Item 2.05 Costs Associated with Exit or Disposal Activities.

On December 12, 2008, Natural Alternatives International, Inc. (the "Company") committed to a plan of termination that resulted in a work force reduction of approximately 41 regular, full-time employees in an effort to reduce costs and improve the Company's competitiveness and profitability. The terminations are expected to be substantially completed by December 23, 2008. Under the plan, each affected employee will be eligible to receive a severance payment and payment by the Company of each affected employee's COBRA premiums for up to three months. Payment of these severance benefits is contingent on the affected employee executing a separation agreement with the Company, which agreement includes a general release of claims against the Company.

The Company estimates that it will incur approximately $200,000 in severance and related payroll costs as a result of this action. This estimate is subject to a number of assumptions, including that each affected employee executes a separation agreement with the Company. Actual costs may differ.

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