SAN MARCOS, Calif., Nov. 12, 2010 /PRNewswire via COMTEX/ --

Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced net income of $912,000 or $0.13 per diluted share on net sales from continuing operations of $13.4 million for the quarter ended September 30, 2010.

Net sales from continuing operations during the three months ended September 30, 2010 decreased $3.6 million from $17.0 million recorded in the comparable prior year period. For the quarter ended September 30, 2010, contract manufacturing sales declined $3.5 million or 21.4% from the comparable quarter last year due primarily to lower sales volumes to our two largest customers. This decline was partially offset by new product sales to existing customers, sales to three new customers and increased royalty income associated with our CarnoSyn(R) beta-alanine license program. As a result, our revenue concentration risk for our two largest customers decreased to 71% as a percentage of our total sales from continuing operations for the first three months of fiscal 2011 compared to 84% in the first three months of fiscal 2010.

Net sales from our branded products totaled $492,000 for the first quarter of fiscal 2011 compared to $588,000 for the comparable prior year period. This decrease was associated with the continued softening of our Pathway to Healing(R) product line. During the first quarter of fiscal 2011 we began the process of re-launching a portion of our Pathway to Healing(R) product line, which included new formulations, labeling and packaging configurations. We intend to further increase our Pathway to Healing(R) marketing and advertising efforts during the remainder of fiscal 2011 in an effort to expand our future sales opportunities.

Net income from continuing operations in the first quarter of fiscal 2011 was $912,000 or $0.13 per diluted share compared to net income of $1.2 million or $0.18 per diluted share in the first quarter of fiscal 2010. The decline was primarily attributable to lower sales during the current year period partially offset by an increase in gross margin as a percentage of sales associated with an improved product net sales mix.

As of September 30, 2010, NAI had cash of $8.3 million and working capital of $19.9 million compared to $8.5 million and $18.4 million, respectively, as of June 30, 2010. As of September 30, 2010, we had $4.2 million available under our working capital line of credit.

Mark LeDoux, Chief Executive Officer, stated, "Our corporate focus remains on consistency of purpose to become the preferred manufacturing resource for companies seeking quality supply partners. With the full implementation of 21 CFR 111 which is the U.S. federal regulation governing Good Manufacturing Practices in the dietary supplement industry, we believe we are well poised to secure additional business opportunities as companies involved in selling finished products in a variety of channels are re-assessing their current supply chain partners. Because NAI has a history of compliance with tough regulatory regimens such as those espoused by the Therapeutic Goods Administration of Australia, along with our certifications for NSF GMP and GMP Sports Compliance, we are confident of our positioning and ability to improve stockholder value through further customer expansion. Because of our strong balance sheet position at the end of the first quarter of fiscal 2011, we also believe we have the capacity to be nimble in our ability to respond to current and new customer's needs."

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 our future financial and operating results, including the amount of our future revenue and profits and our future financial condition, our ability to expand our contract manufacturing business, grow our Pathway to Healing(R) business, including the timing of increased marketing efforts with respect to this product line, comply with Good Manufacturing Practices, improve stockholder value, remain debt free, and develop, maintain or increase sales to new and existing customers, as well as future economic conditions and the impact of such conditions on our business. 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 Operating and Chief Financial Officer, Natural Alternatives International, Inc., at 760-736-7700 or investor@nai-online.com.

Web site: http://www.nai-online.com

SOURCE Natural Alternatives International, Inc.