10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2008
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____.
Commission file number:
001-14608

SCHIFF NUTRITION INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	87-0563574
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2002 South 5070 West Salt Lake City, Utah	84104-4726
(Address of principal executive offices)	(Zip Code)

(801) 975-5000

(Registrant’s telephone number, including area code)

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

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

Large Accelerated Filer q                                                                                                                   Accelerated Filer q

Non-Accelerated Filer q(Do not check if a smaller reporting company)                                     Smaller reporting company þ

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

Yes q  No þ

As of January 8, 2009 the registrant had outstanding 12,512,293 shares of Class A common stock and 14,973,148 shares of Class B common stock.

Schiff Nutrition International, Inc.

Index

ITEM 1. FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND OTHER MATTERS

2. AVAILABLE-FOR-SALE SECURITIES

3. RECEIVABLES, NET

4. INVENTORIES

5. GOODWILL AND INTANGIBLE ASSETS, NET

6. ACCRUED EXPENSES

7. CAPITAL STRUCTURE

8. EARNINGS PER SHARE

9. CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS AND PRODUCTS

10. COMMITMENTS AND CONTINGENCIES

11.	RECENTLY ISSUED ACCOUNTING STANDARDS
12.	SUBSEQUENT EVENT

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

-   General

-   Recent Events

-   Results of Operations (3 months)

-   Results of Operations (6 months)

-   Liquidity and Capital Resources

-   Critical Accounting Policies and Estimates

-   Impact of Inflation

-   Seasonality

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4T.   CONTROLS AND PROCEDURES

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A.   RISK FACTORS

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

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

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

Exhibit 10.2. Amendment No. 3 to the Schiff Nutrition International, Inc. 2004 Incentive Award Plan dated December 8, 2008

Exhibit 10.3. Amendment No. 4 to the 1997 Equity Participation Plan of Weider Nutrition International, Inc. dated December 8, 2008

Exhibit 10.4. Employment Agreement and Change in Control Agreement dated June 1, 2007, as amended as of October 27, 2008, between Schiff Nutrition Group, Inc. and Bruce J. Wood

Exhibit 10.5. Form of Amended and Restated Agreement dated as of October 27, 2008 between Schiff Nutrition Group, Inc. and Certain of its Executives

Exhibit 10.6. Consulting Agreement dated as of November 3, 2008 between Schiff Nutrition Group, Inc. and Daniel A. Thomson

Exhibit 31.1. Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act

Exhibit 31.2. Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act

Exhibit 32.1. CEO and CFO Certifications pursuant to Section 906 of the Sarbanes-Oxley Act

PART I.  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	November 30, 2008		May 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	44,580	$	45,979
Available-for-sale securities		673		3,298
Receivables, net		23,076		22,536
Inventories		41,757		29,233
Prepaid expenses and other		2,263		1,948
Deferred taxes, net		2,427		1,761
Total current assets		114,776		104,755
Property and equipment, net		13,276		13,567
Other assets:
Goodwill		4,346		4,346
Available-for-sale securities		1,265		1,265
Other assets		4		12
Deferred taxes, net		451		541
Total other assets		6,066		6,164
Total assets	$	134,118	$	124,486
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	14,372	$	11,075
Accrued expenses		11,978		11,153
Dividends payable		37		1,046
Short-term debt		769		—
Total current liabilities		27,156		23,274
Long-term liabilities:
Dividends payable		1,193		1,201
Other		546		524
Total long-term liabilities		1,739		1,725
Commitments and contingencies (Note 10)
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-12,456,368 and 11,782,390		124		118
Class B common stock, par value $.01 per share; shares authorized-25,000,000; shares issued and outstanding-14,973,148		150		150
Additional paid-in capital		88,961		89,393
Retained earnings		15,988		9,826
Total stockholders' equity		105,223		99,487
Total liabilities and stockholders' equity	$	134,118	$	124,486

See notes to condensed consolidated financial statements.

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2

SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share data)

(unaudited)

	Three Months Ended November 30,
	2008			2007
Net sales	$	47,293		$	39,535
Cost of goods sold		29,690			22,974
Gross profit		17,603			16,561
Operating expenses:
Selling and marketing		8,412			6,737
General and administrative		3,610			4,452
Research and development		1,119			1,276
Reimbursement of import costs		—			(31	)
Total operating expenses		13,141			12,434
Income from operations		4,462			4,127
Other income (expense):
Interest income		300			437
Interest expense		(38	)		(42	)
Other, net		(2	)		6
Total other income, net		260			401
Income before income taxes		4,722			4,528
Income tax expense		1,810			1,725
Net income	$	2,912		$	2,803
Weighted average shares outstanding:
Basic		27,275,080			26,639,673
Diluted		28,629,174			27,728,332
Net income per share:
Basic	$	0.11		$	0.11
Diluted	$	0.10		$	0.10
Comprehensive income	$	2,912		$	2,803

See notes to condensed consolidated financial statements.

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3

SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share data)

(unaudited)

	Six Months Ended November 30,
	2008			2007
Net sales	$	95,083		$	80,262
Cost of goods sold		59,602			47,280
Gross profit		35,481			32,982
Operating expenses:
Selling and marketing		16,545			13,493
General and administrative		7,348			11,239
Research and development		2,107			2,302
Reimbursement of import costs		—			(31	)
Total operating expenses		26,000			27,003
Income from operations		9,481			5,979
Other income (expense):
Interest income		607			1,258
Interest expense		(64	)		(69	)
Other, net		(4	)		10
Total other income, net		539			1,199
Income before income taxes		10,020			7,178
Income tax expense		3,859			2,727
Net income	$	6,161		$	4,451
Weighted average shares outstanding:
Basic		27,242,692			26,602,385
Diluted		28,648,900			27,480,280
Net income per share:
Basic	$	0.23		$	0.17
Diluted	$	0.22		$	0.16
Comprehensive income	$	6,161		$	4,451

See notes to condensed consolidated financial statements.

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4

SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands )

(unaudited)

	Six Months Ended November 30,
	2008			2007
Cash flows from operating activities:
Net income	$	6,161		$	4,451
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred taxes		(576	)		(403	)
Depreciation and amortization		1,580			1,780
Amortization of financing fees		8			8
Stock-based compensation		214			5,437
Excess tax benefit from equity instruments		(470	)		(292	)
Other		7			(5	)
Changes in operating assets and liabilities:
Receivables		(540	)		2,398
Inventories		(12,524	)		(7,766	)
Prepaid expenses and other		(315	)		(598	)
Other assets		—			77
Accounts payable		3,088			806
Other current liabilities		1,295			(2,079	)
Other long-term liabilities		22			17
Net cash provided by (used in) operating activities		(2,050	)		3,831
Cash flows from investing activities:
Purchase of property and equipment		(1,082	)		(2,057	)
Purchase of available-for-sale securities		(673	)		(21,226	)
Proceeds from sale of available-for-sale securities		3,300			36,472
Net cash provided by investing activities		1,545			13,189
Cash flows from financing activities:
Proceeds from debt		1,338			1,350
Payments on debt		(569	)		(572	)
Proceeds from stock options exercised		270			150
Purchase and retirement of common stock		(1,380	)		(120	)
Excess tax benefit from equity instruments		470			292
Dividends paid		(1,017	)		(42,605	)
Net cash used in financing activities		(888	)		(41,505	)
Effect of exchange rate changes on cash		(6	)		2
Decrease in cash and cash equivalents		(1,399	)		(24,483	)
Cash and cash equivalents, beginning of period		45,979			34,463
Cash and cash equivalents, end of period	$	44,580		$	9,980

See notes to condensed consolidated financial statements.

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5

SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

1.   BASIS OF PRESENTATION AND OTHER MATTERS

The accompanying unaudited interim condensed consolidated financial statements (“interim financial statements”) of Schiff Nutrition International, Inc. and its subsidiaries (the “Company,” “we,” “us” and “our”) do not include all disclosures provided in our annual consolidated financial statements.  These interim financial statements should be read in conjunction with the consolidated financial statements and the footnotes thereto contained in our Annual Report on Form 10-K for the year ended May 31, 2008 as filed with the Securities and Exchange Commission (“SEC”).  The May 31, 2008 condensed consolidated balance sheet, included herein, was derived from our audited financial statements, but all disclosures required by generally accepted accounting principles are not provided in the accompanying footnotes.  We are a majority-owned subsidiary of Weider Health and Fitness (“WHF”).

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

On March 17, 2006, the Compensation Committee of our Board of Directors, pursuant to our 2004 Incentive Award Plan, approved the adoption of a long term incentive plan involving the grant of performance based restricted stock units (the “Units”).  On March 20, 2006, a total of 1,437,200 Units were issued to certain officers and employees.  Each Unit represents the right to receive one share of the Company’s Class A common stock, subject to certain performance based vesting requirements.  The Units vested based on the Company’s performance in relation to certain specified pre-established performance criteria targets over a performance period beginning on January 1, 2006 and expiring on May 31, 2008.  The performance criteria upon which the Units vested was based upon a “Business Value Created” formula, which was comprised of two performance criteria components: operating earnings and return on net capital.  Based upon the amount of Business Value Created in accordance with the formula, the Units vested in full at May 31, 2008.  The grant date fair value of each Unit was $5.11.  We recognized compensation expense over the performance period based on a periodic assessment of the probability that the performance criteria would be achieved.  For the three and six month periods ended November 30, 2007, respectively, we recognized compensation expense of $812 and $1,623, and the related income tax benefit of approximately $324 and $632.

During the fiscal 2009 first quarter, we issued, at $5.47 per share, 466,891 shares of Class A common stock, net of 206,509 shares withheld and effectively reacquired in connection with the payment of individual income taxes, to certain employees for certain Units vested at May 31, 2008.  The shares underlying the remaining vested Units will be issued on specified future dates in accordance with previous deferral elections as determined by certain recipients.  Also during the six months ended November 30, 2008, we withheld and effectively reacquired, at an average price of approximately $6.72 per share, 109,512 shares from certain employees and directors in connection with non-cash net settlement(s) resulting from options exercised.  Pursuant to our 2004 Incentive Award Plan, we provide a net settlement arrangement for employees and directors whereby we withhold shares with a fair value on the date of exercise equal to the option exercise price from shares that would otherwise be issued upon exercise of the vested options.  Concurrent with the net settlement(s), we withheld and effectively reacquired, at an average price of approximately $6.82 per share, 36,698 additional shares in connection with the payment of individual income taxes.

Purchase of property and equipment included in accounts payable amounted to $208 and $465, respectively, for the six months ended November 30, 2008 and 2007.

2.   AVAILABLE-FOR-SALE SECURITIES

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

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SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(dollars in thousands, except share data)

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

	November 30, 2008		May 31, 2008
Federal, state and municipal debt securities	$	965	$	3,764
Corporate debt securities		300		799
Certificates of deposit		673		—
		1,938		4,563
Less long-term portion		1,265		1,265
	$	673	$	3,298

Despite the underlying long-term contractual maturity of ARS, there generally was a ready liquid market for these securities based on the interest reset mechanism.  However, as a result of current negative liquidity and uncertainty in financial credit markets, we have experienced “failed” auctions associated with our ARS.  In the case of a failed auction, the ARS become illiquid long-term bonds (until a future auction is successful or the security is called prior to the contractual maturity date by the issuer) and the rates are reset in accordance with terms in the prospectus/offering circular.  At November 30, 2008, total available-for-sale securities included $1,265 in ARS which experienced remarketing failures and are included in long-term assets.  These ARS consist primarily of fully insured, highly rated municipal or state agency issued securities.  

Available-for-sale securities were measured at fair value at November 30, 2008, using:

Quoted prices in active markets for identical assets (Level 1)	$	673
Significant other observable inputs (Level 2)		—
Significant unobservable inputs (Level 3)		1,265
Total	$	1,938

There were no changes in the beginning and ending balances, including gains or losses, purchases, sales, issuances or settlements, or transfers in or out, of available-for-sale securities measured at fair value using significant unobservable inputs.

Contractual maturities of debt securities are as follows at November 30, 2008:

Less than one year	$	—
One to five years		—
Over five years		1,265
Total	$	1,265

The amount of unrealized gains or losses for the six months ended November 30, 2008 and 2007 was not significant.

3.   RECEIVABLES, NET

Receivables, net, consist of the following: 

	November 30, 2008			May 31, 2008
Trade accounts	$	24,368		$	21,938
Refundable income taxes		842			1,969
Other		70			162
		25,280			24,069
Less allowances for doubtful accounts, sales returns and discounts		(2,204	)		(1,533	)
Total	$	23,076		$	22,536

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SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(dollars in thousands, except share data)

4.   INVENTORIES

Inventories consist of the following:

	November 30, 2008		May 31, 2008
Raw materials	$	14,021	$	9,458
Work in process		2,238		1,897
Finished goods		25,498		17,878
Total	$	41,757	$	29,233

5.   GOODWILL AND INTANGIBLE ASSETS, NET

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

	November 30, 2008										May 31, 2008
	Gross Carrying Amount			Accumul.  Amortiz.				Net Book Value			Gross Carrying Amount			Accumul.  Amortiz.				Net Book Value
Goodwill		$	4,346		$	—			$	4,346		$	4,346		$	—			$	4,346
Intangible assets-patents and trademarks		$	700		$	(700	)		$	—		$	2,090		$	(2,090	)		$	—

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

The carrying amount of goodwill did not change during the first six months of fiscal 2009 or during fiscal 2008.

6.   ACCRUED EXPENSES

Accrued expenses consist of the following: 

	November 30, 2008		May 31, 2008
Accrued personnel related costs	$	2,152	$	4,011
Accrued promotional costs		7,832		5,117
Other		1,994		2,025
Total	$	11,978	$	11,153

7.   CAPITAL STRUCTURE

We have two classes of common stock outstanding.  Both classes of common stock generally have identical rights and privileges, with the exception of voting and conversion, or transfer rights.  Each holder of Class A or Class B common stock is entitled to share ratably in any dividends, liquidating distributions or consideration resulting from certain business combinations.  However, each holder of Class A common stock is entitled to one vote for each share held while each holder of Class B common stock is entitled to ten votes for each share held.  The holders of the Class A common stock and Class B common stock vote together as a single class.  Class A common stock cannot be converted into any other securities of the Company, while Class B common stock holders have the right to convert their shares into Class A common stock on a one-to-one basis.  In addition, generally, any shares of Class B common stock that are transferred will automatically convert into shares of Class A common stock on a one-to-one basis.

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8

SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(dollars in thousands, except share data)

8.   EARNINGS PER SHARE

The following is a reconciliation of the numerators and the denominators of the basic and diluted earnings per share computations: 

	Three Months Ended				Six Months Ended
	November 30, 2008		November 30, 2007		November 30, 2008		November 30, 2007
Income available to common shareholders (numerator):
Net income	$	2,912	$	2,803	$	6,161	$	4,451
Adjustments		—		—		—		—
Income on which basic and diluted earnings per share are calculated	$	2,912	$	2,803	$	6,161	$	4,451
Weighted-average number of common shares outstanding (denominator):
Basic		27,275,080		26,639,673		27,242,692		26,602,385
Add-incremental shares from restricted stock		17,947		440		17,190		220
Add-incremental shares from restricted stock units		754,227		418,333		747,321		200,257
Add-incremental shares from stock options		581,920		669,886		641,697		677,418
Diluted		28,629,174		27,728,332		28,648,900		27,480,280

Options to purchase 32,000 shares of Class A common stock at prices ranges from $6.00 to $7.05 per share were outstanding during the first six months of fiscal 2009 and 2008 but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares.

