10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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

for the Quarterly Period Ended June 30, 2008

Commission file number 000-23731

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

Delaware	87-0515089
(State of incorporation)	(IRS Employer Identification No.)
1400 Kearns Boulevard, 2nd Floor, Park City, Utah	84060
(Address of principal executive office)	(Zip code)

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

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

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

Large accelerated filer o Accelerated filer ý Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

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

        At July 31, 2008, the registrant had 10,842,606 shares of common stock outstanding.

NUTRACEUTICAL INTERNATIONAL CORPORATION

INDEX

Description			Page No.
Part I.	Financial Information		3
	Item 1.	Financial Statements (unaudited)	3
		Condensed Consolidated Balance Sheets—September 30, 2007 and June 30, 2008	3
		Condensed Consolidated Statements of Operations and Comprehensive Income—Three Months and Nine Months Ended June 30, 2007 and 2008	4
		Condensed Consolidated Statements of Cash Flows—Nine Months Ended June 30, 2007 and 2008	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
	Item 4.	Controls and Procedures	20
Part II.	Other Information		21
	Item 1.	Legal Proceedings	21
	Item 1A.	Risk Factors	21
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
	Item 6.	Exhibits	21

2

PART I—FINANCIAL INFORMATION

Item 1.    Financial Statements

NUTRACEUTICAL INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars in thousands)

			September 30, 2007(1)		June 30, 2008
ASSETS
Current assets
	Cash		$	4,605	$	5,314
	Accounts receivable, net			11,549		11,014
	Inventories, net			30,261		33,905
	Prepaid expenses and other current assets			3,523		3,108
	Deferred income taxes			1,596		1,546
		Total current assets		51,534		54,887
Property, plant and equipment, net				39,506		49,975
Goodwill				38,978		40,980
Intangible assets, net				12,753		13,691
Other non-current assets, net				718		531
Deferred income taxes, net				2,913		1,859
		Total assets	$	146,402	$	161,923
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable		$	12,322	$	11,908
	Accrued expenses			7,953		6,215
		Total current liabilities		20,275		18,123
Long-term debt				20,000		30,000
Other non-current liabilities				208		923
		Total liabilities		40,483		49,046
Stockholders' equity
	Common stock			111		108
	Additional paid-in capital			34,135		30,284
	Retained earnings (Note 9)			70,812		81,261
	Accumulated other comprehensive income			861		1,224
		Total stockholders' equity		105,919		112,877
		Total liabilities and stockholders' equity	$	146,402	$	161,923

(1)

The condensed consolidated balance sheet as of September 30, 2007 has been prepared using information from the audited financial statements at that date.

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

3

NUTRACEUTICAL INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME

(unaudited)

(dollars in thousands, except per share data)

		Three months ended June 30,					Nine months ended June 30,
		2007		2008			2007		2008
Net sales		$	38,694	$	40,454		$	116,646	$	125,986
Cost of sales			17,889		18,489			53,193		57,192
	Gross profit		20,805		21,965			63,453		68,794
Operating expenses
	Selling, general and administrative		15,730		16,933			45,688		50,539
	Amortization of intangible assets		121		185			230		522
Income from operations			4,954		4,847			17,535		17,733
Interest and other (income)/expense, net			352		223			814		1,008
Income before provision for income taxes			4,602		4,624			16,721		16,725
Provision for income taxes			1,749		1,771			6,354		6,309
Net income		$	2,853	$	2,853		$	10,367	$	10,416
Other comprehensive income/(loss)
	Foreign currency translation adjustment, net of tax		156		(47	)		175		363
Comprehensive income		$	3,009	$	2,806		$	10,542	$	10,779
Net income per common share
	Basic	$	0.26	$	0.26		$	0.94	$	0.94
	Diluted		0.25		0.26			0.92		0.93
Weighted average common shares outstanding
	Basic		11,047,027		10,964,696			11,027,237		11,043,026
	Dilutive effect of stock options		204,378		132,804			207,538		138,583
	Diluted		11,251,405		11,097,500			11,234,775		11,181,609

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

4

NUTRACEUTICAL INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(dollars in thousands)

