Highlights

- Second quarter fiscal 2008 net sales of $20.4 million versus $24.1 million in the same quarter last year.

- New private label contract manufacturing relationships established with initial shipments expected during the second half of fiscal 2008.

SAN MARCOS, Calif., Feb. 8 /PRNewswire-FirstCall/ -- Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced net sales of $20.4 million and a net loss of $180,000 or $0.03 per share for the three months ended December 31, 2007.

Net sales of $20.4 million in the second quarter of fiscal 2008 declined $3.7 million as compared to $24.1 million for the same quarter last year. The decrease included a $2.8 million decline in private label contract manufacturing sales associated primarily with one of our largest customers and a $900,000 decrease in our branded product business related primarily to the continued softening of our Dr. Cherry Pathway to Healing(R) product line.

For the second quarter of fiscal 2008 we reported a net loss of $180,000, or $0.03 per share, on 7.0 million weighted-average shares outstanding. For the second quarter of fiscal 2007 we reported net income of $554,000, or $0.08 per diluted share, on 7.2 million weighted-average shares outstanding.

Cash flows provided by operating activities for the six months ended December 31, 2007 were $2.0 million. As of December 31, 2007, NAI had cash and working capital of $5.0 million and $16.8 million, respectively, compared to $4.9 million and $16.2 million, respectively, as of June 30, 2007. As of December 31, 2007, we had $7.5 million available under our working capital line of credit.

President Randell Weaver commented, "As we previously anticipated, our second quarter sales and profits were significantly impacted by the reduction in volume from one of our largest private label customers. Looking forward, during the second half of fiscal 2008 we anticipate sales to this customer will trend towards sales levels experienced during the comparable period of fiscal 2007. Additionally, we have established relationships with two new customers and anticipate initial shipments of these products during late third or early fourth quarter of this year. We also expect our branded product sales to improve over our second quarter results as we enter our stronger catalog season during the third and fourth quarters."

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 net sales and profits, our ability to develop, maintain or increase sales to new and existing customers and within our branded products business, and the timing of shipments to new 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.

     



                   NATURAL ALTERNATIVES INTERNATIONAL, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)

                                                      December 31,   June 30,
                                                         2007          2007
                                                      (Unaudited)
    ASSETS
    Cash and cash equivalents                            $5,000       $4,876
    Accounts receivable, net                              5,839        5,264
    Inventories, net                                     12,890       14,099
    Deferred income taxes                                 1,441        1,441
    Other current assets                                  1,949        2,204
        Total current assets                             27,119       27,884
    Property and equipment, net                          14,084       15,059
    Goodwill and purchased intangibles, net               4,141        4,268
    Other assets                                            169          169
        Total Assets                                    $45,513      $47,380

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                                 $10,283      $11,668
    Long-term debt, less current portion                  2,050        2,756
    Deferred income taxes                                 1,620        1,620
    Deferred rent                                         1,205        1,238
    Long-term pension liability                             101           76
        Total Liabilities                                15,259       17,358
    Stockholders' Equity                                 30,254       30,022
        Total Liabilities and Stockholders' Equity      $45,513      $47,380



                   NATURAL ALTERNATIVES INTERNATIONAL, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except share and per share data)
                                 (Unaudited)

                                         Three Months
                                            Ended            Six Months Ended
                                         December 31,           December 31,
                                       2007        2006       2007       2006

    NET SALES                        $20,410     $24,049    $45,929    $49,210
    Cost of goods sold                16,158      18,347     36,383     37,993
    Gross profit                       4,252       5,702      9,546     11,217
    Selling, general &
     administrative expenses           4,524       4,737      9,149      9,420

    (LOSS) INCOME FROM OPERATIONS       (272)        965        397      1,797
    Other expense, net                    27         119         55        349
    (LOSS) INCOME BEFORE INCOME TAXES   (299)        846        342      1,448
    (Benefit) Provision for
     income taxes                       (119)        292         99        507

    NET (LOSS) INCOME                  $(180)       $554       $243       $941

    NET (LOSS) INCOME PER COMMON
     SHARE:
    Basic                             $(0.03)      $0.08      $0.03      $0.14

    Diluted                           $(0.03)      $0.08      $0.03      $0.13

    WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING:
    Basic                          6,980,195   6,840,314  6,947,155  6,780,240

    Diluted                        6,980,195   7,184,910  7,044,402  7,189,213

SOURCE Natural Alternatives International, Inc.

CONTACT: Randell L. Weaver, President of Natural Alternatives International, Inc., +1-760-736-7700, investor@nai-online.com/
Web site: http://www.nai-online.com /