Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced a net loss of $3.3 million or $0.47 per share on net sales from continuing operations of $17.6 million for the second quarter ended December 31, 2008. The second quarter results include a net loss from discontinued operations of $756,000 or $0.11 per share and restructuring costs totaling $558,000 or $0.08 per share.
The second quarter net sales from continuing operations represented a decrease of $800,000 or 4.3% from $18.4 million in the comparable prior year quarter. For the quarter ended December 31, 2008, contract manufacturing sales declined $409,000 or 2.3% from the comparable quarter last year due to lower sales volumes to our largest two customers. These sales decreases were partially offset by increased sales volumes from other existing customers and new customer sales. Net sales from our branded products declined $377,000 or 37.1% in the second quarter of fiscal 2009 compared to the comparable period in fiscal 2008 due primarily to the continued softening of our Pathway to Healing(R) product line.
The net loss from continuing operations in the second quarter of fiscal 2009 was $2.6 million or $0.36 per share compared to net income of $142,000 or $0.02 per diluted share in the second quarter of fiscal 2008. The net loss from continuing operations was attributable to higher raw material costs, a shift in sales mix to lower margin products, increased repairs and maintenance expenses, unfavorable foreign currency exchange rates and restructuring costs. The second quarter loss from continuing operations also reflects a deferred tax asset valuation allowance totaling $308,000. We also incurred a net loss from discontinued operations of $756,000 or $0.11 per share in the second quarter of fiscal 2009 compared to a loss of $322,000 or $0.05 per share in the second quarter of fiscal 2008. The increase in the net loss from discontinued operations was primarily attributable to a deferred tax asset valuation allowance totaling $621,000, which was recorded during the second quarter of fiscal 2009. Overall, the second quarter loss was $3.3 million or $0.47 per share compared to a net loss of $180,000 or $0.03 per share in the comparable quarter last year.
As of December 31, 2008, NAI had cash and certificates of deposit of $4.0 million and working capital of $12.7 million compared to $3.5 million and $18.4 million, respectively, as of June 30, 2008. As of December 31, 2008, we had $3.4 million available under our working capital line of credit.
Chairman and Chief Executive Officer Mark LeDoux stated, "Current economic conditions continue to hamper our operations and our customers' businesses. During this past quarter, we implemented a cost reduction program including the elimination of certain personnel and business activities. This program resulted in a charge to our continuing operations of $558,000 and is expected to reduce our operating overhead costs by approximately $3.6 million annually. With a lower go forward operating cost structure we believe we have positioned the company for profitable performance for the remainder of fiscal 2009. We remain optimistic about our future growth opportunities and intend to continue to leverage our certified manufacturing facilities and excellent customer service reputation to expand our distribution and customer base."
NAI also reported today that it had recently received recertification of its Swissmedic Authority pharmaceutical license for its Manno, Switzerland manufacturing facility and its Therapeutic Goods Administration (TGA) of Australia certification for its Vista, California manufacturing facilities.
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 our future financial and operating results, including the amount of our future revenue and profits and our future financial condition, and our ability to reduce operating costs, expand our contract manufacturing business, and develop, maintain or increase sales to new and existing customers, 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.