				Nine months ended June 30,
				2007			2008
Cash flows from operating activities
Net income				$	10,367		$	10,416
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization				3,501			4,256
	Amortization of deferred financing fees				42			42
	Losses on disposals of property and equipment				4			2
	Deferred income taxes				999			1,167
	Changes in assets and liabilities, net of effects of acquisitions
		Accounts receivable, net			399			1,048
		Inventories, net			1,315			(1,468	)
		Prepaid expenses and other current assets			(1,619	)		462
		Other non-current assets, net			(74	)		(291	)
		Accounts payable			65			(414	)
		Accrued expenses			678			(763	)
		Other non-current liabilities			(47	)		(40	)
			Net cash provided by operating activities		15,630			14,417
Cash flows from investing activities
Proceeds from sale of property and equipment					—			4
Acquisitions of businesses, net of cash acquired					(30,715	)		(5,869	)
Purchases of property and equipment					(6,743	)		(14,061	)
			Net cash used in investing activities		(37,458	)		(19,926	)
Cash flows from financing activities
Proceeds from long-term debt					31,500			14,500
Payments on long-term debt					(8,500	)		(4,500	)
Proceeds from issuances of common stock					1,151			344
Purchases of common stock for treasury					—			(4,217	)
Tax benefit from stock option exercises					320			19
			Net cash provided by financing activities		24,471			6,146
Effect of exchange rate changes on cash					47			72
Net increase in cash					2,690			709
Cash at beginning of period					2,834			4,605
Cash at end of period				$	5,524		$	5,314

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

5

NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(dollars in thousands, except per share data)

1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

        In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all necessary adjustments (consisting of normal recurring accruals) to present fairly the consolidated financial position of Nutraceutical International Corporation and its subsidiaries (the "Company") as of June 30, 2008, the results of their operations for the three months and nine months ended June 30, 2007 and 2008 and their cash flows for the nine months ended June 30, 2007 and 2008, in conformity with accounting principles generally accepted in the United States of America for interim financial information applied on a consistent basis. Results for the three and nine months ended June 30, 2008 are not necessarily indicative of the results to be expected for the full fiscal year.

        Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. Accordingly, these financial statements should be read in conjunction with the Company's Form 10-K for the Fiscal Year Ended September 30, 2007, which was filed with the Securities and Exchange Commission on November 29, 2007.

2. ACCOUNTS RECEIVABLE, NET

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

	September 30, 2007			June 30, 2008
Accounts receivable	$	13,738		$	13,170
Less allowances		(2,189	)		(2,156	)
	$	11,549		$	11,014

3. INVENTORIES, NET

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

	September 30, 2007			June 30, 2008
Raw materials	$	11,501		$	12,387
Work-in-process		6,063			7,441
Finished goods		14,497			15,690
		32,061			35,518
Less reserves		(1,800	)		(1,613	)
	$	30,261		$	33,905

6

NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

4. GOODWILL

        The change in the carrying amount of goodwill from September 30, 2007 to June 30, 2008 was as follows:

		Goodwill
Balance as of September 30, 2007		$	38,978
	Goodwill attributable to fiscal 2008 acquisitions		1,862
	Purchase accounting adjustments related to prior acquisitions		(70	)
	Foreign currency translation adjustment		210
Balance as of June 30, 2008		$	40,980

5. INTANGIBLE ASSETS

        The carrying amounts of intangible assets at September 30, 2007 and June 30, 2008 were as follows:

		September 30, 2007							June 30, 2008
		Gross Carrying Amount (1)		Accumulated Amortization (1)			Net Carrying Amount		Gross Carrying Amount (1)		Accumulated Amortization (1)			Net Carrying Amount		Weighted-Average Amortization Period (Years)
Intangible assets subject to amortization:
	Trademarks/trade names/patents	$	444	$	(324	)	$	120	$	479	$	(356	)	$	123		5
	Customer relationships/distribution rights		2,943		(209	)		2,734		3,434		(616	)		2,818		7
	Developed software and technology		772		(142	)		630		772		(257	)		515		5
			4,159		(675	)		3,484		4,685		(1,229	)		3,456
Intangible assets not subject to amortization:
	Trademarks/trade names/licenses		9,269		—			9,269		10,235		—			10,235
		$	13,428	$	(675	)	$	12,753	$	14,920	$	(1,229	)	$	13,691

(1)

Amounts include the impact of foreign currency translation adjustments.

7

NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

5. INTANGIBLE ASSETS (Continued)

        Estimated future amortization expense related to the June 30, 2008 net carrying amount of $3,456 for intangible assets subject to amortization is as follows:

Year Ending September 30,	Estimated Amortization Expense
2008(1)	$	184
2009		735
2010		728
2011		717
2012		556
Thereafter		536
	$	3,456

(1)

Estimated amortization expense for the year ending September 30, 2008 includes only amortization to be recorded after June 30, 2008.

6. SHARE REPURCHASES

        During the three months ended June 30, 2008, the Company purchased and retired 161,127 shares of common stock for an aggregate price of $2,097. During the nine months ended June 30, 2008, the Company purchased and retired a total of 326,353 shares of common stock for an aggregate price of $4,217. There were no shares repurchased or retired during the nine months ended June 30, 2007. As of June 30, 2008, the Company was permitted to purchase up to 586,712 additional shares under its approved purchase plan.