9.   CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS AND PRODUCTS

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, available-for-sale securities and accounts receivable.  Historically, we invested our excess cash in high-quality, liquid money market accounts, commercial paper, ARS and other variable rate debt and equity securities.  While the underlying securities generally have contractual maturities between 20 and 30 years, the interest rates on ARS typically reset at intervals between 7 to 35 days.  Despite the underlying long-term maturity of these securities, from the investor’s perspective, such securities were priced and subsequently traded as short-term investments because of the interest rate reset feature.  As a result, we generally had the ability to quickly liquidate these securities.

As a result of current negative liquidity and uncertainty in financial credit markets, we elected to liquidate our investments in ARS and other variable rate debt securities.  Proceeds from the sale of these available-for-sale securities were invested in money market accounts, certificates of deposit, United States Treasury Bills with maturities of three months or less, and high-quality commercial paper, substantially all of which are included in cash and cash equivalents.  Generally, our cash and cash equivalents exceed Federal Deposit Insurance Corporation limits on insurable amounts; thus exposing us to certain credit risk.  We minimize our risk by investing in or through major financial institutions.  We have not experienced any realized losses on our cash equivalents and available-for-sale securities.

At November 30, 2008, we held approximately $1,938 in available-for-sale securities consisting of approximately $1,265 in ARS and $673 in certificates of deposit.  The ARS consist primarily of fully insured, highly rated municipal or state agency issued securities. In determining the fair value of our available-for-sale securities at November 30, 2008, we have taken into consideration fair values determined by the financial institutions, current credit rating of the debt securities, insurance provisions, discounted cash flow analysis, as deemed appropriate, and our current liquidity position. Although we believe the remaining ARS and other available-for-sale securities will ultimately be liquidated at or near our current carrying value, any substantial impairment in the value of these securities could adversely impact our results of operations and financial condition.

With respect to accounts receivable, we perform ongoing credit evaluations of our customers and monitor collections from customers continuously.  We maintain an allowance for doubtful accounts which is based upon historical experience as well as specific customer collection issues.  Historically, bad debt expenses have not been significant and have been within expectations and allowances established.  However, we cannot guarantee that we will continue to experience the same credit loss rates that we have in the past.  If the financial condition of one or more of our customers were to deteriorate, additional allowances may be required.

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SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(dollars in thousands, except share data)

The combined net sales to our two largest customers are significant.  At November 30, 2008 and May 31, 2008, respectively, amounts due from Customer A represented approximately 39% and 53%, and amounts due from Customer B represented approximately 30% and 24%, of total trade accounts receivable.  For the first six months of fiscal 2009 and 2008, respectively, Customer A accounted for approximately 44% and 39% and Customer B accounted for approximately 31% and 37% of total net sales.  Net sales of our Schiff® Move Free® brand accounted for approximately 39% and 49%, respectively, of total net sales for the first six months of fiscal 2009 and 2008.

10.   COMMITMENTS AND CONTINGENCIES

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

11.   RECENTLY ISSUED ACCOUNTING STANDARDS

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurement,” that defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  SFAS No. 157 retains the exchange price notion in defining fair value and clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability.  The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price).  SFAS No. 157 expands disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition.  The additional disclosure focuses on the inputs used to measure fair value and the effect of the measurements on net income for the reporting period.  The fair value measurement and disclosure provisions of SFAS No. 157 are effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  In February 2008, the FASB issued Staff Position ("FSP") 157-2.  FSP 157-2 delayed the effective date of SFAS No. 157 for all non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis.  FSP 157-2 is effective for fiscal years beginning after November 15, 2008, and interim periods within those fiscal years.  On June 1, 2008, we applied the provisions of SFAS No. 157 to our financial assets and liabilities.  The partial adoption of SFAS No. 157 did not significantly impact our results of operations and financial condition.  Pursuant to FSP 157-2, we have not yet applied the provisions of SFAS No. 157 to certain non-financial assets and liabilities, including primarily property and equipment, goodwill and other intangible assets.  We have not yet determined the impact of applying the provisions of SFAS No. 157 to such assets and liabilities on our results of operations and financial condition.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value.  SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities.  The measurement and disclosure provisions of SFAS No. 159 are effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.  We did not elect to measure any such existing financial instruments or other items at fair value.

12.   SUBSEQUENT EVENT

On December 12, 2008, the Compensation Committee of our Board of Directors, pursuant to the Company’s 2004 Incentive Award Plan, approved the grant of long term incentive performance awards (“Performance Awards”) to certain officers and employees.  The Performance Awards were granted based on target award value, but will be earned based on the Company’s cumulative performance against three pre-established financial performance targets over a performance period commencing October 1, 2008 and ending on May 31, 2011, as follows: (i) 50% of the award opportunity will be based on cumulative net sales for the performance period; (ii) 35% of the award opportunity will be based on cumulative operating income for the performance period; and (iii) 15% of the award opportunity will be based on cumulative net cash flow for the performance period; provided, however, that no amount will be earned or payable if cumulative operating income for the performance period does not meet or exceed a pre-established threshold amount.  In the event that the cumulative operating income threshold is met, participants can earn from 17.5% of the target award value for the Company’s threshold performance against the cumulative operating income goal (and failure to meet the thresholds for the other two financial goals) and up to 150% of the target award value for maximum Company performance against all three financial goals.

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SCHIFF NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(dollars in thousands, except share data)

The earned value of the Performance Awards will vest on May 31, 2011 subject to continued service by the participant(s) through that date.  The vested portion of the earned value of the Performance Awards will be paid in a combination of cash and shares of the Company’s Class A common stock.  Two-thirds of the earned value will be delivered to participants in cash (subject to any applicable plan limitations, less applicable taxes), and the remaining balance will be paid in shares, based on the closing price of the Company’s common stock on the day preceding the date of the Committee’s certification of the Company’s performance.  No dividends will be paid or accrued with respect to shares granted in payment of the Performance Awards until such shares are issued.

Recognition of compensation cost and accrual of the corresponding liability related to the Performance Awards will begin in the fiscal 2009 third quarter, based on the periodic assessment of the probability that the performance criteria will be achieved.

Also, on December 12, 2008, the Compensation Committee of our Board of Directors granted 240,500 restricted stock units (the “New Units”) to certain employees.  Each New Unit represents the right to receive one share of the Company’s Class A common stock upon vesting.  The aggregate value of the New Units at the grant date was approximately $1,332, which will be expensed over the vesting (service) period.  The New Units cliff vest in full on May 31, 2011, assuming the holder is still employed.  Any dividends paid between the grant date and vesting will be payable to the holder upon vesting of the New Units.

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

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements, including the notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q and other reports filed with the SEC. Sections of this Form 10-Q including, in particular, our Management’s Discussion and Analysis of Financial Condition and Results of Operations, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These statements 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,” “intends,” or similar expressions, are forward-looking statements.  These statements are subject to risks and uncertainties, certain of which are beyond our control, and therefore, actual results may differ materially.  Important factors that may cause results to materially differ from these forward-looking statements include, but are not limited to, the factors indicated from time to time in our reports filed with the SEC, copies of which are available upon request from our investor relations group or which may be obtained at the SEC’s website (www.sec.gov).  Forward-looking statements only speak as of the date hereof and we do not undertake and expressly disclaim any obligation to update or release any revisions to any forward-looking statement whether as a result of new information, future events or otherwise, except as required by law.

General

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

During fiscal 2008 and the first six months of fiscal 2009, we continued to provide selling and marketing support intended both to defend our overall Move Free business against competition, including private label, and ultimately to increase our market share in the joint care product category.  During our fiscal 2008 third quarter, we announced the introduction of smaller tablets for our existing Move Free items as well as the launch of a Move Free line extension.  Operating results for the first half of fiscal 2009, as compared to fiscal 2008, are impacted by the shifting of advertising support from the first half to the second half of fiscal 2008 in support of these Move Free marketing initiatives.  As a result, advertising expense for the first half of fiscal 2009 was greater than the amount recognized in the corresponding prior year period.  Operating results for the first six months of fiscal 2009 are also impacted by incremental private label business awarded in the latter part of fiscal 2008.  The incremental business coupled with increased volume from existing business resulted in a significant change in quarter over quarter sales mix.  The significant increase in lower-margin private label sales resulted in an overall lower gross profit margin for the first six months of fiscal 2009, as compared to the first six months of fiscal 2008.  During the latter part of fiscal 2008, we introduced MegaRed®, an omega-3 krill oil product, into Costco.  During the first half of fiscal 2009, we continued the introduction of MegaRed into certain other retail accounts.  During fiscal 2008 and continuing in fiscal 2009, we are attempting to increase distribution of our joint care products in international markets.  Subject to competitive joint care product category pricing pressures, including private label, the success of incremental private label and new product sales and the ability to increase our distribution in international markets, we expect a high single-digit/low double-digit increase in fiscal 2009 net sales, as compared to fiscal 2008 net sales, primarily driven by incremental private label business.

Our operating results for fiscal 2008 were impacted by the declaration of a special cash dividend in July 2007.  In connection with the declaration of the special dividend, our Board of Directors approved certain dividend equivalent rights allowing holders (employees and directors) of certain equity awards, including stock options and restricted stock units, to receive cash dividends on each share of common stock underlying the stock options and restricted stock units.  As a result, we recognized a non-cash compensation expense, and a corresponding increase in additional paid-in capital, of approximately $0.7 million and $3.7 million, respectively, during the three and six months periods ended November 30, 2007.

Recently, we have experienced increases in certain raw material prices.  While these increases impacted our operating results for the first half of fiscal 2009, the negative impact on our gross profit and operating margins will be greater in the second half.

Our historical results have been affected by a variety of factors, including the implementation of strategic initiatives and measures intended to refine our growth and business strategies.  We continue to consider, evaluate and adjust these initiatives and our growth and business strategies to enhance our results of operations and profitability.  However, we cannot assure you that our decisions and actions relating to the implementation, adjustment or continuation of such initiatives and strategies will not adversely affect our results of operations and financial condition.

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

Recent Events

On December 12, 2008, the Compensation Committee of our Board of Directors, pursuant to the Company’s 2004 Incentive Award Plan, approved the grant of long term incentive performance awards (“Performance Awards”) to certain officers and employees.  The Performance Awards were granted based on target award value, but will be earned based on the Company’s cumulative performance against three pre-established financial performance targets over a performance period commencing October 1, 2008 and ending on May 31, 2011, as follows: (i) 50% of the award opportunity will be based on cumulative net sales for the performance period; (ii) 35% of the award opportunity will be based on cumulative operating income for the performance period; and (iii) 15% of the award opportunity will be based on cumulative net cash flow for the performance period, provided, however, that no amount will be earned or payable if cumulative operating income for the performance period does not meet or exceed a pre-established threshold amount.  In the event that the cumulative operating income threshold is met, participants can earn from 17.5% of the target award value for the Company’s threshold performance against the cumulative operating income goal (and failure to meet the thresholds for the other two financial goals) and up to 150% of the target award value for maximum Company performance against all three financial goals.

The earned value of the Performance Awards will vest on May 31, 2011 subject to continued service by the participant(s) through that date.  The vested portion of the earned value of the Performance Awards will be paid in a combination of cash and shares of the Company’s Class A common stock.  Two-thirds of the earned value will be delivered to participants in cash (subject to any applicable plan limitations, less applicable taxes), and the remaining balance will be paid in shares, based on the closing price of the Company’s common stock on the day preceding the date of the Committee’s certification of the Company’s performance.  No dividends will be paid or accrued with respect to shares granted in payment of the Performance Awards until such shares are issued.

Recognition of compensation cost and accrual of the corresponding liability related to the Performance Awards will begin in the fiscal 2009 third quarter, based on the periodic assessment of the probability that the performance criteria will be achieved.

Also, on December 12, 2008, the Compensation Committee of our Board of Directors granted 240,500 restricted stock units (the “New Units”) to certain employees.  Each New Unit represents the right to receive one share of the Company’s Class A common stock upon vesting.  The aggregate value of the New Units at the grant date was approximately $1.3 million, which will be expensed over the vesting (service) period.  The New Units cliff vest in full on May 31, 2011, assuming the holder is still employed.  Any dividends paid between the grant date and vesting will be payable to the holder upon vesting of the New Units.

Results of Operations

Three Months Ended November 30, 2008 Compared to Three Months

Ended November 30, 2007

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

	2008					2007
Net sales	$	47,293		100.0	%	$	39,535		100.0	%
Cost of goods sold		29,690		62.8			22,974		58.1
Gross profit		17,603		37.2			16,561		41.9
Operating expenses:
Selling and marketing		8,412		17.8			6,737		17.0
General and administrative		3,610		7.6			4,452		11.3
Research and development		1,119		2.4			1,276		3.2
Reimbursement of import costs		—		—			(31	)	—
Total operating expenses		13,141		27.8			12,434		31.5
Income from operations		4,462		9.4			4,127		10.4
Other income, net		260		0.6			401		1.0
Income tax expense		(1,810	)	(3.8	)		(1,725	)	(4.3	)
Net income	$	2,912		6.2	%	$	2,803		7.1	%

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Net Sales.  Net sales increased approximately 19.6% to $47.3 million for the fiscal 2009 second quarter, from $39.5 million for the fiscal 2008 second quarter, primarily due to an increase in private label sales and a modest increase in branded sales.

Aggregate branded net sales increased approximately 6.1% to $34.1 million for the fiscal 2009 second quarter, from $32.2 million for the fiscal 2008 second quarter, primarily due to an increase in sales volume of approximately $2.6 million, or 5.8%, partially offset by an increase in potential product returns for new products.  The increase in branded sales volume was primarily attributable to the introduction of new products, partially offset by a decrease in overall joint care category sales volume.  Move Free net sales were $17.2 million and $18.9 million, respectively, for the fiscal 2009 and 2008 second quarters. The decrease primarily resulted from a decrease in sales volume.

Private label sales increased approximately 78.4% to $13.2 million for the fiscal 2009 second quarter, from $7.4 million for the fiscal 2008 second quarter, primarily due to incremental business awarded in the latter part of fiscal 2008 coupled with an increase in customer promotional activity on existing business.  Private label sales are expected to continue to increase in fiscal 2009, compared to fiscal 2008, due to the incremental business as well as volume increases in existing business.

Gross Profit.  Gross profit increased approximately 6.3% to $17.6 million for the fiscal 2009 second quarter, from $16.6 million for the fiscal 2008 second quarter.  Gross profit, as a percentage of net sales, decreased to 37.2% for the fiscal 2009 second quarter, from 41.9% for the fiscal 2008 second quarter.  These changes reflect the significant increase in private label sales volume resulting in a much higher mix of lower-margin private label sales.  Increasing raw material costs, which modestly impacted the fiscal 2009 second quarter, will more negatively impact subsequent fiscal 2009 quarters.

