NBTY Reports Record Third Quarter Sales and Net Income

BOHEMIA, N.Y., Jul 22, 2002 /PRNewswire/ -- NBTY, Inc. (Nasdaq: NBTY) (www.NBTY.com), a leading manufacturer and marketer of nutritional supplements, today announced results for the fiscal third quarter and nine months ended June 30, 2002.

For the fiscal third quarter ended June 30, 2002: net sales increased $48 million to $252 million, a 24% increase from the comparable quarter last year. Net income increased 53% to $20 million, or $0.30 per diluted share, compared to net income of $13 million, or $0.20 per diluted share, for the comparable period last year. These results do not include a $15 million settlement payment received in the third quarter from price fixing litigation in which the Company was a plaintiff. Including this payment, reported net income increased by 122% to $30 million, or $0.44 per diluted share.

For the nine months ended June 30, 2002: net sales were $719 million, an increase of $123 million, or 21%, from the same period last year. Net income increased 68% to $54 million, or $0.79 per diluted share, compared with net income of $32 million, or $0.48 per diluted share, for the comparable period last year. During this period the Company received a total of $21 million as settlement payments in the price fixing litigation. Including these payments, reported net income increased by 108% to $66 million, or $0.98 per diluted share.

The balance sheet has continued to strengthen. For the nine months ended June 30, 2002, current assets increased by $28 million to $308 million and working capital increased by $22 million to $153 million. Bank debt was reduced by $78 million to $37 million.

Operations for the Third Quarter

Sales for the Nature's Bounty wholesale operation were $80 million compared with $53 million for the previous like quarter, an increase of 52%. The increase reflects greater sales of core products and strong sales response to new product introductions and promotions. The Company believes that greater consumer awareness and acceptance of natural alternatives including flaxseed oil, fish oils and soy-based products has also contributed to increased sales and enhanced Nature's Bounty leading market position.

NBTY continues to outperform its competitors and increase its market share in mass market and chain drug retailers. NBTY's expertise in utilizing consumer sales information received from its Vitamin World and direct response/e-commerce operations, responding to consumer preferences and monitoring the market for trends and ideas continues to generate increased sales for the mass market and drug chains.

Information Resources Inc. (IRI), which tracks industry-wide sales in the food, drug and mass market sectors for comparative four-week periods, has reported vitamin sales increases in these sectors. We previously noted that for the first time in two years, IRI reported a 2.2% increase in vitamin sales in the drug sector for the four-week period ended March 24, 2002. For the next four-week periods that occurred during the months of April, May and June, IRI reported increases of 3.4%, 5.8% and 2.2% respectively. The Company remains encouraged by these increases and expects to capitalize on improving market conditions.

Vitamin World sales increased 13% from the prior like quarter with same store sales increasing 11%. While this operation is still not yet profitable, it continues to be cash flow positive; EBITDA before corporate overhead allocation was $2.8 million. Vitamin World currently operates 540 stores nationwide.

Holland & Barrett sales increased 12%, as it continues to be a leader in the United Kingdom with same store sales increasing 10%. In the third quarter the British pound has strengthened against the US dollar by 3% compared to the prior like quarter. This increased Holland & Barrett's operating income by approximately $500,000. Holland & Barrett currently operates 465 stores in the UK and Ireland.

Third quarter revenues from Puritan's Pride direct response/e-commerce operations increased 16% after being negative in the second quarter of 2002. The number of products available via catalog and website continues to increase, and the Company remains the leader in this sector.

Commenting on the results, NBTY Chairman and CEO, Scott Rudolph, stated: "We are pleased to report a record quarter for operations with all divisions generating substantial sales increases. Our wholesale business again contributed substantially to the overall rise in revenues. These results reaffirm NBTY's position as the dominant force in the nutritional supplement industry. NBTY significantly reduced its debt level while strengthening the Company's financial position. We are confident that NBTY will continue to capitalize on market opportunities. We remain optimistic about the long term outlook for the Company."

ABOUT NBTY

NBTY is a leading vertically integrated U.S. manufacturer and distributor of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world. The Company markets more than 1,500 products under several brands, including Nature's Bounty(R), Vitamin World(R), Puritan's Pride(R), Holland & Barrett(R), Nutrition Headquarters(R), American Health(R), Nutrition Warehouse(R) and Dynamic Essentials(R).

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. All of these forward-looking statements, which can be identified by the use of terminology such as "subject to," "believe," "expects," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy which, although believed to be reasonable, are inherently uncertain. Factors that may affect such forward-looking statements include (i) slow or negative growth in the nutritional supplement industry; (ii) disruptions of business or negative impact on sales and earnings due to acts of war, terrorism, bio-terrorism, or civil unrest; (iii) adverse publicity regarding the consumption of nutritional supplements; (iv) inability to retain customers of companies (or mailing lists) recently acquired; (v) increased competition; (vi) increased costs; (vii) loss or retirement of key members of management; (viii) increases in the cost of borrowings and unavailability of additional debt or equity capital; (ix) unavailability of, or inability to consummate, advantageous acquisitions in the future or the inability of the Company to integrate acquisitions into the mainstream of its business; (x) changes in general worldwide economic and political conditions in the markets in which the Company may compete from time to time; (xi) the inability of the Company to gain and/or hold market share of its wholesale and retail customers; (xii) unavailability of electricity in certain geographical areas; (xiii) exposure to, expense of defending and resolving, product liability claims and other litigation; (xiv) the ability of the Company to successfully implement its business strategy; (xv) the inability of the Company to manage its retail operations efficiently; (xvi) consumer acceptance of the Company's products; (xvii) uncertainty in negotiating and consummating acquisitions which may be subject to bankruptcy court approval; (xviii) the inability of the Company to renew leases on its retail locations; (xix) inability of the Company's retail stores to attain profitability; (xx) the absence of clinical trials for many of the Company's products; (xxi) sales and earnings volatility; (xxii) the Company's ability to manufacture its products efficiently; (xxiii) the rapidly changing nature of the Internet and on-line commerce; (xxiv) fluctuations in foreign currencies, and more particularly the British Pound; (xxv) import-export controls on sales to foreign countries; (xxvi) the inability of the Company to secure favorable new sites for, and delays in opening, new retail locations; (xxvii) introduction of new federal, state or foreign legislation or regulation or adverse determinations by regulators, and more particularly the Food Supplements Directive and the Traditional Herbal Medicinal Products Directive in Europe; (xxviii) the mix of the Company's products and the profit margins thereon; (xxix) the availability and pricing of raw materials; (xxx) risk factors discussed in the Company's filings with the Securities and Exchange Commission; and (xxxi) other factors beyond the Company's control.

Readers are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events.

The Company cannot guarantee future results, events, levels of activity, performance or achievements. The Company does not assume a duty to update or revise any of the forward-looking statements as a result of new information, future events or otherwise.

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