7. STOCK OPTIONS

        The following table summarizes stock option activity during the nine months ended June 30, 2008:

	Number of Options			Weighted-Average Exercise Price
Options outstanding and exercisable at September 30, 2007		750,963		$	10.06
Exercised		(22,081	)		10.74
Forfeited or expired		(149,065	)		17.17
Options outstanding and exercisable at June 30, 2008		579,817		$	8.20

        During the nine months ended June 30, 2008, options to purchase 103,415 shares of common stock expired. These options were originally issued on February 20, 1998.

        Options to purchase 138,515 and 52,500 shares of common stock for the three months ended June 30, 2007 and 2008, respectively, and options to purchase 138,665 and 89,455 shares of common stock for the nine months ended June 30, 2007 and 2008, respectively, were excluded from the

8

NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

7. STOCK OPTIONS (Continued)

computation of diluted earnings per share because the exercise prices of these stock options were greater than the average share price of the Company's common stock and, therefore, the effect would have been antidilutive.

        During the nine months ended June 30, 2008, the Company received proceeds of $237 related to the exercise of stock options and optionees realized an aggregate pre-tax gain of $50 from these stock option exercises.

8. OPERATING SEGMENTS

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

        Net sales attributed to customers in the United States and foreign countries for the three and nine months ended June 30, 2007 and 2008 were as follows:

	Three months ended June 30,				Nine months ended June 30,
	2007		2008		2007		2008
United States	$	34,142	$	35,869	$	104,246	$	110,678
Foreign countries		4,552		4,585		12,400		15,308
	$	38,694	$	40,454	$	116,646	$	125,986

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

        The Company's net sales by product group for the three and nine months ended June 30, 2007 and 2008 were as follows:

	Three months ended June 30,				Nine months ended June 30,
	2007		2008		2007		2008
Branded nutritional supplements and other natural products	$	34,390	$	36,127	$	103,729	$	112,939
Other(1)		4,304		4,327		12,917		13,047
	$	38,694	$	40,454	$	116,646	$	125,986

(1)

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

9

NUTRACEUTICAL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(dollars in thousands, except per share data)

9. INCOME TAXES

        The Financial Accounting Standards Board ("FASB") issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") in June 2006. FIN 48 provides specific guidance on the financial statement recognition, measurement, reporting and disclosure of uncertain tax positions taken or expected to be taken in a tax return. The Company adopted FIN 48 as of October 1, 2007. As a result of the adoption of FIN 48, the Company recognized a $33 decrease in the liability for unrecognized tax benefits, which was recorded as an increase to the October 1, 2007 balance of retained earnings in accordance with the provisions of FIN 48.

        As of October 1, 2007, the Company's liability related to unrecognized tax benefits was $169. Of this amount, approximately $155 would impact the Company's effective tax rate, if recognized. The Company also had $29 in accrued interest at October 1, 2007 related to unrecognized tax benefits. There were no significant changes in the Company's unrecognized tax benefits during the three and nine months ended June 30, 2008 and the Company does not anticipate any significant changes in unrecognized tax benefits during the remainder of fiscal 2008. The liability related to unrecognized tax benefits was recorded as a component of other non-current liabilities in the Company's Condensed Consolidated Balance Sheets. Interest and penalties related to unrecognized tax benefits are recorded as a component of interest and other (income)/expense in the Company's Condensed Consolidated Statements of Operations and Comprehensive Income.

        The Company files income tax returns in the United States ("U.S.") federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. The Company is no longer subject to U.S. federal tax examinations for fiscal years before 2005. The Company is no longer subject to examination in any U.S. state jurisdiction or foreign jurisdiction for fiscal years prior to 2002.

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

General

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

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

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

        We own neighborhood natural food markets, which operate under the trade names The Real Food Company™, Thom's Natural Foods™ and Cornucopia Community Market™. We also own health food stores, which operate under the trade names Fresh Vitamins™, Granola's™ and Pilgrim's Natureway™.

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

Critical Accounting Policies

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

        Our estimates and judgments related to our critical accounting policies, including factors and assumptions considered in making these estimates and judgments, did not vary significantly for the periods presented and had no material impact on the consolidated financial statements as reported. Our critical accounting policies include the following:

Accounts Receivable—Provision is made for estimated bad debts based on periodic analysis of individual customer balances, including an evaluation of days sales outstanding, payment history, recent payment trends and perceived credit worthiness. If general economic conditions and/or customer

11

financial condition were to change, additional provisions for bad debts may be required, which could have a material impact on the consolidated financial statements.