Operating Expenses.  Operating expenses increased approximately 5.7% to $13.1 million for the fiscal 2009 second quarter, from $12.4 million for the fiscal 2008 second quarter.  Operating expenses, as a percentage of net sales, were 27.8% and 31.5%, respectively, for the fiscal 2009 and 2008 second quarters.  The increase in operating expenses resulted primarily from a significant increase in selling and marketing expenses, partially offset by a decrease in general and administrative expenses.

Selling and marketing expenses, including sales, marketing, advertising, freight and other costs, increased to approximately $8.4 million for the fiscal 2009 second quarter, from $6.7 million for the fiscal 2008 second quarter, primarily due to an increase in promotional expenses and other variable selling expenses resulting from the increase in sales volume, coupled with increases in personnel related costs and fuel costs.

General and administrative expenses decreased to approximately $3.6 million for the fiscal 2009 second quarter, from approximately $4.5 million for the fiscal 2008 second quarter.  General and administrative expenses for the fiscal 2008 second quarter include the recognition of approximately $0.5 million in incremental compensation expense for the special dividend.  The compensation expense represents a non-cash charge for dividend equivalent rights received by holders (employees and directors) of certain equity awards, including stock options and restricted stock units.  In addition, an approximate $0.7 million expense associated with the previous long-term management incentive plan was recognized in the prior year quarter.  These reductions were partially offset by modest increases in other personnel related costs and professional fees.  A new long-term incentive plan was approved in December 2008 (see Note 12 of Notes to Condensed Consolidated Financial Statements).  

Research and development costs decreased to approximately $1.1 million for the fiscal 2009 second quarter, from $1.3 million for the fiscal 2008 second quarter, primarily resulting from a decrease in expenses associated with product testing related to the registration of products in countries outside of the United States.

Other Income/Expense.  Other income, net, was $0.3 million for the fiscal 2009 second quarter, compared to $0.4 million for the fiscal 2008 second quarter.  The decrease was primarily due to a reduction in interest income resulting from lower yields on investments.

Income Tax Expense.  Income tax expense was $1.8 million for the fiscal 2009 second quarter, compared to $1.7 million for the fiscal 2008 second quarter, primarily resulting from an increase in pre-tax income.  Our effective tax rate remained relatively constant at 38.3% for the fiscal 2009 second quarter, compared to 38.1% for the fiscal 2008 second quarter.

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Results of Operations

Six Months Ended November 30, 2008 Compared to Six Months

Ended November 30, 2007

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

	2008					2007
Net sales	$	95,083		100.0	%	$	80,262		100.0	%
Cost of goods sold		59,602		62.7			47,280		58.9
Gross profit		35,481		37.3			32,982		41.1
Operating expenses:
Selling and marketing		16,545		17.4			13,493		16.8
General and administrative		7,348		7.7			11,239		14.0
Research and development		2,107		2.2			2,302		2.9
Reimbursement of import costs		—		—			(31	)	—
Total operating expenses		26,000		27.3			27,003		33.7
Income from operations		9,481		10.0			5,979		7.4
Other income, net		539		0.6			1,199		1.5
Income tax expense		(3,859	)	(4.1	)		(2,727	)	(3.4	)
Net income	$	6,161		6.5	%	$	4,451		5.5	%

Net Sales.  Net sales increased approximately 18.5% to $95.1 million for the six months ended November 30, 2008, from $80.3 million for the six months ended November 30, 2007, primarily due to a significant increase in private label sales and a modest increase in branded sales.

Aggregate branded net sales increased 3.3% to $66.6 million for the six months ended November 30, 2008, from $64.5 million for the six months ended November 30, 2007.  An increase in sales volume of approximately $4.8 million, or 5.5%, was offset by an increase in sales promotional incentives classified as sales price reductions and an increase in actual and potential product returns.  Classification of promotional costs as a sales reduction is required when the promotion effectively represents a price reduction.  The increase in branded sales volume was primarily attributable to the introduction of new products, partially offset by a decrease in overall joint care category sales volume.  Move Free net sales were $36.7 million and $39.7 million, respectively, for the six months ended November 30, 2008 and 2007. The decrease primarily resulted from an approximate $2.0 million decrease in sales volume, partially due to promotional timing considerations, together with a $1.0 million increase in promotional incentives and product returns.

Private label sales increased approximately 80.3% to $28.5 million for the six months ended November 30, 2008, from $15.8 million for the six months ended November 30, 2007, primarily due to incremental business awarded in the latter part of fiscal 2008 coupled with an increase in customer promotional activity on existing business.  Private label sales are expected to continue to increase in fiscal 2009, compared to fiscal 2008, due to the incremental business as well as volume increases in existing business.

Gross Profit.  Gross profit increased approximately 7.6% to $35.5 million for the six months ended November 30, 2008, from $33.0 million for the six months ended November 30, 2007.  Gross profit, as a percentage of net sales, decreased to 37.3% for the six months ended November 30, 2008, from 41.1% for the six months ended November 30, 2007.  These changes reflect the significant increase in private label sales volume resulting in a much higher mix of lower-margin private label sales.  While the increase in raw material costs did not significantly impact the six months ended November 30, 2008, the negative impact will be greater during the second half of fiscal 2009.

Operating Expenses.  Operating expenses decreased approximately 3.7% to $26.0 million for the six months ended November 30, 2008, from $27.0 million for the six months ended November 30, 2007.  Operating expenses, as a percentage of net sales, were 27.3% and 33.7%, respectively, for the six months ended November 30, 2008 and 2007.  The decrease in operating expenses resulted primarily from a significant decrease in general and administrative expenses, partially offset by an increase in selling and marketing expenses.

Selling and marketing expenses, including sales, marketing, advertising, freight and other costs, increased to approximately $16.5 million for the six months ended November 30, 2008, from $13.5 million for the six months ended November 30, 2007, primarily due to an increase in promotional expenses and other variable selling expenses resulting from the increase in sales volume, as well as an increase in advertising and fuel costs.  The increase in advertising is primarily due to the impact of shifting advertising spending from the first half to the second half of fiscal 2008 in support of certain Move Free marketing initiatives.  

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General and administrative expenses decreased to approximately $7.3 million for the six months ended November 30, 2008, from approximately $11.2 million for the six months ended November 30, 2007.  General and administrative expenses for the six months ended November 30, 2007 include the recognition of approximately $3.4 million in incremental compensation expense for the special dividend.  The compensation expense represents a non-cash charge for dividend equivalent rights received by holders (employees and directors) of certain equity awards, including stock options and restricted stock units.  In addition, an approximate $1.4 million expense associated with the previous long-term management incentive plan was recognized in the prior year six-month period.  A new long-term incentive plan was approved in December 2008 (see Note 12 of Notes to Condensed Consolidated Financial Statements).  These reductions were partially offset by increases in other personnel related costs and professional fees.

Research and development costs decreased to approximately $2.1 million for the six months ended November 30, 2008, from $2.3 million for the six months ended November 30, 2007, primarily due to a decrease in expenses associated with product research and product testing related to the registration of products in countries outside of the United States.

Other Income/Expense.  Other income, net, was $0.5 million for the six months ended November 30, 2008, compared to $1.2 million for the six months ended November 30, 2007.  The decrease was primarily due to a reduction in interest income resulting from a decrease in cash and available-for-sale securities reflecting the impact of the fiscal 2008 first quarter special dividend, which was funded from cash and liquidation of available-for-sale securities.  The decrease also reflects a lower yield on investments.

Income Tax Expense.  Income tax expense was $3.9 million for the six months ended November 30, 2008, compared to $2.7 million for the six months ended November 30, 2007.  The increase primarily resulted from an increase in pre-tax income together with a modest increase in our effective tax rate primarily due to a decrease in tax-exempt interest income.  Our effective tax rate was 38.5% and 38.0%, respectively, for the six months ended November 30, 2008 and 2007.

Liquidity and Capital Resources

Working capital increased approximately $6.1 million to $87.6 million at November 30, 2008, from $81.5 million at May 31, 2008.  An approximate $4.0 million reduction in cash and cash equivalents and available-for-sale securities includes, among other factors, a significant increase in inventories partially funded by an increase in accounts payable; the payment of approximately $1.0 million in dividends resulting from the vesting of certain restricted stock units; and, the payment of approximately $1.4 million in individual income taxes resulting from withholding and effectively reacquiring shares of Class A common stock issued in exchange for fully vested restricted stock units and stock options exercised.  Inventories increased approximately $12.5 million, which reflects increases in raw material quantities and costs, an increase in finished goods for fiscal 2009 third quarter promotions, consistent with the prior year, as well as other increases including impact of incremental private label business.  The increase in prepaid expenses and short-term debt was primarily due to the renewal of certain insurance policies at September 1, 2008 and the financing of the corresponding annual insurance premiums.  Accrued expenses increased approximately $0.8 million primarily due to increases in accrued promotional expenses, partially offset by the payment of accrued management annual incentive costs.

As a result of current negative liquidity and uncertainty in financial credit markets, we have continued to liquidate our investments in ARS and other variable rate debt securities.  Proceeds from the sale of these available-for-sale securities were invested in money market accounts, certificates of deposit, United States Treasury Bills with maturities of three months or less, and high-quality commercial paper, substantially all of which are included in cash and cash equivalents.  At November 30, 2008, we held approximately $1.9 million in available-for-sale securities including approximately $1.3 million in ARS, which are generally fully insured, highly rated municipal or state agency issued securities.  Although we have experienced failed auctions with each of these ARS, and will therefore not be able to access our funds invested in these ARS until future auctions of these investments are successful, or the securities are called by the issuer; we believe we will be able to successfully liquidate these investments in a reasonable period of time.  However, we believe the unsuccessful liquidation of some, or all, of these securities over the next twelve months will not significantly impact our current liquidity needs.

On June 30, 2004, we entered into, through our wholly-owned direct operating subsidiary Schiff Nutrition Group, Inc.  (“SNG”), a $25.0 million revolving credit facility (the “Credit Facility”) with KeyBank National Association, as Agent.  In August 2006, we extended the maturity of the Credit Facility from June 30, 2007 to June 30, 2009.  The Credit Facility contains customary terms and conditions, including, among others, financial covenants that may limit our ability to pay dividends on our common stock and certain other restrictions.  Our obligations under the Credit Facility are secured by a first priority security interest on all of the capital stock of SNG.  If our total coverage ratio exceeds a certain limit, our obligations will also be secured by a first priority security interest in all of our domestic assets.  In the event we exceed certain other ratio limits, we will be subject to a borrowing base and will be able to borrow up to a lesser of $25.0 million or the sum of (i) 85% of eligible accounts receivable and (ii) 65% of eligible inventory.  Borrowings under the Credit Facility bear interest at floating rates based on the KeyBank National Association prime rate or the Federal Funds effective rate.  The Credit Facility can be used to fund our normal working capital and capital expenditure requirements, with availability to fund certain permitted strategic transactions.  At November 30, 2008, there were no amounts outstanding and $25.0 million was available for borrowing under the Credit Facility.

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

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

A summary of our outstanding contractual obligations at November 30, 2008 is as follows (in thousands):

Contractual Cash Obligations(1)	Total Amounts Committed		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Operating leases	$	10,083	$	2,355	$	4,647	$	3,081	$	—
Purchase obligations(2)		16,333		16,333		—		—		—
Debt obligations		776		776		—		—		—
Total obligations	$	27,192	$	19,464	$	4,647	$	3,081	$	—

(1) Unrecognized income tax benefits totaling approximately $0.5 million are excluded since we are unable to estimate the period of settlement, if any.

(2) Purchase obligations consist primarily 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 condensed consolidated financial statements and the reported amounts of net sales and expenses during the reported periods.  We periodically evaluate our estimates and judgments related to the valuation of available-for-sale securities, inventories and intangible assets, allowances for doubtful accounts, sales returns and discounts, uncertainties related to certain tax benefits, valuation of deferred tax assets, valuation of share-based payments and recoverability of long-lived assets.  Note 1 of Notes to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended May 31, 2008, filed with the SEC, describes the accounting policies governing each of these matters.  Our estimates are based on historical experience and on our future expectations that are believed to be reasonable.  The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from our current estimates and those differences may be material.

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

·   We provide for inventory valuation adjustments for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, market conditions and/or liquidation value.  For the six months ended November 30, 2008 and 2007, inventory valuation adjustments resulted in a decrease in our gross profit and operating income of approximately $0.2 million and $0.5 million, respectively.  If actual demand and/or market conditions are less favorable than those projected by management, additional inventory write-downs would be required.

·   We maintain allowances for doubtful accounts, sales returns and discounts for estimated losses resulting from customer exposures, including among others, product returns, inability to make payments and expected utilization of offered discounts.  Changes in our allowances for doubtful accounts, sales returns and discounts resulted in a decrease in our gross profit and operating income of approximately $0.6 million for the six months ended November 30, 2008.  Changes in these allowances resulted in an increase in our gross profit and operating income of approximately $0.5 million for the six months ended November 30, 2007.  At November 30, 2008 and May 31, 2008, our allowances for doubtful accounts, sales returns and discounts amounted to approximately $2.2 million and $1.5 million, respectively.  Actual results may differ from our current estimates, resulting in adjustment of the respective allowance(s).

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·   We recognize tax benefits relative to certain tax positions in which we may be uncertain as to whether that tax position will ultimately be sustained as filed in our tax return.  The recognition or derecognition of these tax benefits is subject to periodic evaluation of the sustainability of the tax position based upon changes in facts, circumstances or available information.  Changes in the recognition of these tax benefits did not significantly impact net income for the six months ended November 30, 2008 and 2007.  At both November 30, 2008 and May 31, 2008, unrecognized tax benefits totaled approximately $0.5 million.

·   We currently have deferred tax assets resulting from temporary differences between financial and income tax reporting.  These deferred tax assets are subject to periodic recoverability assessments.  The realization of these deferred tax assets is primarily dependent on future operating results.  At November 30, 2008 and May 31, 2008, deferred tax asset valuation allowances were zero.

·   We recognized compensation expense for certain performance based equity instrument awards (share-based payments) over the performance period based on a periodic assessment of the probability that the performance criteria would be achieved.  Our periodic assessment of the probability that the performance criteria would be achieved considered such factors as historical financial results and future financial expectations, including an analysis of sales trends and operating margins; as well as changes in the nutritional supplements industry and competitive environment.  For the six months ended November 30, 2008, we did not recognize any compensation expense since the performance criteria for existing awards was achieved and the equity instruments were fully vested as of May 31, 2008.  For the six months ended November 30, 2007, we recognized compensation expense related to existing awards of approximately $1.6 million.

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

Impact of Inflation

Inflation affects the cost of raw materials, goods and services we use.  In recent years, inflation has been modest.  However, certain raw material prices have increased significantly during fiscal 2009.  We seek to mitigate the adverse effects of inflation primarily through improved productivity, strategic buying initiatives, and cost containment programs.  However, the nutritional supplement industry competitive environment limits our ability to recover higher costs resulting from inflation by raising prices.  See further discussion of raw material pricing matters in the “General” and “Results of Operations” sections above.

