund our normal
      working capital and capital expenditure requirements, with availability to
      fund
      certain permitted strategic transactions. At May 31, 2005, there were no amounts
      outstanding and $25.0 million was available for borrowing under the New Credit
      Facility.





Our
      European
      working capital needs (primarily our Haleko business unit) were supported by
      a
      Germany-based secured credit facility (the “Haleko Facility”) that was subject
      to annual renewal in or around June. Our obligations under the Haleko Facility
      were secured by a first priority lien on substantially all Haleko tangible
      and
      intangible assets. At May 31, 2005, amounts outstanding under the Haleko
      Facility were approximately $2.5 million and available revolving loan funds
      were
      approximately $7.6 million. In connection with the sale of our Haleko Unit
      (see
      Note 18 of the Notes to Consolidated Financial Statements), the purchaser
      assumed the liabilities and obligations under the Haleko Facility.





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 our existing business. We could use cash
      and financing sources discussed herein, or financing sources that subsequently
      become available, to fund additional acquisitions or investments. In addition,
      we may consider issuing additional debt or equity securities in the future
      to
      fund potential acquisitions or growth, or to refinance existing debt. If a
      material acquisition 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
      facilities contain certain customary financial covenants that may limit our
      ability to pay common stock dividends. We can give no assurance that we will
      pay
      dividends in the future.





A
      summary of our outstanding contractual obligations for continuing operations
      (see Note 18 of the Notes to Consolidated Financial Statements) at May 31,
      2005
      is as follows (in thousands):





**Contractual**
              **Cash
                Obligations**
            
            **Total
                Amounts Committed**
            
            **Less
                than 1 year**
            
            **1-3
                Years**
            
            **3-5
                Years**
            
            **After**
              **5
                Years**Debt
                obligations, including interest
            
            $
            507
            
            $
            507
            
            $
            —
            
            $
            —
            
            $
            —Operating
                leases
            
            
            18,044
            
            
            2,310
            
            
            4,525
            
            
            4,661
            
            
            6,548Purchase
                obligations
            
            
            17,073
            
            
            17,073
            
            
            —
            
            
            —
            
            
            —Total
                obligations
            
            $
            32,624
            
            $
            19,890
            
            $
            4,525
            
            $
            4,661
            
            $
            6,548





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





**Critical
      Accounting 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 consolidated financial statements and the reported amounts of net sales
      and
      expenses during the reported periods. We periodically evaluate our estimates
      and
      judgments related to the valuation of inventories and intangible assets,
      allowances for doubtful accounts, notes receivable, sales returns and discounts,
      valuation of deferred tax assets and recoverability of long-lived assets. Note
      1
      of the Notes to the Consolidated Financial Statements 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.





20





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 and market conditions. Inventory valuation adjustments
                resulted in a decrease to gross profit of approximately $0.1 million,
                $0.2
                million and $1.6 million, respectively, for fiscal 2005, 2004 and
                2003.
                Our inventory valuation allowance amounted to approximately $2.2
                million
                and $3.7 million, respectively, at May 31, 2005 and 2004. 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, notes receivable, sales returns and discounts did not materially
                impact our earnings for fiscal years 2005, 2004, and 2003. Increases
                in
                Schiff Specialty allowances for sales returns, primarily resulting
                from
                the risks associated with the launch of new products, were substantially
                offset by decreases in allowances for sales returns in our Active
                Nutrition Unit. Our allowance for doubtful accounts, sales returns
                and
                discounts amounted to approximately $4.8 million and $6.5 million,
                respectively, at May 31, 2005 and 2004. Actual results may differ
                resulting in adjustment of the respective
                allowance(s).





·
            We
                currently
                have deferred tax assets resulting from certain loss carry forwards
                and
                other temporary differences between financial and income tax reporting.
                These deferred tax assets are subject to periodic recoverability
                assessments. The realization of these deferred tax assets is primarily
                dependent on future operating results. To the extent that it is more
                likely than not, that future operations will not generate sufficient
                profit to utilize the loss carry forwards, valuation allowances are
                established. Our deferred tax asset valuation allowances amounted
                to
                approximately $2.8 million and $4.6 million, respectively, at May
                31, 2005
                and 2004.





·
            We
                have
                significant intangible assets, including primarily goodwill. In connection
                with the sale of our Haleko Unit (see Note 18 of the Notes to Consolidated
                Financial Statements), we recognized an impairment loss pertaining
                to our
                trademarks and patents of approximately $3.5 million in fiscal 2005.
                The
                determination of related estimated useful lives and whether or not
                goodwill is impaired involves significant judgment. Changes in strategy
                or
                market conditions could significantly impact our judgment and require
                adjustments to our recorded goodwill
                balance.





**Impact
      of
      Inflation**





Historically,
      we
      generally have been able to pass inflationary increases for raw materials and
      other costs on to our customers through price increases. While we will continue
      efforts to do so in the future, we cannot assure you that we will be successful.
      Recently, we have been unable to pass on increased raw material costs relating
      to our joint care products. See further discussion of raw material pricing
      matters in the “General” and “Results of Operations” sections
      above.





**Seasonality**





Our
      business can be
      seasonal, with fluctuations in sales resulting from timing of marketing and
      promotional activities, customer buying patterns and consumer spending patterns.
      In addition, as a result of changes in 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.





**Recently
      Issued Accounting Standards**





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





21





In
      December 2004, the FASB issued SFAS No. 123 (revised 2004) “Share-Based Payment”
      (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based
      Compensation”, and supersedes APB Opinion No. 25, “Accounting for stock Issued
      to Employees”. SFAS No. 123R requires that costs resulting from all share-based
      payment transactions, a transaction in which an entity exchanges its equity
      instruments for goods or services, be recognized in the financial statements.
      Costs resulting from all share-based payment transactions will be determined
      by
      applying a fair-value-based measurement method at the date of the grant, with
      limited exceptions. Costs will be recognized over the period in which the goods
      or services are received. The recognition and measurement provisions of SFAS
      No.
      123R are effective for all share-based payment transactions entered into during
      fiscal years beginning after June 15, 2005. We have not determined the impact
      SFAS No. 123R will have on our results of operations and financial
      condition.





**ITEM
      7A.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





Our
      cash flows and
      net earnings are subject to fluctuations resulting from changes in interest
      rates and foreign exchange rates. Prior to the sale of out Haleko Unit referred
      to under “Recent Developments” above, we were party to one modest derivative
      instrument relating to our Haleko Unit. Our current investment policy does
      not
      allow speculation in derivative instruments for profit or execution of
      derivative instrument contracts for which there are no underlying exposure.
      We
      do not use financial instruments for trading purposes.





Since
      we have
      subsidiaries whose net sales and expenses are denominated in foreign currencies
      (primarily the Euro), changes in the value of these foreign currencies relative
      to the value of the U.S. dollar may impact our reported net earnings. The U.S.
      dollar volume of these foreign currency denominated net sales was approximately
      $66.8 million, or 28.4% of total net sales, for the year ended May 31, 2005.
      Following the sale of our Haleko Unit referred to under “Recent Developments”
      above, we anticipate that the portion of our total net sales relating to foreign
      currency denominated sales will significantly decrease. The impact of
      fluctuations in foreign currency exchange rates resulted in an approximate
      $4.6
      million increase in net sales for fiscal 2005. The impact of fluctuations in
      foreign currency exchange rates on operating income was negligible for the
      same
      time period.





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





**ITEM8.** **FINANCIAL
          STATEMENTS AND SUPPLEMENTARY DATA**





Financial
      statements and supplementary data are on the following pages F-1 through
      F-22.





**ITEM9.** **CHANGES
          IN
          AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
          DISCLOSURE**





None





**ITEM9A.** **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 the our management, including our Chief
      Executive Officer and Chief Financial Officer, as appropriate, to allow for
      timely decisions regarding required disclosure. In designing and evaluating
      the
      disclosure controls and procedures, we recognize that any controls and
      procedures, no matter how well designed and operated, can provide only
      reasonable assurance of achieving the desired control objectives, and we are
      required to apply our judgment in evaluating the cost-benefit relationship
      of
      possible controls and procedures.





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





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





22





**PARTIII**





**ITEM10.** **DIRECTORS
          AND EXECUTIVE OFFICERS OF THE REGISTRANT**





See
      the Company’s
      2005 Proxy Statement, incorporated by reference in Part III of this Form 10-K,
      under the headings “Board of Directors and Board Committees Information”,
“Nominees for Election to our Board of Directors”, “Executive Officers” and
“Section 16(a) Beneficial Ownership Reporting Compliance.”





**ITEM11.** **EXECUTIVE
          COMPENSATION**





See
      the Company’s
      2005 Proxy Statement, incorporated by reference in Part III of this Form 10-K,
      under the headings “Board of Directors and Board Committees Information”,
“Compensation of Named Executive Officers” and “Certain Relationships and
      Related Transactions.”





**ITEM12.** **SECURITY
          OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
          MATTERS**





See
      the information
      set forth under Item 5 herein and in the Company’s 2005 Proxy Statement,
      incorporated by reference in Part III of this Form 10-K, under the heading
      “Stock Ownership of Beneficial Owners, Directors and Management.”





**ITEM13.** **CERTAIN
          RELATIONSHIPS AND RELATED PARTY TRANSACTIONS**





See
      the Company’s
      2005 Proxy Statement, incorporated by reference in Part III of this Form 10-K,
      under the heading “Certain Relationships and Related Transactions”.





**ITEM14.** **PRINCIPAL
          ACCOUNTANT FEES AND SERVICES**





See
      the Company’s
      2005 Proxy Statement, incorporated by reference in Part III of this Form 10-K,
      under the heading “Fees Paid to Independent Public Accountants”.








23





**PART
      IV**





**ITEM15.** **EXHIBITS,
          FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
          8-K**





(a)
            Documents
                filed as part of this report





(1)  Financial
      Statements





See
“Item
      8.
      Financial Statements and Supplementary Data” for Financial Statements included
      with this Annual Report on Form 10-K.





(2)  Financial
      Statement
      Schedules





Schedule
      II -
      Valuation and Qualifying Accounts. All other schedules have been omitted because
      they are not required, not applicable, or the information is otherwise set
      forth
      in the financial statements or notes thereto.