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

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

        We evaluate the recoverability of our property, plant and equipment in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. We review property, plant and equipment for possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. We measure recoverability of the asset by comparison of its carrying amount to the future undiscounted cash flows we expect the asset to generate. If we consider the asset to be impaired, we measure the amount of any impairment as the difference between the carrying amount and the fair value of the impaired asset.

Goodwill and Intangible Assets—Statement of Financial Accounting Standards No. 141, Business Combinations, and Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), require estimates and judgments in determining the initial recognition and measurement of goodwill and intangible assets, including factors and assumptions used in determining fair values and useful lives. Intangible assets with finite useful lives are amortized, while intangible assets with indefinite useful lives are not amortized. In addition, SFAS 142 requires ongoing, periodic impairment testing, which relies on such factors and assumptions as identified reporting units, as well as expected future net cash flows relative to recorded book values. If an asset impairment were identified, a loss would be recorded, which could have a material impact on the consolidated financial statements.

Revenue Recognition—Revenue is recognized in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition, which states that revenue should be recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the product has been shipped and the customer takes ownership and assumes the risk of loss; (3) the selling price is fixed or determinable; and (4) collection of the resulting receivable is reasonably assured. We believe that these criteria are satisfied upon shipment from our facilities or, in the case of our neighborhood natural food markets and health food stores, at the point of sale within these stores. Revenue is reduced by provisions for estimated returns and allowances, which are based on historical averages that have not varied significantly for the periods presented, as well as specific known claims, if any. No other significant deductions from revenue must be estimated at the point in time that revenue is recognized.

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Results of Operations

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

		Three Months Ended June 30,						Nine Months Ended June 30,
		2007			2008			2007			2008
Net sales			100.0	%		100.0	%		100.0	%		100.0	%
	Cost of sales		46.2	%		45.7	%		45.6	%		45.4	%
Gross profit			53.8	%		54.3	%		54.4	%		54.6	%
	Selling, general and administrative		40.7	%		41.8	%		39.2	%		40.1	%
	Amortization of intangible assets		0.3	%		0.5	%		0.2	%		0.4	%
Income from operations			12.8	%		12.0	%		15.0	%		14.1	%
	Interest and other (income)/expense, net		0.9	%		0.5	%		0.7	%		0.8	%
Income before provision for income taxes			11.9	%		11.5	%		14.3	%		13.3	%
	Provision for income taxes		4.5	%		4.4	%		5.4	%		5.0	%
Net income			7.4	%		7.1	%		8.9	%		8.3	%
EBITDA(1)			16.0	%		15.7	%		18.0	%		17.5	%

(1)

See "—EBITDA."

Comparison of the Three Months Ended June 30, 2008 to the Three Months Ended June 30, 2007

         Net Sales.    Net sales increased by $1.8 million, or 4.5%, to $40.5 million for the three months ended June 30, 2008 ("third quarter of fiscal 2008") from $38.7 million for the three months ended June 30, 2007 ("third quarter of fiscal 2007"). Net sales of branded nutritional supplements and other natural products increased by $1.7 million, or 5.1%, to $36.1 million for the third quarter of fiscal 2008 compared to $34.4 million for the third quarter of fiscal 2007. The increase in net sales of branded nutritional supplements and other natural products was primarily related to the net sales contributions of the two businesses acquired during fiscal 2008 and the two businesses acquired during the third quarter of fiscal 2007, partially offset by a decrease in sales volume of branded products to certain customers. The impact on net sales related to price changes was not material. Other net sales remained relatively flat at $4.4 million for the third quarter of fiscal 2008 compared to $4.3 million for the third quarter of fiscal 2007. Management believes that the VMS Industry continues to have low growth rates and remains very competitive.

         Gross Profit.    Gross profit increased by $1.2 million, or 5.6%, to $22.0 million for the third quarter of fiscal 2008 from $20.8 million for the third quarter of fiscal 2007. This increase in gross profit was primarily attributable to the increase in net sales. As a percentage of net sales, gross profit increased to 54.3% for the third quarter of fiscal 2008 compared to 53.8% for the third quarter of fiscal 2007. The increase in gross profit as a percentage of net sales was primarily attributable to changes in sales mix related to the fiscal 2007 acquisitions.

         Selling, General and Administrative.    Selling, general and administrative expenses increased by $1.2 million, or 7.6%, to $16.9 million for the third quarter of fiscal 2008 from $15.7 million for the third quarter of fiscal 2007. As a percentage of net sales, selling, general and administrative expenses increased to 41.8% for the third quarter of fiscal 2008 compared to 40.7% for the third quarter of fiscal 2007. This increase in selling, general and administrative expenses was primarily attributable to

13

operational and transition costs related to acquired businesses, primarily the two businesses acquired in fiscal 2008 and the two businesses acquired during the third quarter of fiscal 2007.

