Earnings Continue to Improve

SAN MARCOS, Calif., Feb. 14 /PRNewswire/ -- Natural Alternatives International (NAI), Inc. (Nasdaq: NAII), a leading formulator and manufacturer of customized nutritional supplements, announced today the results of its fiscal 2001 second quarter and six months ended December 31, 2000.

The Company reported net revenues of $11.2 million in the second quarter of fiscal 2001, compared to $12.1 million in the second quarter of fiscal 2000, a decrease of $0.9 million. Second quarter fiscal 2001 revenues increased $1.0 million, or 10%, from first quarter fiscal 2001 revenues of $10.2 million. In the second quarter of fiscal 2001, net earnings were $443,000 (or $0.08 per diluted share) compared to the net loss of $2.4 million (or $0.42 per diluted share) in the second quarter of fiscal 2000. Second quarter fiscal 2001 net earnings increased $238,000 from first quarter fiscal 2001 net earnings of $205,000 (or $0.04 per diluted share).

The Company reported net revenues of $21.5 million for the six months ended fiscal 2001, compared to $27.3 million for the six months ended fiscal 2000, a decrease of $5.8 million, or 21%. For the six months ended fiscal 2001, net earnings were $648,000 (or $0.11 per diluted share) compared to the net loss of $2.3 million (or $0.40 per diluted share) for the six months ended fiscal 2000.

"We continue to operate in a very challenging and a contracting marketplace for vitamins, minerals and supplements in the United States," said Mark A. LeDoux, Chief Executive Officer and President. "The consumer remains cautious and confused given the numerous offerings in the marketplace and negative media coverage. However, we believe the long-term demographics are very promising for the companies in the industry that demonstrate innovative, effective and high quality products. We remain committed to meeting the consumer's needs through both our clients and our direct-to-consumer initiatives, while ensuring that our goals are sustainable."

NAI also reported notable operating improvements in the first half of fiscal 2001 resulting from its profit restoration plan, including:

     -- a decrease in SG&A expenses by $2.2 million, or 35%, compared
        to the same period for fiscal 2000;
     -- an increase in gross margin to 23% of net sales compared to a
        10% gross margin for the same period of fiscal 2000;
     -- revenues in excess of $2.3 million, 11% of net sales, in its
        direct-to-consumer physicians branded product line; and
     -- a decrease in total debt of $1.0 million, 11%, since the fiscal
        year ended June 30, 2000.

"The second quarter and first half of fiscal year 2001 results demonstrate we are making progress to restore profitability," said Peter C. Wulff, Chief Financial Officer and Treasurer. "With our recently announced new credit facility, we believe we are positioned to endure through the contraction in the U.S. marketplace. By following our long-term strategy to diversify both our geographic and distribution channels and sales mix, while maintaining stringent cost controls, we believe we can protect our financial position in spite of the current sales pressures."

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 Web site at 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 future financial and operating results; the ability to sustain profitability, diversify both sales channels and sales mix, contain costs, maximize use of manufacturing assets, enhance direct-to-consumer marketing programs, and implement its strategic plan. 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 Company'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 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.

SOURCE: Natural Alternatives International, Inc.

For further information please contact Peter C. Wulff, Chief Financial Officer and Treasurer, Natural Alternatives International, Inc., 760-744-7340, or info@nai-online.com

                     NATURAL ALTERNATIVES INTERNATIONAL, INC.

                  CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                        (In thousands, except share data)

                                Three Months Ended        Six Months Ended
                                    December 31,            December 31,
                                  2000        1999       2000         1999
                                     (Unaudited)             (Unaudited)
    Net sales                    $11,240    $12,064     $21,463     $27,328
    Cost of goods sold             8,395     10,586      16,607      22,661
    Inventory write-off               --      2,000          --       2,000
       Total cost of goods sold    8,395     12,586      16,607      24,661
       Gross profit                2,845       (522)      4,856       2,667
    Selling, general and
     administrative expenses       2,171      3,219       3,907       6,054
       Income from operations        674     (3,741)        949      (3,387)
    Other income (expense)          (174)      (106)       (314)       (116)
       Income before taxes           500     (3,847)        635      (3,503)
    Tax (benefit) expense             57     (1,436)        (13)     (1,179)
       Net earnings/(loss)          $443    $(2,411)       $648     $(2,324)

       Basic net income
        per common share           $0.08     $(0.42)      $0.11      $(0.40)
       Diluted net income
        per common share           $0.08     $(0.42)      $0.11      $(0.40)

       Shares used in
        calculation of net
        income per share:
           Basic               5,761,880  5,758,734   5,761,880   5,767,055
           Diluted             5,803,039  5,758,734   5,783,465   5,767,055


                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In thousands)

                                                   December 31,    June 30,
                                                       2000           2000
    Assets                                         (unaudited)     (audited)
       Cash and cash equivalents                        $987           $815
       Accounts receivable, net                        3,886          4,097
       Inventories, net                                7,868          7,627
       Other current assets                            4,497          4,917
          Total current assets                        17,238         17,456
       Property and equipment, net                    14,162         15,037
       Other assets                                    3,414          2,382
    Total assets                                     $34,814        $34,875

    Liabilities and Stockholders' Equity
       Current liabilities                            $8,705         $9,861
       Long-term debt                                  3,966          3,345
       Other long-term liabilities                       989          1,183
       Stockholders' equity                           21,154         20,486
    Total liabilities and stockholders' equity       $34,814        $34,875

SOURCE Natural Alternatives International, Inc.
Web site: http: //www.nai-online.com
Company News On-Call: http: //www.prnewswire.com/comp/607813.html or fax, 800-758-5804, ext. 607813
CONTACT: Peter C. Wulff, Chief Financial Officer and Treasurer of Natural Alternatives International, Inc., 760-744-7340, info@nai-online.com