Natural Alternatives International, Inc. ("NAI"), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced a net loss of $4.1 million or $0.58 per diluted share on net sales from continuing operations of $73.9 million for the fiscal year ended June 30, 2009. The fiscal 2009 results include a net loss from discontinued operations of $3.9 million or $0.55 per diluted share primarily related to the write-down of goodwill and intangible assets, and severance and other business related exit costs.
Fiscal 2009 net sales from continuing operations decreased $7.9 million from $81.8 million for fiscal 2008. This decrease included a decline in contract manufacturing sales of $6.6 million or 8% primarily from the impact of current economic conditions and inventory management by many of our customers. These sales decreases were partially offset by increased sales volumes from other existing customers and new customer sales and income related to a sublicense agreement for the distribution of Beta-Alanine from within our patent estate. Net sales from our branded products declined $1.2 million or 31% during fiscal 2009 as compared to the prior fiscal year associated with the continued softening of the Pathway to Healing(R) product line. The net loss from continuing operations for fiscal 2009 was $220,000 or $0.03 per diluted share as compared to net income of $912,000 for fiscal 2008 or $0.13 per diluted share.
Net sales from continuing operations for the fourth quarter ended June 30, 2009 totaled $19.4 million and represented a decrease of $2.1 million as compared to net sales of $21.5 million in the fourth quarter of fiscal 2008. Net income from continuing operations in the fourth quarter of fiscal 2009 was $1.2 million or $0.17 per diluted share as compared to a net loss of $3,000 or $0.00 per share in the fourth quarter of fiscal 2008. The increase in net income from continuing operations was attributable to an improved product sales mix, reduced labor and other manufacturing costs and lower selling, general and administrative expenses associated with our cost reduction and organizational consolidation efforts during fiscal 2009. During the second half of fiscal 2009, our cost reduction program resulted in operating expense savings of approximately $3.0 million compared to our cost structure in the comparable prior year period. We expect our cost reduction program to further reduce our operating overhead costs in fiscal 2010 by approximately $3.5 million as compared to fiscal 2009.
The net loss from discontinued operations of $115,000 or $0.02 per diluted share in the fourth quarter of fiscal 2009 compared to a net loss of $165,000 or $0.02 per diluted share in the fourth quarter of fiscal 2008. Overall, net income for the fourth quarter was $1.1 million or $0.16 per diluted share as compared to a net loss of $168,000 or $0.02 per diluted share in the comparable quarter last year.
On July 31, 2009, we sold substantially all of the remaining assets of our wholly owned subsidiary, Real Health Laboratories, Inc. (RHL), related to its wholesale and direct-to-consumer business to PharmaCare US Inc. and PharmaCare Laboratories Pty Ltd. for a cash purchase price of $500,000. As additional compensation, RHL may receive up to an additional $500,000 from the buyers as a conditional earn-out if the RHL business acquired by the buyers meets or exceeds certain budgeted profitability criteria during the period August 1, 2009 through July 31, 2010. The company anticipates the remaining wind-down business activity of RHL will terminate during the second half of fiscal 2010.
As of June 30, 2009 NAI had cash and certificates of deposit of $4.7 million and working capital of $13.9 million compared to $3.5 million and $18.4 million, respectively, as of June 30, 2008. As of June 30, 2009, we had $5.2 million available under our working capital line of credit and were in full compliance with all lender covenants under the terms of our banking agreement.
Chairman and Chief Executive Officer Mark LeDoux stated, "We are pleased to report the improvement in the operating results of NAI. While the current economic conditions continue to challenge the economy at large, we believe our hard work to partner with our customers to develop innovative products and continuing efforts to push initiatives for intelligent cost management are beginning to bear fruit. During this past quarter, we focused on instituting further cost reduction programs including the elimination of certain personnel and non-essential or redundant business activities. We have also sharply reduced our debt as well as enhanced our inventory turnover through better operational oversight. The restoration of focus to our core mission of being the best custom contract manufacturer of dietary supplements for our esteemed clients is sharpening our vision and has helped us sustain operational profitability. We believe that we have positioned the company for profitable performance for fiscal 2010. As we enter our thirtieth year of operations in the U.S. and eleventh year in Switzerland, 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, 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, our ability to reduce operating costs, expand our contract manufacturing business, and develop, maintain or increase sales to new and existing customers, the timing of the completion of the wind-down of RHL, and our ability to successfully leverage our manufacturing facilities, 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.