Natrol Announces Focus on Product Leadership, Scales Up Infrastructure and Realigns Business Units

CHATSWORTH, Calif.--Aug. 18, 2003--Natrol Inc. (Nasdaq:NTOL), a manufacturer and distributor of nationally branded dietary supplements, today announced a series of what Founder, Chairman, President and CEO, Elliott Balbert described as "sweeping changes" to a company-wide grouping of Natrol's approximately 260 employees. "Natrol is reinventing itself," said Balbert. "We cannot allow modest revenue growth with break-even earnings to be an acceptable outcome for our company. Since I founded this company in 1980, I have always demanded excellence in our performance. Now, more than ever, I am driven to deliver revenue and earnings growth as we have achieved in past years. To accomplish this daunting goal we will completely reinvent ourselves and become the most respected, trusted supplement company in the industry. We will do it by having the most innovative, scientifically validated products that deliver what consumers demand from their dietary supplements. We will employ the truest manufacturing practices that technology offers. Consumers will seek out Natrol products because they will know we can be trusted for our quality, innovation and performance."

As a first significant step in this process, Balbert announced that product development would, for the first time in Natrol's history, report directly to the CEO. "This is a signal to all that Natrol must and will develop into the industry's product leader," said Balbert. "Mr. Marc Meyers, Ph.D., is joining the company immediately in the new direct reporting position of V.P. of Technology and Product Development. Mr. Meyers' background includes expertise in micro encapsulation, delivery systems, functional foods, ingredient/product development and technical services for food applications. Mr. Meyers will be responsible for building the product development area in upcoming months and the Company has set no cap on how large or how much support will be assigned to this key function."

Mr. Balbert further announced that the Company would restructure all operational functions before the end of 2003. As part of this reorganization, Prolab, the Company's Connecticut sports fitness division, would relocate all functions except warehousing and distribution to the Company's Chatsworth, California headquarters.

Three division presidents are taking on new roles. President of Prolab, Jon Denis, becomes the new corporate VP of Sales, Anthony Raissen, President of Tamsol becomes VP of Alternative Sales and EPI President Dennis Griffin will move his sales responsibilities under Mr. Denis and take on the dual role of VP of Ingredient sales/contract manufacturing and the new position of Director of Corporate Manufacturing.

Balbert advised the packed room by adding, "We have spent over 5 months working on our new corporate plans. We have developed our strategic map, our corporate initiatives, a restructuring alignment and much more. We are going to invest in product leadership in a way that will define Natrol as a true innovator in this industry. We are going to invest in our employees by creating an internal Natrol University." Balbert added, "We have a new vision. We want to help people feel better physically, we want to help people feel better emotionally and we want to help people feel better financially. We call it WELLFULLNESS and we will become the First Choice for Wellfullness."

The statements made in this press release which are not historical facts including statements regarding expectations for future growth of revenue and profits and trends concerning net sales, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. As a result of a number of factors, including the factors described above that the Company may not currently foresee, the Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause Natrol's actual results to differ materially from those set forth in the forward-looking statements include adverse trends in the dietary supplements industry, intense competition, adverse effects of unfavorable publicity regarding particular products or the Company's industry generally, the Company's dependence on the introduction of successful new products, the Company's ability to gain market share and shelf space in each of its distribution channels, the Company experiencing high rates of product returns, and adverse government regulation, as well as those factors set forth under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2002 and in the Company's other filings with Securities and Exchange Commission.

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