(3)  Exhibits


3.1.
                Amended
                    and
                    Restated Certificate of Incorporation of Weider Nutrition International,
                    Inc. (1)3.2.
                Amended
                    and
                    Restated Bylaws of Weider Nutrition International, Inc.
                    (1)4.1.
                Credit
                    Agreement dated as of June 30, 2004 between Weider Nutrition
                    Group, Inc.
                    and KeyBank National Association. (2)10.1.
                Build-To-Suit
                    Lease Agreement, dated March 20, 1996, between SCI Development
                    Services
                    Incorporated and Weider Nutrition Group, Inc. (1)10.2.
                Agreement
                    by
                    and between Joseph Weider and Weider Health and Fitness.
                    (1)10.3.
                1997
                    Equity
                    Participation Plan of Weider Nutrition International, Inc.
                    (1)10.4.
                Form
                    of Tax
                    Sharing Agreement by and among Weider Nutrition International,
                    Inc. and
                    its subsidiaries and Weider Health and Fitness and its subsidiaries.
                    (1)10.5.
                License
                    Agreement between Mariz Gestao E Investmentos Limitada and Weider
                    Nutrition Group, Limited. (1)10.6.
                Agreement
                    between Weider Nutrition Group, Inc. and Bruce J. Wood.
                    (3)*10.7.
                Form
                    Agreement between Weider Nutrition Group, Inc. and certain of
                    its
                    executives. (3)*10.7.
                Amendments
                    to
                    1997 Equity Participation Plan of Weider Nutrition International,
                    Inc.
                    (4)10.8.
                Employment
                    Agreement between Weider Nutrition Group, Inc. and Bruce J. Wood.
                    (5)*10.9.
                Consulting
                    Agreement between Weider Nutrition Group, Inc. and Gustin Foods,
                    LLC dated
                    as of February 2005. (6)10.10.
                Weider
                    Nutrition International, Inc. 2004 Incentive Award Plan.
                    (7)10.11.
                Amendment
                    effective as of March 1, 2005 to License Agreement between Mariz
                    Gestao E
                    Investmentos Limitada and Weider Nutrition Group, Inc.
                    (8)10.12.
                Stock
                    and
                    Asset Purchase Agreement effective as of March 1, 2005 among
                    Weider
                    Nutrition International, Inc., Weider Nutrition Group, Inc. and
                    Weider
                    Global Nutrition, LLC. (8)10.13.
                Promissory
                    Note of Weider Global Nutrition, LLC payable to Weider Nutrition
                    Group,
                    Inc. (8)10.14.
                Guarantee
                    by
                    Weider Health and Fitness in favor of Weider Nutrition International,
                    Inc.
                    and Weider Nutrition Group, Inc. (8)10.15.
                Share
                    Sale
                    and Transfer Agreement dated June 17, 2005 among Weider Nutrition
                    GmbH,
                    Haleko Management GmbH, Atlantic Grupa d.o.o., Hopen Investments
                    BV and
                    Svalbard Investments GmbH. (9)10.16.
                Form
                    of
                    Indemnification Agreement. (10)*21.1.
                Subsidiaries
                    of Weider Nutrition International, Inc. (11)23.1.
                Consent
                    of
                    Independent Registered Public Accounting Firm. (11)31.1.
                Certification
                    of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley
                    Act. (11)31.2.
                Certification
                    of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley
                    Act. (11)32.1.
                Certification
                    of Chief Executive Officer and Chief Financial Officer pursuant
                    to Section
                    906 of the Sarbanes-Oxley Act. (11)(1)
                Previously
                    filed in the Company’s Registration Statement on Form S-1 (File No.
                    333-12929) and incorporated herein by reference.(2)
                Previously
                    filed in the Company’s Current Report on Form 8-K filed on July 8, 2004
                    and incorporated herein by reference.(3)
                Previously
                    filed in the Company’s Annual Report on Form 10-K filed on August 28, 2003
                    and incorporated herein by reference.(4)
                Previously
                    filed in the Company’s Quarterly Report on Form 10-Q filed on January 14,
                    2002 and incorporated herein by reference.(5)
                Previously
                    filed in the Company’s Annual Report on Form 10-K filed on August 29, 2002
                    and incorporated herein by reference.(6)
                Previously
                    filed in the Company’s Quarterly Report on Form 10-Q filed on April 14,
                    2004 and incorporated herein by reference.(7)
                Previously
                    filed in the Company’s Definitive Proxy Statement on Form 14A filed on
                    September 28, 2004 and incorporated herein by
                    reference.(8)
                Previously
                    filed in the Company’s Current Report on Form 8-K filed on April 4, 2005
                    and incorporated herein by reference.(9)
                Previously
                    filed in the Company’s Current Report on Form 8-K filed on June 23, 2005
                    and incorporated herein by reference.(10)
                Previously
                    filed in the Company’s Current Report on Form 8-K filed on August 10, 2005
                    and incorporated herein by reference.(11)
                Filed
                    herewith.*
                Management
                    contract.





24





**SIGNATURES**





Pursuant
      to the
      requirements of section 13 or 15(d) 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.





**Weider
                Nutrition International, Inc.**By:
            /s/
                Bruce J.
                WoodBruce
                J. WoodDated:
                August
                29, 2005
            Chief
                Executive Officer and President








Pursuant
      to the
      requirements of the Securities Exchange Act of 1934, this report has been signed
      below by the following persons on behalf of the registrant and in the capacities
      and on the dates indicated.








**Name**
            
            **Title**
            
            **Date**/s/
                Eric
                Weider
            
            Chairman
                of
                the Board
            
            August
                29,
                2005Eric
                Weider
            
            and
                Director/s/
                Bruce J.
                Wood
            
            Chief
                Executive Officer,
            
            August
                29,
                2005Bruce
                J.
                Wood
            
            President
                and
                Director(Principal
                Executive Officer)/s/
                Joseph W.
                Baty
            
            Executive
                Vice President and
            
            August
                29,
                2005Joseph
                W.
                Baty
            
            Chief
                Financial Officer(Principal
                Financial Officer andPrincipal
                Accounting Officer)/s/
                Ronald L.
                Corey
            
            Director
            
            August
                29,
                2005Ronald
                L.
                Corey/s/
                Roger H.
                Kimmel
            
            Director
            
            August
                29,
                2005Roger
                H.
                Kimmel/s/
                George F.
                Lengvari
            
            Vice
                Chairman
                of the Board
            
            August
                29,
                2005George
                F.
                Lengvari
            
            and
                Director/s/
                Brian P.
                McDermott
            
            Director
            
            August
                29,
                2005Brian
                P.
                McDermott/s/
                H. F.
                Powell
            
            Director
            
            August
                29,
                2005H.
                F.
                Powell








25
 **WEIDER
            NUTRITION INTERNATIONAL, INC.**
  **INDEX
            TO CONSOLIDATED FINANCIAL STATEMENTS**






















Reportof
                Independent Registered Public
                Accounting Firm
            F
                -
                2Consolidated
                Balance Sheets at May 31, 2005 and 2004
            F
                -
                3Consolidated
                Statements of Operations,
              Years
                Ended
                May 31, 2005, 2004 and 2003
            F
                -
                4Consolidated
                Statements of Stockholders’ Equity,
              Years
                Ended
                May 31, 2005, 2004 and 2003
            F
                -
                5Consolidated
                Statements of Cash Flows,
              Years
                Ended
                May 31, 2005, 2004 and 2003
            F
                -
                6Notes
                to
                Consolidated Financial Statements
            F
                -
                7





F
          -
          1
 **REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
          FIRM**


























The
      Board of Directors


Weider
      Nutrition
      International, Inc. and Subsidiaries:





We
      have audited the accompanying consolidated balance sheets of Weider Nutrition
      International, Inc. and subsidiaries (collectively, the “Company”) as of May 31,
      2005 and 2004, and the related consolidated statements of operations,
      stockholders’ equity and cash flows for each of the three years in the period
      ended May 31, 2005. These financial statements are the responsibility of the
      Company’s management. Our responsibility is to express an opinion on these
      financial statements based on our audits.





We
      conducted our audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audits included consideration of internal control
      over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, assessing the accounting principles used and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our opinion, such consolidated financial statements present fairly, in all
      material respects, the financial position of Weider Nutrition International,
      Inc. and subsidiaries at May 31, 2005 and 2004, and the results of its
      operations and its cash flows for each of the three years in the period ended
      May 31, 2005 in conformity with accounting principles generally accepted in
      the
      United States of America.





As
      discussed in Note 1 to the consolidated financial statements, effective June
      1,
      2002 the Company adopted the provisions of Statement of Financial Accounting
      Standards No. 142, “Goodwill and Other Intangible Assets”.





DELOITTE
&
      TOUCHE LLP











Salt
      Lake City,
      Utah


August
      25,
      2005














F
          -
          2
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
            BALANCE SHEETS**
 **MAY
            31, 2005 AND 2004**
 (dollars in thousands,
            except
            share data)








**ASSETS**2005
            
            2004Current
                assets:Cash
                and cash
                equivalents
            
            $
            11,358
            
            $
            7,449Short-term
                investments (Note 3)
            
            
            24,212
            
            
            —Receivables,
                net (Note 4)
            
            
            29,300
            
            
            35,620Inventories
                (Note 5)
            
            
            32,419
            
            
            28,431Prepaid
                expenses and other
            
            
            4,297
            
            
            5,021Deferred
                taxes, net (Note 11)
            
            
            2,857
            
            
            2,419Total
                current
                assets
            
            
            104,443
            
            
            78,940Property
                and
                equipment, net (Note 6)
            
            
            16,714
            
            
            24,618Other
                assets:Goodwill
                (Note 7)
            
            
            4,346
            
            
            4,346Intangible
                assets, net (Note 7)
            
            
            23
            
            
            5,146Deposits
                and
                other assets
            
            
            1,310
            
            
            1,834Notes
                receivable, net (Note 8)
            
            
            —
            
            
            40Deferred
                taxes, net (Note 11)
            
            
            1,430
            
            
            —Total
                other
                assets
            
            
            7,109
            
            
            11,366Total
                assets
            
            $
            128,266
            
            $
            114,924**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            16,566
            
            $
            14,279Accrued
                expenses (Note 9)
            
            
            13,577
            
            
            17,114Current
                portion of long-term debt (Note 10)
            
            
            3,020
            
            
            1,091Income
                taxes
                payable
            
            
            5,268
            
            
            —Total
                current
                liabilities
            
            
            38,431
            
            
            32,484Long-term
                debt (Note 10)
            
            
            —
            
            
            133Deferred
                taxes, net (Note 11)
            
            
            —
            
            
            6,494Commitments
                and contingencies (Notes 10 and 14)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 -11,309,910 (2005) and 11,127,166
                (2004)
            
            
            113
            
            
            111Class
                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
            
            
            86,857
            
            
            83,902Deferred
                compensation costs
            
            
            (366
            )
            
            (635
            )Other
                accumulated comprehensive income (loss) (Note 12)
            
            
            167
            
            
            (4,060
            )Retained
                earnings (accumulated deficit)
            
            
            2,914
            
            
            (3,655
            )Total
                stockholders’ equity
            
            
            89,835
            
            
            75,813Total
                liabilities and stockholders’ equity
            
            $
            128,266
            
            $
            114,924





See
      notes to
      consolidated financial statements.