         Amortization of Intangibles.    Amortization of intangibles was $0.2 million for the third quarter of fiscal 2008 compared to approximately $0.1 million for the third quarter of fiscal 2007. For each period, amortization expense was primarily related to intangible assets recorded in connection with acquisitions.

         Interest and Other (Income)/Expense, Net.    Net interest and other (income)/expense was $0.2 million for the third quarter of fiscal 2008 and $0.4 million for the third quarter of fiscal 2007 and primarily consisted of interest expense on indebtedness under our revolving credit facility, with the decrease being primarily related to a reduction in interest rates.

         Provision for Income Taxes.    Our effective tax rate was 38.3% for the third quarter of fiscal 2008 and 38.0% for the third quarter of fiscal 2007. In each period, our effective tax rate was higher than the federal statutory rate primarily due to state taxes.

Comparison of the Nine Months Ended June 30, 2008 to the Nine Months Ended June 30, 2007

         Net Sales.    Net sales increased by $9.4 million, or 8.0%, to $126.0 million for the nine months ended June 30, 2008 from $116.6 million for the nine months ended June 30, 2007. Net sales of branded nutritional supplements and other natural products increased by $9.3 million, or 8.9%, to $113.0 million for the nine months ended June 30, 2008 compared to $103.7 million for the nine months ended June 30, 2007. The increase in net sales of branded nutritional supplements and other natural products was primarily related to the net sales contributions of the two businesses acquired during fiscal 2008 and the six businesses acquired during fiscal 2007, partially offset by a decrease in sales volume of branded products to certain customers. The impact on net sales related to price changes was not material. Other net sales remained relatively flat at $13.0 million for nine months ended June 30, 2008 compared to $12.9 million for the nine months ended June 30, 2007. Management believes that the VMS Industry continues to have low growth rates and remains very competitive.

         Gross Profit.    Gross profit increased by $5.3 million, or 8.4%, to $68.8 million for the nine months ended June 30, 2008 from $63.5 million for the nine months ended June 30, 2007. This increase in gross profit was primarily attributable to the increase in net sales. As a percentage of net sales, gross profit remained relatively flat at 54.6% for the nine months ended June 30, 2008 compared to 54.4% for the nine months ended June 30, 2007.

         Selling, General and Administrative.    Selling, general and administrative expenses increased by $4.8 million, or 10.6%, to $50.5 million for the nine months ended June 30, 2008 from $45.7 million for the nine months ended June 30, 2007. As a percentage of net sales, selling, general and administrative expenses increased to 40.1% for the nine months ended June 30, 2008 compared to 39.2% for the nine months ended June 30, 2007. This increase in selling, general and administrative expenses was primarily attributable to operational and transition costs related to the two businesses acquired in fiscal 2008 and the six businesses acquired in fiscal 2007.

         Amortization of Intangibles.    Amortization of intangibles was $0.5 million for the nine months ended June 30, 2008 compared to approximately $0.2 million for the nine months ended June 30, 2007. For each period, amortization expense was primarily related to intangible assets recorded in connection with acquisitions.

         Interest and Other (Income)/Expense, Net.    Net interest and other (income)/expense was $1.0 million for the nine months ended June 30, 2008 and $0.8 million for the nine months ended June 30, 2007 and primarily consisted of interest expense on indebtedness under our revolving credit facility, with the increase being primarily related to additional borrowings for the fiscal 2007 and fiscal 2008 acquired businesses, partially offset by a reduction in interest rates.

14

         Provision for Income Taxes.    Our effective tax rate was 37.7% for the nine months ended June 30, 2008 and 38.0% for the nine months ended June 30, 2007. In each period, our effective tax rate was higher than the federal statutory rate primarily due to state taxes.

EBITDA

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

•

We acknowledge that plant and equipment (while less important in our line of business due to outsourcing alternatives) are necessary to earn revenue based on our current business model.



•

Our use of EBITDA as a measure of operating performance is not based on any belief about the reasonableness of excluding depreciation and amortization when measuring financial performance.



•

Our use of EBITDA is supported by the importance of EBITDA to the following key stakeholders:  



•

Analysts—who estimate our projected EBITDA and other EBITDA-based metrics in their independently developed financial models for investors;



•

Creditors—who evaluate our operating performance based on compliance with certain EBITDA-based debt covenants;



•

Investment Bankers—who use EBITDA and other EBITDA-based metrics in their written evaluations and comparisons of companies within our industry; and



•

Board of Directors and Executive Management—who use EBITDA as an essential metric for evaluating management performance relative to our operating budget and bank covenant compliance, as well as our ability to service debt and raise capital for growth opportunities, including acquisitions, which are a critical component of our stated strategy. Historically, we have recorded a monthly accrual for incentive compensation as a percentage of EBITDA, which has been paid out to executive management, as well as other employees, upon completion of our annual audit.

