Reorganization

SAN MARCOS, Calif., Sept. 28 /PRNewswire/ -- Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator and manufacturer of customized nutritional supplements, today announced financial results for its fiscal year ended June 30, 2001. In addition, NAI announced it has completed a reorganization of its executive management in a continuing commitment to enhance its position to capture future growth opportunities.

NAI reported annual revenues decreased from $47.8 million in 2000 to $42.2 million for its fiscal year ended June 30, 2001, and net losses increased from $4.5 million in the prior fiscal year to $4.9 million in fiscal 2001. NAI added, however, that included in the net loss for the most recent fiscal year were non-cash charges including a $2.4 million reserve for net deferred tax assets, $1.5 million related to impairment of intangible assets and $2.5 million of depreciation.

Mark LeDoux, CEO indicated that, "Revenues for 2001 included a $4.8 million increase to $5.7 million in our Direct-to-Consumer ("DTC") business launched only 14 months ago. Fiscal 2000 revenues from this segment were only $875,000. The growth in revenues in our DTC business is a major step forward in NAI's return to profitability. Our efforts to diversify distribution channels are beginning to generate significant revenue. We are working to create additional growth opportunities and we believe the investments we have been making and continue to make, such as expanding our international sales and manufacturing capacity, will serve us well this year and beyond. As an example, we achieved significant growth in European revenues with our European subsidiary revenues increasing from $3.4 million in fiscal 2000 to $7.5 million in fiscal 2001."

Randy Weaver, Chief Financial Officer stated, "One of the primary strengths of NAI is its significant manufacturing capacity and its focus on science-based product development. While our manufacturing capacity carries definite fixed costs, it also allows us to respond quickly and decisively to customer growth opportunities. We have steadily invested in that capacity over the past few years. Yet in 2001 we were able to reduce our total liabilities by approximately $4.1 million, from $13.6 million to $9.5 million, while we still supported our best customers' and our own DTC segment's growth requirements. In fiscal 2001, we generated $4.4 million of cash from operations compared to $1.6 million use of cash in operations in the prior year. NAI's strong performance in these areas allowed us to not only significantly reduce our debt levels by $3.7 million but clearly positioned us for future growth opportunities that we believe will be available only to the most capable in our industry."

NAI also announced an executive reorganization as part of a significant effort to strengthen its management structure and return the Company to profitability.

As part of those changes Mark LeDoux, founder of NAI, has been appointed Chairman of the Board of Directors. He retains his position as Chief Executive Officer, but will no longer also be President. In his redefined role, Mr. LeDoux will expand his responsibilities representing NAI's increased commitment to industry and government affairs, as well as spearhead NAI's ongoing international expansion efforts.

Mr. LeDoux added, "My mother Marie LeDoux, 85, the Company's largest shareholder and Chairwoman of its Board of Directors for the last two decades, is in failing health and will be decreasing her involvement with the Company."

In addition, NAI announced Randell Weaver has been appointed Chief Operating Officer and has assumed responsibility for all day-to-day operations. Mr. Weaver, who continues as Chief Financial Officer, has over twenty years of experience in finance and operations ranging from audit manager for a national public accounting firm to President and CFO of public and privately held manufacturing operations. "Randy has very capably managed substantial reorganizations and turnaround efforts," stated Mr. LeDoux. "We recognize the difficult times our industry has been through but at NAI we have determined to upgrade our executive capability at the same time as we invest in our manufacturing capacity, increase our distribution channels and continue our international expansion."

NAI also announced Douglas Flaker, formerly Vice President Marketing, has left the Company to pursue other opportunities.

"Watch for us to add additional high level executive capability and expand the scope of our international operations. We believe the consolidation in our industry will continue but at the same time the opportunities both in the United States and abroad will increase in coming years for the most capable and diversified participants. We believe we are making the right investments to profit in that environment," added Mr. LeDoux.

About NAI

Natural Alternatives International, Inc., headquartered in San Marcos, California, is a leading formulator and manufacturer of nutritional supplements providing strategic partnering services to its customers. The Company's comprehensive partnership approach offers a wide range of innovative nutritional products to the client including: scientific research, clinical studies demonstrating product efficacy, 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 Natural Alternatives International, 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 the Company's intentions, expectations and beliefs concerning future events, including, among other things, expectations and beliefs with respect to management and future operating and financial results. The Company wishes to caution and advise readers that 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. 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 the Company with the Securities and Exchange Commission, including the Company's most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K.

For further information, please contact Randell Weaver, Chief Financial Officer of Natural Alternatives International, Inc., +1-760-744-7340, info@nai-online.com.

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CONTACT: Randell Weaver, Chief Financial Officer of Natural Alternatives International, Inc., +1-760-744-7340, info@nai-online.com