F
          -
          3
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
            STATEMENTS OF OPERATIONS**
 **YEARS
            ENDED MAY 31, 2005, 2004 AND 2003**
 **(dollars
            in thousands, except share data)**








2005
            
            2004
            
            2003Net
                sales
            
            $
            239,854
            
            $
            234,974
            
            $
            221,844Cost
                of goods
                sold
            
            
            156,280
            
            
            147,139
            
            
            138,782Gross
                profit
            
            
            83,574
            
            
            87,835
            
            
            83,062Operating
                expenses:Selling
                and
                marketing
            
            
            45,806
            
            
            43,593
            
            
            39,545General
                and
                administrative
            
            
            18,063
            
            
            23,128
            
            
            21,885Research
                and
                development
            
            
            4,017
            
            
            3,811
            
            
            3,866Amortization
                of intangible assets
            
            
            904
            
            
            676
            
            
            756Asset
                impairment loss (Note 18)
            
            
            9,346
            
            
            —
            
            
            —Total
                operating expenses
            
            
            78,136
            
            
            71,208
            
            
            66,052Income
                from
                operations
            
            
            5,438
            
            
            16,627
            
            
            17,010Other
                income
                (expense):Interest
                income
            
            
            441
            
            
            845
            
            
            43Interest
                expense
            
            
            (442
            )
            
            (1,496
            )
            
            (2,307
            )Write-off
                of
                financing fees, including OID costs (Note 10)
            
            
            —
            
            
            —
            
            
            (1,147
            )Other
            
            
            (82
            )
            
            109
            
            
            578Total
                other
                expense, net
            
            
            (83
            )
            
            (542
            )
            
            (2,833
            )Income
                from
                continuing operations before income taxes
            
            
            5,355
            
            
            16,085
            
            
            14,177Income
                tax
                expense (benefit)
            
            
            (467
            )
            
            6,097
            
            
            5,600Income
                from
                continuing operations
            
            
            5,822
            
            
            9,988
            
            
            8,577Income
                (loss)
                from discontinued operations, net of income taxes (Note 2)
            
            
            747
            
            
            (1,101
            )
            
            (719
            )Income
                before
                cumulative effect of change in accounting principle
            
            
            6,569
            
            
            8,887
            
            
            7,858Cumulative
                effect of change in accounting principle, net of income tax benefit
                (Note
                7)
            
            
            —
            
            
            —
            
            
            (15,392
            )Net
                income
                (loss)
            
            $
            6,569
            
            $
            8,887
            
            $
            (7,534
            )Income
                (loss)
                per share - basic:Income
                from
                continuing operations
            
            $
            0.22
            
            $
            0.38
            
            $
            0.32Net
                income
                (loss)
            
            $
            0.25
            
            $
            0.34
            
            $
            (0.29
            )Income
                (loss)
                per share - diluted:Income
                from
                continuing operations
            
            $
            0.22
            
            $
            0.37
            
            $
            0.32Net
                income
                (loss)
            
            $
            0.25
            
            $
            0.33
            
            $
            (0.29
            )























See
      notes to
      consolidated financial statements.





F
          -
          4
 ****WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **CONSOLIDATED
              STATEMENTS OF STOCKHOLDERS' EQUITY**
 **YEARS
              ENDED MAY 31, 2005, 2004 AND 2003**
 **(in
              thousands)**






OtherDeferred
              
              Accum.
              
              RetainedCommon
                  Stock
              
              Add’l
              
              Compen-
              
              Compreh.
              
              EarningsClass
                  A
              
              Class
                  B
              
              Paid-In
              
              sation
              
              Income.
              
              (Accum.Shares
              
              Amount
              
              Amount
              
              Capital
              
              Costs
              
              (Loss)
              
              .Deficit)
              
              TotalBalanceat
                  June 1, 2002
              
              
              11,276
              
              $
              112
              
              $
              150
              
              $
              85,912
              
              $
              —
              
              $
              (4,425
              )
              $
              (5,008
              )
              $
              76,741Comprehensive
                  loss:Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (7,534
              )
              
              (7,534
              )Available-for-sale
                  securities valuation adjustment (Note 12)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (172
              )
              
              —
              
              
              (172
              )Foreign
                  currency translation adjustments (Note 12)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (354
              )
              
              —
              
              
              (354
              )Total
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (8,060
              )Issuance
                  of
                  restricted stock(Note
                  1)
              
              
              640
              
              
              7
              
              
              —
              
              
              1,031
              
              
              (1,038
              )
              
              —
              
              
              —
              
              
              —Amortization
                  of deferred compensation costs
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              165
              
              
              —
              
              
              —
              
              
              165Balance
                  at
                  May 31, 2003
              
              
              11,916
              
              
              119
              
              
              150
              
              
              86,943
              
              
              (873
              )
              
              (4,951
              )
              
              (12,542
              )
              
              68,846Comprehensive
                  income:Net
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              8,887
              
              
              8,887Foreign
                  currency translation adjustments (Note 12)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              891
              
              
              —
              
              
              891Total
                  comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              9,778Cancellation
                  of restricted stock (Note 1)
              
              
              (23
              )
              
              —
              
              
              —
              
              
              (37
              )
              
              37
              
              
              —
              
              
              —
              
              
              —Stock
                  options
                  exercised
              
              
              228
              
              
              2
              
              
              —
              
              
              604
              
              
              —
              
              
              —
              
              
              —
              
              
              606Tax
                  benefit
                  from stock options exercised
              
              
              —
              
              
              —
              
              
              —
              
              
              203
              
              
              —
              
              
              —
              
              
              —
              
              
              203Stock
                  received as payment of notes receivable (Note 8)
              
              
              (994
              )
              
              (10
              )
              
              —
              
              
              (3,811
              )
              
              —
              
              
              —
              
              
              —
              
              
              (3,821
              )Amortization
                  of deferred compensation costs
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              201
              
              
              —
              
              
              —
              
              
              201Balance
                  at
                  May 31, 2004
              
              
              11,127
              
              
              111
              
              
              150
              
              
              83,902
              
              
              (635
              )
              
              (4,060
              )
              
              (3,655
              )
              
              75,813Comprehensive
                  income:Net
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              6,569
              
              
              6,569Foreign
                  currency translation adjustments (Note 12)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              4,227
              
              
              —
              
              
              4,227Total
                  comprehensive income
              
              
              (60
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              10,796Cancellation
                  of restricted stock (Note 1)
              
              
              —
              
              
              —
              
              
              —
              
              
              (96
              )
              
              96
              
              
              —
              
              
              —
              
              
              —Stock
                  options
                  exercised
              
              
              270
              
              
              2
              
              
              —
              
              
              714
              
              
              —
              
              
              —
              
              
              —
              
              
              716Tax
                  benefit
                  from stock options exercised
              
              
              —
              
              
              —
              
              
              —
              
              
              261
              
              
              —
              
              
              —
              
              
              —
              
              
              261Stock
                  received for payment of taxes on restricted stock
                  compensation
              
              
              (27
              )
              
              —
              
              
              —
              
              
              (108
              )
              
              —
              
              
              —
              
              
              —
              
              
              (108
              )Amortization
                  of deferred compensation costs
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              173
              
              
              —
              
              
              —
              
              
              173Gain
                  on sale
                  of Weider branded business, net of taxes (Note 2)
              
              
              —
              
              
              —
              
              
              —
              
              
              2,184
              
              
              —
              
              
              —
              
              
              —
              
              
              2,184Balance
                  at
                  May 31, 2005
              
              
              11,310
              
              $
              113
              
              $
              150
              
              $
              86,857
              
              $
              (366
              )
              $
              167
              
              $
              2,914
              
              $
              89,835








See
      notes to
      consolidated financial statements.





F
          -
          5
 ****WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **CONSOLIDATED
              STATEMENTS OF CASH FLOWS**
 **YEARS
              ENDED MAY 31, 2005, 2004 AND 2003**
 **(dollars
              in thousands)**








2005
            
            2004
            
            2003Cash
                flows
                from operating activities:Net
                income
                (loss)
            
            $
            6,569
            
            $
            8,887
            
            $
            (7,534
            )Adjustments
                to reconcile net income (loss)to
                net cash
                provided by operating activities:Provision
                for
                (recovery of) bad debts/valuation allowances
            
            
            —
            
            
            (1,059
            )
            
            583Deferred
                taxes
            
            
            (8,362
            )
            
            6,182
            
            
            (362
            )Depreciation
                and amortization
            
            
            5,534
            
            
            5,309
            
            
            6,172Asset
                impairment
            
            
            9,346
            
            
            —
            
            
            23,321Interest
                income on settlement of notes receivables
            
            
            —
            
            
            (630
            )
            
            —Amortization
                and write-off of financing fees, including OID costs
            
            
            141
            
            
            524
            
            
            1,859Gain
                on
                disposition of net assets held for sale and property and
                equipment
            
            
            (41
            )
            
            (1,517
            )
            
            (34
            )Amortization
                of deferred compensation costs
            
            
            173
            
            
            201
            
            
            165Tax
                benefit
                from stock options exercised
            
            
            261
            
            
            203
            
            
            —Other
            
            
            3
            
            
            97
            
            
            115Changes
                in
                operating assets and liabilities:Receivables
            
            
            1,939
            
            
            (8,342
            )
            
            13,067Inventories
            
            
            (8,898
            )
            
            (888
            )
            
            (43
            )Prepaid
                expenses and other
            
            
            374
            
            
            (709
            )
            
            (1,823
            )Deposits
                and
                other assets
            
            
            514
            
            
            2,543
            
            
            (566
            )Accounts
                payable
            
            
            5,588
            
            
            (4,117
            )
            
            (1,628
            )Accrued expenses
            
            
            (871
            )
            
            (1,409
            )
            
            (3,576
            )Income
                taxes
                payable
            
            
            5,268
            
            
            —
            
            
            —Net
                cash
                provided by operating activities
            
            
            17,538
            
            
            5,275
            
            
            29,716Cash
                flows
                from investing activities:Purchase
                of
                property and equipment
            
            
            (2,429
            )
            
            (1,680
            )
            
            (1,681
            )Proceeds
                from
                disposition of net assets held for sale and property and
                equipment
            
            
            959
            
            
            7,255
            
            
            5,472Purchase
                of
                intangible assets
            
            
            (7
            )
            
            —
            
            
            (231
            )Proceeds
                from
                sale of Weider branded business (Note 2)
            
            
            9,647
            
            
            —
            
            
            —Purchase
                of
                available-for-sale securities
            
            
            (25,012
            )
            
            —
            
            
            —Proceeds
                from
                sale of available-for-sale securities
            
            
            800
            
            
            —
            
            
            1,496Increase
                in
                notes receivable
            
            
            —
            
            
            —
            
            
            (700
            )Collection
                of
                notes receivable
            
            
            100
            
            
            4
            
            
            182Net
                cash
                provided by (used in) investing activities
            
            
            (15,942
            )
            
            5,579
            
            
            4,538Cash
                flows
                from financing activities:Net
                change in
                revolving line of credit
            
            
            (2
            )
            
            —
            
            
            (12,918
            )Proceeds
                from
                long-term debt
            
            
            4,472
            
            
            2,705
            
            
            4,947Payments
                on
                long-term debt
            
            
            (2,818
            )
            
            (10,451
            )
            
            (25,665
            )Issuance
                of
                common stock
            
            
            716
            
            
            606
            
            
            —Acquisition
                and retirement of treasury stock
            
            
            (108
            )
            
            —
            
            
            —Net
                cash
                provided by (used in) financing activities
            
            
            2,260
            
            
            (7,140
            )
            
            (33,636
            )Effect
                of
                exchange rate changes on cash
            
            
            53
            
            
            272
            
            
            433Increase
                in
                cash and cash equivalents
            
            
            3,909
            
            
            3,986
            
            
            1,051Cash
                and cash
                equivalents, beginning of year
            
            
            7,449
            
            
            3,463
            
            
            2,412Cash
                and cash
                equivalents, end of year
            
            $
            11,358
            
            $
            7,449
            
            $
            3,463





See
      notes to
      consolidated financial statements.






