SAN MARCOS, Calif., Feb. 10, 2011 /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 $854,000 or $0.12 per diluted share on net sales from continuing operations of $14.8 million for the quarter ended December 31, 2010.

Net sales from continuing operations during the quarter ended December 31, 2010 decreased $2.5 million from $17.2 million reported in the comparable prior year period. This decline was primarily related to reduced sales to our two largest customers partially offset by new product sales to other existing customers, sales to three new customers, and an 81% or $301,000 increase in royalty income associated with our CarnoSyn(R) beta-alanine license program for the second quarter of fiscal 2011 compared to the comparable quarter in fiscal 2010. As a result, our revenue concentration risk for our two largest customers decreased to 73% as a percentage of our total sales from continuing operations for the three and six months ended December 31, 2010 compared to 84% for the corresponding periods in fiscal 2010.

Operating income from continuing operations increased to $1.1 million for the second quarter of fiscal 2011 as compared to $736,000 in the comparable prior year quarter. The improvement in operating income from continuing operations was primarily attributable to lower raw material costs, decreased manufacturing labor and overhead expenses, and an improved product sales mix.

For the quarter ended December 31, 2010, contract manufacturing sales declined $2.4 million or 14.3% from the comparable quarter last year due primarily to lower sales volumes from our two largest customers. Net sales from our branded products totaled $466,000 for the second quarter of fiscal 2011 compared to $574,000 for the prior year period. This decrease was associated with the continued softening of our Pathway to Healing(R) product line sales.

Net income from continuing operations in the second quarter of fiscal 2011 was $854,000 or $0.12 per diluted share compared to net income of $614,000 or $0.09 per diluted share in the second quarter of fiscal 2010.

As of December 31, 2010, NAI had cash and cash equivalents of $10.7 million and working capital of $21.0 million compared to $8.5 million and $18.4 million, respectively, as of June 30, 2010. As of December 31, 2010, we had $5.0 million available under our working capital line of credit.

Mark A. LeDoux, Chief Executive Officer, stated, "We are pleased with the performance of our business this past quarter, and are hopeful our initiatives to secure additional customers both domestically and internationally will bear fruit in the not too distant future. Our recent re-certification of our U.S. facilities by the Therapeutic Goods Administration of Australia demonstrates we have exercised the attention to detail required to maintain the trust placed in NAI by its clients. Maintaining standards of excellence in all components of contract manufacturing of dietary supplements is not an inexpensive proposition. Our debt-free posture should allow us to stay abreast of the ever changing regulatory environment. As companies realize their products need to comply with multiple regulatory schemes, particularly under the dietary supplement GMP's in the U.S., we are hopeful we will attract new clientele who want to be secure in the knowledge their manufacturing partner is compliant. NAIE S.A., our wholly owned Swiss facility, is expanding sales into the Pacific Rim, as well as fielding interest from Middle Eastern and Eastern European companies attracted to the Swiss quality of goods produced by our Swiss factility." Mr. LeDoux also stated, "The Company is quite pleased with the continued expansion of the economic value of our intellectual property estate with the branded CarnoSyn(R) beta-alanine."

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 applicable securities laws 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, develop, maintain or increase sales to new and existing customers, maintain our certification and react to changes in the regulatory environment, and expand the commercial value of our patent estate, 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.