Natural Alternatives International, Inc. Announces Record Breaking Revenue for Fiscal 2005

Natural Alternatives

Announces Record Breaking Revenue for Fiscal 2005

SAN MARCOS, CALIF, September 6, 2005 /PRNewswire/ Natural Alternatives

International, Inc. ( NAI ) (Nasdaq: NAII), a leading formulator and manufacturer of customized nutritional supplements, today announced record revenue for fiscal 2005 of $91.5 million, the highest level in the company s 25 year

history. Net income for the fiscal year ended June 30, 2005 was $2.2 million, or $0.34 per diluted share.

For the fiscal year ended June 30, 2005, revenue increased 16% to $91.5 million from $78.5 million in the prior year. The growth in revenue resulted primarily from a 22% increase in contract manufacturing sales.

Income before income taxes increased 13% to $3.4 million from $3.0 million in the prior year. Net income decreased to $2.2 million or $0.34 per diluted share compared to $3.0 million or $0.48 per diluted share in the prior year primarily due to

recognition of a tax benefit in the prior year.

NAI also reported record

revenue for its fourth quarter ended June 30, 2005. Fourth quarter revenue increased 6% to $24.7 million from $23.3 million for the comparable quarter last year. Revenue growth resulted primarily from an 8% increase in contract manufacturing sales.

Income before income taxes decreased to $640,000 from $955,000 in the comparable quarter last year. Net income decreased to $285,000 or $0.04 per diluted share from $1.0 million or $0.15 per diluted share for the comparable quarter last year

partially due to an increase in tax expense of $402,000 related to the prior year recognition of a tax benefit and current year dividend repatriation tax expense.

As of June 30, 2005, NAI had cash and working capital of $1.9 million and $14.4 million, respectively. Cash flows from operating activities

for the fiscal year ended June 30, 2005 were $2.5 million. During fiscal 2005, we invested $7.7 million in capital expenditures primarily for the

expansion of our Vista, California manufacturing facility, and the acquisition of additional manufacturing equipment. We funded our capital expenditures from

available cash on hand. As of June 30, 2005, we had $7.7 million available under our working capital line of credit.

CEO Mark LeDoux commented, We are pleased to report our fourth consecutive year of increased revenue and operating profits. This past year we believe we improved

our competitive positioning and fortified our sustainable growth plans with several accomplishments:

President Randell Weaver added, We are pleased with our 16% growth in 2005 annual

revenue. We are also delighted our revenue has grown by an average compound growth rate of 21% over the last four years. Looking forward, we expect our trend of annual revenue growth to continue. We anticipate quarterly revenue fluctuations due to,

among other things, the timing of customer orders that are impacted by marketing programs, supply chain management, entry into new markets and new product introductions. We anticipate revenue in the first quarter of fiscal 2006 will be lower than

our recent fourth quarter due to the timing of customer orders.

also expect our long-term trend of growth in annual profitability to continue, however; there may be periodic quarterly declines in profitability due to revenue fluctuations, regulatory compliance costs and investments in new marketing, brand

development and channel diversification initiatives. Regulatory compliance costs related to our TGA recertification are largely complete. Additionally, during our fourth quarter of fiscal 2005, we restructured our regulatory compliance, quality

assurance and product development departments to be more responsive to customer demands and more competitive in the marketplace. Looking forward, in the first quarter of fiscal 2006 we expect an improvement in gross margin percentage and lower

regulatory compliance costs that are expected to be offset by an increase in brand development costs.

NAI, headquartered in San Marcos, California, is a leading formulator and manufacturer 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 the client 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 www.nai-online.com.

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, receiving continuing support from our larger customers, our expectations and beliefs with respect to future financial and operating results, our competitive positioning, our ability to continue to

improve profitability and implement our strategic plans and the sustainability of our growth. 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.

SOURCE Natural Alternatives International, Inc.

R. Reaves, Chief Financial Officer, Natural Alternatives International, Inc.,

760-736-7700 or investor@nai-online.com.

NATURAL ALTERNATIVES

CONDENSED CONSOLIDATED BALANCE SHEETS

NATURAL ALTERNATIVES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)