Seasonality

Our business is not inherently seasonal; however, we experience fluctuations in sales resulting from timing of marketing and promotional activities, customer buying patterns and consumer spending patterns.  In addition, as a result of changes in product sales mix, competitive conditions, raw material pricing pressures and other factors, as discussed above, we experience fluctuations in gross profit and operating margins on a quarter-to-quarter basis.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Our cash flows and net earnings may be subject to fluctuations resulting from changes in interest rates.  Our current policy does not allow speculation in derivative instruments for profit or execution of derivative instrument contracts for which there is no underlying exposure.  We do not use financial instruments for trading purposes.  We measure market risk, related to our holdings of financial instruments, based on changes in interest rates utilizing a sensitivity analysis.  Our Credit Facility, under which borrowings bear interest at floating rates, had no amounts outstanding at November 30, 2008.  Interest income earned on our short-term investments is impacted by changes in interest rates.  We do not believe that a hypothetical 10% change in interest rates would have a material effect on our pretax earnings or cash flows.

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  ITEM 4T.  CONTROLS AND PROCEDURES

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

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

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

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PART II. OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

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

 ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed by us in Part I, Item 1A of our Annual Report on Form 10-K for the year ended May 31, 2008.

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

None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5.   OTHER INFORMATION

Not applicable.

ITEM 6.   EXHIBITS

3.1.	Amended and Restated Certificate of Incorporation of Schiff Nutrition International, Inc.  (1)
3.2.	Amended and Restated Bylaws of Weider Nutrition International, Inc.  (2)
4.1.	Revolving Credit Agreement dated as of June 30, 2004 between Weider Nutrition Group, Inc. and KeyBank National Association.  (3)
4.2.	Form of specimen Class A common stock certificate.  (4)
10.1.	Form of Performance Award Grant Notice, Performance Award Agreement and Deferral Election. (5)
10.2.	Amendment No. 3 to the Schiff Nutrition International, Inc. 2004 Incentive Award Plan dated December 8, 2008.  (6) *
10.3.	Amendment No. 4 to the 1997 Equity Participation Plan of Weider Nutrition International, Inc. dated December 8, 2008. (6) *
10.4.	Employment Agreement and Change in Control Agreement dated June 1, 2007, as amended as of October 27, 2008, between Schiff Nutrition Group, Inc. and Bruce J. Wood. (6) *
10.5.	Form of Amended and Restated Agreement dated as of October 27, 2008 between Schiff Nutrition Group, Inc. and Certain of its Executives. (6) *
10.6.	Consulting Agreement dated as of November 3, 2008 between Schiff Nutrition Group, Inc. and Daniel A. Thomson. (6) *
31.1.	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.  (6)
31.2.	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.  (6)
32.1.	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.  (7)

1.	Previously field in the Company’s Quarterly Report on Form 10-Q filed on January 17, 2006 and incorporated herein by reference.
2.	Previously filed in the Company's Registration Statement on Form S-1/A (File No.  333-12929) filed on October 16, 1996 and incorporated herein by reference.
3.	Previously filed in the Company's Current Report on Form 8-K filed on July 8, 2004 and incorporated herein by reference.
4.	Previously filed in the Company’s Annual Report on Form 10-K filed on August 29, 2006 and incorporated herein by reference.
5.	Previously filed in the Company’s Current Report on Form 8-K filed on December 18, 2008 and incorporated herein by reference.
6.	Filed herewith.
7.	Furnished herewith.
*	Management contract.

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SIGNATURES

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

SCHIFF NUTRITION INTERNATIONAL, INC.

Date: January 9, 2009	By:	/s/  Bruce J. Wood
		Bruce J. Wood
		President, Chief Executive Officer and Director

Date: January 9, 2009	By:	/s/  Joseph W. Baty
		Joseph W. Baty
		Executive Vice President and Chief Financial Officer

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21

EX-10.2

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Exhibit 10.2

AMENDMENT NO. 3

TO THE

SCHIFF NUTRITION INTERNATIONAL, INC.

2004 INCENTIVE AWARD PLAN

This Amendment No. 3 (“Amendment”) to the Schiff Nutrition International, Inc. 2004 Incentive Award Plan (the “Plan”), is adopted by Schiff Nutrition International, Inc., a Delaware corporation (the “Company”), on December 8, 2008 (the “Effective Date”).  Capitalized terms used in this Amendment and not otherwise defined shall have the same meanings assigned to them in the Plan.

RECITALS

A.  Section 14.1 of the Plan provides that the “Administrator” (as defined in the Plan) may, with the approval of the Board of Directors of the Company (the “Board”), amend the Plan, subject to certain limitations.  Section 12.1 of the Plan authorizes the Board, in its absolute discretion, to exercise any and all rights and duties of the Administrator under the Plan, subject to certain limitations.

B.  The Board deems it to be in the best interests of the Company and its stockholders to amend the Plan.

AMENDMENT

1.   Section 11.1(a) of the Plan shall be amended and restated in its entirety to read as follows:

“(a)  In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization, distribution of Company assets to stockholders (other than normal cash dividends), or any other corporate event affecting the Stock or the share price of the Stock, the Administrator shall make such proportionate adjustments, if any, to reflect such changes with respect to (i) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (iii) the grant or exercise price per share for any outstanding Awards under the Plan.  Any adjustment affecting an Award intended as Qualified Performance-Based Compensation shall be made consistent with the requirements of Section 162(m) of the Code.”

2.   Each and every award agreement evidencing an outstanding award under the Plan is hereby deemed amended consistent with this Amendment.

3.   Except as otherwise expressly set forth in this Amendment, the Plan and each award agreement shall remain in full force and effect in accordance with its terms.

4.   This Amendment shall be governed by, interpreted under, and construed and enforced in accordance with the internal laws, and not the laws relating to conflicts or choice of laws, of the State of Delaware applicable to agreements made and to be performed wholly within the State of Delaware.

(Signature Page Follows)

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I hereby certify that this Amendment was duly adopted by the Board of Directors of Schiff Nutrition International, Inc. on December 8, 2008.

Executed this 8th day of December, 2008.

SCHIFF NUTRITION INTERNATIONAL, INC.

Bruce J. Wood

President and Chief Executive Officer

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EX-10.3

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Exhibit 10.3

AMENDMENT NO. 4

TO THE

1997 EQUITY PARTICIPATION PLAN OF

WEIDER NUTRITION INTERNATIONAL, INC.

This Amendment No. 4 (“Amendment”) to the 1997 Equity Participation Plan of Weider Nutrition International, Inc. (the “Plan”), is adopted by Schiff Nutrition International, Inc., a Delaware corporation, formerly known as Weider Nutrition International, Inc. (the “Company”), on December 8, 2008 (the “Effective Date”).  Capitalized terms used in this Amendment and not otherwise defined shall have the same meanings assigned to them in the Plan.

RECITALS

A.  Section 10.2 of the Plan provides that the Plan may be amended by the Board of Directors of the Company (the “Board”) or the Compensation Committee of the Board, subject to certain limitations.

B.  The Board deems it to be in the best interests of the Company and its stockholders to amend the Plan.

AMENDMENT

1.   The name of the Plan is hereby amended to read in its entirety as the “1997 Equity Participation Plan of Schiff Nutrition International, Inc.”  All references in the Plan to Weider Nutrition International, Inc. shall be replaced with references to Schiff Nutrition International, Inc.

2.   Section 10.3(a) of the Plan shall be amended and restated in its entirety to read as follows:

“(a)  In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization, distribution of Company assets to stockholders (other than normal cash dividends), or any other corporate event affecting the Common Stock or the share price of the Common Stock, the Administrator shall make such proportionate adjustments, if any, to reflect such changes with respect to (i) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Sections 1.2 and 2.1); (ii) the terms and conditions of any outstanding awards under the Plan (including, without limitation, any applicable performance targets or criteria with respect thereto); and (iii) the grant or exercise price per share for any outstanding awards under the Plan.  Any adjustment affecting an award intended to qualify as “qualified performance-based compensation”, as described in Section 162(m)(4)(C) of the Code, shall be made consistent with the requirements of Section 162(m) of the Code.”

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3.   Each and every award agreement evidencing an award outstanding under the Plan is hereby deemed amended consistent with this Amendment.

4.   Except as otherwise expressly set forth in this Amendment, the Plan and each award agreement shall remain in full force and effect in accordance with its terms.

5.   This Amendment shall be governed by, interpreted under, and construed and enforced in accordance with the internal laws, and not the laws relating to conflicts or choice of laws, of the State of Delaware applicable to agreements made and to be performed wholly within the State of Delaware.

(Signature Page Follows)

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I hereby certify that this Amendment was duly adopted by the Board of Directors of Schiff Nutrition International, Inc. on December 8, 2008.

Executed this 8th day of December, 2008.

SCHIFF NUTRITION INTERNATIONAL, INC.

Bruce J. Wood

President and Chief Executive Officer

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EX-10.4

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Exhibit 10.4

EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT

BRUCE J. WOOD

PARTIES

This Employment and Change in Control Agreement (this “Agreement”) is entered into effective as of June 1, 2007 (the “Effective Date”) by and between Schiff Nutrition Group, Inc., a Utah corporation with offices at 2002 South 5070 West, Salt Lake City, Utah 84104-4836 (the “Company”) and Bruce J. Wood residing at 3983 East Alta Approach, Sandy, Utah 84092 (“Executive”).

WITNESSETH:

WHEREAS, the Company and Executive are parties to that certain Employment Agreement dated as of June 1, 2002, that expired on May 31, 2007 (the “Prior Agreement”);

WHEREAS, the Company and Executive are also parties to that certain Change in Control Agreement dated as of October 1, 2005 (the “Change in Control Agreement”); and

WHEREAS, the Company and the Executive desire to enter into a single agreement setting forth the terms of a new employment agreement and amending and restating the terms of the Change in Control Agreement to extend the period during which Executive’s employment will be deemed to be terminated “in connection with a Change in Control,” to clarify the intent of certain provisions, and to make certain other changes.

TERMS OF AGREEMENT

NOW, THEREFORE, in exchange for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Executive agree as follows:

1.      Definitions.  For purposes of this Agreement, the terms listed below shall be defined as indicated.

Affiliate:  A domestic or foreign business entity controlled by, controlling, under common control with, or in joint venture with, the applicable person or entity.

Annual Bonus:  See Section 3.2.

Base Salary:  Except as otherwise noted in the Agreement, the base salary described in Section 3.1 for a 12 month period, as in effect from time to time, but without regard to any reduction in Executive’s base salary that would serve as a basis for a termination of employment by Executive for “Good Reason” pursuant to Section 5.2.

Board:  The Board of Directors of the Company or Schiff Nutrition International, Inc. (“SNI”).

Cause:  See Section 5.1.

Change in Control:  The occurrence of any of the following:

(a)A transaction or series of transactions (other than an offering of SNI Class A common stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act (other than SNI, any of its subsidiaries, an employee benefit plan maintained by SNI or any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, SNI) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of SNI possessing more than 50% of the total combined voting power of SNI’s securities outstanding immediately after such acquisition, excluding any transaction involving a distribution of SNI’s Class A common stock (or any substituted security) held by Weider Health and Fitness (“WHF”) to individual stockholders of WHF or their family trusts if and to the extent the Board finds such distribution to not be within the intent of this subsection (a);

(b)During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board of Directors of SNI together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with SNI to effect a transaction described in subsection (a) or subsection (c)) whose election by the Board of Directors of SNI or nomination for election by SNI’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;

(c)The consummation by SNI (whether directly involving SNI or indirectly involving SNI through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of SNI’s assets or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

(i)Which results in SNI’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of SNI or the person that, as a result of the transaction, controls, directly or indirectly, SNI or owns, directly or indirectly, all or substantially all of SNI’s assets or otherwise succeeds to the business of SNI (SNI or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

(ii)After which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this subsection (c)(ii) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in SNI prior to the consummation of the transaction; or

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(d)SNI’s stockholders approve a liquidation or dissolution of SNI.

Code:  The Internal Revenue Code of 1986, as amended.

Competition Date:   See Section 8.4.

Confidential Information:  All secret proprietary information of the Company and its Affiliates, not otherwise publicly disclosed, whether or not discovered or developed by Executive, known by Executive as a consequence of Executive’s employment with the Company at any time as an employee or agent.  Without limiting the generality of the foregoing, such proprietary information shall include (a) customer lists; (b) acquisition, expansion, marketing, financial and other business information and plans; (c) research and development; (d) computer programs; (e) sources of supply; (f) identity of specialized consultants and contractors and confidential information developed by them for the Company and its Affiliates; (g) purchasing, operating and other cost data; (h) special customer needs, cost and pricing data; (i) manufacturing methods; (j) quality control information; (k) inventory techniques; (l) employee information; any of which information is not generally known in the industries in which the Company and its Affiliates are conducting business or shall at any time during Executive’s employment conduct business including (without limitation) the Nutraceutical Industry.  Confidential Information also includes the overall business, financial, expansion and acquisition plans of the Company and its Affiliates, and includes information contained in manuals, memoranda, projections, minutes, plans, drawings, designs, formula books, specifications, computer programs and records, whether or not legended or otherwise identified by the Company and its Affiliates as Confidential Information, as well as information which is the subject of meetings and discussions and not so recorded. Notwithstanding the foregoing, Confidential Information shall not include (i) information, from a source other than the Company,  which is in Executive’s possession on the date hereof or subsequently becomes available to Executive so long as such information was lawfully obtained and is not, to the knowledge of Executive, subject to another confidentiality agreement or obligation of secrecy to the Company or another person, or (ii) information which becomes generally available to the public other than directly or indirectly as a result of disclosure by Executive.

Closing Price:  The closing price, as reported in The Wall Street Journal, of  a share of Common Stock (or any successor company’s equivalent shares) on the principal exchange on which such shares are traded (currently the New York Stock Exchange), subject to equitable adjustment for stock splits, recapitalizations or similar transactions including stock received or exchanged on any merger, consolidation or similar event.

Common Stock: Class A common stock of SNI.

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Developments:  Those discoveries, inventions, improvements, advances, methods, practices and techniques, concepts and ideas, whether or not patentable, relating to or arising out of Executive’s employment activities with the Company and/or the Products.

Effective Date:  See preamble.

Employment Period:  The period from the Effective Date through the Expiration Date, except as terminated earlier or extended as provided in this Agreement.

Equity Awards:  Restricted stock or other equity awards granted pursuant to the Equity Incentive Plan.

Exchange Act:  The Securities Exchange Act of 1934, as amended.

Expiration Date:  May 31, 2008.

Good Reason:  See Section 5.2.

Good Reason Date:  The day on which the material breach or event occurs resulting in “Good Reason” pursuant to Section 5.2.

Inventions:  Those discoveries, developments, concepts and ideas, whether or not patentable, relating to the present, future and prospective activities and Products and Services of the Company and its Affiliates, which such activities and Products and Services are known to Executive by virtue of Executive’s employment with the Company and its Affiliates.

Equity Incentive Plan:  SNI’s 1997 Equity Participation Plan, SNI’s 2004 Incentive Award Plan, as either may be amended from time to time, and any other plan or arrangement under which SNI (or any successor thereto) or its subsidiaries grant equity-based awards.

Options:  Stock option awards granted pursuant to the Equity Incentive Plan.

Nutraceutical Industry:  The manufacture and sale of nutritional products whether in the form of drinks, bars, herbs, minerals, supplements, powders, vitamins or pills or otherwise but not the food and beverage industry generally.

Products and Services:  All products or services sold, rented, leased, rendered or otherwise made available to its customers by the Company and its Affiliates, or otherwise the subject of the business of the Company and its Affiliates.