F
          -
          6
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(dollars
              in thousands, except share data)**





**1.**
            **SIGNIFICANT
                ACCOUNTINGPOLICIES**





**Description
      of Business -** We
      develop,
      manufacture, market, distribute and sell branded and private label vitamins,
      nutritional supplements and sports nutrition products 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, are
      primarily marketed through mass market, health food store and health club and
      gym distribution channels. We market our branded nutritional supplement
      products, both domestically and internationally, in three principal categories:
      specialty supplements, vitamins and minerals and nutrition bars.





Prior
      to the sale
      of our Weider branded business and Haleko Unit, as discussed in Notes 2 and
      18,
      we also offered various powdered drink mixes and ready-to-drink beverages,
      marketed primarily through the same channels.





**Principles
      of Consolidation -** Our
      consolidated
      financial statements include the accounts of Weider Nutrition International,
      Inc. and its wholly-owned subsidiaries. All significant inter-company accounts
      and transactions have been eliminated. We are a majority-owned subsidiary of
      Weider Health and Fitness (“WHF”).





**Use
      of
      Estimates and Assumptions in Preparing Financial Statements -** In
      preparing our
      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 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 valuation of inventories and intangible assets, allowances for doubtful
      accounts, notes receivable, sales returns and discounts, valuation of deferred
      tax assets and recoverability of long-lived assets. 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.





**Cash
      Equivalents** -
      Cash equivalents
      include highly liquid investments with an original maturity of three months
      or
      less.





**Short-term
      Investments -** Short-term
      investments, consisting of equity and debt securities, are classified as
      available-for-sale securities and are carried at their fair value based upon
      the
      quoted market prices at period end. Accordingly, unrealized gains and losses,
      net of taxes, are computed on the basis of specific identification and included
      in other accumulated comprehensive income (loss) in stockholders’ equity until
      realized. We periodically evaluate whether declines in fair values of
      our
      short-term investments are other-than temporary.  This evaluation consists
      of a review of qualitative and quantitative factors, including quoted market
      prices, if available; recent financial results and operating trends; other
      publicly available information; implied values from any recent financing rounds;
      or other conditions that bear on the value of our
      investments.





**Inventories
      -** Inventories,
      primarily consisting of direct materials, direct labor and manufacturing
      overhead, are stated at the lower of cost (on a first-in, first-out basis)
      or
      market.





**Property
      and Equipment -** Property
      and
      equipment are stated at cost less accumulated depreciation and amortization.
      Depreciation and amortization expense was $4,494 (2005), $4,431 (2004) and
      $5,177 (2003), computed using the straight-line method over the estimated useful
      lives of 31 to 50 years for buildings, 2 to 10 years for furniture and equipment
      and 3 to 8 years for leasehold improvements. Leasehold improvements are
      amortized over the shorter of their useful life or of the lease
      term.





**Intangible
      Assets -** Effective
      June 1,
      2002, we adopted Statement of Financial Accounting Standard (“SFAS”) No. 142,
“Goodwill and other Intangible Assets”, which establishes accounting and
      reporting standards for goodwill and other intangible assets. SFAS No. 142
      requires that goodwill and other intangible assets with indefinite lives be
      tested for impairment, at least annually, rather than amortize them. Upon
      adoption of SFAS No. 142, as disclosed in Note 7, we recognized an after-tax
      goodwill impairment charge of $15,392. Prior to fiscal 2003, goodwill was
      amortized using the straight-line method over periods ranging from 15 to 35
      years. Other intangibles with definite lives are amortized using the
      straight-line method over estimated useful lives of 2 to 5 years.





**Long-Lived
      Assets -** Effective
      June 1,
      2002, we adopted SFAS No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets”, which establishes accounting and reporting standards for the
      impairment or disposal of
      long-lived
      assets. SFAS No. 144 removes goodwill from its scope and retains the
      requirements of SFAS No. 121 regarding the recognition of impairment losses
      on
      long-lived assets held for use. SFAS No. 144 also supersedes the accounting
      and
      reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations
      - Reporting the Effects of Disposal of Segment of a Business, and Extraordinary,
      Unusual and Infrequently Occurring Events and Transactions,”for the
      disposal of
      a segment of a business. In accordance with SFAS No. 144, as disclosed in Note
      2, the operating results for Venice Beach® and the Weider branded business are
      reflected as discontinued operations in the accompanying consolidated statements
      of operations.





F
          -
          7
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**








We
      evaluate the carrying value of long-term assets based upon current and
      anticipated undiscounted cash flows, and recognize an impairment when such
      estimated cash flows will be less than the carrying value of the asset.
      Measurement of the amount of impairment, if any, is based upon the difference
      between carrying value and fair value. As disclosed in Note 18, subsequent
      to
      May 31, 2005, we sold our Haleko business unit. Net proceeds were approximately
      $9,346 less than the carrying value of Haleko’s long-term assets. Accordingly,
      we recognized an asset impairment loss in fiscal 2005.





**Income
      Taxes -** We
      record deferred
      income tax liabilities and assets for temporary differences in the basis of
      assets and liabilities as reported for financial statement purposes and income
      tax purposes. Deferred tax assets are reduced by a valuation allowance when,
      in
      our opinion, it is more likely than not that some portion or all of the deferred
      tax assets will not be realized.





**Revenue
      Recognition -** Sales
      are
      recognized when all of the following criteria are met: (1) persuasive evidence
      of an arrangement exists; (2) delivery has occurred or services have been
      rendered; (3) the seller’s price to the buyer is fixed or determinable; and, (4)
      collectibility is reasonably assured. Although we utilize a variety of shipping
      terms, our primary shipping terms are “FOB Destination”.





Net
      sales represent
      products at gross sales price, less estimated returns and allowances for which
      provisions are made at the time of sale and less certain other discounts,
      allowances and sales incentives. The Company utilizes various types of sales
      incentives and promotions in marketing its product; including, price reductions,
      coupons, rebate offers, slotting fees and free product. Generally, the cost
      of
      these sales incentives and promotions, with the exception of free product,
      are
      accounted for as a direct reduction of sales. The cost of free product is
      classified as cost of goods sold.





Advertising
      costs,
      including cooperative advertising payments to retailers, are charged to expense
      in the period that the advertising first takes place. Cooperative advertising
      payments to retailers are generally accounted for as an operating expense;
      however, the portion of the cost in excess of the estimated fair value of the
      benefit received is classified as a direct reduction of sales. Total advertising
      expense, included in continuing operations, amounted to $13,066, $12,893 and
      $12,180, respectively, for fiscal 2005, 2004 and 2003.





Shipping
      costs,
      included in selling and marketing expenses, were $5,667, $5,606 and $4,792,
      respectively, for fiscal 2005, 2004 and 2003. Handling costs, included in
      general and administrative expenses, were $4,211, $3,661 and $3,569,
      respectively, for fiscal 2005, 2004 and 2003.





**Concentration
      Risk -** Net
      sales to our
      two largest customers combined, which are included in our Schiff Specialty
      Unit,
      are significant. For fiscal 2005, 2004 and 2003, respectively, Customer A
      accounted for approximately 28%, 30% and 32% and Customer B accounted for
      approximately 24%, 23% and 20% of total net sales. At May 31, 2005 and 2004,
      respectively, amounts due from Customer A represented approximately 21% and
      23%
      and amounts due from Customer B represented approximately 15% and 15% of total
      trade accounts receivable. Domestic net sales of Schiff Move Free® brand,
      included in our Schiff Specialty Unit, accounted for approximately 27%, 27%
      and
      25%, respectively, of total net sales for fiscal 2005, 2004 and 2003. Net sales
      of Haleko’s Multipower® brand, included in our Haleko Unit, accounted for
      approximately 12%, 13% and 12%, respectively, of total net sales for fiscal
      2005, 2004 and 2003.





**Issuance
      of
      Restricted Stock** -
      Effective August
      16, 2002, we issued 640,000 restricted shares of Class A common stock to certain
      officers and employees. The aggregate value of the restricted shares at issuance
      was approximately $1,038, which we are expensing on a straight-line basis over
      the accompanying five-year vesting period. As a result of the voluntary
      termination of certain employees, 60,000 and 23,200, respectively, of these
      restricted shares were cancelled during fiscal 2005 and 2004.





**Stock-Based
      Compensation -** We
      disclose the
      effect of SFAS No. 123, “Accounting for Stock-Based Compensation”, on a proforma
      basis and continue to follow Accounting Principles Board (“APB”) Opinion No. 25
      (as permitted by SFAS No. 123) as it relates to stock based
      compensation.





F
          -
          8
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**





Proforma
      information regarding net income (loss) and net income (loss) per share is
      required by SFAS No. 123, as amended by SFAS No. 148, and has been determined
      as
      if we had accounted for our employee stock options under the fair value method
      of SFAS No. 123. For the purposes of proforma disclosure, the estimated fair
      value of the stock options is amortized to expense over the options vesting
      period. Proforma net income (loss) and net income (loss) per share for fiscal
      2005, 2004 and 2003 are as follows:





2005
            
            2004
            
            2003Net
                income
                (loss), as reported
            
            $
            6,569
            
            $
            8,887
            
            $
            (7,534
            )Deduct
                stock-based employee compensation expense determinedunder
                fair-value based method, net of related tax effects
            
            
            (371
            )
            
            (340
            )
            
            (62
            )Net
                income
                (loss), proforma
            
            $
            6,198
            
            $
            8,547
            
            $
            (7,596
            )Basic
                net
                income (loss) per share, as reported
            
            $
            0.25
            
            $
            0.34
            
            $
            (.29
            )Diluted
                net
                income (loss) per share, as reported
            
            
            0.25
            
            
            0.33
            
            
            (.29
            )Basic
                net
                income (loss) per share, proforma
            
            
            0.24
            
            
            0.33
            
            
            (.29
            )Diluted
                net
                income (loss) per share, proforma
            
            
            0.23
            
            
            0.32
            
            
            (.29
            )





**Net
      Income
      (Loss) Per Share -** Basic
      net income
      (loss) per share is computed using the weighted average number of common shares
      outstanding during the period. Diluted net income (loss) per share is computed
      using the weighted average number of common shares and potentially diluted
      common shares outstanding during the period. Potentially dilutive common shares
      consist of common stock options and restricted stock (“Common Stock
      Equivalents”). Common Stock Equivalents were anti-dilutive during fiscal 2003
      and, accordingly, were not included in the computation of diluted net loss
      per
      share. Weighted average shares outstanding and net income (loss) per share
      for
      fiscal 2005, 2004 and 2003 are as follows:





