Natural Alternatives International, Inc., a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced net income of $1.9 million or $0.27 per diluted share on net sales from continuing operations of $17.0 million for the quarter ended March 31, 2010.
Net sales from continuing operations during the three months ended March 31, 2010 decreased $373,000 from $17.3 million reported in the comparable prior year period. Operating income from continuing operations decreased to $837,000 for the third quarter of fiscal 2010 as compared to operating income in the comparable prior year quarter of $1.4 million. The decline in operating income from continuing operations was primarily attributable to decreased sales, increased manufacturing labor and overhead expenses, and increased selling and general administrative expenses.
For the quarter ended March 31, 2010, contract manufacturing sales declined $282,000 or 1.7% 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 $536,000 for the third quarter of fiscal 2010 compared to $627,000 for the prior year period. This decrease was associated with the continued softening of our Pathway to Healing(R) 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 third quarter of fiscal 2010. During early fiscal 2011 we intend to increase our Dr. Cherry marketing and advertising efforts and plan to re-launch certain Dr. Cherry products with new formulations, labeling and packaging in an effort to expand our future sales opportunities.
Net income from continuing operations in the third quarter of fiscal 2010 was $1.9 million or $0.27 per diluted share compared to a net income of $1.4 million or $0.21 per diluted share in the third quarter of fiscal 2009. Net income from continuing operations in the third quarter of fiscal 2010 included a $1.3 million tax benefit due to a tax loss recognized as a result of the write-off of our tax basis in our wholly-owned subsidiary formerly known as Real Health Laboratories.
During the third quarter of fiscal 2010 we also generated net income from discontinued operations of $2,000 or $0.00 per diluted share as compared to a net loss of $1.9 million or $0.28 per diluted share in the third quarter of fiscal 2009. The net loss from discontinued operations in the prior year quarter was primarily attributable to a non-cash impairment charge related to the intangible assets associated with discontinued operations.
As of March 31, 2010, NAI had cash and certificates of deposit of $7.8 million and working capital of $18.2 million compared to $4.7 million and $13.9 million, respectively, as of June 30, 2009. As of March 31, 2010, we had $3.8 million available under our working capital line of credit.
Mark A. LeDoux, Chief Executive Officer, stated, "We are pleased with the results of our last quarter as we have been for the last five quarters. Going forward, we see potential for growth in our sales due in large part to our ability to meet the ever more challenging regulatory requirements in our industry. As more and more companies weigh the requirements to improve their supply chain with greater transparency and adherence to these stringent quality standards, we expect NAI will continue to have increased opportunities."
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.