Termination Date:  The effective date of the termination of Executive’s employment with the Company for any reason.  In the event of Executive’s death, the Termination Date shall be his date of death.  In the event of termination under Sections 5.1 through 5.4, the Termination Date shall be specified in the written notice.

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Weider Group:  Weider Health and Fitness (or its successor) and its Affiliates.

SNI:  Schiff Nutrition International, Inc., a Delaware corporation and the parent of the Company.

2.      Employment.  Subject to the terms and conditions of this Agreement, Executive hereby agrees to continue his employment as the President and Chief Executive Officer of the Company reporting to the Board and to continue to perform to the best of Executive’s ability, experience and talent those acts and duties and to furnish those services to the Company and its Affiliates in connection with and related to such position as the Board shall from time to time direct, provided such acts and directives are consistent with the duties of a chief executive officer.  Executive shall continue to use Executive’s best and most diligent efforts to promote the interests of the Company and its Affiliates. Executive shall continue to devote his full business time to his duties to the Company. Executive shall continue to be provided with secretarial services, an office and similar support services and facilitates as appropriate to Executive’s position and responsibilities.

3.      Compensation and Benefits; Disability.

3.1.Salary.  During the Employment Period, the Company shall pay Executive a Base Salary at an annual rate of $488,000, payable in equal installments pursuant to the Company’s customary payroll policies in force at the time of payment (but in no event less frequently than monthly), less required payroll deductions. Executive’s Base Salary shall be subject to review and increase in the sole discretion of the Compensation Committee of the Board.

3.2.Annual Bonus.  In addition to Executive’s Base Salary, during the Employment Period Executive shall be eligible to participate in a bonus plan established by the Board or the Board’s Compensation Committee for senior executives.  The bonus plan will correspond to the Company’s fiscal year and payments under the bonus plan shall be paid to Executive within 75 days after the end of the Company’s fiscal year.  Executive’s target bonus percentage shall be equal to 70% of his Base Salary, subject to review and increase in the sole discretion of the Board’s Compensation Committee.  Executive shall not have earned, and shall not be entitled to payment of, the Annual Bonus unless he remains employed through the end of such fiscal year, except as provided in Sections 5.4(c) and 6.1(a)(ii).

3.3.Other Benefits.  Executive shall be entitled, during the Employment Period, to participate, in any life insurance, disability insurance, health insurance or hospital plans or other fringe benefits or benefit plans presently in effect and hereafter maintained by the Company for executives generally. Executive shall also be entitled to an automobile allowance in the amount of $970 per month, subject to review and increase in the sole discretion of the Board’s Compensation Committee.

3.4.Vacation.  Executive shall be entitled to the greater of four weeks vacation time per year, or such amount of vacation time provided to senior executives of the Company under the Company’s vacation pay policies as in effect from time to time.

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3.5.Expenses.  Pursuant to the Company’s customary policies in force at the time of payment, Executive shall be promptly reimbursed, against presentation of vouchers or receipts therefor, for all authorized expenses properly incurred by Executive on the Company’s behalf in the performance of Executive’s duties hereunder.

4.      Employment Period.

4.1.Termination of Employment Period.  The Employment Period shall continue through the Expiration Date unless terminated prior to such date by the earliest of (a) Executive’s discharge for Cause pursuant to Section 5.1, (b) Executive’s discharge without Cause pursuant to Section 5.3, (c) Executive’s death, (d) Executive’s termination because of disability, pursuant to Section 5.4(b) or (e) termination of this Agreement by Executive for Good Reason pursuant to Section 5.2; unless, however, the Employment Period is extended pursuant to the following sentence. The Employment Period shall automatically be extended for up to three successive one year terms unless either party hereto gives written notice (pursuant to Section 12) of non-extension to the other no later than three months prior to the end of the otherwise applicable term. In all events, the post employment provisions of Section 8 shall survive termination of the Employment Period.

5.      Termination of Employment.

5.1.By Company for Cause.  The Company may discharge Executive and terminate this Agreement for Cause upon written notice to Executive.  As used in this Section, “Cause” shall mean any one or more than one of the following:

(a)Gross or willful misconduct of Executive during (i) the Employment Period or (ii) any prior period of employment of Executive in an executive capacity by any person or entity if not disclosed to the Company prior to the execution hereof;

(b)Executive’s conviction or plea of guilty or nolo contendere to a fraud or felony during the Employment Period;

(c)Executive’s substantial and willful failure to follow specific and lawful substantive written directives or resolutions of the Board;

(d)Executive’s willful and knowing violation of any rules or regulations of any governmental or regulatory body, which is materially injurious to the financial condition of the Company;

(e)Executive’s drug, alcohol or substance abuse (to the extent not protected by the Americans with Disabilities Act or similar state law) during the Employment Period; or

(f)any material breach of any of the terms of this Agreement which is not corrected after written notice and a reasonable cure period not to exceed 15 days.

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Upon discharge of Executive for Cause, the Company shall be relieved and discharged of all obligations to make payments to Executive which would otherwise be due under this Agreement, except as to Base Salary earned for actual services rendered prior to the date of discharge.

5.2.By Executive.  Executive may terminate this Agreement for “Good Reason” upon written notice to the Company.  As used in this Section 5.2, “Good Reason” shall mean: (a) the Company’s material breach of any of the terms of this Agreement; or (b) a Change in Control occurs and Executive does not become the chief executive officer of the principal operating business of the surviving entity.

5.3.By Company without Cause.  The Company may, on 30 days written notice to Executive, terminate this Agreement without cause at any time during the Employment Period.

5.4.Termination on Executive’s Death or Disability.

(a)This Agreement and the Employment Period shall terminate, and the Company shall be relieved and discharged of all obligations to make further payment to Executive after the date of the death of Executive, except as described in subsection (c).

(b)If, during the Employment Period, Executive shall become ill, disabled, or otherwise incapacitated so as to be unable regularly to perform Executive’s usual duties for a period in excess of 180 total days during any consecutive 12 months, then the Company shall have the right to terminate this Agreement on 10 days written notice to Executive.

(c)In case of termination of employment described in subsections (a) or (b), the Company shall pay to Executive, or his estate, all salary earned for actual services rendered prior to the Termination Date and, in addition, a pro-rated bonus at the level of 100% of his Base Salary (calculated as the product of his then rate of Base Salary and the fraction of the fiscal year elapsed through the date of termination of Executive’s employment) in a single lump sum within ten (10) business days of the Termination Date. To the extent that the payment of the pro rata bonus is subject to the provisions of Section 409A of the Code, payment of such amount shall be made only if such termination constitutes a Separation from Service (as defined in Section 6.1(a)).

(d)Upon a termination of Executive’s employment pursuant to subsections (a) or (b),  unless otherwise provided in the applicable equity award agreement all Options (or Equity Awards) that would have become exercisable (or vested) on or before the first anniversary of the date of grant following the Termination Date shall become exercisable (or vested) upon the Termination Date.

6.      Payments on Certain Terminations.

6.1.Severance Payments.  Upon a termination of Executive’s employment pursuant to Sections 5.2 or 5.3or a notice of non-renewal given by the Company pursuant to Section 4.1, and in consideration of and subject to Executive’s delivery to the Company of a release that becomes irrevocable within 60 days of Executive’s Separation from Service (as defined below), in form and substance reasonably satisfactory to the Company, of any claims that Executive might have against the Company:

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(a)the Company shall make payments to Executive, as liquidated damages in lieu of all other claims, of an amount equal to the sum of:

(i)Executive’s Base Salary, and

(ii)the greater of Executive’s Annual Bonus for the prior fiscal year or Executive’s Base Salary.

Subject to Section 9, such amount shall be paid in 24 equal semi-monthly installments, without interest, beginning on the first business day of the first month that is at least 60 days following Executive’s separation from service with the Company and/or its Affiliates within the meaning of Section 409A(a)(2)(A)(i) of the Code and the regulations thereunder (the “Separation from Service”).  The Company shall have no obligation to make such payments in the event of a breach by Executive of Executive’s covenants in Section 8.

(b)Unless otherwise provided in the applicable equity award agreement, all Options (or Equity Awards) that would have become exercisable (or vested) on or before the first anniversary of the date of grant following the Termination Date shall become exercisable (or vested) upon the Termination Date; and,

(c)In the event Executive’s employment with the Company is terminated pursuant to Section 5.2 or 5.3, subject to Section 9 of this Agreement, Executive and Executive’s covered dependents shall be entitled to continue to receive, at the expense of the Company (other than Executive’s continued payments of the current portion of such costs for Executive and his covered dependents), and participate in, for a period of 12 months from the Termination Date, any life insurance, disability insurance, dental insurance, health insurance or hospital plans of the Company in effect at the Termination Date (as such plans may be amended from time to time thereafter); provided, that, in the event of Executive’s termination of employment “in connection with a Change in Control” (as defined in Section 7), such benefits shall be substantially similar in the aggregate to (or greater than) the benefits provided to Executive and his covered dependents immediately prior to the Change in Control (or, if greater, the benefits provided to Executive and his covered dependents immediately prior to Executive’s termination of employment).

7.      Change in Control Severance Payment.

In addition to any severance payments Executive may be entitled to receive under Section 6.1, if Executive’s employment with the Company is terminated pursuant to Section 5.2 or 5.3 and such termination is made “in connection with a Change in Control,” then in consideration of and subject to the delivery by Executive to the Company of a release that becomes irrevocable within 60 days of Executive’s Separation from Service, in form and substance reasonably satisfactory to the Company, of any claims that Executive might have against the Company, the Company shall pay to Executive an amount equal to his then current Base Salary (the “CIC Severance Benefit”).  Subject to Section 9 of this Agreement and the execution and non-revocation by Executive of the release described above, the Enhanced Severance Benefit shall be paid to Executive, without interest, in 24

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equal semi-monthly installments, beginning on the first business day of the thirteenth month following Executive’s Separation from Service. For purposes of this Agreement, any termination “in connection with a Change in Control” shall be any termination pursuant to Section 5.2 or 5.3 of the Employment Agreement during the period beginning 90 days prior to and concluding 12 months following the consummation of a Change in Control, provided that the Change in Control is both (i) subject to a definitive written purchase, sale, merger or similar agreement entered into during the period beginning on the Effective Date and ending on the Expiration Date and (ii) consummated on or prior to the expiration of six months following the Expiration Date; provided however, that if the termination occurs prior to a Change in Control, Executive shall only be entitled to receive benefits pursuant to this Section 7 if the Change in Control is consummated and the transaction constitutes a change in the ownership or effective control of the Company (or SNI) or a change in the ownership of a substantial portion of the assets of the Company (or of SNI), as described in Treasury Regulation Section 1.409A-3(i)(5).  The payments provided herein are expressly in addition to and not a substitution for any payments Executive is entitled to receive under Section 6.1 of this Agreement for such terminations.

8.      Parachute Payments.

8.1.If it is determined (as hereafter provided) that any payment, compensation or other benefit provided by the Company (or any successor entity) to or for the benefit of Executive under this Agreement or any other plan, agreement or arrangement (the “Payments”) would be subject to the excise tax imposed by Code Section 4999 (a “Parachute Tax”), or any tax, interest, penalty or other expense incurred by Executive pursuant to Code Section 409A (a “Deferred Compensation Tax”) to which Executive would not have been subject but for the Company’s failure to pay any severance amounts pursuant to the provisions of Section 6, 7 and 9 of this Agreement or other failure to make such payments in a manner that avoids such payments qualifying as deferred compensation under Section 409A of the Code, then Executive shall be entitled to receive an additional payment or payments (a “Gross-Up Payment”) in an amount such that, after payment by Executive of all taxes (including any Parachute Tax or Deferred Compensation Tax) imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Parachute Tax and/or Deferred Compensation Tax imposed upon the Payment.

8.2.Subject to the provisions of Section 8.1 hereof, all determinations required to be made under this Section 8, including whether a Parachute Tax or Deferred Compensation Tax is payable by Executive with regard to a Payment and the amount of such Parachute Tax or Deferred Compensation Tax and whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by the nationally recognized firm of certified public accountants (the “Accounting Firm”) used by the Company (prior to the Change in Control, if applicable), or, if such Accounting Firm declines to serve, the Accounting Firm shall be a nationally recognized firm of certified public accountants selected by the Company.  For purposes of making the calculations required by this Section, the Accounting Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G, 4999 and 409A of the Code, provided that the Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).  The Accounting Firm shall be directed

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by the Company or Executive to submit its preliminary determination and detailed supporting calculations to both the Company and Executive within 15 calendar days after the determination date, if applicable, and any other such time or times as may be requested by the Company or Executive.  If the Accounting Firm determines that any Parachute Tax or Deferred Compensation Tax is payable by Executive with regard to a Payment, the Company shall pay the required Gross-Up Payment to, or for the benefit of, Executive within five business days after receipt of such determination and calculations (and in any event, such Gross-Up Payment shall be paid to Executive by the end of the calendar year next following the calendar year in which Executive remits the Parachute Tax or Deferred Compensation Tax to the appropriate tax authorities).  If the Accounting Firm determines that no Parachute Tax or Deferred Compensation Tax is payable by Executive with regard to a Payment, it shall, at the same time as it makes such determination, furnish Executive with an opinion that he has substantial authority not to report any Parachute Tax or Deferred Compensation Tax on his federal tax return.  Any good faith determination by the Accounting Firm as to whether a Gross-Up Payment is to be made with regard to a Payment and the amount of the Gross-Up Payment shall be binding upon the Company and Executive absent a contrary determination by the Internal Revenue Service or a court of competent jurisdiction; provided, however, that no such determination shall eliminate or reduce the Company’s obligation to provide any Gross-Up Payments that shall be due as a result of such contrary determination.  As a result of the uncertainty in the application of Code Section 4999 or Code Section 409A at the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made hereunder.  In the event that the Company exhausts or fails to pursue its remedies pursuant to Section 8.6 hereof and Executive thereafter is required to make a payment of any Parachute Tax or Deferred Compensation Tax, Executive shall direct the Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its determination and detailed supporting calculations to both the Company and Executive as promptly as possible.  Any such Underpayment shall be promptly paid by the Company to, or for the benefit of, Executive within five business days after receipt of such determination and calculations (and in any event, such Underpayment shall be paid to Executive by the end of the calendar year next following the calendar year in which Executive remits the related Parachute Tax or Deferred Compensation Tax to the appropriate tax authorities).

8.3.The Company and Executive shall each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determination contemplated by Section 8.2 hereof.

8.4.The federal tax returns filed by Executive (or any filing made by a consolidated tax group which includes the Company) shall be prepared and filed on a basis consistent with the determination of the Accounting Firm with respect to the Parachute Tax or Deferred Compensation Tax payable by Executive.  Executive shall make proper payment of the amount of any Parachute Tax or Deferred Compensation Tax, and at the request of the Company, provide to the Company true and correct copies (with any amendments) of his federal income tax return as filed with the Internal Revenue Service, and such other documents reasonably requested by the Company, evidencing such payment.  If prior to the filing of Executive’s federal income tax return, the Accounting Firm determines in good faith that the amount of the Gross-Up Payment should be reduced, Executive shall within five business days pay to the Company the amount of such reduction.

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8.5.The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by Sections 8.2 and 8.4 hereof shall be borne by the Company.  If such fees and expenses are initially advanced by Executive, the Company shall reimburse Executive the full amount of such fees and expenses within five business days after receipt from Executive of a statement therefor and reasonable evidence of his payment thereof.