2005
              
              2004
              
              2003Basic
              
              Diluted
              
              Basic
              
              Diluted
              
              Basic
              
              DilutedWeighted
                  average shares outstanding
              
              25,816,553
              
              26,417,535
              
              25,873,721
              
              26,771,182
              
              26,249,436
              
              26,249,436Net
                  income
                  (loss) per share:Income
                  from
                  continuing operations
              
              $
              0.22
              
              $
              0.22
              
              $
              0.38
              
              $
              0.37
              
              $
              0.32
              
              $
              0.32Income
                  (loss)
                  from discontinued operations
              
              
              0.03
              
              
              0.03
              
              
              (0.04
              )
              
              (0.04
              )
              
              (0.02
              )
              
              (0.02
              )Income
                  before
                  cumulative effect of change in accounting principle
              
              
              0.25
              
              
              0.25
              
              
              0.34
              
              
              0.33
              
              
              0.30
              
              
              0.30Cumulative
                  effect of change in accounting principle
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (0.59
              )
              
              (0.59
              )Net
                  income
                  (loss)
              
              $
              0.25
              
              $
              0.25
              
              $
              0.34
              
              $
              0.33
              
              $
              (0.29
              )
              $
              (0.29
              )


Net
      income (loss)
      per diluted share for fiscal 2005, 2004 and 2003, respectively, excludes the
      effect of options to purchase 2,111,692, 1,838,551 and 2,912,750 shares because
      the exercise price exceeds the average market price and therefore would have
      been anti-dilutive.





**Financial
      Instruments -** Our
      financial
      instruments, when valued using market interest rates, would not be materially
      different from the amounts presented in the consolidated financial
      statements.




**Foreign
      Currency Translation -** We
      consider the
      local currency as the functional currency for our foreign operations. Assets
      and
      liabilities are translated at period-end exchange rates and all statements
      of
      operations amounts are translated using average monthly rates.





**Hedging
      Activities -** We
      account for
      hedging activities in accordance with SFAS No. 133, “Accounting for Derivative
      Instruments and Hedging Activities.” Derivatives are recognized as either assets
      or liabilities in the balance sheet and measured at fair value. At May 31,
      2005
      and 2004, we were party to one interest rate derivative with a fair value of
      approximately $49 and $95, respectively.





F
          -
          9
 ****WEIDER
          NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**







**Reclassifications**  -
      Certain amounts
      in prior year consolidated financial statements have been reclassified to
      conform to the current year presentation.





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





In
      December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based
      Payment” (“SFAS No. 123R”), which replaces SFAS No. 123, “Accounting for
      Stock-Based Compensation”, and supersedes APB Opinion No. 25, “Accounting for
      stock Issued to Employees”. SFAS No. 123R requires that costs resulting from all
      share-based payment transactions, a transaction in which an entity exchanges
      its
      equity instruments for goods or services, be recognized in the financial
      statements. Costs resulting from all share-based payment transactions will
      be
      determined by applying a fair-value-based measurement method at the date of
      the
      grant, with limited exceptions. Costs will be recognized over the period in
      which the goods or services are received. The recognition and measurement
      provisions of SFAS No. 123R are effective for all share-based payment
      transactions entered into during fiscal years beginning after June 15, 2005.
      We
      have not determined the impact SFAS No. 123R will have on our results of
      operations and financial condition.





**2.**
            **DIVESTITURES**





Effective
      March 1,
      2005, we sold certain assets of our Active Nutrition Unit relating to our Weider
      branded business domestically and internationally to Weider Global Nutrition,
      LLC (“WGN”), a wholly-owned subsidiary of WHF. We received cash proceeds of
      $12,877, and a note receivable for $1,100 in exchange for assets relating to
      our
      domestic Weider branded business, including inventory, receivables, and
      intangible and intellectual property, the capital stock of certain of our
      international subsidiaries related to our international Weider branded business
      (including the working capital of those subsidiaries), and the assumption of
      certain associated liabilities by WGN. We recognized a gain on the sale of
      $2,184, net of income taxes of $1,581, in fiscal 2005, which includes
      transaction related costs of $587 and a realized foreign currency translation
      loss of $127. Since the sale was to a related party, the gain is reflected
      as an
      increase to additional paid-in capital.





The
      carrying
      amounts of the assets and liabilities disposed of in connection with the sale
      of
      the Weider branded business consisted of the following:





Cash
                and cash
                equivalents
            $
            2,643Receivables,
                net
            
            4,381Inventories
            
            4,910Prepaid
                expenses and other
            
            350Property
                and
                equipment, net
            
            807Intangible
                assets, net
            
            778Deposits
                and
                other assets
            
            24Accounts
                payable
            
            3,301Accrued
                expenses
            
            1,094





In
      connection with the transaction, the parties also entered into separate
      agreements whereby we will provide certain general and administrative, research
      and development, and logistics services to WGN for an annual fee. The terms
      of
      the service agreements are for a one year period, with options by either party
      for one additional year. We also received a license to use the Weider name
      for
      corporate purposes for a limited period of time (up to twelve months) prior
      to
      transitioning to a new name for our company.





At
      May 31, 2005, the balance due on the note receivable was $1,000, and net amounts
      due WGN from performance of certain administrative functions, including
      collection of trade receivables, was $458.





F
          -
          10
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**





Effective
      in our
      fiscal 2004 first quarter, we sold substantially all of the assets of our Venice
      Beach sports apparel business to Hucke AG, a German apparel company, for net
      cash proceeds of approximately $7,134. In connection with the transaction,
      we
      recognized a gain of $977, net of income taxes of $612.





In
      accordance with SFAS No. 144, the operating results for Venice Beach and the
      Weider branded business, as well as the gain on the sale of Venice Beach, are
      reflected as discontinued operations in the accompanying consolidated statements
      of operations.





Summarized
      financial information included in discontinued operations for fiscal 2005,
      2004
      and 2003, is as follows:





2005
            
            2004
            
            2003Net
                sales
            
            $
            19,396
            
            $
            22,554
            
            $
            45,201Pre-tax
                income (loss)
            
            
            1,215
            
            
            (3,348
            )
            
            (1,187
            )Income
                taxes
                (benefit)
            
            
            468
            
            
            (1,270
            )
            
            (468
            )Net
                income
                (loss)
            
            
            747
            
            
            (2,078
            )
            
            (719
            )Gain
                on sale,
                net of tax
            
            
            —
            
            
            977
            
            
            —





Effective
      July 26,
      2002, we announced the sale of substantially all the assets and certain
      associated liabilities of our American Body BuildingTM and Science Foods® brands
      to American Body Building Products, L.L.C., a wholly owned subsidiary of Optimum
      Nutrition, Inc., a privately held company. The final sales price, which was
      based on a closing statement of acquired assets and assumed liabilities,
      included $5,650 cash and the assumption of an approximate $246 mortgage on
      an
      accompanying beverage facility.





**3.**
            **SHORT-TERM
                INVESTMENTS**





Short-term
      investments at fair value, which approximates unamortized cost, consist of
      the
      following at May 31, 2005:





State
                and
                municipalities debt securities
            
            $
            12,112Corporate
                debt securities
            
            
            5,600Corporate
                equity securities
            
            
            6,500$
            24,212





All
      securities are
      available for immediate sale. Contractual maturities of debt securities are
      as
      follows at May 31, 2005:





Less
                than one
                year
            
            $
            2,112One
                to five
                years
            
            
            300Over
                five
                years
            
            
            15,300$
            17,712





Proceeds
      from the
      sale of short-term investments, which approximated the unamortized cost of
      the
      securities sold, totaled $800 in fiscal 2005.




**4.**
            **RECEIVABLES,
                NET**





Receivables,
      net,
      consist of the following at May 31:





2005
            
            2004Trade
                accounts
            
            $
            32,886
            
            $
            40,982Income
                taxes
            
            
            —
            
            
            391Income
                tax
                refund due from WHF
            
            
            361
            
            
            361Current
                portion of note receivable due from WGN (see Note 2)
            
            
            600
            
            
            —Other
            
            
            215
            
            
            39034,062
            
            
            42,124Less
                allowances for doubtful accounts,sales
                returns
                and discounts
            
            
            (4,762
            )
            
            (6,504
            )Total
            
            $
            29,300
            
            $
            35,620






F
          -
          11
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**








**5.**
            **INVENTORIES**





Inventories
      consist
      of the following at May 31:





2005
            
            2004Raw
                materials
            
            $
            11,419
            
            $
            7,814Work
                in
                process
            
            
            1,887
            
            
            1,385Finished
                goods
            
            
            19,113
            
            
            19,232Total
            
            $
            32,419
            
            $
            28,431





**6.**
            **PROPERTYAND
                EQUIPMENT,
                NET**





Property
      and
      equipment, net, consists of the following at May 31:





2005
            
            2004Buildings
            
            $
            3,473
            
            $
            7,185Furniture
                and
                equipment
            
            
            37,721
            
            
            38,426Leasehold
                improvements
            
            
            11,229
            
            
            11,705Construction
                in progress
            
            
            83
            
            
            7552,506
            
            
            57,391Less
                accumulated depreciation and amortization
            
            
            (35,792
            )
            
            (32,773
            )Total
            
            $
            16,714
            
            $
            24,618





**7.**
            **GOODWILLAND
                INTANGIBLE ASSETS,
                NET**





Goodwill
      and
      intangible assets, net, consist of the following at May 31:





2005
            
            2004Gross
                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
            
            $
            5,479
            
            $
            (5,456
            )
            $
            23
            
            $
            10,365
            
            $
            (5,219
            )
            $
            5,146





In
      connection with the sale of our Haleko Unit (see Note 18), we recognized an
      impairment loss pertaining to intangible assets of approximately $3,506 in
      fiscal 2005.





Estimated
      amortization expense, assuming no changes in our intangible assets, is $23
      for
      fiscal 2006 and zero thereafter.





F
          -
          12
 ****WEIDER
          NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**






Upon
      the
      implementation of SFAS No. 142, we tested goodwill for impairment by comparing
      the carrying amount, including goodwill, for each of our reporting (business)
      units at June 1, 2002 to the fair value for each of the reporting units. We
      assessed the fair value of the reporting units by evaluating their current
      cash
      flows and net book values in comparison to our overall market capitalization.
      Based on this comparison, we concluded that the net book values for two of
      our
      reporting units, Haleko and Active Nutrition, exceeded their respective fair
      values. For those two reporting units, we then compared the implied fair values
      of their respective goodwill to their respective net book values to determine
      the asset impairment amount. Based on this comparison, effective June 1, 2002,
      we recognized an impairment loss of $23,321, or an after-tax charge of $15,392,
      as a cumulative effect of a change in accounting principle.





