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Natural Alternatives International, Inc. Announces Third Quarter Results
Date:5/13/2008

Highlights - Third quarter fiscal 2008 revenue of $21.9 million versus $23.8 million

in the same quarter last year.

- On target to meet new FDA published GMP requirements for Dietary

Supplement Manufacturing Companies.

SAN MARCOS, Calif., May 13 /PRNewswire-FirstCall/ -- Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced revenue of $21.9 million and a net loss of $446,000 or $0.06 per share for the three months ended March 31, 2008.

Net sales of $21.9 million in the third quarter of fiscal 2008 declined $1.9 million from the same quarter last year. The decrease included a $2.5 million decline in our domestic private label contract manufacturing sales associated primarily with the continued softness in sales from one of our largest customers, partially offset by a $1.0 million increase in our international private label contract manufacturing business related to higher sales volumes of established products to existing markets. Our branded product sales declined $342,000 during the current quarter primarily related to our Dr. Cherry Pathway to Healing (R) product line.

Gross profit totaled $4.1 million or 18.6% as compared to $5.4 million or 22.7% during the prior year quarter. The decrease in gross profit as a percentage of sales was primarily due to higher per unit private label manufacturing costs associated with lower production levels, increased product testing costs associated with new product offerings and system and process validation costs related to improving our existing processes and implementing newly required good manufacturing practices (GMPs).

For the fiscal 2008 third quarter we reported a net loss of $446,000, or $0.06 per share, on 7.0 million weighted-average shares outstanding. For the third quarter of fiscal 2007 we reported net income of $369,000, or $0.05 per diluted share, on 7.2 million weighted-average shares outstanding.

Cash flows from operating activities for the nine months ended March 31, 2008 were $1.7 million. As of March 31, 2008, NAI had cash and working capital of $3.8 million and $16.6 million, respectively, compared to $4.9 million and $16.2 million, respectively, as of June 30, 2007. As of March 31, 2008, we had $7.5 million available under our working capital line of credit.

President Randell Weaver stated, "Our third quarter results were negatively affected by the continued softness in business from one of our largest contract manufacturing clients and the slower than expected increase in sales volumes from our new customers. During the third quarter we also continued to experience decreased revenues from our branded products business compared to the year ago quarter primarily due to lower sales of the Dr. Cherry Pathway to Healing(R) product line. These decreases along with the increased testing, documentation and validation expenses associated with new product introductions and our ongoing GMP programs negatively impacted our operating income. As we enter the fourth quarter, we anticipate our contract manufacturing sales volume will improve as we expect to deliver initial shipments to one of our new customers and sales to one of our largest customers to trend towards historical sales levels experienced in the comparable prior year period."

Chairman and Chief Executive Officer Mark LeDoux added, "Although the cost of compliance is significant, we believe our unwavering commitment to quality and our steadfast support of the FDA published GMPs makes us well positioned to meet the higher standards of the new law."

NAI, headquartered in San Marcos, California, is a leading formulator, manufacturer and marketer of nutritional supplements and provides strategic partnering services to its customers. Our comprehensive partnership approach offers a wide range of innovative nutritional products and services to our clients including: scientific research, clinical studies, proprietary ingredients, customer-specific nutritional product formulation, product testing and evaluation, marketing management and support, packaging and delivery system design, regulatory review and international product registration assistance. For more information about NAI, please see our website at http://www.nai-online.com.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that are not historical facts and information. These statements represent our intentions, expectations and beliefs concerning future events, including, among other things, our expectations and beliefs with respect to future financial and operating results, including the amount of our future revenue and profits, our ability to meet the new FDA published GMPs, to continue to implement our strategic plans, to expand and successfully market our brands, and to develop, maintain or increase sales to new and existing customers, and the timing of shipments to customers. We wish to caution readers these statements involve risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or views expressed herein. NAI's financial performance and the forward-looking statements contained herein are further qualified by other risks including those set forth from time to time in the documents filed by us with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

CONTACT - Kenneth Wolf, Chief Financial Officer, Natural Alternatives International, Inc., 760-736-7700 or investor@nai-online.com.

NATURAL ALTERNATIVES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

March 31, June 30,

2008 2007

(Unaudited)

ASSETS

Cash and cash equivalents $3,804 $4,876

Accounts receivable, net 4,773 5,264

Inventories, net 17,792 14,099

Deferred income taxes 1,441 1,441

Other current assets 3,103 2,204

Total current assets 30,913 27,884

Property and equipment, net 13,872 15,059

Goodwill and purchased intangibles, net 4,078 4,268

Other noncurrent assets, net 169 169

Total Assets $49,032 $47,380

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities $14,325 $11,668

Long-term debt, less current portion 1,656 2,756

Deferred income taxes 1,620 1,620

Deferred rent 1,190 1,238

Long-term pension liability 113 76

Total Liabilities 18,904 17,358

Stockholders' Equity 30,128 30,022

Total Liabilities and Stockholders' Equity $49,032 $47,380

NATURAL ALTERNATIVES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(In thousands, except per share data)

(Unaudited)

Three Months Ended Nine Months Ended

March 31, March 31,

2008 2007 2008 2007

NET SALES $21,929 100.0% $23,791 100.0% $67,858 100.0% $73,001 100.0%

Cost of goods

sold 17,856 81.4% 18,394 77.3% 54,239 79.9% 56,387 77.2%

Gross profit 4,073 18.6% 5,397 22.7% 13,619 20.1% 16,614 22.8%

Selling,

general &

administrative

expenses 5,019 22.9% 4,801 20.2% 14,168 20.9% 14,221 19.5%

(LOSS) INCOME

FROM OPERATIONS (946) -4.3% 596 2.5% (549) -0.8% 2,393 3.3%

Other income

(expense), net 153 0.7% (117) -0.5% 98 0.1% (466) -0.6%

(LOSS) INCOME

BEFORE INCOME

TAXES (793) -3.6% 479 2.0% (451) -0.7% 1,927 2.6%

(Benefit)

provision for

income taxes (347) 110 (248) 617

NET (LOSS)

INCOME ($446) -2.0% $369 1.6% ($203) -0.3% $1,310 1.8%

NET (LOSS)

INCOME PER

COMMON SHARE:

Basic ($0.06) $0.05 ($0.03) $0.19

Diluted ($0.06) $0.05 ($0.03) $0.18

WEIGHTED

AVERAGE COMMON

SHARES

OUTSTANDING:

Basic 7,014 6,885 6,969 6,815

Diluted 7,014 7,202 6,969 7,194


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SOURCE Natural Alternatives International, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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