8.6.In the event that the Internal Revenue Service claims that any payment or benefit received under this Agreement constitutes an “excess parachute payment” within the meaning of Code Section 280G(b)(1), Executive shall notify the Company in writing of such claim.  Such notification shall be given as soon as practicable but not later than 10 business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  Executive shall not pay such claim prior to the expiration of the 30 day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and reasonably satisfactory to Executive; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including, but not limited to, additional interest and penalties and related legal, consulting or other similar fees) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for and against for any Parachute Tax or income tax or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.

8.7.The Company shall direct Executive with regard to all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive on an interest-free basis (to the extent permitted by applicable law), and shall indemnify and hold Executive harmless, on an after tax basis, from any Parachute Tax or Deferred Compensation Tax (or other tax including interest and penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that if Executive is required to extend the statue of limitations to

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enable the Company to contest such claim, Executive may limit this extension solely to such contested amount.  The Company’s right to direct Executive with regard to the contest shall be limited to issues with respect to whether and the extent to which a payment or benefit is an “excess parachute payment” pursuant to Code Section 280G(b)(1), the imposition of the Parachute Tax under Code Section 4999 and the imposition of the Deferred Compensation Tax under Code Section 409A, and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.  In addition, the Company shall not direct Executive to take a position or agree to any final resolution if such position or resolution could reasonably be expected to adversely affect Executive unrelated to matters covered hereto, unless Executive consents in writing to such position or agreement.

8.8.If, after the receipt by Executive of an amount advanced by the Company in connection with the contest of the Parachute Tax or Deferred Compensation Tax claim, Executive receives any refund with respect to such claim, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto); provided, however, if the amount of that refund exceeds the amount advanced by the Company Executive may retain such excess.  If, after the receipt by Executive of an amount advanced by the Company in connection with a Parachute Tax or Deferred Compensation Tax claim, a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to direct Executive to contest the denial of such refund prior to the expiration of 30 days after such determination such advance shall be deemed to be in consideration for services rendered after the Termination Date.

9.      Code Section 409A.  Notwithstanding any provision to the contrary in the Agreement, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (a) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (b) the date of Executive’s death.  Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section 9 shall be paid in a lump sum to Executive, and any remaining payments due under the Agreement shall be paid as otherwise provided herein.  To the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A of the Code, any reimbursements payable to Executive shall be paid to Executive no later than December 31 of the year following the year in which the cost was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and  Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.  For purposes of Section 409A of the Code, Executive’s right to receive the payments of compensation pursuant to the Agreement shall be treated as a right to receive a series of separate payments and accordingly, each payment shall at all times be considered a separate and distinct payment.

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10.    Inventions, Confidential Information and Related Matters.

10.1.Assignment of Inventions.  Executive hereby assigns and transfers to the Company any and all works of authorship, inventions and innovations (whether deemed patentable or not), which relate to the business of the Company and which are made by Executive (or by Executive jointly with others) during the term of Executive’s employment and/or within one year after the termination of Executive’s employment with the Company or any of its Affiliates, if such work of authorship, invention, or innovation is based upon or relates to Confidential Information acquired by Executive during the term of employment with the Company or any of its Affiliates.  For purposes of copyright law, any such work of authorship shall be deemed a work made for hire.  Executive agrees to promptly disclose to the Company and its Affiliates all such works of authorship, inventions, and innovations.  Executive agrees to execute any document reasonably requested by the Company and/or its Affiliates that is necessary or appropriate to document, perfect, or effect the intention of this Section 10 or to secure any patent, copyright registration (as a work made for hire), trademark registration or other protection thereof for the Company and its Affiliates.

10.2.Restrictions on Use and Disclosure.  Except as otherwise required by Executive’s employment duties for the Company or any of its Affiliates, Executive shall maintain in strict confidence and shall not directly, indirectly or otherwise, use, publish, disclose or disseminate, or use for Executive’s benefit or the benefit of any person, firm, corporation or entity, any Confidential Information of or relating to the Company or its Affiliates (or which the Company or its Affiliates has a right to use).  For purposes of this Agreement “Confidential Information” shall mean all confidential and proprietary information of the Company and its parents, subsidiaries and affiliates, whether in oral, written or electronic form or obtained by observation or otherwise, whether or not legended or otherwise identified as confidential or proprietary information, and whether or not discovered or developed by Executive or known or obtained by Executive as a consequence of Executive’s employment with the Company or any of its Affiliates at any time as employee or agent.  Confidential Information shall include, without limitation, all scientific, clinical, engineering, technical, process, method or commercial data, information or know-how, relating to the research, development, manufacture, distribution, sale or marketing of any vitamins, minerals, nutritional supplements, sports nutrition products, beverages, food bars, powdered food supplements, or other products or product lines of the Company and its Affiliates.  Confidential Information shall also include, without limitation, all customer lists, pricing data, sources of supply and related supplier and vendor information, purchasing, operating or other cost data, manufacturing methods, quality control information, regulatory information, employee and compensation information, financial data, trade secrets, formulas, intellectual property, manuals, financial data, forecasts, business plans, expansion or acquisition plans and product development information and plans.  Notwithstanding the foregoing, Confidential Information shall not include (i) information, from a source other than the Company and its Affiliates, which is in Executive’s possession on the date hereof or subsequently becomes available to Executive so long as such information was lawfully obtained and is not, to the knowledge of Executive, subject to another confidentiality agreement or obligation of secrecy to the Company, its Affiliates or another person, or (ii) information which becomes generally available to the public other than directly or indirectly as a result of disclosure by Executive or another party bound by legal obligations prohibiting such disclosure.

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10.3.Return of Documents and Materials.  Upon termination of Executive’s employment, Executive shall forthwith deliver to the Company all Confidential Information and Inventions embodied in any form, including all copies, then in Executive’s possession or control, whether prepared by Executive or others, as well as all other Company property in Executive’s possession or control.

10.4.Competitive Activities.  From the date hereof and (a) during the term of this Agreement and (b) thereafter until the “Competition Date” which shall be

(i)in the case of terminations of Executive’s employment pursuant to Sections 5.2 or 5.3, the 182nd day following the Termination Date, or

(ii)in the case of any other termination of Executive’s employment, the first anniversary of the Termination Date,

Executive shall not, directly or indirectly, within the territorial United States, become an employee or consultant or otherwise render services to, lend funds to, serve on the board of, invest in (other than as a 1% or less shareholder of a publicly-traded corporation) or guarantee the debts of, any of: Leiner Health Products, Perrigo, NBTY, Nutraceutical, Inc. or Pharmavite or any newly created, successor or acquired businesses of same which competes with the Company in the Nutraceutical Industry or any business newly created by Executive following termination of employment which competes with the Company in the Nutraceutical Industry; provided, however, that in no event shall the restrictions set forth in this Section 10.4 prohibit Executive from providing services to, lending funds to, serving on the board of, investing in or guaranteeing the debts of any entity which is an Affiliate of the Company at the time such action is taken.  The Board may in its sole discretion give Executive written approval to engage in such activities or render such services after termination of this Agreement if Executive and such prospective firm or business organization gives the Company written assurances, satisfactory to the Board in its sole discretion, that the integrity of the Confidential Information, the Inventions and the good will of the Company and its majority owned Affiliates will not be jeopardized by such employment.  Executive shall, for a period of 12 months after the Competition Date notify the Company of any change in address and identify each subsequent employment or business activity in which Executive shall engage during such 12 months, stating the name and address of the employer or business organization and the nature of Executive’s position.

10.5.Solicitation of Executives.  From the date hereof until 12 months after the termination of Executive’s employment with the Company, Executive shall not, without the prior written approval of the Board of the Company, directly or indirectly, solicit, raid, entice or induce any person who presently is or at any time during the term hereof shall be an employee of the Company or its majority owned Affiliates and who was or is eligible for a grant under the Equity Incentive Plan or any successor plan, to become employed by any other person, firm or corporation in any business in competition with the Company.

11.    No Other Contracts.  Executive represents and warrants that neither the execution and delivery of this Agreement by Executive nor the performance by Executive of Executive’s obligations hereunder, shall constitute a default under or a breach of the terms of any other agreement, indenture or contract to which Executive is a party or by which Executive is bound, nor shall the execution and delivery of this Agreement by Executive or the performance of Executive’s duties and obligations hereunder give rise to any claim or charge against either Executive or the Company based upon any other contract, indenture or agreement to which Executive is a party or by which Executive is bound.

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12.    Notices.  Any notices or communication given by any party hereto to the other party shall be in writing and personally delivered or mailed by registered or certified mail, return receipt requested, postage prepaid.  Notices shall be addressed to the parties at the addresses set forth above.  Mailed notices shall be deemed given when received.  Any person entitled to receive notice may designate in writing, by notice to the others, such other address to which notices to such party shall thereafter be sent.

13.    Miscellaneous.

13.1.Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersede any and all prior agreements of the parties with respect to such subject matter.

13.2.Amendment; Waiver.  This Agreement may not be amended, supplemented, canceled or discharged, except by written instrument executed by the party affected thereby.  No failure to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof.  No waiver of any preceding or succeeding breach of this Agreement.

13.3.Binding Effect; Successors; Assignment.

(a)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise, including, without limitation, any successor due to a Change in Control) to the business or assets of the Company, by agreement in form and substance reasonably satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place.  This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including, without limitation, any person directly or indirectly acquiring the business or assets of the Company in a transaction constituting a Change in Control (and such successor shall thereafter be deemed the “Company” for the purpose of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.

(b)This Agreement will inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees, but will not otherwise be assignable, transferable or delegable by Executive.

13.4.Headings.  The headings contained in this Agreement (except those in Section 1) are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

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13.5.Governing Law; Interpretation.  This Agreement shall be construed in accordance with and governed for all purposes by the laws and public policy of the State of Utah applicable to contracts executed and to be wholly performed within such State.  Service of process in any dispute shall be effective (a) upon the Company, if served on any senior officer of the Company; (b) upon Executive, if served at Executive’s residence last known to the Company.  Executive acknowledges that breach of Sections 10.1 through 10.5 would entail irreparable injury and that, in addition to the Company’s other express and implied remedies, the Company shall be entitled to injunctive and other equitable relief to prevent any actual, intended or likely such breach.

13.6.Further Assurances.  Each party agrees at any time, and from time-to-time, to execute, acknowledge, deliver and perform, and/or cause to be executed, acknowledged, delivered and performed, all such further acts, deeds assignments, transfers, conveyances, powers of attorney and/or assurances as may be necessary, and/or proper to carry out the provisions and/or intent of this Agreement.

13.7.Gender; Singular/Plural.  In this Agreement, the use of one gender (e.g., “he”, “she” and “it”) shall mean each other gender; and the singular shall mean the plural, and vice versa, all as the context may require.

13.8.Severability.  The parties acknowledge that the terms of this Agreement are fair and reasonable at the date signed by them.  However, in light of the possibility of a change of conditions or differing interpretations by a court of what is fair and reasonable, the parties stipulate as follows: if any one or more of the terms, provisions, covenants and restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; further, if any one or more of the provisions contained in this Agreement shall for any reason be determined by a court of competent jurisdiction to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed, by limiting or reducing it, so as to be enforceable to the extent compatible with then applicable law.

13.9.Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original.

13.10.Indemnification.  The Company indemnifies Executive to the full extent available under the Company’s Articles of Incorporation and Bylaws.

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EXECUTION

The parties, intending to be legally bound, executed this Agreement as of the date first above written, whereupon it became effective in accordance with its terms.

BRUCE J. WOOD ___________________________________	SCHIFF NUTRITION GROUP, INC. By: ___________________________________
	Title: __________________________________

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EX-10.5

Back to 10Q

Exhibit 10.5

AMENDED AND RESTATED AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT (this “Agreement”) is entered into effective as of October 27, 2008 (the “Effective Date”) by and between __________, an individual residing at ____________, Utah 84____ (“Executive”), and Schiff Nutrition Group, Inc., a Utahcorporation with offices located at 2002 South 5070 West, Salt Lake City, Utah 84104 (the “Company”).

This Agreement amends and restates that certain Agreement, dated as of September 21, 2007, by and between Executive and the Company (the “Prior Agreement”).

RECITALS

WHEREAS, the Company and Executive desire to amend and restate the Prior Agreement to extend the term of the Agreement, to clarify the intent of certain provisions, and to make certain other changes.

TERMS OF AGREEMENT

NOW, THEREFORE, in exchange for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Executive agree as follows:

1.Certain Defined Terms.  In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:

(a)“Affiliate” shall mean a domestic or foreign business entity controlled by, controlling, under common control with, or in a joint venture with, the applicable person or entity.

(b)“Board” shall mean the Board of Directors of the Company.

(c)“Cause” shall mean Executive’s:

(i)Gross or willful misconduct of Executive at any time during Executive’s employment by the Company, or any such misconduct during any prior period of employment in an executive capacity with any person or entity if not disclosed to the Company in writing prior to the execution hereof;

(ii)Substantial and willful failure to perform specific and lawful directives of the Board or a superior employee of the Company;

(iii)Willful and knowing violation of any rules or regulations of any governmental or regulatory body, which is materially injurious to the financial condition of the Company;

(iv)Conviction of or plea of guilty or nolo contendere to a felony or fraud during Executive’s employment with the Company;

(v)Drug, alcohol or substance abuse (to the extent not inconsistent with the Americans with Disability Act or similar state law); or

(vi)Material breach of the terms of this Agreement which is not corrected after written notice and a reasonable cure period not to exceed 15 days

(d)“Change in Control” means and includes each of the following:

(i)A transaction or series of transactions (other than an offering of SNI Class A common stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than SNI, any of its subsidiaries, an employee benefit plan maintained by SNI or any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, SNI) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of SNI possessing more than 50% of the total combined voting power of SNI’s securities outstanding immediately after such acquisition, excluding any transaction involving a distribution of SNI’s Class A common stock (or any substituted security) held by Weider Health and Fitness (“WHF”) to individual stockholders of WHF or their family trusts if and to the extent the Board finds such distribution to not be within the intent of this Section 1(d)(i);

(ii)During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board of Directors of SNI together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with SNI to effect a transaction described in Section 1(d)(i) or Section 1(d)(iii)) whose election by the Board of Directors of SNI or nomination for election by SNI’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;

(iii)The consummation by SNI (whether directly involving SNI or indirectly involving SNI through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of SNI’s assets or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

(A)Which results in SNI’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of SNI or the person that, as a result of the transaction, controls, directly or indirectly, SNI or owns, directly or indirectly, all or substantially all of SNI’s assets or otherwise succeeds to the business of SNI (SNI or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

(B)After which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this Section 1(d)(iii)(B) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in SNI prior to the consummation of the transaction; or

(iv)SNI’s stockholders approve a liquidation or dissolution of SNI.

(e)“Code” shall mean Internal Revenue Code of 1986, as amended.

(f)“Good Reason” shall mean any one of the following conduct or events which occurs without Executive’s consent, and is not cured by the Company within 30 days after Executive’s notice in writing to the Company within 90 days of the first happening of the conduct or event (and Executive terminates employment with the Company no later than 180 days after the first happening of such conduct or event specified in the notice):

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(i)the Company’s material diminution of Executive’s authority, responsibilities, duties, or compensation; or

(ii)any relocation of Executive’s principal place of business to a location that represents a material change in geographic location (including, without limitation, any involuntary relocation that is more than 50 miles from Executive’s current principal place of business with the Company).