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

	Three Months Ended June 30,				Nine Months Ended June 30,
	2007		2008		2007		2008
Net income	$	2,853	$	2,853	$	10,367	$	10,416
Provision for income taxes		1,749		1,771		6,354		6,309
Interest and other (income)/expense, net(1)		352		223		814		1,008
Depreciation and amortization		1,236		1,514		3,501		4,256
EBITDA	$	6,190	$	6,361	$	21,036	$	21,989

(1)

Includes amortization of deferred financing fees.

15

        Our EBITDA increased to $6.4 million for the third quarter of fiscal 2008 from $6.2 million for the third quarter of fiscal 2007. EBITDA as a percentage of net sales decreased to 15.7% for the third quarter of fiscal 2008 from 16.0% for the third quarter of fiscal 2007.

        Our EBITDA increased to $22.0 million for the nine months ended June 30, 2008 from $21.0 million for the nine months ended June 30, 2007. EBITDA as a percentage of net sales decreased to 17.5% for the nine months ended June 30, 2008 from 18.0% for the nine months ended June 30, 2007.

Seasonality

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

Liquidity and Capital Resources

        We had working capital of $36.8 million as of June 30, 2008 compared to $31.3 million as of September 30, 2007. This increase in working capital was primarily the result of increases in cash and inventories and decreases in accounts payable and accrued expenses, partially offset by decreases in accounts receivable and prepaid expenses and other current assets.

        Net cash provided by operating activities for the nine months ended June 30, 2008 was $14.4 million compared to $15.6 million for the comparable period in fiscal 2007. This decrease in net cash provided by operating activities for the nine months ended June 30, 2008 was primarily attributable to changes in assets and liabilities, net of effects of acquisitions.

        Net cash used in investing activities was $19.9 million for the nine months ended June 30, 2008 compared to $37.5 million for the comparable period in fiscal 2007. Our investing activities during these periods primarily consisted of acquisitions of businesses and capital expenditures.

        During the nine months ended June 30, 2008, we acquired two businesses for $5.9 million in cash. On December 12, 2007, we acquired certain assets of Dowd and Rogers, Inc. for $0.1 million in cash and on March 20, 2008, we acquired selected assets of Arkopharma, LLC for $5.8 million in cash. In comparison, during the nine months ended June 30, 2007, we acquired six businesses for $30.7 million in cash. The expected long-term sales and expense synergies of acquired businesses are generally not realized immediately following acquisition as certain transition and integration matters must be completed.

        Capital expenditures during these periods related primarily to building improvements related to facility consolidation efforts, distribution and manufacturing equipment and information systems.

        Net cash provided by financing activities was $6.1 million for the nine months ended June 30, 2008 compared to $24.5 million for the comparable period in fiscal 2007. During these periods, financing activities primarily related to borrowings and repayments under our revolving credit facility, purchases of common stock and proceeds from the issuance of common stock related to stock option exercises and the direct stock purchase plan.

        In October 2007, we registered a direct stock purchase plan with the Securities and Exchange Commission. The purpose of this direct stock purchase plan is to provide a convenient way for existing stockholders, as well as new investors, to purchase shares of our common stock. A total of 1,500,000

16

shares of our common stock were registered under the plan with 8,722 shares purchased during the nine months ended June 30, 2008.

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

        At June 30, 2008, we had outstanding revolving credit borrowings of $30.0 million. Borrowings under the revolving credit facility are collateralized by certain of our assets. At our election, borrowings under the revolving credit facility bear interest at the applicable Eurodollar Rate plus a variable margin or at a base rate, which is the higher of the Federal Funds Rate plus 0.5% or the Prime Lending Rate, plus a variable margin. At June 30, 2008, the applicable weighted-average interest rate for outstanding borrowings was 3.59%, exclusive of any interest rate swap agreements. We are also required to pay a variable quarterly fee on the unused balance under the revolving credit facility. At June 30, 2008, the applicable rate was 0.18%. Accrued interest on Eurodollar Rate borrowings is payable based on elected intervals of one, two or three months. Accrued interest on base rate borrowings is payable quarterly. The revolving credit facility matures on September 7, 2011, and we are required to repay all principal outstanding under the revolving credit facility on such date.

        The revolving credit facility contains restrictive covenants, including limitations on incurring certain other indebtedness and requirements that we maintain certain financial ratios. As of June 30, 2008, we were in compliance with the restrictive covenants. Upon the occurrence of a default, the lender has various remedies or rights, which may include proceeding against the collateral or requiring us to repay all amounts outstanding under the revolving credit facility.