**8.**
            **NOTESRECEIVABLE,
                NET**





Prior
      to our
      initial public offering (“IPO”), certain individuals (the “Recipients”) had
      management incentive agreements (the “Agreements”) pursuant to which the
      individuals were granted performance units (“Performance Units”) as incentive
      compensation. Simultaneously with the IPO, which triggered a conversion under
      the Agreements, we paid in cash and shares of Class A Common stock the vested
      portion of the Performance Units. The unvested portion of the performance units
      vested (contingent upon continued employment and/or other factors) over a
      five-year period at 20% per year.





In
      order to facilitate the payment of individual income taxes, we made available
      to
      each Recipient a loan in principal amount up to 30% of the conversion value
      of
      the vested Performance Units held by each Recipient. These notes receivable
      were
      recourse, generally collateralized by debtors’ shares of our Class A common
      stock and originally repayable beginning in June of 2002 and ending December
      of
      2006.





In
      connection with subsequent collection efforts, settlement agreements were
      reached during fiscal 2004 with five of the note holders. Accordingly, we
      received $99 in cash and acquired and retired 994,017 shares of our Class A
      common stock valued at approximately $3,821 as full payment of principal and
      interest accrued on their aggregate respective notes. The settlement of these
      outstanding notes receivable resulted in the reduction of previously recognized
      allowances for unrealizable amounts of $1,069, reflected as a reduction of
      general and administrative expense, and recognition of contractually due
      interest income of approximately $696. The remaining outstanding note, with
      a
      net balance of $40 at May 31, 2004, was settled in fiscal 2005.






F
          -
          13
 ****WEIDER
          NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**






**9.**
            **ACCRUEDEXPENSES**





Accrued
      expenses
      consist of the following at May 31:





2005
            
            2004Accrued
                personnel related costs
            
            $
            4,564
            
            $
            5,333Accrued
                promotional costs
            
            
            3,927
            
            
            2,616Other
            
            
            5,086
            
            
            9,165Total
            
            $
            13,577
            
            $
            17,114








**10.**
            **LONG-TERM
                DEBT**





Long-term
      debt
      consists of the following at May 31:





2005
            
            2004Advances
                under a U.S. based $45,000 secured revolving line of credit bearing
                interest at floating rates (5.50% at May 31, 2004); see
                below
            
            $
            —
            
            $
            2Advances
                under a Germany, euro-based $10,335 (at current exchange rate) secured
                revolving line of credit bearing interest at vaiable rates ranging
                from
                4.00% to 7.25% at May 31, 2005 and 2004; see below
            
            
            2,483
            
            
            775Other
            
            
            537
            
            
            447Total
            
            
            3,020
            
            
            1,224Less
                current
                portion
            
            
            (3,020
            )
            
            (1,091
            )Long-term
                portion
            
            $
            —
            
            $
            133





Effective
      June 30,
      2000, we were party to a senior credit facility (the “Credit Facility”) with
      Bankers Trust Company, on behalf of our domestic subsidiaries. The Credit
      Facility, as subsequently amended, was comprised of a $45,000 revolving loan.
      The Credit Facility, which was being used to fund normal working capital and
      capital expenditure requirements, was terminated on June 30, 2004 in favor
      of a
      new credit facility discussed below.





Our
      domestic
      operations were also supported by a subordinated loan (the “Subordinated Loan”)
      obtained in conjunction with the Credit Facility. Effective November 27, 2002,
      we used funds available under our revolving loan to pay-off the remaining $5,000
      balance of the Subordinated Loan. As a result of the modifications to the Credit
      Facility and Subordinated Loan noted above, during fiscal 2003, we recognized
      approximately $1,147 in write-offs of previously capitalized financing fees,
      including OID costs.





On
      June 30, 2004, we entered into, through our wholly-owned direct operating
      subsidiary Weider Nutrition Group, Inc. (“WNG”), a new $25,000 revolving credit
      facility (the “New Credit Facility”) with KeyBank National Association, as
      Agent. The New Credit Facility contains customary terms and conditions,
      including, among others, financial covenants and certain restrictions. Our
      obligations under the New Credit Facility are secured by a first priority
      security interest on all of the capital stock of WNG. 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 $25,000 or the sum of (i) 85% of eligible
      accounts receivable and (ii) 65% of eligible inventory. Borrowings under the
      New
      Credit Facility bear interest at floating rates based on the KeyBank National
      Association prime rate or the Federal Funds effective rate, and the New Credit
      Facility matures on June 30, 2007, with options for one-year extensions under
      certain circumstances. The New Credit Facility can be used to fund our normal
      working capital and capital expenditure requirements, with availability to
      fund
      certain permitted strategic transactions. At May 31, 2005, there were no amounts
      outstanding and $25,000 was available under the New Credit
      Facility.







F
          -
          14
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**





Our
      European
      working capital needs (primarily our Haleko Unit) were supported by a
      Germany-based secured credit facility (the “Haleko Facility”) that is subject to
      annual renewal. Our obligations under the Haleko Facility were secured by a
      first priority lien on substantially all Haleko tangible and intangible assets.
      At May 31, 2005, amounts outstanding under the Haleko Facility were $2,483
      and
      available revolving loan funds were $7,648. In connection with the sale of
      our
      Haleko Unit (see Note 18), the purchaser assumed the liabilities and obligations
      under the Haleko Facility.





At
      May 31, 2005, all future payments of long-term debt are due in fiscal 2006.
      Cash
      interest payments amounted to $320, $884 and $2,349, respectively, for fiscal
      2005, 2004 and 2003.





**11.**
            **INCOMETAXES**





The
      components of
      income tax expense (benefit) for fiscal 2005, 2004 and 2003, are as
      follows:





2005
            
            2004
            
            2003Federal:Current
            
            $
            5,195
            
            $
            1,187
            
            $
            2,661Deferred
            
            
            (3,870
            )
            
            4,329
            
            
            1,847Change
                in
                valuation allowance
            
            
            (1,618
            )
            
            (280
            )
            
            2,789Foreign:Current
            
            
            249
            
            
            (76
            )
            
            286Deferred
            
            
            (423
            )
            
            284
            
            
            (101
            )Change
                in
                valuation allowance
            
            
            —
            
            
            —
            
            
            (1,741
            )State
                and
                local:Current
            
            
            640
            
            
            332
            
            
            312Deferred
            
            
            (442
            )
            
            370
            
            
            (794
            )Change
                in
                valuation allowance
            
            
            (198
            )
            
            (49
            )
            
            341Total
            
            $
            (467
            )
            $
            6,097
            
            $
            5,600





Income
      tax expense
      (benefit) differs from a calculated income tax at the Federal statutory rate
      as
      follows:





2005
            
            2004
            
            2003Computed
                Federal income tax expense (benefit) at the statutory rate of
                34%
            
            $
            1,821
            
            $
            5,469
            
            $
            4,820Foreign
                tax
                rate differential
            
            
            —
            
            
            481
            
            
            168Miscellaneous
                credits
            
            
            (1,029
            )
            
            (315
            )
            
            (398
            )Change
                in
                valuation allowance
            
            
            (1,816
            )
            
            (329
            )
            
            1,389State
                income
                tax expense (benefit)
            
            
            198
            
            
            702
            
            
            (483
            )Other
            
            
            359
            
            
            89
            
            
            104Total
            
            $
            (467
            )
            $
            6,097
            
            $
            5,600





Net
      cash income tax
      payments (refunds) amounted to $1,895, $1,353, and $(5,253), respectively,
      for
      fiscal 2005, 2004 and 2003.







F
          -
          15
 ****WEIDER
          NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**





Net
      deferred income
      taxes consist of the following at May 31:





2005
            
            2004Current
            
            Long-Term
            
            Current
            
            Long-TermAssets:Accounts
                receivable allowances
            
            $
            1,480
            
            $
            —
            
            $
            1,586
            
            $
            —Inventories
                adjustment
            
            
            898
            
            
            —
            
            
            894
            
            
            —Deferred
                compensation
            
            
            —
            
            
            646
            
            
            —
            
            
            710Accrued
                vacation, bonuses and other
            
            
            782
            
            
            —
            
            
            784
            
            
            —Basis
                differences in fixed and intangible assets
            
            
            —
            
            
            3,508
            
            
            —Capital
                loss
                and charitable contribution carryforwards
            
            
            —
            
            
            524
            
            
            —
            
            
            292Net
                operating
                loss carryforwards
            
            
            —
            
            
            2,433
            
            
            —
            
            
            3,805Research
                and
                development, and other credits
            
            
            —
            
            
            792
            
            
            —
            
            
            851Total
            
            
            3,160
            
            
            7,903
            
            
            3,264
            
            
            5,658Liabilities:Basis
                differences in fixed and intangible assets
            
            
            —
            
            
            —
            
            
            —
            
            
            1,903Foreign
                currency adjustment
            
            
            —
            
            
            3,343
            
            
            —
            
            
            5,053Other
            
            
            303
            
            
            299
            
            
            845
            
            
            549Total
            
            
            303
            
            
            3,642
            
            
            845
            
            
            7,505Deferred
                income taxes before valuation allowance
            
            
            2,857
            
            
            4,261
            
            
            2,419
            
            
            (1,847
            )Valuation
                allowance
            
            
            —
            
            
            (2,831
            )
            
            —
            
            
            (4,647
            )Deferred
                income taxes, net
            
            $
            2,857
            
            $
            1,430
            
            $
            2,419
            
            $
            (6,494
            )





Our
      net operating
      loss and capital loss carryforwards expire over various periods depending on
      the
      tax jurisdiction in which such carryforwards arose. At May 31, 2005, we had
      foreign tax net operating loss carryforwards of $7,587 which do not have an
      expiration date. We also had domestic tax capital loss carryforwards of which
      $1,200 expires in 2007 and $110 expires in 2008. We have established a valuation
      allowance for those carryforwards and other temporary differences for which
      no
      benefit is expected to be realized. The amount of the deferred tax assets
      considered realizable and the corresponding valuation allowance, however, could
      be reduced or increased in the near-term if facts, including the amount of
      taxable income or the mix of taxable income between subsidiaries, differ from
      our estimates. The decrease, or release, of the valuation allowance during
      the
      current year relates to a decrease resulting from the conclusion of an Internal
      Revenue Service (“IRS”) audit (see below) net of an increase due to expected
      unrealizability of certain foreign tax credit and capital loss
      carryforwards.





During
      fiscal year
      2002, we implemented a tax initiative which created a significant tax net
      operating loss (“NOL”). The NOL was carried back to obtain tax refunds and the
      remaining balance was carried forward. At the time of the transaction, we
      established a valuation allowance of $2,520 as a contingency against potential
      claims from a subsequent IRS challenge, and the potential implications to the
      NOL carryforwards.





During
      fiscal year
      2004, the IRS commenced an examination of our fiscal 2002 U.S. income tax return
      and subsequently expanded the audit to include fiscal years 2003 and 2004.
      Upon
      the recent conclusion of the IRS audit, we recognized an income tax benefit
      of
      approximately $2,902, which includes substantial reversal of the valuation
      allowance and an adjustment for research and development credits.






