SAN MARCOS, Calif., Feb. 16 /PRNewswire-FirstCall/ -- Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced net income of $674,000 or $0.10 per diluted share on net sales from continuing operations of $17.2 million for the quarter ended December 31, 2009. Net sales from continuing operations during the quarter ended December 31, 2009 decreased $367,000 from $17.6 million reported in the comparable prior year period. Operating income from continuing operations increased to $736,000 for the second quarter of fiscal 2010 as compared to an operating loss in the comparable prior year quarter of $2.1 million. The improvement in operating income from continuing operations was primarily attributable to lower raw material costs, decreased manufacturing labor and overhead expenses, and reductions in selling and general administrative expenses, including restructuring charges, associated with our cost reduction programs implemented during fiscal 2009. For the quarter ended December 31, 2009, contract manufacturing sales declined $303,000 or 1.8% from the comparable quarter last year due primarily to lower sales volumes from various customers and the discontinuance of a customer relationship during the first quarter of fiscal 2010. Net sales from our branded products totaled $574,000 for the second quarter of fiscal 2010 compared to $638,000 for the prior year period. This decrease was associated with the continued softening of our Pathway to Healing® product line sales. During late fiscal 2009 we revamped our Dr. Cherry website and increased our direct-to-consumer marketing and advertising efforts, which helped reduce the historical sales decline for these products during the second quarter of fiscal 2010. During late fiscal 2010 we intend to further increase our Dr. Cherry marketing and advertising efforts and plan to re-launch various product offerings including new formulations, labeling and packaging in an effort to expand our future sales opportunities. Net income from continuing operations in the second quarter of fiscal 2010 was $614,000 or $0.09 per diluted share compared to a net loss of $2.5 million or $0.36 per share in the second quarter of fiscal 2009. During the second quarter of fiscal 2010 we also generated net income from discontinued operations of $60,000 or $0.01 per diluted share as compared to a net loss of $756,000 or $0.11 per share in the second quarter of fiscal 2009. The net loss from discontinued operations in the prior year quarter was primarily attributable to a deferred tax asset valuation allowance totaling $621,000. On July 31, 2009, we sold substantially all of the remaining assets of Real Health Laboratories (RHL) and anticipate the remaining wind-down business activity of RHL will be completed during the second half of fiscal 2010. As of December 31, 2009, NAI had cash and certificates of deposit of $5.3 million and working capital of $15.9 million compared to $4.7 million and $13.9 million, respectively, as of June 30, 2009. As of December 31, 2009, we had $3.8 million available under our working capital line of credit. Mark A. LeDoux, Chief Executive Officer, stated, "Our continued focus on operational improvements and efficiencies has demonstrated positive results. We have found ways of doing more with less and intend to continue to focus on adding value to our client partnerships. We also have expanded our efforts and footprint in generating commercial value from our patent estate with our CarnoSyn® beta-alanine compound. We are evaluating new packaging systems to improve customer retention and compliance with daily regimens of supplementation and provide portability to consumers – further enhancing customer loyalty and helping improve nutritive status." 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, the timing of the completion of the wind-down of RHL, and our ability to further reduce operating costs, reduce our debt, expand and retain our contract manufacturing business, grow our Dr. Cherry business and the timing of our increased marketing efforts and the re-launch of this product line, develop, maintain or increase sales to new and existing customers, 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.