(g)“Separation from Service” shall mean Executive’s separation of service with the Company and/or its Affiliates within the meaning of Section 409A(a)(2(A)(i) of the Code and the regulations thereunder.

(h)“Termination Date” shall mean the effective date of the termination of Executive’s employment with the Company for any reason.

(i)“SNI” shall mean Schiff Nutrition International, Inc., a Delaware corporation and the parent of the Company.

2.Term of Agreement. The term of this Agreement shall commence on the Effective Date and shall continue through the full payment of all severance and other benefits to Executive in accordance with the terms and conditions of this Agreement.  Subject to Section 3(b), this Agreement shall be effective with respect to (a) the termination of Executive’s employment with the Company other than for Cause only if such termination occurs during the period commencing on the Effective Date and ending on September 30, 2010 or (b) the termination of Executive’s employment with the Company for Good Reason only if the event or conduct giving rise to Good Reason occurs during the period commencing on the Effective Date and ending on September 30, 2010.  Notwithstanding the foregoing sentence, this Agreement shall be effective with respect to any “termination in connection with a Change in Control” (as defined in Section 3(b) below) if the Change in Control is (i) subject to a definitive written purchase, sale, merger or similar agreement entered into on or before September 30, 2010 and (ii) consummated on or prior to the expiration of six months following September 30, 2010. During the term of this Agreement, Executive shall be employed as an at-will employee of the Company.

3.Severance Payment/Benefits.

(a)If Executive’s employment as an at-will employee of the Company shall be terminated either by the Company other than for Cause or by Executive for Good Reason, then in consideration of and subject to the delivery by Executive to the Company of a release that becomes irrevocable within 60 days of Executive’s Separation from Service, in form and substance reasonably satisfactory to the Company, of any claims that Executive might have against the Company, the Company shall pay Executive a severance benefit in an amount equal to the sum of (a) his then annual rate of base salary (but without regard to any reduction in Executive’s base salary that would serve as a basis for a termination of employment by Executive for Good Reason) and (b) the greater of (i) his annual bonus paid or payable relating to the Company’s most recently completed fiscal year, (ii) the average of his annual bonuses paid or payable relating to the Company’s three most recently completed fiscal years, or (iii) 30% of his then annual rate of base salary.  Subject to Section 4 of this Agreement, such amount shall be paid, without interest, in 24 equal semi-monthly installments payable beginning on the first business day of the first month that is at least 60 days following Executive’s Separation from Service.

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(b)If Executive’s employment as an at-will employee of the Company shall be terminated “in connection with a Change in Control” either by the Company other than for Cause or by Executive for Good Reason, then in consideration of and subject to the delivery by Executive to the Company of a release that becomes irrevocable within 30 days of Executive’s Separation from Service, in form and substance reasonably satisfactory to the Company, of any claims that Executive might have against the Company, and in lieu of the provisions of Section 3(a) above, the Company shall pay Executive a severance benefit in an amount equal to 150% of the sum of (a) his then annual rate of base salary  (but without regard to any reduction in Executive’s base salary that would serve as a basis for a termination of employment by Executive for Good Reason) and (b) the greater of (i) his annual bonus paid or payable relating to the Company’s most recently completed fiscal year, (ii) the average of his annual bonuses paid or payable relating to the Company’s three most recently completed fiscal years, or (iii) 50% of his then annual rate of base salary.  Subject to Section 4 of this Agreement, such amount shall be paid, without interest, in 36 equal semi-monthly installments beginning on the first business day of the first month that is at least 30 days after Executive’s Separation from Service.  For purposes of this Agreement, any termination “in connection with a Change in Control” shall mean any termination either by the Company other than for Cause or by Executive for Good Reason during the period beginning 90 days prior to and concluding 12 months following the consummation of a Change in Control; provided however, that if the termination occurs prior to a Change in Control, Executive shall only be entitled to receive benefits pursuant to this Section 3(b) if the Change in Control is consummated and the transaction constitutes a change in the ownership or effective control of the Company (or SNI) or a change in the ownership of a substantial portion of the assets of the Company (or of SNI), as described in Treasury Regulation Section 1.409A-3(i)(5).

(c)Upon the occurrence of a Change in Control, unless otherwise provided in the applicable equity award agreement, all restricted stock, options to purchase shares of Class A Common Stock of SNI or other equity awards granted to Executive under SNI’s 1997 Equity Participation Plan or 2004 Incentive Plan, as either may be amended from time to time, shall become vested and exercisable as of the effective date of the Change in Control.

(d)In the event Executive’s employment as an at-will employee of the Company shall be terminated pursuant to Section 3(a), subject to Section 4 of this Agreement, Executive and Executive’s covered dependents shall be entitled to continue to receive, at the expense of the Company (other than Executive’s continued payments of the current portion of such costs for Executive and his covered dependents), and participate in, for a period of 12 months from the Termination Date, any life insurance, dental insurance, disability insurance, health insurance or hospital plans of the Company in effect at the time of termination (as such plans may be amended from time to time thereafter).  In the event Executive’s employment as an at-will employee of the Company shall be terminated pursuant to Section 3(b), subject to Section 4 of this Agreement, Executive shall be entitled to continue to receive, at the expense of the Company (other than Executive’s continued payments of his current portion of such costs), and participate in, for a period of 18 months from the Termination Date, any life insurance, dental insurance, disability insurance, health insurance or hospital plans of the Company in effect at the time of termination (as such plans may be amended from time to time thereafter); provided, that, in the event of Executive’s termination of employment “in connection with a Change in Control” (as defined in Section 3), such benefits shall be substantially similar in the aggregate to (or greater than) the benefits provided to Executive and his covered dependents immediately prior to the Change in Control (or, if greater, the benefits provided to Executive and his covered dependents immediately prior to Executive’s termination of employment).

4.Code Section 409A.  Notwithstanding any provision to the contrary in the Agreement, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the benefits to which Executive is entitled

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under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (a) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (b) the date of Executive’s death.  Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section 4 shall be paid in a lump sum to Executive, and any remaining payments due under the Agreement shall be paid as otherwise provided herein.  To the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A of the Code, any reimbursements payable to Executive shall be paid to Executive no later than December 31 of the year following the year in which the cost was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and  Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.  For purposes of Section 409A of the Code, Executive’s right to receive the payments of compensation pursuant to the Agreement shall be treated as a right to receive a series of separate payments and accordingly, each payment shall at all times be considered a separate and distinct payment.

5.Parachute Payments.

(a)If it is determined (as hereafter provided) that any payment, compensation or other benefit provided by the Company (or any successor entity) to or for the benefit of Executive under this Agreement or any other plan, agreement or arrangement (the “Payments”) would be subject to the excise tax imposed by Code Section 4999 (a “Parachute Tax”), or any tax, interest, penalty or other expense incurred by Executive pursuant to Code Section 409A (a “Deferred Compensation Tax”) to which Executive would not have been subject but for the Company’s failure to pay any severance amounts pursuant to the provisions of Section 3 and Section 4 of this Agreement or other failure to make such payments in a manner that avoids such payments qualifying as deferred compensation under Section 409A of the Code, then Executive shall be entitled to receive an additional payment or payments (a “Gross-Up Payment”) in an amount such that, after payment by Executive of all taxes (including any Parachute Tax or Deferred Compensation Tax) imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Parachute Tax or Deferred Compensation Tax imposed upon the Payment.

(b)Subject to the provisions of Section 5(a) hereof, all determinations required to be made under this Section 5, including whether a Parachute Tax or Deferred Compensation Tax is payable by Executive with regard to a Payment and the amount of such Parachute Tax or Deferred Compensation Tax and whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by the nationally recognized firm of certified public accountants (the “Accounting Firm”) used by the Company (prior to the Change in Control, if applicable), or, if such Accounting Firm declines to serve, the Accounting Firm shall be a nationally recognized firm of certified public accountants selected by the Company.  For purposes of making the calculations required by this Section, the Accounting Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G, 4999 and 409A of the Code, provided that the Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).  The Accounting Firm shall be directed by the Company or Executive to submit its preliminary determination and detailed supporting calculations to both the Company and Executive within 15 calendar days after the determination date, if applicable, and any other such time or times as may be requested by the Company or Executive.  If the Accounting Firm determines that any Parachute Tax or Deferred Compensation Tax is payable by Executive with regard to a Payment, the Company shall pay the required Gross-Up Payment to, or for the benefit of, Executive within five business days after receipt of such determination and calculations (and in any event, such Gross-Up Payment shall be paid to Executive by the end of the calendar year next following the calendar year in which Executive remits the Parachute Tax or Deferred Compensation Tax to appropriate tax authorities).  If the Accounting Firm determines that no Parachute Tax or Deferred Compensation Tax is

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payable by Executive with regard to a Payment, it shall, at the same time as it makes such determination, furnish Executive with an opinion that he has substantial authority not to report any Parachute Tax or Deferred Compensation Tax on his federal tax return.  Any good faith determination by the Accounting Firm as to whether a Gross-Up Payment is to be made with regard to a Payment and the amount of the Gross-Up Payment shall be binding upon the Company and Executive absent a contrary determination by the Internal Revenue Service or a court of competent jurisdiction; provided, however, that no such determination shall eliminate or reduce the Company’s obligation to provide any Gross-Up Payments that shall be due as a result of such contrary determination.  As a result of the uncertainty in the application of Code Section 4999 or Code Section 409A at the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made hereunder.  In the event that the Company exhausts or fails to pursue its remedies pursuant to Section 5(f) hereof and Executive thereafter is required to make a payment of any Parachute Tax or Deferred Compensation Tax, Executive shall direct the Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its determination and detailed supporting calculations to both the Company and Executive as promptly as possible.  Any such Underpayment shall be promptly paid by the Company to, or for the benefit of, Executive within five business days after receipt of such determination and calculations (and in any event, such Underpayment shall be paid to Executive by the end of the calendar year next following the calendar year in which Executive remits the related Parachute Tax or Deferred Compensation Tax to the appropriate tax authorities).

(c)The Company and Executive shall each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determination contemplated by Section 5(b) hereof.

(d)The federal tax returns filed by Executive (or any filing made by a consolidated tax group which includes the Company) shall be prepared and filed on a basis consistent with the determination of the Accounting Firm with respect to the Parachute Tax or Deferred Compensation Tax payable by Executive.  Executive shall make proper payment of the amount of any Parachute Tax or Deferred Compensation Tax, and at the request of the Company, provide to the Company true and correct copies (with any amendments) of his federal income tax return as filed with the Internal Revenue Service, and such other documents reasonably requested by the Company, evidencing such payment.  If prior to the filing of Executive’s federal income tax return, the Accounting Firm determines in good faith that the amount of the Gross-Up Payment should be reduced, Executive shall within five business days pay to the Company the amount of such reduction.

(e)The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by Sections 5(b) and (d) hereof shall be borne by the Company.  If such fees and expenses are initially advanced by Executive, the Company shall reimburse Executive the full amount of such fees and expenses within five business days after receipt from Executive of a statement therefor and reasonable evidence of his payment thereof.

(f)In the event that the Internal Revenue Service claims that any payment or benefit received under this Agreement constitutes an “excess parachute payment” within the meaning of Code Section 280G(b)(1), Executive shall notify the Company in writing of such claim.  Such notification shall be given as soon as practicable but not later than 10 business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  Executive shall not pay such claim prior to the expiration of the 30 day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive

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shall (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company and reasonably satisfactory to Executive; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including, but not limited to, additional interest and penalties and related legal, consulting or other similar fees) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for and against for any Parachute Tax or income tax or other tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.

(g)The Company shall direct Executive with regard to all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive on an interest-free basis (to the extent permitted by applicable law), and shall indemnify and hold Executive harmless, on an after tax basis, from any Parachute Tax or Deferred Compensation Tax (or other tax including interest and penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that if Executive is required to extend the statue of limitations to enable the Company to contest such claim, Executive may limit this extension solely to such contested amount.  The Company’s right to direct Executive with regard to the contest shall be limited to issues with respect to whether and the extent to which a payment or benefit is an “excess parachute payment” pursuant to Code Section 280G(b)(1), the imposition of the Parachute Tax under Code Section 4999 and the imposition of the Deferred Compensation Tax under Code Section 409A, and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.  In addition, the Company shall not direct Executive to take a position or agree to any final resolution if such position or resolution could reasonably be expected to adversely affect Executive unrelated to matters covered hereto, unless Executive consents in writing to such position or agreement.

(h)If, after the receipt by Executive of an amount advanced by the Company in connection with the contest of the Parachute Tax or Deferred Compensation Tax claim, Executive receives any refund with respect to such claim, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto); provided, however, if the amount of that refund exceeds the amount advanced by the Company Executive may retain such excess.  If, after the receipt by Executive of an amount advanced by the Company in connection with a Parachute Tax or Deferred Compensation Tax claim, a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to direct Executive to contest the denial of such refund prior to the expiration of 30 days after such determination such advance shall be deemed to be in consideration for services rendered after the Termination Date.

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6.Confidential Information and Inventions.

(a)Except as otherwise required by Executive’s employment duties for the Company, Executive shall maintain in strict confidence and shall not directly, indirectly or otherwise, use, publish, disclose or disseminate, or use for Executive’s benefit or the benefit of any person, firm, corporation or entity, any Confidential Information of or relating to the Company or its affiliates (or which the Company or its affiliates has a right to use).  For purposes of this Agreement, “Confidential Information” shall mean all confidential and proprietary information of the Company and its parents, subsidiaries and affiliates, whether in oral, written or electronic form or obtained by observation or otherwise, whether or not legended or otherwise identified as confidential or proprietary information, and whether or not discovered or developed by Executive or known or obtained by Executive as a consequence of Executive’s employment with the Company at any time as employee or agent.  Confidential Information shall include, without limitation, all scientific, clinical, engineering, technical, process, method or commercial data, information or know-how, relating to the research, development, manufacture, distribution, sale or marketing of any vitamins, minerals, nutritional supplements, sports nutrition products, beverages, food bars, powdered food supplements, or other products or product lines of the Company.  Confidential Information shall also include, without limitation, all customer lists, pricing data, sources of supply and related supplier and vendor information, purchasing, operating or other cost data, manufacturing methods, quality control information, regulatory information, employee and compensation information, financial data, trade secrets, formulas, intellectual property, manuals, financial data, forecasts, business plans, expansion or acquisition plans and product development information and plans.  Notwithstanding the foregoing, Confidential Information shall not include (i) information, from a source other than the Company,  which is in Executive’s possession on the date hereof or subsequently becomes available to Executive so long as such information was lawfully obtained and is not, to the knowledge of Executive, subject to another confidentiality agreement or obligation of secrecy to the Company or another person, or (ii) information which becomes generally available to the public other than directly or indirectly as a result of disclosure by Executive or another party bound by legal obligations prohibiting such disclosure.