F
          -
          16
 ****WEIDER
          NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**







**12.**
            **OTHERACCUMULATED
                COMPREHENSIVE INCOME
                (LOSS)**





Other
      accumulated
      comprehensive income (loss) consists only of foreign currency translation
      adjustments at May 31, 2005 and 2004. At May 31, 2005 and 2004, respectively,
      the balance was $167, net of income taxes of $855, and $(4,060), net of income
      tax benefit of $2,565.





The
      components of
      other comprehensive income (loss) for fiscal 2005, 2004 and 2003, are as
      follows:




Pre-tax
                    Income (Loss)
                
                Tax
                    Expense
                    (Benefit)
                
                Net
                    Income
                    (Loss)2005:Foreign
                    currency translation adjustments:Unrealized
                    gains
                
                $
                2,390
                
                $
                (1,763
                )
                $
                4,153Less
                    reclassification adjustment for realized loss
                
                
                (127
                )
                
                (53
                )
                
                (74
                )Net
                    unrealized gain
                
                $
                2,517
                
                $
                (1,710
                )
                $
                4,2272004:Net
                    unrealized gain on foreign currency translation
                
                $
                1,449
                
                $
                558
                
                $
                8912003:Available-for-sale
                    securities:Unrealized
                    gains
                
                $
                251
                
                $
                100
                
                $
                151Less
                    reclassification adjustment for realized gains
                
                
                539
                
                
                216
                
                
                323Net
                    unrealized loss
                
                
                (288
                )
                
                (116
                )
                
                (172
                )Net
                    unrealized loss on foreign currency translation
                
                
                (590
                )
                
                (236
                )
                
                (354
                )Net
                    unrealized loss
                
                $
                (878
                )
                $
                (352
                )
                $
                (526
                )




**13.**
            **MANAGEMENTINCENTIVE
                AND STOCK
                PLANS**





Our
      1997 Equity
      Participation Plan, as amended (the “1997 Plan”), provided for the granting of
      stock options, stock appreciation rights, restricted or deferred stock and
      other
      awards (“Awards”) to officers, directors and key employees responsible for the
      direction and management of the Company and to non-employee consultants. Such
      Awards were granted at fair value as of the date of grant. Under the 1997 Plan,
      a total of 3,500,000 shares of Class A common stock (or the equivalent in other
      equity securities) are reserved for issuance.





On
      October 26, 2004, our stockholders adopted the Weider Nutrition International,
      Inc. 2004 Incentive Award Plan (the “2004 Plan”). Our 2004 Plan provides for the
      grant of incentive stock options, nonqualified stock options, restricted stock,
      stock appreciation rights, performance shares, performance stock units, dividend
      equivalents, stock payments, deferred stock, restricted stock units, other
      stock-based awards, and performance-based awards to officers, directors,
      employees and consultants of the Company and its subsidiaries.





Shares
      available
      for grant include 2,000,000 shares of Class A common stock reserved for issuance
      under the 2004 Plan, plus the number of shares of Class A common stock
      that
      as of the date of adoption of the 2004 Plan were, or thereafter become,
      available for issuance under the 1997 Plan.





Stock
      options
      granted under the 1997 Plan and 2004 Plan primarily become exercisable after
      one
      to five years from the date of grant in equal, ratable amounts per each
      successive anniversary date. Stock options expire no later than eight years
      after the date of grant under the 1997 Plan and no later than ten years after
      the date of grant under the 2004 Plan.





F
          -
          17
 ****WEIDER
          NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**







Information
      relating to stock options issued under the 1997 Plan and 2004 Plan is as
      follows:





Number
                of
                Shares
            
            Weighted
                Average per Share Option PriceOptions
                outstanding, June 1, 2002
            
            
            2,561,100
            
            $
            4.60Granted
            
            
            1,008,250
            
            
            1.60Exercised
            
            
            —
            
            
            —Canceled,
                forfeited and/or expired
            
            
            (1,296,600
            )
            
            6.07Options
                outstanding, May 31, 2003
            
            
            2,272,750
            
            
            2.43Granted
            
            
            535,500
            
            
            4.15Exercised
            
            
            (227,995
            )
            
            2.66Forfeited
                and/or expired
            
            
            (70,836
            )
            
            3.00Options
                outstanding, May 31, 2004
            
            
            2,509,419
            
            
            2.76Granted
            
            
            110,000
            
            
            4.44Exercised
            
            
            (267,750
            )
            
            2.66Canceled,
                forfeited and/or expired
            
            
            (105,500
            )
            
            2.92Options
                outstanding, May 31, 2005
            
            
            2,246,169
            
            $
            2.85Exercisable
                options, May 31, 2005
            
            
            1,679,048
            
            $
            2.74





The
      weighted
      average fair market value of options granted was $2.39, $2.00 and $0.50,
      respectively, for fiscal 2005, 2004 and 2003.





We
      applied APB Opinion No. 25 in accounting for our stock options. All stock
      options were granted at fair value and, accordingly, no compensation expense
      was
      recognized in the accompanying consolidated financial statements. For purposes
      of applying SFAS No. 123, the fair value for these options was estimated at
      the
      date of grant using a Binomial Option pricing model with the following weighted
      average assumptions for fiscal 2005, 2004 and 2003, respectively.





2005
            
            2004
            
            2003Risk-free
                interest rate
            3.43
            %
            2.58
            %
            2.95
            %Dividend
                yield
            0.00
            %
            0.00
            %
            0.00
            %Volatility
                factor
            59.63
            %
            61.14
            %
            42.01
            %Weighted
                average expected life
            5.00
            years
            4.00
            years
            3.00
            years









F
          -
          18
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**







The
      following table
      summarizes information about stock options outstanding at May 31,
      2005:





**Options
                Outstanding**
            
            **Options
                Exercisable**Range
                of
                Exercise Prices
            
            Number
                Outstanding
            
            Weighted
                Average Remaining Contractual Life
              (in
                years)
            
            Weighted
                Average Exercise Price
            
            Number
                Exercisable
            
            Weighted
                Average Exercise Price$1.40
                to
                $2.50
            
            988,084
            
            5.59
            
            $1.59
            
            772,563
            
            $1.59$2.51
                to
                $4.00
            
            951,085
            
            4.49
            
            $3.30
            
            749,152
            
            $3.14$4.01
                to
                $11.00
            
            307,000
            
            5.90
            
            $5.51
            
            157,333
            
            $6.41





**14.**
            **COMMITMENTSAND
                CONTINGENCIES**





**Leases
      -** We
      lease warehouse
      and office facilities, manufacturing and production facilities, transportation
      equipment and other equipment under operating lease agreements expiring through
      2013. At May 31, 2005, future minimum payments for our continuing operations
      (see Note 18) of $18,044 under these non-cancelable operating leases are due
      as
      follows: $2,310 (2006), $2,189 (2007), $2,336 (2008), $2,331 (2009), $2,330
      (2010), and $6,548 thereafter. Rental expense was $3,849, $3,542 and $4,622,
      respectively, for fiscal 2005, 2004 and 2003.





**Litigation
      -** At
      May 31, 2005, we
      were named as a defendant in three lawsuits alleging that the consumption of
      various products containing ephedra (distributed by several different companies)
      caused or contributed to injuries and damages to the plaintiffs. We dispute
      the
      allegations and are opposing the lawsuits. Subsequent to the fiscal year end,
      we
      settled our portion of one of the matters for a nominal amount, all of which
      is
      covered by insurance. The settlement agreement for this matter is subject to
      court approval. As the remaining two ephedra cases are not covered by insurance,
      a large adverse damage award could have a material adverse effect on our results
      of operations and financial condition. In connection with the sale of the
      American Body Building and Science Foods brands in July 2002, we discontinued
      the sale of products that contain ephedra. However, we may be subject to further
      litigation with respect to ephedra products we have already sold.





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





**Royalties
      -** Pursuant to an
      agreement with WHF and certain other parties, Mariz Gestao E Investimentos
      Limitada (“Mariz”) obtained the exclusive international rights to use the
      trademarks and brand names used by WHF and its affiliates on or prior to
      December 1996. Mariz is a company incorporated under the laws of Portugal and
      owned by a trust of which the family members of a director are included among
      the beneficiaries. Pursuant to a sublicense agreement with Mariz dated as of
      December 1, 1996, we obtained the exclusive international worldwide rights
      to
      use these trademarks and brand names outside the United States, Canada, Mexico,
      Spain and Portugal (for which countries we have the rights outside of the Mariz
      sublicense), except in Japan. Certain terms of the sublicense were amended
      and
      the rights under the sublicense to the Weider name and certain related
      trademarks were transferred as of March 1, 2005 in connection with the sale
      of
      our Weider branded business to WGN.





Under
      the terms of
      the amended sublicense agreement, we are required to make annual royalty
      payments to Mariz on sales of products covered by the agreement in the countries
      listed above. The royalty payments, as amended, are to be equal to (i) 4% of
      sales up to $7,000 (ii) 3.5% of sales greater than $7,000 and less than $14,000;
      (iii) 3.0% of sales from $14,000 to $21,000; and (iv) 2.5% of sales over
      $21,000. The sublicense agreement includes an irrevocable buy-out option,
      exercisable by us after February 28, 2009, for a purchase price equal to the
      greater of $2,000 or 6.5 times the aggregate royalties paid by us in the royalty
      year immediately preceding the date of the exercise of the option. In addition,
      if the Schiff trademark is sold to a third party prior to February 28,
      2009, the sublicense agreement provides that the Buyer must also purchase all of
      Mariz’s rights to the trademarks for a purchase price equal to $2,000. Royalty
      expense,
      related to the Mariz licensing agreement, amounted to $646, $629 and $510,
      respectively, for fiscal 2005, 2004 and 2003.





F
          -
          19
 ****WEIDER
          NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**** **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**





**Retirement
      Plan -** We
      sponsor a
      contributory 401(k) savings plan covering all employees who have met minimum
      age
      and service requirements. We make discretionary contributions of 50% of the
      employee’s contributions up to the first six percent of the employee’s
      compensation. Contribution expense amounted to $373, $355 and $345,
      respectively, for fiscal 2005, 2004 and 2003.





**15.**
            **RELATEDPARTY
                TRANSACTIONS**





Significant
      related
      party transactions, not otherwise disclosed, are summarized below.





Payments
      to
      reimburse WHF for expenses (including primarily advertising, endorsements and
      royalties) for fiscal 2005, 2004 and 2003, are as follows:





2005
            
            2004
            
            2003Operating
                expenses
            
            $
            146
            
            $
            99
            
            $
            519Discontinued
                operations
            
            
            838
            
            
            980
            
            
            1,628Total
            
            $
            984
            
            $
            1,079
            
            $
            2,147





Subsequent
      to the
      sale of our Weider branded business (see Note 2), we continue to provide
      contract manufacturing services to WGN. For fiscal 2005, net sales to WGN were
      approximately $447 with a gross profit of approximately $67. In addition, we
      received approximately $125 (reflected as a reduction in operating expenses)
      for
      certain general and administrative, research and development, and logistics
      services provided to WGN.





