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NBTY Reports 49% Increase in Net Income for First Quarter

BOHEMIA, N.Y., Jan. 22 -- NBTY, Inc. (Nasdaq: NBTY) , a leading manufacturer and marketer of nutritional supplements, today announced record results for the fiscal first quarter ended December 31, 2002.

For the fiscal first quarter ended December 31, 2002, net sales increased 12% to $241 million compared to $215 million for the fiscal first quarter ended December 31, 2001. Net income for the first quarter rose 49% to $17 million, or $0.24 per diluted share, compared to net income of $11 million, or $0.17 per diluted share, for the comparable prior period.

Results for the first quarter reflect an increase in sales generated in all areas of the Company's operations. The Company continues to enhance its financial strength. At December 31, 2002 total assets were $753 million reflecting an increase of $18 million from September 30, 2002, and working capital was $201 million reflecting an increase of $16 million. During the first quarter ended December 31, 2002, total debt was reduced by $6 million to $181 million. As a result of continued debt repayments, interest cost decreased by $2 million, compared to the comparable prior period. Overall gross profit was 55.8% for the first quarter ended December 31, 2002, compared with 53.1% for the comparable prior period. The increase in gross profit reflects improvements in operating efficiencies and capacity utilization.


Sales for the Nature's Bounty wholesale division were $74 million, compared with $66 million for the comparable prior period, or an increase of 13%. The increases are primarily due to increased sales to the mass market. NBTY continues to increase its wholesale presence in the nutritional supplement marketplace. By utilizing consumer sales information received from its Vitamin World and direct-response/e-commerce operations, the Company has been able to provide its mass-market customers with tools to drive sales. The Company continues to respond to consumer preferences and to monitor the market for trends and ideas, which efforts have translated into increased sales. The Nature's Bounty brand continues to be recognized for its ability to generate greater sales than competing brands. The Company continues to focus its energies in gaining market share in the wholesale arena.

Sales for the Vitamin World operation for the first quarter increased 14% to $50 million from $44 million in the comparable prior period. While this operation was not profitable in the first quarter, losses were reduced by $1 million, or 38%, compared to the comparable prior period. The Vitamin World operations continue to be cash flow positive with EBITDA of $1.3 million. Same store sales increased 11%. Advertising costs increased $600,000 to $2.2 million. Vitamin World currently has 542 stores in operation nationwide.

Holland & Barrett sales increased 14% to $83 million from $73 million, for the comparable prior period. Holland & Barrett continues to be a leader in the United Kingdom with same store sales increasing 13% for the first quarter. These results include the positive effect of a strong British Pound. Holland & Barrett currently operates 468 stores in the UK and Ireland.

Revenues from Puritan's Pride direct response/e-commerce operations for the first quarter increased 5% to $34 million from $33 million for the comparable prior period. The Company remains the leader in the direct response and e-commerce sector and the number of products available via catalog and website continues to increase.

NBTY Chairman and CEO, Scott Rudolph, said: "We are pleased to report another record quarter for operations with all divisions generating sales increases. These results reaffirm NBTY's position as the dominant force in the nutritional supplement industry. We are confident in NBTY's ability to further capitalize on market opportunities, make acquisitions that complement our operations, and enhance our financial strength. We are confident in the long-term outlook for the Company."


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 1,100 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 which may materially affect such forward-looking statements include: (i) slow or negative growth in the nutritional supplement industry; (ii) interruption of business or negative impact on sales and earnings due to acts of war, terrorism, bio-terrorism, civil unrest or disruption of mail service; (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, including those that may be subject to bankruptcy approval or the inability of the Company (as defined below) 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) loss or reduction in ephedra sales; (xiii) unavailability of electricity in certain geographical areas; (xiv) exposure to and expense of defending and resolving, product liability claims and other litigation; (xv) the ability of the Company to successfully implement its business strategy; (xvi) the inability of the Company to manage its retail, wholesale, manufacturing and other operations efficiently; (xvii) consumer acceptance of the Company's products; (xviii) the inability of the Company to renew leases on its retail locations; (xix) inability of the Company's retail stores to attain or maintain profitability; (xx) the absence of clinical trials for many of the Company's products; (xxi) sales and earnings volatility and/or trends; (xxii) the effect on Company sales of the rapidly changing nature of the Internet and on-line commerce; (xxiii) fluctuations in foreign currencies, and more particularly the British Pound; (xxiv) import-export controls on sales to foreign countries; (xxv) the inability of the Company to secure favorable new sites for, and delays in opening, new retail locations; (xxvi) introduction of new federal, state, local 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; (xxvii) the mix of the Company's products and the profit margins thereon; (xxviii) the availability and pricing of raw materials; (xxix) risk factors discussed in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"); and (xxx) other factors beyond the Company's control.

Readers are cautioned not to place undue reliance on forward-looking statements. The Company cannot guarantee future results, trends, events, levels of activity, performance or achievements. The Company does not undertake and specifically declines any obligation to update, republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events.

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