LETTER TO  SHAREHOLDERS My Fellow Shareholders: Many years ago we made it Our Mission “to be the leading natural/organic and specialty food company, with an integrated portfolio of better-for-you natural, organic and medical diet products that meet consumer demand for convenient, innovative products that taste good.” We were  Changing the Way the World Eats . We now know that natural and organic standards deliver benefits that go far beyond food to improve the quality of many of the products you use every day, including personal care items. We’ve revisited our goals as a company and today strive to provide more than just healthier foods— our goal today is to provide  A Healthy Way of Life ™. Our Mission is to be the leading manufacturer, marketer and seller of natural and organic beverages, snacks, specialty foods and personal care products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience.  Our business strategy is to integrate all of our brands under one management team and employ a uniform marketing, sales and distribution program. We capitalize on our brand equity and the distribution achieved through each of our acquired businesses with strategic introductions of new products that complement existing lines to enhance revenues and margins. Our recent acquisition of Jason—a manufacturer of natural and organic personal care products—takes us one step further in spreading the message about the benefits of pure ingredients. The market for natural and organic foods and beverages in the United States is expected to reach $28 billion by 2006, with the combination of Europe and the United States expected to reach $46.7 billion by 2007. The rising obesity rates across all demographics are expected to result in a revision of The Food Guide Pyramid in 2005 to support the consumption of healthy foods. Many Hain Celestial products have always been whole grain-based, certified organic, low in fat and naturally sweetened, with no transfat or cholesterol and completely free from artificial colors, flavors, and preservatives and genetically engineered ingredients.  As our employees, investors and other constituents know, the key to our success is to enhance mainstream products for mass appeal—naturally and organically—with improved products and packaging. We look at trends and make better, all-natural and organic versions of what consumers desire in markets today. Financial Overview. In a challenging year, our revenues grew 17% to $544.1 million from $466.5 million through internal growth and acquisitions. We faced the challenges of increased costs of raw materials, fuel and freight, and weathered production issues at a major co-packer for our soup business and a prolonged grocery strike in Southern California. These events resulted in a decline in our net income to $27.0 million, or $0.74 per share, from $27.5 million, or $0.79 per share, while diluted shares increased by approximately 1.6 million shares this year. Our cash flow from operations remained strong at $30.8 million. We ended the year with $27.5 million in cash and an increased $300 million credit facility, of which $99.2 million had been borrowed as of June 30, 2004.  Our sales growth came from our Snacks brands, Earth‘s Best® baby foods and Celestial Seasonings® teas as well as the launch of Carb Fit™ products. Sales also benefited from the integration of Imagine® Foods and Walnut Acres Certified Organic® brands and to a lesser extent, the newly acquired Natumi®, Rosetto®, Ethnic Gourmet® and JASON® brands. Our increase in expenses was attributable to higher costs of consumer and trade spending, regulatory requirements and personnel. New Products. This year, Stagnito’s New Products Magazine acknowledged Hain Celestial as the Innovator of the Yearfor our new product strategies. In Specialty Tea, we expanded our red, white, green, herb and dessert tea lines with delectable new flavors. In Snacks, Terra® Kettle Blends krinkle cut potato chips broadened our snacks offerings with three crispy and delicious flavors. In Grocery, we introduced Health Valley® functional medley cereals HeartWise™, BoneWise™, Empower™ and Slender™. Rosetto® pasta and Ethnic Gourmet® entrées, pizzas and wraps expanded our platform of convenient frozen foods. The Prima Veggie line from Yves Veggie Cuisine® was specifically formulated for health- conscious consumers seeking meat alternatives. Natumi® expanded our soy, rice and oat vegetable milk products for Non-Dairy in Europe. JASON established our presence with natural and organic personal care products for skin, body, oral and hair care. We utilized our core competencies to develop a line of low-carb products under the Carb Fit™ brand to meet consumer demand.  2 The Hain Celestial Group, Inc.