**16.**
            **OPERATINGSEGMENTS**





Historically,
      we
      were organized into three business units: the Schiff Specialty Unit, the Active
      Nutrition Unit and the Haleko Unit. Effective March 1, 2005, we sold certain
      assets of our Active Nutrition Unit (see Note 2). As a result of the sale,
      the
      remaining assets and related operations for the Active Nutrition Unit were
      consolidated into our Schiff Specialty Unit. Prior to the sale, certain domestic
      assets were not allocated to the Schiff Specialty and Active Nutrition
      Units.





At
      May 31, 2005, we are organized into two business units: the Schiff Specialty
      Unit and the Haleko Unit (our primary European subsidiary). The business units
      are managed independently, each with its own sales and marketing resources,
      and
      supported by its own product research and development, operations and technical
      services and administrative functions.





We
      manufacture and market nutritional products, including specialty supplements,
      vitamins, minerals and nutrition bars through our Schiff Specialty Unit. Schiff
      Specialty Unit products are marketed primarily in the United States through
      mass
      market distribution channels, with additional limited distribution in health
      food stores and various international markets on an export basis. We manufacture
      and market nutritional products, including a full line of sports nutrition
      supplements, together with certain other nutraceuticals within our Haleko Unit.
      Haleko Unit products are marketed primarily in Europe (approximately 78% in
      Germany) through mass market and health club and gym distribution channels.





The
      accounting
      policies of these business units are the same as those described in Note 1
      to
      the consolidated financial statements. We evaluate the performance of our
      business units based on actual and expected operating results of the respective
      business units. Segment reporting information is provided for fiscal 2005,
      2004
      and 2003.





Effective
      in our
      fiscal 2006 first quarter, we sold our Haleko Unit (see Note 18). Beginning
      with
      our fiscal 2006 first quarter, segment information will not be provided.
      Historical operating results for our Haleko Unit will be reflected as
      discontinued operations and all remaining assets and operations will be
      consolidated into our Schiff Specialty Unit.





F
          -
          20
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**





Segment
      information
      for fiscal 2005, 2004 and 2003, is summarized as follows:





2005:
            
            Net
                Sales
            
            Income
                (Loss)
                from Operations
            
            Interest
                Expense
            
            Depreciation
                and Amortization ExpenseSchiff
                Specialty
            
            $
            173,095
            
            $
            14,763
            
            $
            262
            
            $
            3,039Haleko
            
            
            66,759
            
            
            (9,325
            )
            
            180
            
            
            2,211$
            239,854
            
            $
            5,438
            
            $
            442
            
            $
            5,156





2004:
            
            Net
                Sales
            
            Income
                from
                Operations
            
            Interest
                Expense
            
            Depreciation
                and Amortization ExpenseSchiff
                Specialty
            
            $
            168,128
            
            $
            13,922
            
            $
            1,013
            
            $
            3,325Haleko
            
            
            66,846
            
            
            2,705
            
            
            483
            
            
            1,590$
            234,974
            
            $
            16,627
            
            $
            1,496
            
            $
            4,915





2003:
            
            Net
                Sales
            
            Income
                from
                Operations
            
            Interest
                Expense
            
            Depreciation
                and Amortization ExpenseSchiff
                Specialty
            
            $
            154,912
            
            $
            14,273
            
            $
            1,768
            
            $
            3,854Haleko
            
            
            63,830
            
            
            1,955
            
            
            539
            
            
            1,435Other(1)
            
            
            3,102
            
            
            782
            
            
            —
            
            
            81$
            221,844
            
            $
            17,010
            
            $
            2,307
            
            $
            5,370





(1)Amounts
          represent operations of our American Body Building and Science Foods brands
          which were sold in July 2002. Previously, these operations were included
          in our
          Active Nutrition Unit.





Reconciliation
      of
      assets for the reportable segments is as follows at May 31:





2005
            
            2004Schiff
                Specialty - domestic
            
            $
            140,208
            
            $
            —Active
                Nutrition - international
            
            
            —
            
            
            11,827Haleko
                -
                international
            
            
            27,422
            
            
            37,173Unallocated
                -
                domestic Schiff Specialty and Active Nutrition
            
            
            —
            
            
            127,376Eliminations
            
            
            (39,364
            )
            
            (61,452
            )Total
            
            $
            128,266
            
            $
            114,924





Total
      domestic and
      international net sales amounted to $168,648 and $71,206, respectively, for
      fiscal 2005, $165,319 and $69,655, respectively, for fiscal 2004, and $152,907
      and $66,320, respectively, for fiscal 2003. Total Schiff Specialty (domestic),
      Active Nutrition (international) and Haleko (international) capital expenditures
      amounted to $1,471, $181 and $777, respectively, for fiscal 2005, $689, $289
      and
      $702, respectively, for fiscal 2004, and $1,158, $123 and $400, respectively,
      for fiscal 2003.






F
          -
          21
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS –*(CONTINUED)***
 **(dollars
              in thousands, except share data)**






**17.**
            **QUARTERLYRESULTS
                (UNAUDITED)**





Quarterly
      results
      (unaudited) for fiscal 2005 and 2004, are as follows:





Quarter
                Ended2005:
            
            Aug.
                31
            
            Nov.
                30
            
            Feb.
                28
            
            May
                31Net
                sales
            
            $
            63,070
            
            $
            60,501
            
            $
            59,315
            
            $
            56,968Gross
                profit
            
            
            24,438
            
            
            22,259
            
            
            19,311
            
            
            17,566Income
                (loss)
                from operations
            
            
            5,754
            
            
            5,959
            
            
            800
            
            
            (7,075
            )Income
                tax
                expense (benefit)
            
            
            2,165
            
            
            2,286
            
            
            321
            
            
            (5,239
            )Net
                income
                (loss)
            
            
            3,688
            
            
            3,464
            
            
            1,219
            
            
            (1,802
            )Basic
                net
                income (loss) per share
            
            
            .14
            
            
            .13
            
            
            .05
            
            
            (.07
            )Diluted
                net
                income (loss) per share
            
            
            .14
            
            
            .13
            
            
            .05
            
            
            (.07
            )





Quarter
                Ended2004:
            
            Aug.
                31
            
            Nov.
                30
            
            Feb.
                29
            
            May
                31Net
                sales
            
            $
            58,276
            
            $
            55,259
            
            $
            62,315
            
            $
            59,124Gross
                profit
            
            
            21,522
            
            
            20,348
            
            
            23,512
            
            
            22,453Income
                from
                operations
            
            
            3,638
            
            
            4,591
            
            
            4,887
            
            
            3,511Income
                tax
                expense
            
            
            1,345
            
            
            1,733
            
            
            1,894
            
            
            1,125Net
                income
            
            
            2,195
            
            
            2,666
            
            
            2,565
            
            
            1,461Basic
                net
                income per share
            
            
            .08
            
            
            .10
            
            
            .10
            
            
            .06Diluted
                net
                income per share
            
            
            .08
            
            
            .10
            
            
            .10
            
            
            .05





Quarterly
      information presented above includes certain reclassifications from amounts
      previously reported to reflect the March 1, 2005 sale of the Weider branded
      business (see Note 2).





**18.**
            **SUBSEQUENTEVENT**





On
      June 17, 2005, we sold the capital stock and partnership interest in our
      international subsidiaries that operate the Haleko Unit to Atlantic Grupa of
      Zagreb, Croatia and certain of its subsidiaries for cash proceeds of $15,089.
      In
      accordance with SFAS No. 144, we recognized an asset impairment loss of $9,346
      in fiscal 2005 as the cash proceeds, net of transaction related costs of $700
      and including a realized foreign currency translation loss of $711, were less
      than the carrying value of our Haleko Unit’s long-term assets.





The
      carrying
      amounts of the Haleko Unit assets and liabilities, included in the accompanying
      consolidated balance sheets, consist of the following at May 31,





2005
            
            2004Cash
                and cash
                equivalents
            
            $
            719
            
            $
            2,269Receivables,
                net
            
            
            13,619
            
            
            12,917Inventories
            
            
            8,042
            
            
            6,899Prepaid
                expenses and other
            
            
            1,244
            
            
            1,500Property
                and
                equipment, net
            
            
            3,378
            
            
            8,960Intangible
                assets, net
            
            
            —
            
            
            4,235Deposits
                and
                other assets
            
            
            420
            
            
            393Accounts
                payable
            
            
            7,706
            
            
            8,716Other
                current
                liabilities
            
            
            6,038
            
            
            6,174Long-term
                debt
            
            
            —
            
            
            133








F
          -
          22
 **WEIDER
            NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES**
 **VALUATION
            AND QUALIFYING ACCOUNTS**
 **YEARS
            ENDED MAY 31, 2005, 2004 AND 2003**
 **(in
            thousands)**








**Description**
              
              **Balance
                  at Beginning of Year**
              
              **Additions
                  (Reductions) Charged to Costs / Expenses**
              
              **Additions
                  Charged to Net Sales**
              
              **Reductions
                  due to Divestiture**
              
              **Deductions
                  / Write-offs**
              
              **Balance
                  at End of Year****ALLOWANCE
                  FOR DOUBTFUL ACCOUNTS:**2003
              
              $
              4,607
              
              $
              583
              
              $
              —
              
              $
              (719
              )
              $
              (1,166
              )
              $
              3,3052004
              
              $
              3,305
              
              $
              10
              
              $
              —
              
              $
              —
              
              $
              (1,134
              )
              $
              2,1812005
              
              $
              2,181
              
              $
              —
              
              $
              —
              
              $
              (557
              )
              $
              (354
              )
              $
              1,270**ALLOWANCE
                  FOR SALES RETURNS AND DISCOUNTS:**2003
              
              $
              5,359
              
              $
              (382
              )
              $
              20,573
              
              $
              —
              
              $
              (20,231
              )
              $
              5,3192004
              
              $
              5,319
              
              $
              (1,962
              )
              $
              21,218
              
              $
              —
              
              $
              (20,252
              )
              $
              4,3232005
              
              $
              4,323
              
              $
              (1,665
              )
              $
              17,113
              
              $
              (351
              )
              $
              (15,928
              )
              $
              3,492**ALLOWANCE
                  FOR UNREALIZABLE NOTES RECEIVABLE:**2003
              
              $
              1,952
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              (666
              )
              $
              1,2862004
              
              $
              1,286
              
              $
              (1,069
              )
              $
              —
              
              $
              —
              
              $
              (118
              )
              $
              992005
              
              $
              99
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              (99
              )
              $
              —**DEFERRED
                  TAXES VALUATION ALLOWANCE:**2003
              
              $
              3,587
              
              $
              1,389
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              4,9762004
              
              $
              4,976
              
              $
              (329
              )
              $
              —
              
              $
              —
              
              $
              —
              
              $
              4,6472005
              
              $
              4,647
              
              $
              (1,816
              )
              $
              —
              
              $
              —
              
              $
              —
              
              $
              2,831