        On August 10, 2007, we entered into a one-year interest rate swap agreement covering $15.0 million of our outstanding revolving credit borrowings. The interest rate swap has an all-in fixed interest rate of 6.01% and was not designated as a hedge in accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). For the nine months ended June 30, 2008, the interest rate swap had an unfavorable change in fair value of $136 thousand, which was included as a component of interest and other (income)/expense in the Condensed Consolidated Statements of Operations and Comprehensive Income.

        A key component of our business strategy is to seek to make additional acquisitions, which may require that we obtain additional financing, which could include the incurrence of substantial additional indebtedness or the issuance of additional stock. We believe that borrowings under our current revolving credit facility or a replacement credit facility, together with cash flows from operations, will be sufficient to make required payments under the current credit facility or any such replacement facility, and to make anticipated capital expenditures and fund working capital needs for fiscal 2008.

        Our significant non-cancelable contractual obligations as of June 30, 2008 were as follows:

	(dollars in thousands)
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years
Revolving credit facility	$	30,000	$	—	$	—	$	30,000	$	—
Interest on revolving credit facility(a)		4,006		1,200		2,316		490		—
Operating leases		7,531		3,136		3,589		743		63
Total	$	41,537	$	4,336	$	5,905	$	31,233	$	63

(a)

Represents estimated interest obligations associated with our outstanding revolving credit facility balance of $30.0 million at June 30, 2008, assuming no principal payments are made before maturity, a weighted-average interest rate of 3.59% and an underutilization fee rate of 0.18%, offset by a one-year interest rate swap covering $15.0 million of our outstanding revolving credit borrowings at an all-in fixed rate of 6.01%.

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New Accounting Standards

        The Financial Accounting Standards Board ("FASB") issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") in June 2006. FIN 48 provides specific guidance on the financial statement recognition, measurement, reporting and disclosure of uncertain tax positions taken or expected to be taken in a tax return. We adopted FIN 48 as of October 1, 2007. As a result of the adoption of FIN 48, we recognized a $33 thousand decrease in the liability for unrecognized tax benefits, which was recorded as an increase to the October 1, 2007 balance of retained earnings in accordance with the provisions of FIN 48.

        As of October 1, 2007, our liability related to unrecognized tax benefits was $169 thousand. Of this amount, approximately $155 thousand would impact our effective tax rate, if recognized. We also had $29 thousand in accrued interest at October 1, 2007 related to unrecognized tax benefits. There were no significant changes in our unrecognized tax benefits during the three and nine months ended June 30, 2008 and we do not anticipate any significant changes in unrecognized tax benefits during the remainder of fiscal 2008. The liability related to unrecognized tax benefits was recorded as a component of other non-current liabilities in our Condensed Consolidated Balance Sheets. Interest and penalties related to unrecognized tax benefits are recorded as a component of interest and other (income)/expense in our Condensed Consolidated Statements of Operations and Comprehensive Income.

        We file income tax returns in the United States ("U.S.") federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. We are no longer subject to U.S. federal tax examinations for fiscal years before 2005. We are no longer subject to examination in any U.S. state jurisdiction or foreign jurisdiction for fiscal years prior to 2002.

        In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. In November 2007, the FASB decided to postpone for one year the effective date of SFAS 157 for other non-financial assets and liabilities. SFAS 157 is effective for us as of October 1, 2008 for financial items and October 1, 2009 for other non-financial assets and liabilities. We do not expect the adoption of SFAS 157 to have a material impact on our consolidated financial statements.

        In February 2007, the FASB issued Statement of Financial Accounting Standard No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 ("SFAS 159"). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective for us as of October 1, 2008. We do not expect the adoption of SFAS 159 to have a material impact on our consolidated financial statements.

        In December 2007, the FASB issued Statement of Financial Accounting Standard No. 141 (Revised 2007), Business Combinations ("SFAS 141(R)"). SFAS 141(R) addresses fair value accounting and the related disclosure for assets and liabilities acquired in a business combination. SFAS 141(R) is effective for our 2010 fiscal year. We are currently evaluating the impact this standard may have on business acquisitions we may complete after September 30, 2009.

        In April 2008, the FASB issued Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets ("FSP 142-3"). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142. FSP 142-3 is effective for us as of October 1, 2009. Early adoption is prohibited. We are currently evaluating the impact FSP 142-3 may have on our consolidated financial statements.

        We periodically review new accounting standards that are issued from time to time. Although some of these accounting standards may be applicable to us, we have not identified any other new standards

18

that we believe merit further discussion, and we expect that none would have a significant impact on our consolidated financial statements.