(b)Executive hereby assigns and transfers to the Company any and all works of authorship, inventions and innovations (whether deemed patentable or not), which relate to the business of the Company and which are made by Executive (or by Executive jointly with others) during the term of Executive’s employment and/or within one year after the termination of Executive's employment with the Company, if such work of authorship, invention, or innovation is based upon or relates to Confidential Information acquired by Executive during the term of employment with the Company.  For purposes of copyright law, any such work of authorship shall be deemed a work made for hire.  Executive agrees to promptly disclose to the Company all such works of authorship, inventions, and innovations.  Executive agrees to execute any document reasonably requested by the Company that is necessary or appropriate to document, perfect, or effect the intention of this Section 6 or to secure any patent, copyright registration (as a work made for hire), trademark registration or other protection thereof for the Company.

(c)Upon termination of Executive’s employment, Executive shall immediately deliver to the Company all Confidential Information embodied in any form (including any form of computer media), including all copies, then in Executive’s possession or control, whether prepared by Executive or others, as well as other Company property in Executive’s possession or control.

7.Successors and Binding Agreement.

(a)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise, including, without limitation, any  successor due to a Change in Control) to the business or assets of the Company, by agreement in form and substance reasonably satisfactory to Executive, expressly assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place.

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This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including, without limitation, any person directly or indirectly acquiring the business or assets of the Company in a transaction constituting a Change in Control (and such successor shall thereafter be deemed the “Company” for the purpose of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.

(b)This Agreement will inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees, but will not otherwise be assignable, transferable or delegable by Executive.

8.Validity.  If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal.

9.Governing Law; Jurisdiction.  The laws of the state of Utah shall govern the interpretation, validity and performance of the terms of this Agreement, regardless of the law that might be applied under principles of conflicts of law.  Any suit, action or proceeding against Executive, with respect to this Agreement, or any judgment entered by any court in respect of any of such, may be brought in any court of competent jurisdiction in the State of Utah, and Executive hereby submits to the jurisdiction of such courts for the purpose of any such suit, action, proceeding or judgment.

10.Notices.  Any notices or communications given by any party hereto to the other party shall be in writing and personally delivered or mailed by registered or certified mail, return receipt requested, postage prepaid.  Notices shall be addressed to the parties at the addresses set forth above.   Notices shall be deemed given when received.  Either party may designate in writing, by notice to the others, such other address to which notices to such party shall thereafter be sent.

11.Further Assurances.  Each party agrees at any time, and from time-to-time, to execute, acknowledge, deliver and perform, and/or cause to be executed, acknowledged, delivered and performed, all such further acts, deeds assignments, transfers, conveyances, powers of attorney and/or assurances as may be necessary, and/or proper to carry out the provisions and/or intent of this Agreement.

12.Amendment; Waiver; Entire Agreement.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Executive and the Company.  No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes any and all prior agreements of the parties with respect to such subject matter.

13.Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

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IN WITNESS WHEREOF, the parties have caused this Amended and Restated Agreement to be duly executed and delivered as of the date first set forth above.

SCHIFF NUTRITION GROUP, INC.

By:

Title:

EXECUTIVE

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EX-10.6

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Exhibit 10.6

CONSULTING AGREEMENT

This Consulting Agreement (this “Agreement”) is made and entered into as of November 3, 2008, by and between Schiff Nutritional Group, Inc., a Utah corporation (the “Company”), and Daniel Thomson, a Utah resident (“Consultant”).

Introduction.  Consultant is the former Executive Vice President of Business Development, General Counsel and Corporate Secretary of the Company, having resigned from such offices as of November 3, 2008 (the “Resignation Date”).  The Company wishes to retain Consultant to provide various services that will, among other things, facilitate the transition in the executive leadership of the Company.  Based on such premise, and for certain good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, the Company and Consultant, intending to be legally bound, hereby agree as follows:

1.Appointment and Acceptance.  On the terms and subject to the conditions set forth herein, the Company hereby appoints, engages and retains Consultant as a consultant, and Consultant hereby ac­cepts such appoint­ment.  During the term of this Agreement (as described in Section 2), Consultant agrees to use his best efforts to advance the interests of the Company and its affiliates and to facilitate the successful transition of the individual who has succeeded Consultant as the Company’s General Counsel and Corporate Secretary.

2.Term.  The term of this Agreement (“Term”) shall begin on the date hereof and shall end on August 15, 2009, unless terminated earlier in accordance with the provisions of Section 7.

3.Consulting Services.  Consultant shall perform such consul­ting services for the Company as the Company may reasonably request from time to time during the term of this Agreement.  Consultant shall perform the consulting services on such dates, at such times, and in such locations as the Company may reasonably request; provided, however, that Consultant shall not be required to occupy an office or keep hours at the Company’s place of business on a regular basis.  Consultant shall devote such time as is reasonably necessary to perform the consulting services in a timely manner.  Consultant shall report directly to the Chief Executive Officer of the Company.  Upon request by the Chief Executive Officer from time to time, Consultant shall provide the Chief Executive Officer or his designees with briefings, reports, updates and other information relating to the consulting services performed by Consultant for the Company.  In addition, Consultant shall make himself available to travel on the Company’s business if reasonably requested by the Chief Executive Officer and any travel expenses associated therewith shall be reimbursed to the extent provided by Section 5(b).

4.Non-Compete; Non-Solicitation; Confidentiality; etc.  In exchange for the payments and other benefits set forth in this Agreement, which the Consultant acknowledges is good, valuable and sufficient consideration for the covenants set forth in this Section 4, the parties agree as follows:

(a)The Consultant shall not, at any time during the period beginning on the date hereof and ending on the six month anniversary of such date (the “Restricted Period”) directly or indirectly engage in, have any equity interest in, or manage or operate any business listed on Exhibit A (each a “Competitive Business”), unless the Consultant shall have first notified the Company and received written permission from the Company to engage in, obtain an equity interest in (other than as a 1% or less shareholder of a publicly-traded corporation) or manage or operate such Competitive Business.  The Consultant acknowledges that compliance with this Paragraph 4(a) is necessary to protect the business and good will of the Company and that a breach of any of these provisions will irreparably and continually damage the Company, for which money damages may not be adequate.

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(b)During the Restricted Period, the Consultant will not (and will not permit any employee directly reporting to him in at a level equivalent to a vice president level employee of the Company or above) solicit to employ or actually employ any of the officers or vice president level employees of the Company (other than (i) general solicitations for employees in the ordinary course of business which are directed at the public in general and/or found in general publications for employees, or (ii) solicitations through a recruiting or search firm using a data base of candidates without targeting the Company or specific Company employees); provided, however, that Consultant may employ any employee of the Company who contacts Consultant on his or her own initiative without any direct or indirect solicitation, encouragement, or discussions by Consultant.

(c)For the purpose of protecting the Company’s legitimate business and property interests, Consultant hereby agrees that, without the prior written consent of the Company, he shall not, directly or indirectly, disclose to any person or entity outside of the Company other than the Company’s representatives, or use for any purpose other than to further the business interests of the Company, (a) any Confidential Information other than a Trade Secret during the Term and anytime thereafter or (b) any Trade Secret from and after the date of this Agreement.  As used in this Agreement, the term “Confidential Information” means any and all information concerning the Company and its past, present and future business and affairs and any other information that Consultant becomes aware of by virtue of his performance of consulting services under this Agreement; and the term “Trade Secret” means any and all Confidential Information that is a trade secret with the meaning of any applicable trade secret or similar law.  Notwithstanding the foregoing, Consultant shall be permitted to disclose any Confidential Information that he is required to disclose pursuant to any applicable law or legal process.  In such event, before making any such disclosure, Consultant shall promptly notify the Company thereof and, at the Company’s expense, shall reasonably consult with the Company on the advisability of taking any step to resist or narrow such disclosure and shall reasonably cooperate with the Company in any attempt to obtain a protective order or other appropriate remedy or assurance that the disclosed Confidential Information will be afforded confidential treatment.  If such protective order or other appropriate remedy or assurance is not obtained, Consultant shall disclose only that portion of the Confidential Information that he is required to disclose pursuant to the applicable law or legal process.

5.Compensation.  In consideration of the consulting services performed by Consultant under this Agreement and the non-compete, non-solicitation, and confidentiality provisions of Section 4, the Company shall:

(a)pay to Consultant (i) a monthly fee of $37,694.28, which shall be payable on or before the last day of each month, for the period beginning November 3, 2008 and ending July 31, 2009, and (ii) a final payment of $18,847.14 on or before August 15, 2009; and

(b)promptly reimburse Consultant for all reasonable and necessary expenses that he incurs and pays in performing the consulting services, provided that such expenses are documented by receipts or other appropriate evidence relating thereto in accordance with the Company’s customary procedures.

6.Representations and Warranties.  Consultant represents and warrants that (a) Consultant has all necessary legal capacity to execute and deliver this Agreement and to perform his obligations hereunder; (b) Consultant has had an opportunity to consult with counsel of his choosing with respect to this Agreement and all of the terms and provisions hereof; and (c) Consultant is entering into this Agreement voluntarily and with complete knowledge as to the terms and provisions set forth herein.

7.Termination.  This Agreement may be terminated prior to the expiration of its term only as follows:

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(a)by the mutual written agreement of the parties, in which case the termination will be effective on the date set forth in such agreement;

(b)upon the death or disability of Consultant, in which case the termination will be effective on the date of his death or disability; or

(c)by the Consultant or the Company if the Consultant shall accept employment with a subsequent employer.

Notwithstanding the termination of this Agreement pursuant to this Section 7, and in consideration for the restrictions and provisions set forth in Section 4, the Company shall continue to compensate Consultant pursuant to Section 5 through and including August 15, 2009.

8.Independent Contractor Status.  It is expressly understood and agreed that (a) the duties of Consultant under this Agreement are not those that ordinarily would attend a contract of employment; (b) Consultant is engaged by the Company as an independent contractor and not as an employee of the Company; (c) Consultant shall provide all of the services required under this Agreement in the capacity of an independent contractor; and (d) the Company shall have no control over, or supervisory power as to, the manner or method of performance by Consultant of the services provided for herein.  The Company shall not withhold any amount from the compensation paid to Consultant under this Agreement as either a federal or state income tax withholding or an employee contribution to any federal or state insurance program.  Subject to the provisions of the release agreement (particularly Section 11) dated as of November 3, 2008 between Consultant and the Company (the “Release Agreement”), Consultant shall be solely responsible for the determination and payment of any federal and state income taxes and insurance program contributions attributable to the compensation received pursuant to this Agreement and Consultant shall comply with all applicable laws related to such taxes and contributions.

9.General Provisions.

(a)Entire Agreement.  This Agreement and the Release Agreement supersede all prior negotiations, understandings, agreements, representations, warranties, and courses of conduct and dealing, whether written or oral, between the parties with respect to its subject matter, and constitute a complete and exclusive statement of the terms and conditions of the agreement between the parties with respect to its subject matter.  This Agreement is not a contract of employment between Consultant and the Company, and Consultant and the Company hereby agree and acknowledge that this Agreement does not impose any obligation on the Company to offer employment to the Consultant at any time.

(b)Notices.  All notices, consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a party when (1) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid), (2) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment, or (3) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses, facsimile numbers or e-mail addresses and marked to the attention of the person (by name or title) designated below, or to such other address, facsimile number, e-mail address or person as a party may designate by notice to the other party:

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Company:	Schiff Nutrition Group, Inc.
	2002 South 5070 West
	Salt Lake City, UT   84104
	Attention: Bruce Wood
	Telephone:  (801) 975–5053
	Fax:  (801) 886-2504
Consultant:	Daniel Thomson
	1468 East Michigan Ave
	Salt Lake City, UT  84105
	Telephone:  (801) 583-0766

(c)Remedies Cumulative.  The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither any failure nor any delay by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege shall preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.

(d)Waiver.  To the maximum extent permitted by applicable law, no claim or right arising from this Agreement can be discharged by a party, in whole or in part, by a waiver of the claim or right unless such waiver is in writing and is signed by the waiving party, and no waiver that may be given by a party shall be applicable except in the specific instance for which it is given.

(e)Amendment.  This Agreement may not be amended, supplemented, or otherwise modified except by a written agreement executed by all of the parties.

(f)Assignment; Successors.  This Agreement is personal to Consultant and, therefore, Consultant may not assign this Agreement or any of his rights or obligations hereunder to any person or entity.  Without the written consent of Consultant, the Company may only assign this Agreement and its rights and obligations hereunder to any successor entity or direct subsidiary or parent entity, in which event this Agreement shall apply to, be binding in all respects upon, and inure to the benefit of the successors and assignees of the Company.

(g)Severability.  If a court of competent jurisdiction holds that any provision of this Agreement or portion thereof is illegal, invalid or unenforceable, then such provision shall be modified automatically to the extent necessary to make such provision fully legal, valid or enforceable. If such court does not modify any such provision or portion thereof as contemplated herein, but instead declares it to be wholly illegal, invalid or unenforceable, then such provision or portion thereof shall be severed from this Agreement, this Agreement and the rights and obligations of the parties shall be construed as if this Agreement did not contain such severed provision or portion thereof, and this Agreement otherwise shall remain in full force and effect.

(h)Construction. The headings of sections in this Agreement are provided for convenience only and shall not affect its construction or interpretation.

(i)Governing Law.  This Agreement shall be governed by, construed under, and enforced in accordance with the laws of the State of Utah in effect from time to time without regard to conflicts-of-laws principles that would require the application of any other law.

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(j)Execution of Agreement.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

(k)Authority.  Consultant hereby acknowledges and agrees that he shall have no right or authority to enter into any agreements or other arrangements in the name or on behalf of the Company, or to assume or create any obligation or liability of any kind whatsoever, express or implied, in the name or on behalf of the Company.

(l)Arbitration.  Any dispute or controversy arising under, out of, in connection with or in relation to this Agreement and Consultant’s services to the Company or termination by the Company shall be finally determined and settled by arbitration before a single arbitrator in the city of Salt Lake City, Utah in accordance with the rules and procedures of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction thereof.

[signature page follows]

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IN WITNESS WHEREOF, this Agreement is executed and delivered by the parties on the date first set forth above.

COMPANY:

Schiff Nutrition Group, Inc.

By:

Bruce Wood

President & CEO

CONSULTANT:

Daniel Thomson

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EX-31.1

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Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Bruce J. Wood, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Schiff Nutrition International, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 9, 2009	By:	/s/ Bruce J. Wood
		Bruce J. Wood
		Chief Executive Officer

EX-31.2

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Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Joseph W. Baty, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Schiff Nutrition International, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 9, 2009	By:	/s/ Joseph W. Baty
		Joseph W. Baty
		Chief Financial Officer

EX-32.1

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Exhibit 32.1

The following certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350 and in accordance with SEC Release No. 33-8238. These certifications shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. §1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Schiff Nutrition International, Inc., a Delaware corporation (the “Company”), hereby certifies, to his knowledge, that:

(i)the accompanying Quarterly Report on Form 10-Q of the Company for the period ended November 30, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: January 9, 2009	By:	/s/ Bruce J. Wood
		Bruce J. Wood
		Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Schiff Nutrition International, Inc. and will be retained by Schiff Nutrition International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. §1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Schiff Nutrition International, Inc. a Delaware, corporation (the “Company”), hereby certifies, to his knowledge, that:

(iii)the accompanying Quarterly Report on Form 10-Q of the Company for the period ended November 30, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(iv)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: January 9, 2009	By:	/s/ Joseph W. Baty
		Joseph W. Baty
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Schiff Nutrition International, Inc. and will be retained by Schiff Nutrition International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.