Inflation

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

Forward-Looking Statements

        This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date this Form 10-Q was first filed with the SEC. Important factors that may cause results to differ from these forward-looking statements include, but are not limited to, government regulations, product liability claims and litigation, insurance coverage issues, a decrease in or slowing of the growth rate of the vitamin, mineral and supplement market, the success of the healthy foods channel, consumer perception of the safety and quality of our products and similar products, competition, intellectual property rights of other parties, the loss of key personnel, disruptions from acquisitions, issues with obtaining raw materials of adequate quality or quantity, problems with information management systems, manufacturing efficiencies and operations, litigation generally, the volatility of the stock market generally and of our stock specifically, a general lack of adequate industry analyst coverage, and other factors indicated from time to time in our SEC reports, 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).

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

        At our election, borrowings under our revolving credit facility bear interest at the applicable Eurodollar Rate plus a variable margin or at a base rate, which is the higher of the Federal Funds Rate plus 0.5% or the Prime Lending Rate, plus a variable margin. At June 30, 2008, the applicable weighted-average interest rate for borrowings was 3.59% and we had total borrowings outstanding of $30.0 million.

        On August 10, 2007, we entered into a one-year interest rate swap agreement covering $15.0 million of our outstanding revolving credit borrowings. The interest rate swap has an all-in fixed interest rate of 6.01% and was not designated as a hedge in accordance with SFAS 133. For the nine months ended June 30, 2008, the interest rate swap had an unfavorable change in fair value of $136 thousand, which was included as a component of interest and other (income)/expense in the Condensed Consolidated Statements of Operations and Comprehensive Income.

19

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

Item 4.    Controls and Procedures

         Evaluation of Disclosure Controls and Procedures.    We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow for timely decisions regarding required disclosure.

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

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

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

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PART II—OTHER INFORMATION

Item 1.    Legal Proceedings

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

        We carry insurance coverage in the types and amounts that we consider reasonably adequate to cover the risks we face in the industry in which we compete. However, our current liability policy excludes claims related to certain ingredients, including products containing kava.

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

Item 1A.    Risk Factors

        There have been no material changes in our risk factors from those disclosed in our 2007 Annual Report on Form 10-K.

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

        We did not sell any unregistered equity securities during the period covered by this Form 10-Q for the Quarterly Period Ended June 30, 2008.

        Under our share purchase program which was initially approved on June 22, 2000, we are authorized to buy up to 2,500,000 shares of our common stock, of which 586,712 shares may yet be purchased as of June 30, 2008. The shares available for purchase at June 30, 2008 have no expiration date. Purchases under this program during the three months ended June 30, 2008 occurred in May and June as follows:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan		Maximum Number of Shares that May Yet Be Purchased Under the Plan
5/1/08 to 5/31/08		33,705	$	12.93		33,705
6/1/08 to 6/30/08		127,422		13.03		127,422
		161,127	$	13.01		161,127		586,712

        All shares repurchased during the three months ended June 30, 2008 were retired on June 27, 2008.

Item 6.    Exhibits

31.1

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



32.1

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

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SIGNATURE

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

	NUTRACEUTICAL INTERNATIONAL CORPORATION (Registrant)
Date: July 31, 2008	By:	/s/ CORY J. MCQUEEN Cory J. McQueen Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

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EX-31.1

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Exhibit 31.1

CERTIFICATIONS

I, Frank W. Gay II, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Nutraceutical International Corporation;



2.

Based on my knowledge, this quarterly 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 quarterly report is being prepared;



b)

designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c)

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



d)

disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's third 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: July 31, 2008 /s/ FRANK W. GAY II
Frank W. Gay II
Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)

CERTIFICATIONS

I, Cory J. McQueen, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Nutraceutical International Corporation;



2.

Based on my knowledge, this quarterly 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 quarterly report is being prepared;



b)

designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c)

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



d)

disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's third 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: July 31, 2008 /s/ CORY J. MCQUEEN
Cory J. McQueen
Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)

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CERTIFICATIONS

EX-32.1

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Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the quarterly report on Form 10-Q of Nutraceutical International Corporation (the "Company") for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Frank W. Gay II, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)

the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

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

/s/ FRANK W. GAY II
Frank W. Gay II
Chairman of the Board
and Chief Executive Officer

Date: July 31, 2008

CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the quarterly report on Form 10-Q of Nutraceutical International Corporation (the "Company") for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Cory J. McQueen, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)

the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

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

/s/ CORY J. MCQUEEN
Cory J. McQueen
Vice President and
Chief Financial Officer

Date: July 31, 2008

        Signed originals of these written statements required by Section 906 have been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002